Enabling
PROGRESS
Annual Report and Accounts 2022
DCC is a leading international
sales, marketing and support
services group with a clear
focus on performance and
growth. We operate in
three sectors: energy,
healthcare and technology.
We are an ambitious and entrepreneurial business operating in 21 countries,
supplying products and services used by millions of people, every day. Building
strong routes to market, driving for results, focusing on cash conversion
and generating superior, sustainable returns on capital employed enable
us to reinvest in our business, creating value for all our stakeholders.
Contents
Strategic Report
Governance
Financial Statements
2
3
4
6
8
10
12
16
18
22
28
36
40
44
48
56
80
92
Highlights of the Year
At a Glance
Investment Case
Our Sustainable Growth Model
Our Strategy
Our Business Model
Our Markets and Trends
Chairman’s Statement
Chief Executive’s Review
Energy Strategy
Strategy in Action
People
Stakeholder Engagement
Key Performance Indicators
Financial Review
Operating Reviews
Sustainable Business Report
Risk Report
103 Chairman’s Introduction
104 Board of Directors
106 Group Management Team
108 Corporate Governance Statement
119 Governance and Sustainability
Committee Report
123 Audit Committee Report
128 Remuneration Report
154 Report of the Directors
158 Statement of Directors’ Responsibilities
159
164 Financial Statements
Independent Auditor’s Report
Supplementary Information
238 Principal Subsidiaries and Associates
242 Shareholder Information
244 Corporate Information
245
Independent Assurance Statement
247 Additional Sustainability Information
249 Alternative Performance Measures
255 5 Year Review
Index
256
Strategic Report
Governance
Financial Statements
Supplementary Info
Enabling
PEOPLE AND
BUSINESSES TO
GROW AND
PROGRESS
As a trusted partner to our suppliers and customers, we understand the importance
of making impactful connections and doing the right thing. These are the foundations
that help us to deliver sustainable value for all of our stakeholders.
Enabling Energy Transition
Enabling Healthcare
Read more on page 28
Read more on page 30
Enabling Access to Technology
Enabling Our People
Read more on page 32
Read more on page 36
DCC plc Annual Report and Accounts 2022
1
Strategic Report
Highlights of the Year
Excellent organic
performance and continued
acquisitive growth
The Group delivered an excellent performance in a challenging macro environment, with profit growth
across each of our divisions, again demonstrating the resilience of our business. Our colleagues around
the Group continued to deliver for our energy, healthcare and technology customers, ensuring the supply
of DCC’s essential products and services.
It was a very good period for acquisition activity, with approximately £600 million committed to the
continued growth and evolution of the Group, which included the acquisition of Almo, the Group’s
largest acquisition to date.
Separately, the Group developed an updated strategy for our activities in the energy sector. We are
committed to leading our customers in their energy transition by providing innovative and cleaner
energy solutions that will help them to achieve their net zero goals.
Adjusted operating profit 1
+11.1%
Adjusted EPS 1
+11.2%
Dividend per share
+10.0%
£589.2m
430.11p
175.78p
2022
2021
2020
£589.2m
£530.2m
£494.3m
2022
2021
2020
430.11p
386.62p
362.64p
2022
2021
2020
175.78p
159.80p
145.27p
Operating profit
+8.4%
EPS
+6.6%
Carbon intensity
£458.4m
316.78p
76.4gCO2e/MJ
2022
2021
2020
£458.4m
£422.9m
£366.6m
2022
2021
2020
316.78p
297.04p
249.64p
2022
2021
2020
76.4
76.5
79.3
Free cash flow
£382.6m
Return on capital employed 2
16.5%
2022
2021
2020
£382.6m
£687.8m
£492.3m
2022
2021
2020
16.5%
17.1%
16.5%
1. All references to ‘adjusted operating profit’ and
‘adjusted earnings per share’ included in the Strategic
Report are stated excluding net exceptionals and
amortisation of intangible assets. Other ‘Alternative
Performance Measures’ (‘APMs’) are detailed on pages
249 to 254.
2. Return on capital employed excludes the impact
of IFRS 16 Leases. See APMs on pages 252 and 253
for further information.
2
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
At a Glance
Our Operations
We combine our strengths to connect people and businesses with the essential products
and services that they require to keep growing and progressing.
We operate across three sectors: energy, healthcare and technology, employing 15,400 people
in 21 countries. In the year under review, we were organised and managed across four divisions.
Energy
DCC LPG
Healthcare
Technology
DCC Retail & Oil
DCC Healthcare
DCC Technology
A leading liquefied petroleum gas
(’LPG’) sales and marketing business,
supplying LPG to residential,
commercial and industrial
customers. In addition, DCC LPG
continues to develop a broader
customer offering through the
supply of natural gas, power and
renewable energy products.
A leading provider of transport and
heating energy, lower emission fuels,
biofuels and related services to
consumers and businesses across
Europe, with a focus on providing
sustainable energy solutions.
A leading healthcare business,
partnering with consumer brands
to create and manufacture high
quality health and beauty products,
and supplying primary and
secondary care providers with
essential products and services.
A leading specialist distribution
partner for global technology and
appliance brands and customers,
providing reach, simplicity and
scale which enables our partners’
businesses to grow and progress.
Read more on page 56
Read more on page 62
Read more on page 68
Read more on page 74
Volumes (tonnes)
Volumes (litres)
Revenue
2.6m
(+15.8%)
11.6bn
(+14.0%)
£765m
(+16.8%)
Revenue
£4.6bn
(+3.6%)
Adjusted operating profit
Adjusted operating profit
Adjusted operating profit
Adjusted operating profit
£238m
(+2.8%)
Employees
3,819
£169m
(+17.0%)
Employees
3,785
Profit by division
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
14%
17%
40%
29%
£100m
(+22.9%)
Employees
2,829
Profit by geography
Continental Europe
UK
Rest of World
Ireland
24%
£82m
(+12.8%)
Employees
4,908
42%
8%
26%
DCC plc Annual Report and Accounts 2022
3
Investment Case
What sets
DCC apart?
Our vision
Our vision
for growth
for growth
Our
Our
partnerships
partnerships
Our proven
business model
The capabilities and
The capabilities and
opportunities we have
opportunities we have
today make us enthusiastic
today make us enthusiastic
about the Group’s growth
about the Group’s growth
prospects. Our ambition
prospects. Our ambition
is to grow Group profits by
is to grow Group profits by
more than 10% on average
more than 10% on average
over the next decade, while
over the next decade, while
maintaining returns on
maintaining returns on
capital employed well in
capital employed well in
excess of our cost of capital.
excess of our cost of capital.
Why we are positioned for success
• DCC has a long track record
of growing profits organically.
Leveraging strong market
positions, driving innovation in our
sales and marketing processes
and operational excellence are
all hallmarks of DCC. The Group
can continue to grow its profits
organically, by leveraging these
strengths, driven by our agile
and devolved business model.
• We have the ability to materially
increase the scale of the
Group and our total capital
employed over the next ten
years and beyond.
We are an integral part
We are an integral part
of the supply chain in our
of the supply chain in our
chosen sectors, connecting
chosen sectors, connecting
the products of our
the products of our
partners with the needs
partners with the needs
of our customers.
of our customers.
We have a proven business
model that has consistently
delivered high growth and
strong returns over our 28
years as a public company.
Why we are positioned for success
• We are a trusted partner to our
suppliers and customers. The
essential products we supply
are used every day by millions
of consumers and businesses.
• Many of our energy customers
also look to us to help reduce
their carbon emissions,
while continuing to provide
reliable energy.
• Our suppliers and customers
value our scale and financial
strength.
Why we are positioned for success
• We select resilient, diverse
sectors where we provide
essential products and services.
• Our diversified business model
offers exposure to multiple
growth trends.
• Our businesses are customer
focused and asset light, backed
by a strong portfolio of brands
and well-invested facilities.
• Our compounding business
model combines organic growth
with leading M&A capability.
• We have a clear set of priorities
for the allocation of capital
which are aligned with Group
and divisional strategies.
Read more: Chief Executive’s Review
Read more: Operating Reviews
Read more: Our Business Model
4
4
DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
Organic Profit Growth
c.3% – 4% p.a.
on average
Leading M&A Capability
c.6% – 8% profit growth p.a.
on average
Focus on Cashflow and Returns
c.85% – 90% FCF conversion
Mid-to-high teen ROCE
Double Digit
Earnings Growth
Our leading role in
energy transition
Our people
and culture
Our acquisition and
integration expertise
Our strategy is to accelerate
the net zero journey of our
customers by leading the
sales, marketing and
distribution of low carbon
energy solutions.
Our people are our greatest
asset. We have proven
management teams who
are highly experienced in
our sectors. Our teams are
engaged, empowered,
supported, and rewarded
for their performance.
Although organic growth
is our primary focus,
acquisitions have enabled
us to enter new product
categories and new
geographies, which have
in turn opened up new
avenues for growth.
Why we are positioned for success
• We understand energy markets
and have long-term customer
relationships.
• We are scaling our energy
solutions in solar, biofuel,
renewable power, biogas,
e-mobility and energy efficiency
solutions and believe this will
more than compensate for
traditional fuel declines.
• We are moving towards an
integrated offering, delivering
multi-energy solutions for
customers.
• We work with a range of partners
to deliver the energy solutions
of the future.
Why we are positioned for success
• Our devolved model ensures
proximity to customers, local
responsibility and focus. This
creates real agility and drives
a high-performance culture.
• We foster a culture of continuous
development for our people,
ensuring that we have the talent
and capabilities we need, now
and in the future.
• Our divisions are bound by our
common culture and values,
and a shared ambition to continue
to build a stronger Group.
Why we are positioned for success
• The Group has become a
successful and efficient
consolidator in our markets,
having completed over 350
acquisitions since we became
a public company in 1994.
• We have a wide range of options
for capital allocation and a clear
process for their prioritisation.
We continue to see opportunities
in our chosen sectors.
• We have the financial and
management capacity to
continue to be acquisitive.
Read more: Energy Strategy
Read more: Our People
Read more: Financial Review
DCC plc Annual Report and Accounts 2022
5
Our Sustainable Growth Model
Connecting
purpose to
performance
Our purpose is to enable people and
businesses to grow and progress.
Underpinned by our values, our
purpose informs everything we do,
from guiding our strategy and
shaping our business model to
defining the metrics we use to
measure our success.
Our purpose is our
reason for being
Our values
reflect how we
live our purpose
We fulfil our purpose
by focusing on our
strategic priorities
Our business
model is driven
by our strategy
Our business model
creates value for
our stakeholders
Our KPIs measure
our progress
6
DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
Our purpose is to enable people and businesses to grow and progress. It summarises the
role that DCC plays in society. In a large group it acts as a focus for our strategy and creates
a connection across our diverse activities. We strive to play a part in helping and supporting
the success of others – our employees, our customers, our suppliers, our investors and the
communities we serve.
Read more:
Chairman’s Statement
Our values underpin our business activities and are at the heart of our culture, guiding all
that we do. We believe these values strongly support our effectiveness as a business and
our wider societal responsibilities. These values have been communicated Group-wide and
will continue to be promoted by the Group’s management teams to guide our employees in
the way that we do business, particularly as we expand into new geographies and embrace
new cultures.
Read more:
People
Our strategy has been consistent over the long term. Our strategic objective is to build
a growing, sustainable and cash-generative business which consistently provides returns on
capital well in excess of our cost of capital. This simple strategic objective drives a consistent
Group-wide focus on continuous value creation, exploration of growth opportunities and a
steadfast commitment to sustainable business activities.
Read more:
Our Strategy
Our business model describes the resources and activities required to generate value
for our stakeholders. Organic growth is enabled by our growth-focused management
teams, operating in carefully chosen markets, whilst our strong cash generation facilitates
further organic and acquisition growth as well as investment in our people and returns
for our investors.
Read more:
Our Business model
Our commitment to strong stakeholder relationships is reflected in our purpose, our values
and our strategy and the interests of our stakeholders are reflected in our decision making.
As the needs and priorities of our stakeholders evolve, including the global need to address
the climate crisis, we will continue to evolve and innovate to enable the people and businesses
who are our stakeholders to grow and progress. This is what makes our business truly sustainable.
Read more:
Stakeholder Engagement
Our business model generates financial and non-financial returns for our stakeholders,
and we employ key performance indicators (‘KPIs’) to measure these. Our divisional KPIs
are directly aligned with Group and divisional strategies.
Read more:
KPIs
DCC plc Annual Report and Accounts 2022
7
Strategic Report
Our Strategy
Our strategy creates long-
term sustainable value
Our strategy informs how we enable people and businesses to grow and progress and achieve our long-term
strategic objective, which is to build a growing, sustainable and cash-generative business which consistently
provides returns on capital well in excess of our cost of capital.
We do this by developing high quality sales, marketing and support services businesses within industries that
provide essential products and services to society. Our businesses create sustainable competitive advantage
within these industries by building leading positions in selected sectors, focusing on value creation for their
stakeholders, and benefiting from Group expertise in areas such as capital deployment and risk management.
Building leading
businesses
Grow organically
We focus first on delivering sustainable organic growth across
the Group.
This is achieved through a deep knowledge of individual
markets, committed and empowered management teams,
long-term partnerships with suppliers and customers, and
continuous improvement and innovation in our operations.
Convert profits to cash
We ensure that the profits from our operations are promptly
available for reinvestment.
Identify investment opportunities
Businesses across the Group then look for ways to improve
and expand by making investments in their people, in organic
growth, such as improving their manufacturing facilities,
and in acquisitions.
Investing for growth
Maintain investment capacity and expertise
A strong and liquid balance sheet, a clear set of investment
priorities, and leading M&A and integration capabilities enable
us to invest in further growth and development.
We combine market knowledge with capital allocation and
transaction expertise to ensure investment opportunities
are assessed and progressed efficiently.
Expand opportunities to invest
As the Group grows into new geographies and markets that
are aligned with positive long-term trends, our opportunities
for further investment increase.
Priorities for the year
•
Identify opportunities for further investment that
are aligned with Group and divisional strategies and
our capital deployment priorities.
Review our acquisition processes to reflect our
energy strategy and support its implementation.
•
Priorities for the year
•
Progress the continued implementation of our
energy strategy.
Complete recent manufacturing and warehouse
expansion projects in DCC Healthcare.
•
8
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Strategy in Action
We made significant progress in the delivery
of our strategy during the year. Throughout
this Report we have included examples of
our strategy in action.
Driving long-term
sustainable value
Benefit our stakeholders
This combination of organic growth, investment in existing and
new operations, plus a focus on continuously developing our
people and wider capabilities delivers positive, sustainable
outcomes for the Group’s stakeholders.
Our entrepreneurial and values-led culture is essential to the delivery
of these outcomes and we therefore seek to encourage and deepen
it across the Group, especially in recently-acquired businesses.
We measure these outcomes for stakeholders through both
financial and non-financial performance measures.
Focus on our objective and purpose
Our overall objective is to deliver a growing, sustainable
and cash-generative business which consistently provides
returns on capital employed well in excess of our cost of capital
and which also fulfils the Group’s purpose in society: to enable
our stakeholders – the people and businesses we deal with
– to grow and progress.
Priorities for the year
•
•
Support and integrate recent acquisitions, such as
Almo Corporation.
Continue to develop our reporting to reflect the value
that we generate for stakeholders, as part of our Group
Sustainability Programme.
Strategic
enablers
Our strategic enablers are key disciplines
that enable us to deliver against our
three priorities.
These enablers ensure a common approach
to value-creation across the Group.
Read more: Strategy in Action
Market leading
positions
Operational
excellence
Innovation
Extend our
geographic
footprint
Development
of our people
Financial
discipline
DCC plc Annual Report and Accounts 2022
9
Strategic Report
Our Business Model
Guided by our strategy, our
business model describes how
we create value for all our
stakeholders from the resources
and relationships we use to
operate the business.
Our resources
People
DCC at its core is a people business. We are a multinational and
multicultural Group, employing 15,400 people in 21 countries.
We have an inclusive and diverse culture with shared values and
a common purpose. The Group’s continued success depends
on a skilled, engaged and inclusive workforce to deliver the right
products and services, safely and on time, to our customers
every day.
Partnerships
We are a trusted partner to millions of customers ranging from
major corporations and governments to sole traders and
individual consumers. We partner with thousands of the world’s
leading energy, healthcare and technology companies, giving
us access to a diverse range of quality products. Our suppliers
are carefully selected, and our aim is to create long-term
sustainable relationships with them.
Financial
The Group has a strong and liquid balance sheet which enables us
to react quickly to commercial opportunities. At 31 March 2022,
the Group had cash resources of £1.3 billion and total equity
of £3.0 billion.
Infrastructure
We are well positioned to execute our strategy, having robust
adaptable, and well-invested operating platforms, a diverse
geographic footprint across 21 countries and the capacity
and appetite to invest further in existing and new assets.
Intellectual
The quality of our skills and expertise together with our own
brands, third-party brands, licences and business processes
provide significant competitive advantage. We foster a culture
of innovation across the Group and constantly challenge each
business to identify and implement innovative and effective
solutions in a rapidly changing, digitally-enabled environment.
10
DCC plc Annual Report and Accounts 2022
How we create
and sustain
value
We choose
where we
operate
We combine our
expertise
We focus on
growth
Our Financial
Model is
sustainable
Strategic Report
Governance
Financial Statements
Supplementary Info
We compete in attractive and sustainable markets and have
the skills and platforms for further growth. When investing,
we focus on sectors with equally attractive dynamics where
we can win because of our proven ability to operate and grow
customer-focused sales, marketing and support services
businesses. This generates recurring revenue with high cash
conversion, in developed markets with similar risk profiles and
opportunities for consolidation.
How we
share value
We build for the long-term and combine global expertise
with local know-how to create value at a meaningful
scale for the people and businesses we work with society
and our investors. Our business model generates
financial and non-financial returns for our stakeholders.
Here, we summarise the principal financial returns
created during the year. The Group KPIs, the People
section, the Stakeholder Engagement section and the
Sustainable Business Report address our stakeholder
relationships and the non-financial value we generate
for our stakeholders in more detail.
Suppliers
and Customers
Goods and services supplied
£16.5bn
We operate a devolved management structure which allows
our businesses to drive innovation in their chosen markets and
to remain agile and responsive to changes in customer needs.
Our devolved model is a critical mechanism for ensuring local
responsibility, focus and autonomy. Our businesses are
supported by central functions with expertise in areas such as
talent development, risk management and capital allocation,
together with setting a consistent strategic direction.
Employees
Employee payments
£761m
Investors
Dividend to shareholders
We support growth with a rigorous set of management
processes that ensure a constant focus on improvement,
investment and further cash generation. We drive organic
growth within our businesses by partnering with our
stakeholders and by fostering a culture of high performance,
innovation and entrepreneurship in our teams. This organic
growth facilitates ongoing investment in our people and in
our operations and the delivery of consistent returns to our
investors. This is supported by disciplined and selective capital
redeployment for expansion and new acquisitions, allowing
us to sustain our growth model.
We provide products and services that millions of people
and businesses use every day. There is long-term and
sustainable demand in the sectors in which we operate,
and our divisions and businesses all possess the platforms
and capabilities to achieve further growth in the future. Our
choice of markets results in a highly sustainable financial
model. Our financial model of organic growth and strong cash
generation is designed to strike the right balance between
reinvesting in future organic growth and acquisitions and
sharing value with all stakeholders.
£173m
Interest payments
£77m
Communities
and the
Environment
We are committed to
continually improving our
environmental performance
through careful management
of our operations. This year
we have committed to achieve
net zero, across Scopes 1, 2
and 3 by 2050 or sooner.
Governments
and Regulators
Corporate taxes
£81m
Capital for
reinvestment
Retained for reinvestment
£280m
Read more: our Economic Contribution APM on
page 254 details the sources for the data presented above.
DCC plc Annual Report and Accounts 2022
11
Our Markets and Trends
Aligning our strategy
with key trends
Trend
INCREASED
DEMAND FOR
ENERGY IN
A NET ZERO
WORLD
For more detail on our energy markets
and market positions see pages 22 to 27
and pages 56 to 67.
What does it mean for DCC?
The global response to climate change has resulted
in a fast-growing demand for new technologies and
solutions that enable a transition towards a lower
carbon future. Energy markets across the globe are
fundamentally shifting towards lower carbon but
energy demand is expected to continue to rise
through to 2050. Oil, gas, biofuels and renewables will
all play significant roles during the energy transition.
Our energy businesses are the leading providers
and distributors of energy products to more than
nine million consumers across 13 countries. As a
distributor of energy, we are the trusted partner to
our customers on their decarbonisation journey.
We build markets for those products, educate
customers in their use and simplify the overall
transition. We are committed to supporting them
in the delivery of affordable, secure and increasingly
clean energy solutions, be it in the form of increasing
biogenic content in fuels, solar power and heat pumps
for businesses, electric vehicle charging, or further
innovations in carbon reduction.
Trend
A DESIRE FOR
OPTIMUM
HEALTH AND
WELLNESS
COUPLED
WITH AGING
POPULATIONS
For more detail on our healthcare markets
and market positions see pages 68 to 73.
What does it mean for DCC?
Today’s consumers are increasingly aware of the
connections between health, nutrition, beauty and
self-care. They don’t want to just look good, they also
want to feel good and are searching for better, healthier
and smarter nutrition and beauty solutions to enable
them to achieve their desired lifestyle. Nutritional
supplements have grown 5%, and dermo cosmetics
are projected to grow 6% per annum through 2024.
At the same time, the pace of product innovation and
complexity of regulatory requirements has accelerated.
An increase in life expectancies and aging populations
also means the focus of healthcare is evolving from
’sick-care’ to ‘well-care’. This is resulting in a growing
demand for medical products and services, and an
expansion of healthcare from hospitals into primary
or community care settings. Covid-19 is continuing to
impact healthcare on both of these fronts, enhancing
the awareness of demands for nutrition and wellness
while creating a treatment backlog and ongoing demand
from healthcare providers of all types.
These trends represent significant opportunities for
DCC’s Healthcare division. Global brand owners are
increasingly partnering with outsourced manufacturers,
and value the full range of services and wide range of
formats provided by DCC H&BS’s eight industry-
leading, well-invested facilities in the UK and US. DCC
Vital is a leading partner of health systems across UK,
Ireland and DACH, working with acute care providers,
primary care providers and “blue light” services. Its
comprehensive sales channel coverage across hospitals,
community care, primary care and other fragmented
healthcare settings provides an excellent platform
for growth.
Trend
SURGING
DEMAND FOR
TECHNOLOGY
PRODUCTS
AND SERVICES
What does it mean for DCC?
Technology is an integral part of how we live and
work today. It has transformed the global economy,
improved living standards and enabled smoother
international trade. The fast-paced emergence of
disruptive products and business models, as well
as the transformative power of digital technologies
will continue to have a major impact on the
global economy.
services across cloud, workplace, home and
‘on the move’ environments with a particular
sales and market expertise in:
• cloud infrastructure
• public cloud services
• gaming software and hardware
• Pro AV and Pro audio
retail electricals
•
For more detail on our technology markets
and market positions see pages 74 to 79.
We partner with thousands of the world’s brands
to market and sell a range of products and solutions
to more than 50,000 customers. Our technology
businesses provide a broad range of products and
DCC Technology is well-placed to ensure that
these technology products and services find
the most efficient route to market.
12
DCC plc Annual Report and Accounts 2022
Strategic Report A number of global trends influence our markets and business decisions. Our ability
to grow our existing business organically, while identifying, completing and integrating
acquisitions positions us well to take advantage of current global market trends,
and thereby unlock our full potential for sustainable value creation.
Delivering through our strategy
DCC Energy’s strategy, as outlined on pages 22
to 27, is focused on delivering energy products
and services to customers in ways that will help
them reduce their carbon emissions. Our
capital-light operating model and innovative
culture ensure we remain agile in navigating
the evolving energy markets where we operate.
Our ambition is to bring decarbonisation closer
for our customers through domestic and
commercial energy solutions and multi-fuel
mobility networks.
Delivering through our strategy
DCC’s Healthcare’s strategy is to build a leading
healthcare business focused on the provision
of high-quality contract manufacturing and
related services to the health and beauty
sector, and the sales, marketing and distribution
of medical products across all healthcare
settings. We will continue to grow our
international reach, our presence in specific
customer segments and our high-quality
technical expertise. We will achieve this by
investing to create value for our broad
customer base and for other stakeholders
in this fragmented market.
Delivering through our strategy
DCC Technology’s strategy is focused on being
the leading international specialist distribution
group in technology and lifestyle products.
Our businesses operate primarily in niche
specialisms within each of our geographies,
providing a high level of product and market
knowledge for the benefit of our customers.
Increasingly, we provide e-commerce solutions
to manufacturers servicing both the business-
to-business and direct-to-customer channels.
These market segments have higher growth
rates and offer more attractive margins.
DCC plc Annual Report and Accounts 2022
13
Supplementary InfoFinancial StatementsGovernanceStrategic Report Our Markets and Trends
Our Global
Footprint
The Group employs 15,400 people across 21 countries and three continents.
We operate across three markets: energy, healthcare, and technology, and our products
and services are sold globally.
DCC Energy
DCC LPG supplies LPG in both cylinder and bulk formats to commercial, domestic, agricultural and industrial customers across ten countries
in Europe, the US, and Hong Kong and Macau in Asia. DCC Retail & Oil sells transport and heating fuels and related services to commercial,
retail, domestic, agricultural, industrial, aviation and marine customers in nine European countries.
Read more: pages 56 to 67
EUROPE
France: No.2 in LPG;
No.1 operator of
unmanned retail
petrol stations
UK: No.2 in LPG; No.1
in oil distribution; leading
operator of unmanned
retail petrol stations;
leading reseller of
fuel cards
Ireland: No.2 in LPG
Netherlands: Joint No.1
in LPG
Sweden: No.1 in LPG;
No.1 in oil distribution;
leading operator of
unmanned retail
petrol stations
Norway: No.1 in LPG;
No.3 operator of retail
petrol stations
Denmark: No.2 in oil
distribution; No.2 in
aviation fuels; leading
operator of retail
petrol stations
Germany: No.3 in
refrigerants
Austria: No.2 in
oil distribution
Luxembourg: leading
operator of retail
petrol stations
14
DCC plc Annual Report and Accounts 2022
NORTH AMERICA
USA: Top 10 player in the
LPG market
REST OF WORLD
Hong Kong & Macau:
No.1 in LPG
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Supplementary Info
DCC Healthcare
DCC Vital is a leader in the manufacturing, sales, marketing and
distribution of medical products in the British, Irish, German and Swiss
markets. DCC Health & Beauty Solutions is a leading outsourced contract
manufacturing service provider to the health and beauty sector in
Europe and the US.
DCC Technology
DCC Technology partners with many of the world’s leading
technology brands to market and sell a range of consumer,
business and enterprise products and services to a broad
customer base across the globe.
Read more: pages 74 to 79
Read more: pages 68 to 73
EUROPE
NORTH AMERICA
EUROPE
NORTH AMERICA
UK: No. 1 supplier to GPs
and leading supplier to
broader primary care
and acute care markets;
No.1 in health and
beauty contract
manufacturing
Ireland: No. 1 supplier
of devices and pharma
to hospitals
Germany: leading
primary care supplier
USA: Three leading
nutritional contract
manufacturing facilities
in Montana, Florida
and Minnesota
UK & Ireland: No. 2
distributor of technology
products
USA and Canada: No. 1
distributor of pro audio
products and musical
instruments
Western Europe: No. 4
distributor of technology
products
REST OF WORLD
China: Divisional
sourcing operations
UAE: Expanding share
of the technology
distribution market
DCC plc Annual Report and Accounts 2022
15
Chairman’s Statement
Purpose and
Strategy Driving
Performance
In his first year as Chairman, Mark Breuer reflects on how DCC’s
purpose and strategy are focused on delivering long-term benefits
to all of the Group’s stakeholders.
16
DCC plc Annual Report and Accounts 2022
Dear Shareholder,
This is my first statement to you as Chairman
of DCC, having succeeded John Moloney on
his retirement at the end of our 2021 AGM.
My time to date as Chairman has reinforced my
view of the many strengths of DCC, including
the agility of our strategy and business model,
the quality and commitment of our people,
and the resilience of demand for the products
and services we provide. We have built on
these strengths in the last year, notably in the
development of an updated growth and carbon
reduction strategy for our energy activities.
Performance
The qualities of the Group were demonstrated
by another very strong performance in the year
to 31 March 2022. Group operating profit was
£589.2 million, generating a return on capital
employed of 16.5%. And, just as importantly,
the Group also continued to deliver in other
ways, with steps forward taken on important
subjects like carbon emissions, safety and the
development of our people.
All of these results were achieved through the
constant, diligent efforts of the Group’s 15,400
employees. I want to thank them here on behalf
of the Board for their teamwork, customer
focus, innovative thinking and determination
to get the job done, even when our operating
environment was challenging.
Dividend
The Group’s strong performance over the year
has allowed the Board to recommend a final
dividend of 119.93 pence per share. This will
result in a total dividend for the year to 31 March
of 175.78 pence per share, up 10% on the prior
year. This extends our record of 28 years of
uninterrupted dividend growth. Total return to
shareholders in the last 10 years has been
377%, taking account of growth in our share
price and dividends paid.
Purpose
DCC’s purpose in society is to enable people
and businesses to grow and progress. This
reflects the nature of the Group – we are a
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
business of businesses, based on strong
relationships between management of the
Group and each business within it, all with
a clear focus on growth. Our purpose also
reflects the importance of people to the
Group’s current and future success, with the
aim that they are offered opportunities to
progress by working here. And our purpose
illustrates our role in the supply chain, enabling
suppliers to reach markets efficiently and
helping customers to access a broader range
of products and services.
In the year under review, our purpose has
continued to inform decision making across the
Group, including the evolution of our strategy.
Strategy
The Board invested a significant amount of time
during the year on the evolution of the Group’s
energy strategy. Our performance over the last
few years has convinced us that our focus on
three core areas of the energy market is correct.
This has resulted in an updated strategy for the
sector, outlined at an online investor event on
17 May and also set out in this Report. The
strategy is focused on continuing to facilitate and
support existing and new customers as they
transition to lower carbon forms of energy, while
achieving growth and maintaining returns to our
shareholders. DCC Energy will play a critical and
positive role in accelerating the transition to
lower carbon forms of energy, providing a vital
link between suppliers of energy and the many
customers we serve.
Our energy growth strategy has allowed us,
for the first time, to set a target to reach net
zero carbon emissions from not only our own
activities but also from the use of the products
we sell. We will achieve net zero, across Scope 1,
2 and 3 carbon emissions by 2050 or sooner.
This reduction will be accelerated as lower
carbon energy becomes available at scale and
as technology develops.
The Group’s overall strategy remains consistent
and continues to guide our decision making as
our operations grow and our markets evolve.
Every division of the Group made progress
against strategy during the year, with a notable
development being DCC Technology’s
acquisition of Almo Corporation in December.
Sustainability
DCC’s purpose and strategy are resolutely
focused on delivering demonstrable long-term
benefits to all of our stakeholders, including the
planet through our focus on net zero.
Good progress was made against our Scope 1
and 2 carbon emission reduction targets during
the year and we are setting a new target to
reduce our Scope 1 and 2 emissions by 50%
from a 2019 base by 2030 with the target of
getting to net zero, across Scope 1, 2 and 3 by
2050 or sooner.
Dividend (pence)
Years ended 31 March
3
.
5
4
1
4
.
8
3
1
0
.
3
2
1
8
.
1
1
1
2
.
7
9
5
.
4
8
9
.
6
7
6
.
7
6
9
.
9
6
8
.
5
7
1
8
.
9
5
1
All of us in DCC were deeply saddened by
the sudden death in July 2021 of Cormac
McCarthy, who had been a non-executive
Director since 2016. Cormac brought great
insight and generosity to his role as a Director
of DCC and remains greatly missed.
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Total Shareholder Return (’TSR’)
TSR over 10 years: 377%
600
500
400
300
200
100
377%
0 2012 2013
2014
2015 2016
2017
2018 2019
2020
2021
2022
The chart above shows the growth of a hypothetical
£100 holding in DCC plc shares since 1 April 2012.
We also made good progress in other critically
important areas such as safety and people. We
achieved a further reduction in lost time injuries
and continued to invest in a diverse pipeline of
talented leaders who will, in due course, take on
some of the most senior roles in the Group.
The creation of long-term benefits for
stakeholders is the best yardstick of a company’s
sustainability. DCC’s purpose, strategy and skills
will enable it to deliver for our stakeholders for
many years into the future.
Culture and Values
The Board recognises that DCC’s culture –
ambitious, innovative, collaborative and focused
on excellence – is one of the Group’s principal
competitive advantages and something to be
carefully preserved and developed. Our four core
values of Safety, Excellence, Partnership and
Integrity reflect our culture and support our
purpose and strategy when decisions are taken.
The Board continues to monitor the Group’s
culture and values from a range of perspectives,
such as safety, compliance and internal audit
reports. This year, the results of Group-wide
employee engagement surveys added an
additional and useful perspective on this. This
year’s Governance Report provides some
additional detail on how the Board monitors the
Group’s culture.
Evolution of the Board
This year has seen a good deal of renewal
on the Board. Caroline Dowling succeeded
me as the Company’s Senior Independent
Director on my appointment as Chairman,
and we welcomed Lily Liu and Laura Angelini
as non-executive Directors.
Jane Lodge, who had been due to retire from
the Board in late 2021, kindly agreed to remain
on the Board to facilitate the appointment of
a new Director to replace Cormac. We were
subsequently very pleased to welcome Alan
Ralph to the Board in November 2021. Alan was
appointed Chair of the Audit Committee with
effect from 31 March this year, when Jane
retired. Finally, Dr Pam Kirby, who has been a
member of the Board since September 2013,
will retire at our 2022 AGM.
On behalf of the Board, I extend our sincere
appreciation to John, Jane and Pam for their
contributions to DCC during their time as
Directors and wish them all the best for the
future. Lily, Laura and Alan’s extensive
experience complements and further expands
the diverse range of skills on the Board. The
Board continues to meet the recommendations
of the Hampton-Alexander Review and Parker
Review. Developing our diversity will remain a
focus in the selection of future Board members.
The Year Ahead
As I write this, the war in Ukraine is in its third
month. Its effects, on the people of Ukraine and
more generally, will continue to be felt for some
time. DCC was able to provide a donation to
UNICEF earlier this year to support its work in
Ukraine. We are also seeking to provide practical
support to refugees from Ukraine in European
countries where we have operations. I have been
impressed once again by the way the employees
of the Group respond in times of crisis like this.
The year ahead is likely to remain challenging, but
the Board is confident that DCC’s people, resilient
business model and purpose-driven strategy will
continue to deliver for all our stakeholders.
Conclusion
DCC operates in three sectors – energy,
technology and healthcare – that are essential to
modern societies. The Group’s ability to deliver
for all our stakeholders and even in periods of
disruption, has been evident in the last few years
and will remain important in the year to 31 March
2023. The Board’s priorities for this year will be
the implementation of our updated strategy for
the energy sector, progress against our wider
sustainability goals including the development
of our people, and maintaining high standards
of operational performance.
I conclude by thanking you, our shareholders,
for your continued support for the Group.
Mark Breuer
Chairman
16 May 2022
DCC plc Annual Report and Accounts 2022
17
Chief Executive’s Review
ALL SET FOR OUR
NEXT HORIZON
Donal Murphy answers questions about key aspects of
DCC’s activities, including business performance during
the year, acquisitions, the impact of inflation, and plans
for continued growth.
18
DCC plc Annual Report and Accounts 2022
Q. The Group delivered another very
strong performance during the year.
What were the highlights?
DCC delivered an excellent performance
for the year with earnings growth of 11.2%.
However, in my 24 years in the Group, I have
never experienced a more volatile and
challenging environment.
We have seen dramatic volatility in energy
prices, significant challenges in supply chains,
rampant inflation, severe labour availability
issues, and Covid-19 still lingers with its
knock-on impact on our operations.
Despite all these challenges our business
performed very strongly and I was particularly
pleased with our 6.1% organic profit growth
for the year.
In our energy divisions we saw good recovery
in volumes particularly in the commercial and
industrial sectors and in mobility as economies
opened up after Covid-19 lockdowns. Demand
in the residential sector remained robust
throughout the year. Managing the significant
price volatility has been a huge focus
throughout the year and the businesses
have navigated their way through the volatility
very well while ensuring we looked after our
vulnerable customers.
As we will discuss throughout this Report,
our Energy division has a critical role to play in
leading our customers through their complex
decarbonisation processes. We continue to
make great progress in energy transition and
during the period under review, we introduced
many innovative energy solutions for our
commercial and industrial, residential and
mobility customers.
Strategic Report Strategic Report
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Financial Statements
Supplementary Info
Some of the highlights for the year were:
• The continued expansion of our network of
EV fast chargers including a new partnership
with ENGIE in France;
• The launch of a partnership with Shell in
Denmark to provide EV charging in the
home, office, forecourts and public spaces;
• A continued growth in our lower carbon
fuels business, with lower carbon fuels,
renewable fuels and services now
accounting for 71% of the operating profit
of DCC’s energy businesses;
• The expansion of our lubricants business
into France; and
• The launch of a 100% biofuel solution for
our residential heating customers in Britain.
We have had a really strong organic performance
in the Healthcare business over the last few
years driven by demand for Covid-19 related
products in the primary and secondary care
sectors of the market and very strong demand
in our health and beauty business for nutritional
products as people have focused on keeping
themselves healthy throughout the pandemic.
FY22 was another year of very strong organic
growth driven by DCC Vital, which generated
excellent organic profit growth across Britain,
Ireland and the DACH region. DCC Health &
Beauty Solutions performed well against a
challenging operational backdrop. The strong
result also benefited from the first-time
contribution of Wörner, acquired in April 2021,
which traded ahead of expectations.
DCC Technology delivered very strong
operating profit growth despite a challenging
supply chain environment. This growth was
driven by contributions from acquisitions
completed during the year. The business in
North America performed very strongly and
benefited from the acquisition of Almo,
completed in December 2021.
The strong performance of the Group
throughout the pandemic demonstrates the
phenomenal capability, agility and commitment
of the 15,400 people who work across the 21
countries in which DCC operates. We continue
to invest in our people and strive every day
to make DCC a great place to work. I’d like to
say a big thank you to all of my colleagues for
delivering another strong performance in a very
challenging environment.
Q. These are very uncertain times for
many people and businesses. What is DCC
doing to support its stakeholders?
Our purpose of “enabling people and
businesses to grow and progress” has helped
us navigate through the very challenging and
uncertain times we are living through.
For our customers, every business in the
Group worked tirelessly to deliver the essential
products and services that they required,
helping health services to operate, giving
people the extra nutrients and immunity
benefits they sought, warming homes, making
working from home viable through technology
and maintaining supply chains by powering
transport, commercial and industrial activity.
For our people safety always comes first. Our
mantra is that “Nothing we do is so important
that it cannot be done safely – every time”.
Whatever the role, wherever the business,
whatever the environment we always ensure
that safety always comes first.
We also strive to make DCC a great place to
work and are making good progress, as outlined
in the People section of this Report.
For our investors we continue to drive
sustainable growth at returns on capital
employed significantly ahead of our cost
of capital. We have enhanced our investor
relations activities and during the last 12
months held dedicated investor events on our
healthcare, technology and energy activities.
DCC continues to support the communities
and the environment in which we operate.
In response to the shocking war in Ukraine,
DCC made a significant donation to UNICEF
to provide humanitarian relief on the ground
in Ukraine. The money will be used to support
UNICEF’s work in providing life-saving support
for children and their families there. The
donation is equivalent to the total annual
donation that DCC makes to our other charity
partners. We have also worked with UNICEF
to set up a dedicated DCC donations page,
where employees can make donations which
will also go to support UNICEF’s aid programme.
We are also looking at other ways we can support
the c.10 million people displaced by the events
in Ukraine.
DCC businesses had a small number of
customers in Russia or Belarus before
24 February 2022. Those relationships that
existed have come to an end. Similarly, the
number of suppliers controlled from Russia or
Belarus that we dealt with was also very small.
Other than in the energy sector, these have
come to an end. Some of our energy businesses
purchase product from European subsidiaries
of Russian energy groups, such as Gazprom,
although the amounts involved are very modest.
Given Europe’s reliance on energy from Russia,
there is currently no effective way to avoid this if
we are to meet our obligations to our customers.
We are keeping this situation under active review.
We also continued to play our part in supporting
our local communities. At Group level, we
continue to support Social Entrepreneurs
Ireland (‘SEI’). SEI’s services are needed more
than ever, as social entrepreneurs have a key
role to play in dealing with the fallout from the
pandemic and indeed the events in Ukraine.
DCC’s focus on the community also runs
throughout our businesses, many of which
champion their own local initiatives. We are
showcasing their invaluable support to our
wider stakeholders via social media and our
website. Please see www.dcc.ie, LinkedIn:
DCC plc, and Twitter: @dccplc for more.
Q. How is the Group coping with higher
energy prices and rising business costs
in general?
DCC has operated in the energy industry for
c.45 years and in that time has seen many
periods of significant price volatility. As a sales,
marketing and distribution business for energy
products and services, DCC Energy passes
on increases or decreases in the underlying
commodity prices to its customers. The
majority of our transactions in the energy
sector are based on the daily spot price of the
product and movements in the commodity
cost get passed on instantaneously to the
market. Where we have fixed or term prices
with our customers, we have hedging strategies
in place to minimise the impact of price volatility.
This enables us to provide price certainty to our
customers while reducing the commodity risk.
Despite the significant level of price volatility
experienced during the year, the business
delivered a strong financial performance
demonstrating the resilience in its pricing
strategies. We have also been very focused on
managing the impact of the volatility on our
vulnerable customers.
Aside from the underlying energy price volatility,
all businesses are experiencing significant cost
inflation, be it labour costs, freight or supply
chain costs. A key part of DCC’s business
model is our strong financial disciplines across
the Group. These disciplines ensure that there
is daily focus on passing through cost increases
to the market, whether they are the cost of
the underlying products and services we sell
or indeed our own operating costs. The organic
performance of the Group during a period of
significant cost increases demonstrates our
financial disciplines in action.
DCC plc Annual Report and Accounts 2022
19
Strategic Report
Chief Executive’s Review continued
Q. The Group was very active on the
development front during the year.
What were the highlights?
While organic growth is our number one growth
objective, acquisitions are also a key pillar of
DCC’s growth strategy and since our results
announcement in May 2021, DCC committed
approximately £600 million to acquisitions
across each of our divisions.
During the year we acquired Naturgy Ireland,
an energy solutions business for commercial
and industrial customers. The business is a
service-led supplier of electricity and gas to
large B2B energy customers and also provides
a range of services, including demand side
management, lighting-as-a-service and solar
PV. The acquisition enhances DCC’s presence
in the Irish electricity and gas markets and
represents an important step in our strategy to
expand our energy solutions offering across the
island of Ireland. We also continued to expand
our presence in the US LPG market, completing
a number of small bolt-on acquisitions in
Colorado and Kentucky.
We expanded our mobility business with the
acquisition of a network of 19 retail convenience
sites in Luxembourg. The locations, which
DCC will operate, have a leading convenience
offering utilising the Cactus Shoppi brand.
The network contains well-located, urban sites,
suitable for investment in EV fast charging
infrastructure in the future. In Britain, the
business acquired a new HGV bunker site in
the Port of Felixstowe, further strengthening
our HGV network to 26 strategically located
facilities across Britain.
During the year, DCC Healthcare completed
two bolt-on acquisitions in Germany, following
fast on its initial entry into the market through
the acquisition of Wörner in April 2021. The
primary care market is highly fragmented in the
DACH region, and although modest, the
acquisitions demonstrate that DCC is now well
positioned to consolidate in that market.
And in our largest acquisition to date and
definitely the development highlight of the year,
DCC Technology completed the acquisition of
Almo Corporation, one of the largest specialist
Pro AV businesses in the United States and
a leading national distributor of consumer
appliances, consumer electronics and lifestyle
products selling to integrators, resellers,
dealers, retailers and e-tailers nationwide.
Further details on the acquisition are
highlighted on the next page and on page 32.
Q. The Group is evolving its focus on the
energy sector. What’s the reason behind
these changes?
Climate change is one of the greatest
challenges facing society today. The choice to
adapt our consumption of energy is one of the
most important steps we can take in combating
20
DCC plc Annual Report and Accounts 2022
climate change. Understanding those choices
and getting access to real solutions is difficult
and complex for people and businesses around
the world. DCC’s strategy for the energy sector
is to “Lead the Energy Transition”, bringing
decarbonisation closer for our customers
through domestic and commercial energy
solutions and multi-fuel mobility networks.
Today, DCC is a multi-energy sales, marketing
and distribution business with operations across
21 countries on three continents. We are not a
producer of energy but rather we build long-term
partnerships with the producers of energy and
provide over 9 million customers with the
essential energy they require to heat their homes,
run their businesses and farms and to move
about. We continue to make great progress in
energy transition, introducing many innovative
energy solutions for our commercial and
industrial, residential, and mobility customers.
We are focused on energy transition from the
point of view of the customer. As a multi-energy
distributor, our role is to understand our
customers’ transition journey and support
their transition to cleaner energy products and
services. We leverage our long-term deeply
embedded relationships with our customers
to target our cleaner energy offerings. The
evolution of the energy mix plays to DCC’s
strengths as an agile, experienced, multi-energy
business with leadership positions in the
markets we operate in, backed by our scale and
industry partnerships. We deliver real practicable
decarbonisation solutions and help educate our
customers on their transition pathways.
Energy transition is complex and will require
many excellent organisations working in
partnership, something DCC has excelled at over
many years and is one of our core values. We are
extending existing partnerships and creating
new ones to make multi-energy products and
solutions available to our customers.
Our new structure, as detailed on pages 22
to 27, of a single energy division focused
on leading our customers on their energy
transition to lower carbon and renewable
energies will enable us to accelerate our
growth in the energy sector.
Q. And how will those changes help
the response to climate change?
The single biggest contribution that DCC can
make in the fight against climate change is to
lead our customers through their complex
decarbonisation journey.
In terms of our own operations, we are making
very good progress on our own net zero
journey and have set a new target of achieving
a 50% reduction on our Scope 1 and 2
emissions by 2030.
Q. The Group has invested strongly in
North America in recent years. What were
the reasons for this and will it continue?
Less than four years ago DCC decided to
expand into North America. Today we have
c.30% of our Group capital employed in North
America, with businesses in all our sectors and
approximately 2,800 colleagues growing and
developing our activities. But most importantly
we are only starting, as we have small shares
in large, fragmented sectors. With the growth
platforms we’ve created, we now are an
advantaged acquirer in North America.
Having identified the nutritional contract
manufacturing market as a very attractive
fragmented market where we could leverage
the knowledge and experience of our European
business, we set about building relationships
with businesses in the sector. Our first
acquisition in North America was in February
2018 when we acquired Elite One Source,
a nutritional contract manufacturer based in
Montana. We further expanded our business in
this sector through the acquisitions of Ion Labs
in November 2019 and Amerilab in March 2020.
Organic growth in our nutritional business in
North America is strong and we’ve created a
platform for further capital deployment in this
attractive high growth sector.
In April 2018, we acquired Retail West which
represented our entry into the energy sector in
North America. Retail West, now DCC Propane,
had operations in ten States, mainly in the
Midwest. Since the acquisition, we’ve grown
strongly, deploying c.$500m in total to create a
business operating across 22 States supplying
LPG and related products and services to
approximately 310,000 customers.
And similarly in technology, we made our first
acquisition in the Pro AV sector of the market
when we acquired Stampede in July 2018. We
quickly followed with the addition of Jam, which
gave us not only a Pro Audio extension but also
consumer platforms in electronics and musical
instruments. Having completed two substantial
acquisitions, we added a number of bolt-on
acquisitions in Pro Audio and broadcasting
technologies. Leveraging the relationships
we built in the Pro AV segment of the market
since acquiring Stampede, we acquired Almo
Corporation in December 2021 (see below).
While there is still considerable uncertainty on
the transition pathways for our customers to
net zero, we are absolutely committed to being
a net zero company across Scope 1, 2 and 3 by
2050 or sooner.
What pleases me most about our progress
in North America is the organic growth
we’ve achieved by leveraging the DCC
business model.
Strategic Report
Governance
Financial Statements
Supplementary Info
Q. You announced the acquisition
of Almo Corporation in December.
What does Almo mean for DCC Technology?
Almo is one of the largest specialist Pro AV
businesses in the United States and is a leading
national distributor of consumer appliances,
consumer electronics and lifestyle products,
selling to integrators, resellers, dealers, retailers
and e-tailers nationwide. The business is
headquartered in Philadelphia and employs
approximately 700 people across the United
States. In its most recent financial year ended
30 April 2021, the business recorded revenues
of approximately $1.3 billion (£1.0 billion)
and had underlying EBITA of approximately
$75 million (£57 million). Almo is a high-quality
scale business and represents DCC’s largest
acquisition to date. It is a major step in the
continuing expansion of DCC Technology
in North America. Since entering the market
in 2018, DCC Technology has expanded
significantly, through strong organic growth
and acquisition activity. Together with DCC
Technology’s existing platform, the acquisition
of Almo will create the leading specialist Pro AV
business in North America. It also provides the
Group with real scale across the e-commerce
and consumer channels, through Almo’s
significant presence in the growing lifestyle,
consumer appliance and electronics markets.
Q. How is the strategy of
the Group developing?
DCC is a purpose-led organisation and we
are focused on the value we create for all our
stakeholders. Our purpose really came to life
throughout the pandemic as DCC delivered
the essential products and services that people
and businesses required while also delivering
a strong financial performance. We achieve this
by building impactful connections: as a
distributor we are at the heart of the supply chain
connecting the producers of products with
consumers. We’re a trusted provider building
long-term partnerships with our customers and
our suppliers. We focus on creating sustainable
growth and superior value over the long-term.
We achieve this through a consistent strategic
Adjusted operating profit (continuing) (£’m)
28 year CAGR 14.1%
objective to build a growing, sustainable and
cash-generative business which consistently
provides returns on capital employed
significantly ahead of our cost of capital. This
winning Group strategy remains consistent
and we implement it through our three sectoral
strategies as outlined in the Energy Strategy
section on page 22 and our divisional operating
reviews on pages 56 to 79.
While our sectoral strategies continue to
evolve, the overall Group strategy has remained
consistent and has delivered over our 28 years
as a public company:
• Growing operating profit 14.1% CAGR;
• An unbroken dividend growth of
13.7% CAGR;
• Strong free cash flow conversion
of 100%; and
• Average ROCE of 19%.
Q. What are the key growth opportunities
for DCC in the future?
We have a proven business model that has
consistently delivered high growth and high
returns over our 28 years as a public company.
We achieve this by driving the organic
performance of our businesses, investing and
reinvesting capital and leveraging the benefit
and resilience of our diverse sectors.
We have clear priorities for capital allocation
across the two pillars of organic capital
expenditure and acquisitions.
We are focused on accelerating the growth
of our Healthcare and Technology divisions,
and in building our capability in new and
renewable energies.
We believe there is a substantial growth
opportunity in our Healthcare business. The
market growth rates are strong across both the
health and beauty market and in the sectors
which are addressed by DCC Vital. The overall
environment is one of increasing consumer
focus on healthcare and nutrition coupled with
a backdrop of policy and regulation which also
plays to the skillsets we have in DCC. We have
built scale into the Healthcare division over
the last three years and the organic growth we
have delivered has been very strong. We see
long-term market growth rates available to us
in the range of 4-6% per annum.
In Technology, again we are focused on
building out the specialist capability we have
in this growth industry. The industry is one
characterised by constant change, but one
where the supply chain services and route
to market we offer tends to be ever present
and growing. We believe the market growth
rates available to us here will be in the range
of 3-5% per annum.
Our Energy business produces strong cash flow
that enables the development ambitions of the
entire Group. We are focused on redeploying
those cashflows into areas which will support our
capability to lead our customers in energy
transition and on their journey to net zero. There
will be significant investment by all economies in
energy transition over the next 30 years and the
emerging energy areas where we will operate will
have high market growth of at least 5% per annum.
Finally, we continue to deploy capital in
consolidating our markets and building our
customer base where we believe there is a clear
transition pathway for them and a profitable
cash-generative transition for DCC.
We have a very clear purpose and strategy
for the Group and for each of the sectors in
which we operate. Most importantly, we have
the platforms to drive high levels of organic
growth and the cashflows to deploy capital
to accelerate our growth. After 28 years as a
public company, I believe we are only starting on
our journey.
Donal Murphy
Chief Executive
16 May 2022
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DCC plc Annual Report and Accounts 2022
21
Energy Strategy
Leading the move
to NeT Zero,
with energy
Since DCC’s formation nearly 50 years ago, we have grown with energy, broadening
the range of energies we sell and working with partners to bring innovative solutions
to customers. Now, as the world looks for new answers to energy security and
net zero challenges, we continue to lead, with energy.
The challenge is clear
The world must achieve net zero to prevent the worst
effects of climate change. The path to net zero in the
energy sector is not fully certain, but we are committed to
reaching our net zero targets and helping our customers
to do the same.
The changes we are making in our energy businesses are
the result of this review. They align our energy operations
with the long-term global goal of achieving net zero,
and provide a compelling vision and a clear framework
for the further successful development and growth of
our operations in this area, in line with our purpose.
Many of DCC Energy’s customers are in segments
of the market that face particularly high economic,
technological and societal barriers to change. We are
in a unique position to work with our suppliers, customers
and other stakeholders to help overcome those barriers.
The changes combine the strengths of our existing energy
divisions and reinforce the progress they are already
making on energy transition. They allow us to support
existing and new customers in reducing their reliance on
fossil fuels, while continuing to deliver sustainable returns
to our shareholders.
Achieving net zero is a cross-society challenge.
We have a clear view of the path ahead, are committed
to the journey and will be a partner for entrepreneurs,
policymakers, energy suppliers and our customers
along the way.
A future, with energy
A core strength of DCC is the empowerment of our
management teams who set strategies for their
businesses, based on the needs of their customers and
their operating environments. These teams have been
successfully introducing lower carbon products and
services for several years.
The following are the key pathways to net zero in the
sectors we serve:
DCC Energy
Energy Solutions
Mobility
During the year, our management teams and the Board
devoted considerable time to evaluating the overall
opportunity created by energy transition and how best
to respond to it.
Commercial
and Industrial
Transition Pathway
See page 25
Domestic
Transition
Pathway
See page 25
Mobility
Pathway
See page 26
22
DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
DCC Energy
Operating profit
Operating cash flow
Volume (litres)
ROCE
£407.1m
£518.4m
15.9bn
18.6%
Customers
Employees
Countries
9m
7,600
13
How we win
The key strengths of DCC Energy are:
• Selecting market segments where we
have significant experience.
• Remaining focused on our role as a
distributor to get new products and
services to market.
• Helping customers make the right choices
as they decarbonise.
• Leveraging our devolved model to ensure
agility and tailored solutions in line with
local trends and market regulation.
Our strategy is to accelerate the net zero
journey of our customers by leading the sales,
marketing and distribution of low carbon
energy solutions.
This strategy is based on our deep understanding
of our customers’ energy needs, our skills in
delivering a broad range of solutions, and our
ability to adapt as new energy solutions develop.
We will deliver this strategy through one division
– DCC Energy. This division will operate in two
main sectors:
• Energy Solutions: businesses that work
closely with commercial and domestic
customers to provide effective energy
solutions.
• Mobility: businesses that build and operate
leading energy networks for road users.
The world’s focus on new energy systems
and formats, driven by the pursuit of lower
carbon and the need for greater energy
security creates opportunities for businesses
that understand evolving energy markets.
Our strategy will increase the lifetime value
of our customers, create new opportunities
for capital deployment, all while driving a just
transition to net zero.
Our belief in our energy strategy is reflected in
our commitment to achieve net zero, across
Scopes 1, 2 and 3, by 2050 or sooner, and a
50% reduction in our Scope 1 and 2 emissions
by 2030.
Customers
22%
37%
Please see www.dcc.ie for a recording of our
Capital Markets Event on 17 May 2022 in which
we updated the market on our energy strategy.
Domestic
Commercial and Industrial
Mobility
41%
Operating Profit
25%
75%
Energy Solutions
Mobility
DCC plc Annual Report and Accounts 2022
23
Strategic Report
Energy Strategy
energy solutions
Our Energy Solutions teams are focused on building decarbonisation solutions for commercial, industrial and domestic customers.
Due to their location, energy needs, or ability to invest, mainstream energy transition solutions are not currently suitable for many customers in these
segments. By understanding their exact energy challenges, and having access to a wide range of solutions, we help our customers meet their energy
needs while also reducing their carbon emissions.
Our assessment of our customers’ energy needs is that their transition will accelerate beyond 2030. Up to that point, we expect transition to take
place among first movers and customers that are trialling new technologies. Our role is to support these early movers, while building the supply
chains and expertise to deliver a range of new energy solutions. In the meantime, we will continue to provide the traditional fuels that customers
will require for a significant period of time.
Energy Solutions at a glance
Volume (litres)
Operating profit
11.2bn
£305.9m
Energy Solutions: Adjusted operating profit
15%
20%
Lower Carbon
(cid:11)(cid:423)(cid:25)(cid:24)(cid:3)(cid:78)(cid:74)(cid:38)(cid:50)2e/GJ)
Traditional
(>65 kgCO2/GJ)
Services, Renewables and Other
(cid:11)(cid:423)(cid:20)(cid:19)(cid:3)(cid:78)(cid:74)(cid:38)(cid:50)2e/GJ)
65%
Traditional includes oil; Lower Carbon includes LPG; Services, Renewables and Other includes
biofuels and renewable electricity.
Carbon intensity values are based on emissions from the use of products sold.
24
DCC plc Annual Report and Accounts 2022
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Governance
Financial Statements
Supplementary Info
Commercial and Industrial Transition Pathway
Our commercial and industrial customers operate a wide range of businesses. And they all need reliable sources of competitively-priced energy,
often in large volumes. They use this energy in manufacturing, to operate fleets of cars, vans and trucks and to heat buildings.
We are already working with these customers to reduce their energy use and their carbon emissions. We see a rapid increase in demand for these
services as businesses seek to reduce their energy costs, ensure their energy supplies are secure, and also reduce their carbon emissions.
(cid:5)(cid:6)(cid:7)
(cid:2)(cid:3)(cid:4)
2020s
Energy efficiencies and the use of cleaner
transition fuels, like LPG, will generate the
majority of emission reductions for
commercial and industrial customers
during the 2020s.
An increasing number of businesses will
adopt solar energy, renewable electricity
and biofuels.
2030s
In the 2030s, energy technologies that
were developed in the 2020s, such as solar
power and more advanced biofuels, will be
far more widely available and used by most
businesses. The introduction of further
energy efficiencies will improve the
intensity of energy use in many sectors
even as overall energy demand grows.
2040s
As we approach 2050, most emission
reductions for this sector will have been
achieved. But newer energy
technologies, like hydrogen and
ammonia, will be more widely available,
allowing the final push to net zero.
Domestic Transition Pathway
Our domestic customers use the energy we supply to heat and power their homes. Many of them live in rural areas and are not served by piped
natural gas. For decades, these customers have relied on our businesses to provide them with reliable, safe and competitive supplies of energy.
Some of these customers are already investing in energy efficiency measures and more renewable forms of energy, like heat pumps, biofuels and
renewable electricity. Some will need financial support to make these changes, whether in the form of a government grant or extended payment
solutions from their energy providers.
(cid:2)(cid:3)(cid:4)
2020s
The introduction of energy efficiencies,
like insulation and better heating
systems, will help domestic customers
reduce their energy use and emissions.
Increasing numbers of customers will
invest in lower carbon energy solutions,
like biofuels and heat pumps.
2030s
In the 2030s, heat pump systems
will have improved and become more
affordable. Biofuels will be more widely
available. Energy efficiency measures
will remain important, although
overall energy demand from domestic
customers will increase as more people
drive EVs.
2040s
Homes will be highly energy-efficient.
Many will have the ability to meet their
own energy needs. EV charging will
generally be bidirectional, meaning
that cars can supply power to homes
as well as the other way round. Energy
companies will focus on providing energy
technologies and related services, with
biofuels widely available.
DCC plc Annual Report and Accounts 2022
25
Strategic Report
Energy Strategy continued
Mobility
Our Mobility teams are developing networks that provide a wide range of energies and related services for road users.
The needs of road users, such as drivers of cars, vans and trucks, will evolve at different speeds over the next few years, as vehicle and energy
technology develop. Cars and vans will electrify faster than heavier vehicles, particularly those that travel long distances.
Therefore, our current network of retail fuel stations will evolve over time to focus on three areas:
• Sites at motorways, providing a full range of transport energies and convenience services.
• EV charging and traditional fuel sites in urban locations, focused on providing fast charging and convenience services.
• Automated, high-quality conventional sites in rural and industrial areas.
This approach allows us to introduce new forms of energy as they become more widely available. For instance, we will have the capacity to introduce
hydrogen, compressed natural gas or very high capacity charging for use in heaver vehicles as supply and demand increases. It also ensures that
we meet the need for traditional fuels, which will remain an important element of the energy mix for some time, particularly for heavier vehicles.
Mobility at a glance
Volume (litres)
4.7bn
Operating profit
£101.2m
Mobility Pathway
Mobility: Adjusted operating profit
46%
Traditional
(>65 kgCO2e/GJ)
Services, Renewables and Other
(cid:11)(cid:423)(cid:20)(cid:19)(cid:3)(cid:78)(cid:74)(cid:38)(cid:50)2e/GJ)
54%
Traditional includes petrol and diesel; Services, Renewables and Other includes fuel
card services.
Carbon intensity values are based on emissions from the use of products sold.
(cid:2)
(cid:3)
2020s
Investments will be focused
on developing attractive sites
in busy locations that provide
fast charging for EVs, blended
biofuels, and convenience
retail.
2030s
By the end of the 2030s, there
will be an extensive network
of destination sites providing
fast charging and high-
percentage biofuels along
with a range of related food
and retail services.
2020s/2030s
Heavy goods vehicles (HGVs)
become increasingly efficient.
Biofuels will become more
widely available. Demand for
energy, plus secure parking,
convenience food and
payment services will increase.
2040s
Following their introduction
in the 2030s, electric HGVs,
plus hydrogen and renewable
compressed natural gas
will be widely used, allowing
this critical sector to reach
net zero.
26
DCC plc Annual Report and Accounts 2022
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Supplementary Info
Growing, with energy
Our commitment to net zero
We believe that net zero is the right path for the
world and the right path for our business. We
are committed to innovating, with energy for
our customers on their own net zero journey.
We support the goals of the Paris Agreement.
For these reasons, we have this year set a
target of achieving net zero from our Scope 1, 2
and 3 emissions by 2050 or sooner. We have
also this year set a new interim target of
reducing our Scope 1 and 2 emissions by 50%
from a 2019 base by 2030. We will over the next
few years carefully consider setting an interim
target for Scope 3 emissions as the markets
where we operate develop, but our ambition on
net zero is clear.
Ambitious for future growth
The strategy set out in this section of the
Report is designed to create value for our
shareholders, customers and wider society.
It allows us, as a Group, to look forward to the
development and further growth of our energy
businesses with confidence and a renewed
sense of purpose.
DCC has always been an ambitious company
with a strong track record of growth. We are
now channelling that ambition to help solve
the biggest challenge facing the planet today.
We will meet the world’s growing need for more
and cleaner energy solutions in ways that are
economically, environmentally and socially
responsible.
Government policy is the key influence on the
speed of transition for our energy markets.
Increased government intervention will help
grow our business and accelerate the road to
net zero.
The Financial Review on page 48 describes how
our energy strategy and the impact of climate
change more generally is taken into account
in our capital allocation and investment
processes. The Sustainable Business Report on
page 80 provides more detail on our approach
to net zero and carbon emissions reporting,
including our reduction targets and how we
report against them. The Risk Report on page
92 also provides additional detail on the
scenarios we considered in the development
of the strategy outlined here.
There will be challenges ahead but we know,
through decades of experience, that we have
the knowledge, capacity, and resilience to
implement and deliver new products and
solutions that meet the changing demands
of our customers and society.
Our experience and expertise will enable us to
grow our existing relationships with customers
who have a long-term need for energy. It also
allows us to further develop our network of
distribution assets to support the sale of new
forms of energy such as renewable liquid fuels
and EV charging. And it is an opportunity to
leverage our knowledge in building long-term
partnerships with manufacturers and suppliers
of a wide range of energy products.
We will maintain a clear focus on maintaining
returns from our energy activities, with robust
existing commercial models and the agility and
skills to develop new ones as our markets develop.
We are confident in our ability to deliver against
this strategy and in the contribution it makes to
solving a key question for society. It is a growth
opportunity for our businesses, our suppliers
and our customers but it is also a necessity for
all of us.
Measuring the success of our
energy strategy
We will measure progress against our energy
strategy using the following metrics:
• Return on capital employed (ROCE).
• Free cash flow (FCF).
• Profits generated from renewable energy
products and services.
• Profits generated from renewable energy
products and services as a proportion of the
profits of the Energy division as a whole.
• Number of EV charging locations.
Progress in reducing our emissions,
in line with our target to reach net zero
2050 or sooner:
• Carbon intensity (gCO2e/MJ energy sold).
• Biogenic content of energy sold (% biogenic
content/GJ energy sold).
• Scope 1, 2 and 3 emissions (mtCO2e).
DCC plc Annual Report and Accounts 2022
27
Strategic Report
Strategy in Action
Strategic linkage
Market leading positions
Innovation
Providing energy
transition solutions
The transition to a more sustainable, low-carbon future is
accelerating, and flexible energy systems will be an integral part
of DCC Energy’s future growth story, as outlined in our new
energy strategy on pages 22 to 27.
Flogas Ireland’s vision is to be Ireland’s leading
provider of energy transition solutions. The
acquisition of Naturgy Ireland, was an important
step on this journey. Naturgy Ireland is a leading
and innovative provider of renewable gas and
electricity to large energy users across the
island of Ireland.
The Naturgy Ireland business, now re-branded
as Flogas Enterprise Solutions, has added a
large portfolio of power purchase agreements
(‘PPAs’) accounting for c.150MW of installed
capacity through partnerships with a diverse
range of renewable wind and solar farms.
The acquisition of Naturgy Ireland facilitated the
formation of Flogas Enterprise Solutions during
the year. Flogas Enterprise Solutions offers its
customers a wide range of energy services,
enabling them to improve their energy efficiencies
and offer renewable solutions. It is also the first
company in Ireland to provide biomethane
through its partnership with Green Generation.
Green Generation converts food waste to
biomethane using anaerobic digestion.
For many years, Flogas Ireland’s LPG business
has been assisting a wide range of off-grid
commercial customers to transition from
heavy fuel oil and diesel to lower-carbon LPG
as part of their energy transition journey. In
more recent times, Flogas Ireland has entered
the electricity market and now offers 100%
renewable electricity to its customers.
Flogas Ireland also supplies bio-LPG and
biomass to off-grid customers who wish to
accelerate their own energy transition to net
zero-carbon.
This wide range of renewable products and
services, combined with the company’s focus
on close customer relationships, means that
Flogas Ireland is well positioned to assist Irish
companies to meet their energy transition
requirements.
“Flogas Enterprise
Solutions offers
its customers a wide
range of energy
services, enabling
them to improve
their energy
efficiencies and
offer renewable
solutions.”
Read more: DCC LPG on page 56
Flogas Ireland made its first
delivery of bio-LPG during the year
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DCC plc Annual Report and Accounts 2022
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Leading,
with energy
DCC plc Annual Report and Accounts 2022
29
Strategic Report
Strategy in Action
Strategic linkage
Market leading positions
Innovation
Empowering patients
in their own care
Significant advances in medical and infusion technologies in recent years have meant
that patients who would previously have received time-consuming infusions at hospital
are now able to receive the same treatment in their own homes.
Since 2017, DCC Vital’s Irish subsidiary, Fannin
and CSL Behring, a leading global biotech
company, have worked together to bring
CSL Behring’s leading IVIG (intravenous
immunoglobulin) products to patients in their
homes in Ireland. Fannin uses its expertise
and skilled employee base to help bring CSL
Behring’s product to market on a large scale.
IVIG is a treatment derived from human plasma
for people with weakened immune systems.
While IVIG was traditionally provided in a
hospital setting, it can now be administered
at home, but needs the support of specialist
support teams.
Prior to its partnership with Fannin, CSL Behring
had a small share of the Irish market. The
partnership resulted in Fannin establishing
a strong market position and today CSL
Behring is the leading IVIG brand in Ireland.
The true value of Fannin’s Homecare service
was evidenced when the Covid-19 pandemic
hit in 2020. The pandemic placed vulnerable
patients, such as those who receive IVIG
treatment, in life-threatening situations due
to the high risk of infection.
At DCC Vital, we are passionate about the
well-being of our patients and endeavour
to support them in every way we can. Rather
than shaping life around their treatment,
Fannin Homecare allows patients to shape
their treatment around their life.
The Irish Health Services therefore moved to
transfer those patients from hospital to the
safety of their own homes, while ensuring
their continued treatment under Fannin’s
Homecare service. The number of Homecare
patients more than doubled over this period.
Aligned with the trend of moving healthcare
away from hospital settings, as outlined on
page 12, the Fannin Homecare service is
designed to give patients greater control
of their lives, empowering them in the
management of their treatment. Rather than
shaping life around their treatment, Fannin
Homecare allows patients to shape their
treatment around their life.
“ Rather than shaping
life around their
treatment, Fannin
Homecare allows
patients to shape
their treatment
around their life.”
Read more: DCC Healthcare on page 68
30
DCC plc Annual Report and Accounts 2022
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Governance
Financial Statements
Supplementary Info
Partnering
to expand our
Homecare offering
DCC plc Annual Report and Accounts 2022
31
Strategic Report
Strategy in Action
Strategic linkage
Market leading positions
Extend our geographic
footprint
Doubling the size
of DCC Technology’s
business in North
America
In December 2021, DCC Technology acquired Almo, supporting the technology
division’s position as the number one specialist distributor of Pro AV, Pro Audio,
musical instruments and consumer appliances in North America, with a growing
presence in consumer electronics and a portfolio of own-brand lifestyle products.
The acquisition of Almo represents DCC’s largest
acquisition to date and doubles the size of our
business in North America. This acquisition is
aligned with our strategic objective to grow our
leading businesses in new geographies and
markets with similar characteristics to those
where we operate already.
DCC Technology entered the North American
distribution market in 2018 with the acquisitions
of Stampede and Jam. Stampede, based in
Buffalo, was a leading specialist distributor of
Pro AV products, whereas Jam, headquartered
in Montreal with businesses throughout North
America, held leadership positions in Pro Audio
and musical instruments with a developing
position in consumer electronics.
Two complementary acquisitions followed in
2020 – The Music People, which added to our
Pro Audio segment and JB&A, which extended
our reach beyond Pro Audio into broadcast.
Based in Philadelphia, Almo is a market leading,
value-added distributor of Pro AV, consumer
appliances, electronics and lifestyle products.
This acquisition provides us with an excellent
platform for future growth and offers us
exceptional market reach. Our leading market
positions, specialist focus and nationwide
distribution footprint makes us the ideal partner
for international manufacturers, Pro AV installers
and retail and e-tail customers.
“ The Almo acquisition
provides us with an
excellent platform
for future growth and
offers us exceptional
market reach.”
Read more: DCC Technology on page 74
32
DCC plc Annual Report and Accounts 2022
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Governance
Financial Statements
Supplementary Info
Broadening
our horizons
DCC plc Annual Report and Accounts 2022
33
Strategic Report
Strategy in Action
Strategy in Action
Strategic linkage
Innovation
Operational Excellence
Driving growth
through innovation
Innovation is a long-standing enabler in DCC. Across all the divisions, our approach
to innovation is collaborative, entrepreneurial, agile and continuous. This approach has
enabled our divisions to deliver an exciting array of acquisitions, products, efficiencies
and technological solutions over the course of the year.
Strategy in Action
Expanding our online capabilities
HomeFuels Direct’s smart and frictionless
online customer journey has resulted in the
establishment of a loyal customer base
across the UK, as consumers simultaneously
seek convenience and the best price for their
heating oil.
The acquisition of HomeFuels Direct
is highly complementary to Certas Energy’s
portfolio as it focuses on strengthening its
position in the increasingly important online
channel in the UK heating market. The
business is also a strong strategic fit, adding
digital expertise as Certas Energy builds out
the digital capabilities of its core brands across
both domestic and commercial markets.
“ HomeFuels Direct
provides consumers
with a simple, quick,
and convenient
online method of
ordering heating
oil through a secure
e-commerce
platform.”
Read more: DCC Retail & Oil on page 62
In recent years, e-commerce has become
an indispensable part of the global retail
framework as online shopping continues to
change the way consumers find and buy their
goods and services. Maintaining a diverse,
long-term growth portfolio of businesses
is a core strategic objective. Consistent with
this objective, in October 2021 Certas Energy
acquired HomeFuels Direct, a ‘one-stop,
online heating oil shop’.
Established in January 2008, HomeFuels
Direct provides consumers with a simple,
quick and convenient online method of
ordering heating oil through a secure
e-commerce platform. The platform is live
24/7 and 365 days a year, while offering
complete transparency on its pricing model.
34
34
Annualual ReR port and Accounts 2022
DCC plc Annual Report and Accounts 2022
plp c Annualual ReReport and Accounts 2022
DCCCD
DCCCDC plp c
2
c Ann l R port and Accounts
DCCCD
DCC plc Annual Report and Accounts 2022
Strategic Report
Strategic Report
Governance
Governance
Financial Statements
Financial Statements
Supplementary Info
Supplementary Info
Strategy in Action
Delivering operational efficiencies in our warehouses
MacroEV services also enhances the Exertis
distribution offering to customers by
providing innovative, value-added options
including 3PL Services (product supply,
technical services, logistics and global
export control specialism), device staging/
configuration, project management,
consultancy and deployment, web portal
development and in-life support services,
end of term device trade-in and recycling
and certified data wipe and device disposal.
Read more: DCC Technology on page 74
meeting our customers’ needs. It also allows
us to run a large scale, low cost facility in a way
that ensures regulatory compliance and good
environmental stewardship.
The innovative redesign of the facility allows
us to harness the latest technological tools
and position our business for the next level
of growth, including the successful redesign
and implementation of our SAP core system
to include new functionality for improved
stock management and service delivery.
We also focused on the design and
implementation of the Warehouse
Management Systems functionality on
SAP to improve the effectiveness of our
warehouse, resulting in improved productivity
and performance visibility. We continued the
automation of our processes using our
in-house Robotic Process Automation and
Master Data teams, resulting in multiple
repetitive mundane processes, now being
performed by bots, and, freeing up our teams
to focus on more productive tasks.
We are constantly looking for innovative
ways to improve our businesses and drive
efficiencies across our divisions. DCC
Technology’s strong growth in recent
years resulted in a number of our Irish
operations being spread across three
separate Dublin locations.
To achieve greater efficiencies, the decision
was made to centralise the three operations:
Exertis Ireland, MacroEV, and Exertis Supply
Chain Services, by relocating to a new facility
in Dublin. This new state-of-the-art 7,800 sq. m
facility offers us the opportunity to take a
more collaborative and agile approach to
Strategy in Action
Laleham Health & Beauty support
Trinny’s skincare launch
Recognised for her honest and authentic
advice, Trinny Woodall founded Trinny London
in 2017 to offer effortless, personalised
beauty to people of all ages. Following a very
successful make-up launch, Trinny launched
an innovative skincare range with the support
of Laleham Health & Beauty.
Laleham Health & Beauty has a strong track
record of helping brands bring their ideas to life by
supporting their customers through the product
development and manufacturing process.
Trinny London provided a set of complex
formulas to meet its consumer needs and
wished to develop the product for wider reach.
Laleham Health & Beauty provided Trinny
with access to an agile supply chain, and high
value, short shelf-life active ingredients.
Laleham’s chemists and process
improvement experts ensured production
of high-quality premium products capable
of delivering on customer requirements and
consumer needs, as well as being presented in
an innovative re-fillable packaging format that
further supported the brand’s sustainability
credentials. This project was delivered through
a combination of partnership, creative thinking
and operational innovation, allowing Trinny
London to successfully launch its new range
of skincare products in February 2022.
Read more: DCC Healthcare on page 68
Annual Report and Accounts 2022
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Annual Report and Accounts 2022
DCC plc Annual Report and Accounts 2022
DCC plc
DCC plc
DCC pl Annual Report and Accounts 2022
DCC plc Annual Report and Accounts 2022
35
35
Strategic Report
Strategic Report
People
Enabling an engaged
and diverse TEAM
Employees by geography
1%
8%
18%
50%
23%
UK
Continental Europe
North America
Ireland
Rest of World
Employees by division
32%
25%
18%
25%
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
DCC is a people business; developing and
investing in our people is a strategic objective
for the Group. Our company focuses on
growing our talent, finding better ways of
working, building partnerships, supporting
innovation, and successfully executing our
growth strategy. All of our divisions and
businesses have highly experienced and
ambitious management teams with deep
knowledge of the markets in which they
operate. As the Group continues to grow,
the depth and quality of our talent is a key
contributor to our future success.
At 31 March 2022, we employed 15,400 people,
which is a 13% increase on the prior year. This
increase was largely due to our acquisition of
Almo Corporation in the US, which has over
700 employees. Our employee turnover rate
during the year was 28% and our new joiners
amounted to 27% of all employees. The
turnover numbers are in line with expectations
and are a reflection of the wider employee
environment, albeit higher than last year. Both
of these figures include our seasonal workforce,
who support our businesses in peak periods
of trading, many of whom return year after
year to work with us.
OUR VALUES
Safety
Our first priority is the safety of our
employees, contractors, customers and
other persons who may be affected by our
business activities.
Partnership
Our business is all about creating sustainable
partnerships. By working together as a team
with those stakeholders who share our values,
our passion and our drive – we become stronger.
Nothing we do is so important that it cannot
be done safely, every time.
We believe safety to be a foundation of our
sustainable business success and that is why
we continuously look for ways to improve our
safety culture, systems and processes.
We seek to develop mutually beneficial,
long-term relationships, founded on trust
and respect and place significant value on
commitment and loyalty.
Integrity
Being honest, open, accountable and fair
is in our nature. These traits are the pillars
on which our business has been built.
We believe in doing the right thing and
inspiring others by being true to ourselves
and treating people with respect and dignity.
We are committed and responsible
employers. We lead by example and take
pride in delivering on our promises.
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DCC plc Annual Report and Accounts 2022
Excellence
We believe great performance comes from
preparation, focus on the detail, relentless
determination, a sense of urgency and
a genuine hunger for success.
These are the hallmarks of our people.
We have a passion for accuracy and getting
it right first time, every time. We share a
collective entrepreneurial spirit. We are agile,
responsive and continuously looking for ways
to improve what we do.
Strategic Report
Governance
Financial Statements
Supplementary Info
Employee engagement
Our people’s expectations of work has
changed considerably post the pandemic.
We recognise the importance of culture and
engagement in delivering superior performance
and creating competitive advantage.
Our people across 20 countries in 60
businesses were given the opportunity to
participate in the survey. At the time the survey
was launched, we had only recently acquired
Certas Energy Luxembourg, our only business
in Luxembourg, and it was not included in
the survey.
In 2021, we made a step change in our
approach to engagement and listening to what
really matters to our people. We launched our
first Group-wide engagement survey which
provided a direct feedback opportunity for our
colleagues as well as an opportunity for us to
measure employee sentiment and understand
their experience of working in our businesses.
We achieved an excellent participation rate of
77%, with an overall engagement score of 74%.
This initiative has given us new insights into
what is important to our people and reinforced
the strengths of our devolved business model.
The results highlighted that our colleagues have
a strong sense of purpose and understand why
their work matters. Our people are also invested
in the future of the company and feel fairness
and respect are at the heart of our working
relationships. Encouragingly, our people also
feel real accountability for our safety culture,
a core value for DCC. While the results were very
positive overall, we also identified a number of
areas that need improvement. Our businesses
and managers have implemented action plans
at a local and team level to ensure that DCC
businesses continue to be great places to work.
Employee engagement survey
20
countries
77%
60
businesses
87%
17
languages
89%
Overall participation rate
of colleagues surveyed care about
the future of the company
of colleagues surveyed believe
their work contributes to their
company’s purpose
Case study
Recognition scheme in Flogas Britain
As part of our employee engagement
activities, each business in the Group was
encouraged to promote a ”great place to
work” culture through a three-point
improvement plan that addressed local
business priorities.
Flogas Britain, which is part of our DCC LPG
division, had a strong overall response rate
of 79%. The business’ most favourable
feedback centred around clarity of goals, line
management fairness, caring about the future
of the company and safety empowerment.
Safety is a core value for DCC businesses;
80% of colleagues in Flogas Britain told us
they feel empowered to speak up when
something is unsafe and 90% feel their
managers are committed to safety.
One of the business’ key areas for
improvement was centred around how their
colleagues feel recognised and valued for their
contributions. To address this, the business
implemented a consistent and inclusive
recognition scheme for all its colleagues
who produce great work, live their values
and show their loyalty to both the business
and their customers.
Flogas Britain launched their ‘My Reward &
Recognition’ initiative on 4 March 2021 to align
with National Employee Appreciation Day.
The recognition scheme allows any colleague
to recognise another colleague in one of two
different ways. The first way is through an
eCard, a virtual greeting card, to commend a
colleague’s performance and contribution and
the second way is to nominate a colleague for
a LOVE (Living Our Values Everyday) award for
someone who has gone above and beyond.
Flogas Britain has 1,243 colleagues and the
recognition scheme has been a big success
for the business with over 2,675 tokens of
recognition sent, resulting in a significant
proportion of their colleagues’ receiving
appreciation for their contributions. The ‘My
Reward & Recognition’ initiative is empowered
by the business’ HR platform which is accessible
to all of Flogas’ colleagues, and this allows
everyone to share and learn about the great
work happening right across the business.
Initial feedback and uptake show the initiative
has been well received and the business is
looking forward to viewing its 2022 results
to see the impact the programme has had
on people feeling valued in the business.
DCC plc Annual Report and Accounts 2022
37
Strategic Report
People continued
Case study
Inclusion and Diversity Pulse Survey
Having expanded rapidly across multiple
geographies and cultures, DCC Technology
is keen to ensure that people working in its
businesses feel engaged around people
policies and practices and have an opportunity
to shape the Inclusion and Diversity (I&D)
journey into the future.
In January 2022, the DCC Technology division
launched a pulse survey on I&D to understand
whether colleagues feel they can be their
true selves at work and whether there is any
difference in experience when viewed through
a diversity lens. The survey issued to c.3,700
colleagues and over 70% shared their
important viewpoints with us.
We are pleased that 90% of the respondents
feel that DCC Technology is living up to its
I&D commitments.
While we still have work to do to ensure our
workforce is more diverse, our colleagues
gave us invaluable insight into how each
business can be a better place to work
for everyone.
The results also provide a valuable baseline
for measuring improvements over the
coming years.
92%
reported that they experienced
an inclusive environment and felt
a sense of belonging
95%
reported that DCC Technology
was committed to improving I&D
Building an inclusive and diverse culture
We aim to create an environment where every
individual feels a sense of belonging and can
thrive and contribute to their fullest in our
businesses. That means embracing diversity in
the broadest possible sense, including gender,
ethnicity, ability, age, sexual orientation,
education, and ways of thinking. We believe that
to reap the benefits of our diverse and talented
workforce we need inclusive work environments
where all of our colleagues have the freedom
to achieve their ambitions and a culture that
cultivates the energy and passion our
colleagues bring to work. Our focus has been
on targeting greater gender diversity, with a
particular focus on developing a diverse pipeline
of talented future leaders for the Group. Our
Inclusion and Diversity Policy, ‘You Belong Here’
lays firm foundations to bring our inclusion and
diversity strategy to life in a meaningful way. We
remain committed to increasing diversity and
inclusion within our workforce at all levels. Thirty
seven percent of the people we employ across
our global business are women. In the year
under review, we were encouraged to see
stronger retention of our female employees
at senior level, across all our divisions relative
to their male counterparts. This demonstrates
the success of our various initiatives to achieve
our ‘You Belong Here’ commitments.
As a Group, we recognise the importance of
workforce turnover as a sustainability metric
and, like most companies, we are experiencing
strong competition for talent. Our employee
turnover rate during this financial year was 28%.
We continue to place great emphasis on our
ability to attract, develop and retain talent and
identify this as a key element of our risk agenda
as highlighted in our Risk Report. We will
continue to further enhance our diversity-led
activities including the requirement for diverse
candidate lists for senior open roles, providing
unconscious bias training for thousands of our
colleagues across the Group, taking
opportunities to celebrate diversity and most
importantly listening to the views of our people.
For more on this, see Case Study above.
Celebrating diverse cultures and traditions
With over 15,400 colleagues across 21 countries,
DCC is a multinational and multicultural
organisation. We recognise the opportunity
that global cultural events provide, to raise
awareness and understanding of our
differences, as well as our common interests.
These global awareness days create visibility
and instills a sense of pride to ensure all
our colleagues feel respected and valued.
Undaunted by the challenges presented by
Covid-19, in this financial year we found new
ways to celebrate global events, demonstrating
the importance we place on valuing diversity.
Over the course of the year, we held activities to
mark celebrations such as World Mental Health
Day, International Women’s Day, International
Men’s Day and Black History Month.
Gender diversity
Group
63%
37%
Senior Management
81%
19%
Board
58%
42%
Male
Female
We recognise the benefits of diversity at Board
level as well. Our Board is fully compliant with
the recommendations of the Parker and
Hampton-Alexander reviews and more detail
on this is contained in the Governance Report.
Developing our diverse workforce
Attracting talent that goes beyond
To enhance our collective ability to attract
and retain talent in today’s competitive career
marketplace, we ran focus groups with
colleagues from varied roles and different
businesses from across the Group to refine
our employee value proposition (EVP).
‘Go Beyond’ reflects the culture of our devolved
model where our individual businesses are
unique and it draws from the strengths and
values that are common to all of our
“ We aim to create an
environment where
every individual feels
a sense of belonging
and can thrive and
contribute to their
fullest in our
businesses.”
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
businesses. Our companies offer current and
prospective employees opportunities to build
skills, help transform our organisation, and
shape consumer behaviour in the industries
we operate within for the better.
ensure a continued focus on the visibility
and development of our diverse talent on
an ongoing basis which will lead to greater
diversity and balance in our management
teams over time.
96%
of business managers completed
the annual performance cycle
DCC Graduate Programme
The DCC Graduate Programme is an integral part
of the Group’s talent development process,
designed to create a pipeline of high potential,
internationally mobile, early career talent for the
Group. Each year, we select graduates from a
broad range of backgrounds and nationalities
ensuring diversity in this talent pool at this early
career stage. Graduates have the opportunity
to develop their careers in the areas of Business
Management, Commercial & Sales, IT, Logistics
and Marketing. DCC is a fast-paced environment
and graduates on our two-year programme
are provided with a wide range of opportunities
to support their learning and development.
Many are given the opportunity to undertake
international work placements and assignments
where they benefit from the diversity of markets
and geographies in which we operate. We have a
commitment to continuous on-the-job coaching
and coaching for all graduates, maximising the
benefits of this programme. Find out more online
at www.dccgraduateprogramme.com.
Talent planning and career pathing
DCC has a strong record of developing its
talent; most of our senior leadership have
progressed their careers through a succession
of exciting roles in our diverse businesses
across the Group. Throughout the year, we
continued to identify and develop talent to
meet the future needs of our businesses
through our annual talent planning process.
All our businesses actively engage in the annual
talent process and use a consistent approach
to focus on succession planning for high impact
roles and identify talent for development
purposes. Through this annual process we
The number of roles in scope for succession
planning has grown considerably over the past
number of years in line with our growth over the
same period. We strive to make talent visible
and identify career paths for people within their
own business as well as across the Group.
About 78% of our management team positions
currently have internally identified successors
from within our Group. Of those, all identified
critical positions have succession coverage
and we have worked hard to create visibility
of our internal talent options.
Talent management system
We continue to invest in our Group-wide
talent platform to help us identify internal talent
and ensure talent management processes
are embedded consistently across the Group.
The platform currently supports the automation
of succession planning, reward and performance
management processes across 17 geographies.
As more of our businesses have recognised
the value of the system, we have had a 15%
increase in the number of users over the last
12-months.
High-performance culture
Our people are driven to achieve and have an
unwavering focus on results. We are open and
transparent on performance and constantly
measure our progress. Every member of our
business management teams actively engages
in our annual performance review process.
To support and drive our high-performance
culture, we offer regular coaching skills-based
training to our business management teams
at key points during the performance cycle.
Developing leaders
We strive to foster a culture of continuous
development for our people, ensuring we have
the talent and capabilities we need, now and
in the future. Again, this year, as a result of the
Covid-19 pandemic, in-person classroom
training was not possible and all of our key
leadership and management programmes
were redesigned to be delivered in remote
live settings including the DCC Management
Essentials programme, the DCC Finance for
Non-Finance Managers programme and
our flagship DCC Business Leadership
Development programme. While we are looking
forward to more in-person learning in 2022, we
will continue to invest in this area to facilitate
broader access to e-learning across the Group.
Mentoring diverse talent
We were delighted to launch a mentoring
programme to support the development of
diverse talent during the year. Our objective
for this programme is to create visibility and
sponsorship for this key talent cohort.
Mentees are supported with their personal
development through seasoned advice and
guidance provided by their mentors to progress
their careers. The programme also increases
awareness in our mentors of the challenges
facing diverse talents in our businesses so that
they can influence change from a leadership
perspective in their own businesses.
“ We ensure a
continued focus
on the visibility and
development of our
diverse talent on
an ongoing basis.”
DCC plc Annual Report and Accounts 2022
39
Strategic Report
Stakeholder Engagement
Understanding
what matters to
our stakeholders
We recognise that the sustainability of our business strategy is enhanced when it is reflective of
stakeholder views and our stakeholders benefit from their dealings with our Group. This section
provides an overview of our key stakeholder relationships. Further detail on how the Board
considers stakeholder views in its discussion, is set out in on pages 114 to 115.
Customers
Our customers, whether they are businesses
or consumers, look to us for advice on a wide
range of essential products and services.
They rely on us to provide those products and
services at a competitive price and on time,
even when supply chains are disrupted.
What matters to our customers?
Our customers are interested in supply chain
reliability, the identification of opportunities
that offer profitable growth for their businesses,
technical expertise, and excellent customer
service. The environmental impact of our
goods and services is also of increasing interest
to our customers.
How our businesses engage
Our teams across the Group actively engage
with customers to ensure we are meeting
their expectations and consistently identify
ways to improve performance based on
these discussions. Members of divisional
management teams also meet with key
customers during the year to reinforce
these relationships.
How our Board engages
Our extensive customer engagement shapes
our divisional strategies and business plans,
which are reviewed in detail, and on a regular
basis, by the Board.
How we respond
We provide reliable supplies of essential
products and services to millions of businesses
and consumers across the world. Our supply
chain expertise ensured minimal disruption
during the Covid-19 pandemic and during
recent supply disruption caused by the war in
Ukraine. In the year under review, we updated
our energy strategy to support our energy
customers in reducing their carbon emissions.
Case study
Certas Energy
Customer Services
The continuing impact of the Covid-19
pandemic and the volatility in energy
markets following Russia’s invasion of
Ukraine, led to disruption in the supply
chains for many of the products we sold
during the year. The team in Certas Energy
worked hard to ensure they could make
deliveries, in spite of industry-wide HGV
driver shortages, looking out especially
for customers in vulnerable situations.
Where prices or delivery times were
uncertain, Certas took additional steps
to communicate with their customers.
They added significantly to their customer
service team to ensure that customer
service was maintained.
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Suppliers
Our suppliers rely on us to provide an efficient
route to market for their products and to advise
them on how those markets are evolving.
Through collaboration with them, we maximise
our collective impact, ensuring a tailored, reliable,
and sustainable source of supply for customers.
What matters to our suppliers?
Strong, mutually beneficial commercial
partnerships matter to our suppliers, as do
responsible supply chain management,
open engagement and fair payment terms.
Our financial strength is a key factor for many
of our suppliers.
Employees
Our greatest asset is our experienced, diverse,
and dedicated workforce. Our relationship with
our people is open and honest. We support,
develop, and reward them so they feel
encouraged to do their best in all that they do.
What matters to our employees?
Our people are interested in opportunities to
grow and develop their career in line with fair
pay and reward expectations. They seek an
open and honest workplace and management
practices that enable them to achieve their full
potential. They want to work in a place where
they are accepted and valued for who they are,
regardless of their background.
How our businesses engage
We work closely with suppliers to ensure
reliable and efficient supply chains. We also
hold regular meetings with our supply partners
to discuss product and service innovation. And
we engage closely with them on responsible
supply chain management.
How we respond
The year under review has seen continued
disruption to supply chains, exacerbated since
February by the war in Ukraine. Businesses
across the Group worked closely with suppliers
over the year to maintain supplies of key
products into the markets they serve.
How our Board engages
The Board receives frequent updates on trading
performance across the Group, including on
any material changes in supplier relationships.
Our Executive Risk Committee regularly
monitors progress on sustainability in our
supply chain and the results of this are reported
to the Audit Committee and the Board. The
Board also considers and approves our Modern
Slavery Act statement annually.
How our businesses engage
At business, divisional and Group level, we
communicate with our employees through
a range of channels, including team meetings
in town halls, regular engagement surveys,
including an annual Group survey, and employee
recognition programmes.
How our Board engages
Our non-executive Workforce Engagement
Director Mark Ryan holds regular discussions
with management on matters related to the
Group’s workforce. His report is set out on
page 114. The Board also actively considers
employee engagement survey results and
discusses responses with management.
Progress against our overall people strategy
is regularly discussed at Board meetings during
the year.
How we respond
During the year we undertook a Group-wide
employee engagement survey and are
responding to the feedback obtained from this,
with Group businesses developing suitable
local action plans. We also maintained our
consistent approach to talent and performance
management and provided extensive learning
and development both in person and online.
Embedding our Inclusion and Diversity Policy
‘You Belong Here,’ was a key part of our
employee engagement during the year. Safety
is one of DCC’s core values and we continued
to embed a safety culture through training,
awareness and visible health and safety
leadership and were therefore particularly
pleased to see further progress in our safety
record (measured by lost time injuries) in
the year.
Members of
Almo’s ProAV
national sales
team volunteered
at their local food
bank to pack over
6,000 meals for
those in need.
This was part
of a yearlong
‘75 Ways of Giving
Campaign’ for
Almo’s 75th
anniversary.
DCC plc Annual Report and Accounts 2022
41
Strategic Report
Stakeholder Engagement continued
How our Board engages
Following his appointment as Chairman in July
2021, Mark Breuer met with a number of our
largest shareholders. Our CEO, CFO and Head
of Investor Relations regularly update the Board
on investor relations issues.
How we respond
During the year we increased our dividend,
representing our 28th year of unbroken
dividend growth. We held separate capital
market events on our Energy, Technology and
Healthcare businesses. This year members
of the management team presented at 17
conferences and conducted 378 institutional
investor one-on-one and group meetings.
Investors
Our investors include individual and institutional
shareholders. We maintain an active dialogue
with them through our extensive investor
relations programme.
What matters to our investors?
Our investors rely on DCC to operate a
sustainable business that delivers returns on
capital employed significantly ahead of the
Group’s cost of capital, converts profits from
those operations to cash, shares some of
those returns through a progressive dividend
policy, and retains a further proportion of them
to improve existing operations and generate
further growth, including through acquisitions.
They also demand high standards of corporate
governance, led and overseen by our Board.
How our businesses engage
Members of the management team meet
regularly with investors and analysts, in
particular at the time of our annual results,
interim reporting dates, at capital market
conferences and at investor roadshows. This
year, we also undertook a detailed investor
perception study to enhance our understanding
of investors’ views.
Governments and Regulators
We seek to engage constructively with
governments and regulators to achieve
the best outcomes for all our stakeholders.
In some cases, we work with governments
and regulators to shape our industries to help
ensure the right outcomes for customers
and society.
How our Board engages
The Board discusses changes in regulation and
governance reforms where they are material
to the Group. The Board also reviews a detailed
report twice a year on notable dealings with
regulatory and government authorities.
How we respond
We provide thousands of jobs directly, and
support many more indirectly and contributed
£81m in duties and taxes in the countries
where we operate. In the year under review,
we continued to operate to high standards of
safety, quality and compliance, with no notable
safety, product quality or compliance breaches
recorded during the year. We engaged
constructively with regulators on several
relevant policy proposals, including by making a
submission to the UK Department for Business,
Energy and Industrial Strategy on reforms
proposed in its White Paper: Restoring Trust
in Audit.
What matters to governments
and regulators?
Reliable and efficient availability of the essential
products and services provided by businesses
across the Group is of crucial importance to the
smooth running of the societies we serve.
Governments expect large global businesses
to provide reliable employment for thousands
of people, often in rural locations. They rightly
expect organisations such as ours to operate to
high standards of safety, quality and compliance
and expect that we support a just transition to
a low carbon society.
How our businesses engage
We engage with governments and regulators
both directly and through business and trade
associations on matters like product quality,
availability and affordability, supply chain
efficiency, safety, carbon emissions reduction
and corporate governance.
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Donal Murphy
at the launch
of Social
Entrepreneur
Ireland’s
national call for
applications.
Communities and the Environment
Our aim is to be a force for good in the
communities we serve. Climate change,
including the need to transition to lower
carbon forms of energy and get to net zero,
is an issue of critical importance for every
community we serve. This year, we have
extended our existing carbon emission
reduction targets to include emissions from
the energy we sell. We have undertaken to get
to net zero, across Scope 1, 2 and 3 carbon
emissions by 2050 or sooner.
How our businesses engage
We continue to reduce our own carbon
emissions and to support our customers in
moving to lower carbon energies. More detail
on this is contained in the Energy Strategy
section on pages 22 to 27 and the Sustainable
Business Report on page 80. Our businesses
support a range of community organisations
such as Social Entrepreneurs Ireland and
the Laura Lynn Foundation in Ireland. And we
also took steps in European countries where
we operate to support people displaced by the
invasion of Ukraine.
We help a number of community groups,
both through financial support and through
our employee giving programme.
What matters to our communities
and the environment?
Climate adaptation and moving toward net
zero emissions by 2050 or sooner is a primary
concern to our communities and is clearly
of critical importance for the environment.
Protection of the environment in other ways,
through the elimination of oil spills is also of
importance. Our communities expect us to
provide reliable, safe jobs, and to support for
a range of community organisations.
How our Board engages
The Board receives regular updates on progress
in the implementation of our energy strategy.
It also considers a quarterly report from the
Head of Group Sustainability on progress in
reducing carbon emissions. Following the
invasion of Ukraine, the Board considered our
response including our support for the work
of UNICEF in Ukraine and for affected
Ukrainians in other European countries.
How we respond
During the year, we set a new target to reduce
our own (Scope 1 and 2) carbon emissions by
50% by 2030. In addition, we set a target of
getting to net zero, across Scope 1, 2 and 3
by 2050 or sooner. To support this, we further
improved our carbon emissions reporting and
increased our CDP rating to ‘B’. We continued
to work closely with our customers to ensure
their energy needs are met while they reduce
their own carbon emissions. At community
level, we continued to support Social
Entrepreneurs Ireland and the Laura Lynn
Foundation in Ireland.
We also provided a financial donation to
UNICEF to assist their work in Ukraine.
Our primary goal is to genuinely improve the
position of the causes that we support.
DCC plc Annual Report and Accounts 2022
43
Strategic Report
Key Performance Indicators
Financial
The Group employs 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 56 to 79.
Return on capital employed (excl. IFRS 16)
Growth in adjusted operating profit
16.5%
2022
2021
2020
£589.2m
+11.1% (+15.1% constant currency)
16.5%
17.1%
16.5%
2022
2021
2020
£589.2m
£530.2m
£494.3m
Description and basis of calculation
Return on capital employed (‘ROCE’) is defined as
adjusted operating profit expressed as a percentage
of the average capital employed. The Group
calculates ROCE both including and excluding the
impact of IFRS 16 Leases as detailed in the Group’s
‘Alternative Performance Measures’ on page 249.
Strategic linkage
ROCE is the key financial benchmark we use
when evaluating both the performance of existing
businesses and potential investments and is a key
component of DCC’s executive bonus plans and
Long-Term Incentive Plan.
FY22 comment
The Group continued to generate very strong returns
on capital employed, notwithstanding the substantial
increase in the scale of the Group in recent years.
The modest decrease in return on capital employed
versus the prior year reflects the substantial
acquisition spend during the year of £720 million and
the timing of the acquisition of Almo, the Group’s
largest acquisition to date, which occurred later in the
year and seasonally had a dilutive impact. It also
reflects recent investment in development capital
expenditure and working capital which will deliver good
organic growth for the Group in the future.
Description and basis of calculation
The change in adjusted operating profit achieved in
the current year compared to the prior year.
Strategic linkage
Adjusted operating profit measures the underlying
operating performance of the Group’s businesses and
is an indicator of our revenue generation, margin
management, cost control and performance efficiency.
FY22 comment
All four divisions recorded profit growth versus the
prior year. The growth was driven by the excellent
organic performance in DCC Healthcare and the
strong organic growth in DCC Retail & Oil, along
with the contribution from acquisitions completed
in the current and prior year.
DCC LPG performed strongly during the year
with operating profit increasing by 2.8% (6.7% on
a constant currency basis) to £237.7 million. Please
refer to DCC LPG operating review on page 57 for
further details.
Operating profit in DCC Retail & Oil increased to
£169.4 million, 17.0% ahead of prior year (20.1% on
a constant currency basis). Please refer to DCC Retail
& Oil operating review on page 63 for further details.
FY23 outlook and aims
The achievement of returns on capital employed
in excess of the Group’s cost of capital will continue
to be a key focus in order to ensure the efficient
generation of cash to fund organic growth,
acquisitions and dividend growth.
DCC Healthcare delivered an excellent performance,
generating operating profit growth of 22.9% (25.5%
on a constant currency basis), approximately
two-thirds of which was organic. Please refer to
DCC Healthcare operating review on page 69 for
further details.
Read more: Financial Review on page 54
DCC Technology delivered very strong operating
profit growth of 12.8% (19.9% on a constant
currency basis), driven by the contributions from
acquisitions completed during the year. Please refer
to DCC Technology operating review on page 75
for further details.
FY23 outlook and aims
Notwithstanding the challenging macro environment
at present, the Group expects that the year ending
31 March 2023 will be another year of profit growth
and development.
Read more: Financial Review on pages 49 to 50
Strategic Linkages
Market leading
positions
Operational
excellence
Innovation
Extend our
geographic footprint
Development
of our people
Financial
discipline
Linked to Directors’
Remuneration
44
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Growth in adjusted earnings per share
Free cash flow
Committed acquisition expenditure
430.1p
+11.2% (+15.2% constant currency)
£382.6m
£603.4m
2022
2021
2020
430.1p
386.6p
362.6p
2022
2021
2020
£382.6m
£687.8m
£492.3m
2022
2021
2020
£374.6m
£168.6m
£603.4m
Description and basis of calculation
The change in adjusted EPS achieved in the current
year compared to the prior year.
Description and basis of calculation
Cash generated from operations before exceptional
items and after net capital expenditure.
Description and basis of calculation
Cash spent and acquisition related consideration
for acquisitions committed to during the year.
Strategic linkage
Adjusted EPS is a widely accepted metric used in
determining corporate profitability. It also represents
an important metric in determining the generation of
superior shareholder returns and is a key component
of DCC’s executive bonus plans and Long-Term
Incentive Plan.
FY22 comment
The increase in adjusted EPS of 11.2% reflects
a 11.4% increase in adjusted earnings, driven by the
factors mentioned under the adjusted operating
profit KPI.
FY23 outlook and aims
The main driver of growth in EPS is the Group’s
operating profit performance which, as noted above,
is expected to continue to grow.
Read more: Financial Review on page 51
Strategic linkage
Free cash flow represents the funds available
for reinvestment, acquisitions and dividends,
so maintaining a high level of free cash flow is key
to maintaining a strong, liquid balance sheet.
Strategic linkage
The Group constantly seeks to add value-enhancing
acquisitions in order to provide shareholders with
returns on capital in excess of our cost of capital.
FY22 comment
The Group committed to acquisition expenditure
of £603.4m during the period which principally
comprised the acquisitions of Almo Corporation in
DCC Technology and Naturgy Ireland in DCC LPG.
FY23 outlook and aims
The Group will continue to pursue attractive
opportunities in our traditional markets as well as
looking to extend our business into selected new
geographic markets. We continue to pursue a strong
pipeline of opportunities, but acquisition targets
must meet our demanding criteria and we will remain
disciplined in our approach to acquisition spend.
Read more: Financial Review on page 53
FY22 comment
The Group’s free cash flow amounted to £382.6
million versus £687.8 million in the prior year. The
Group’s cumulative conversion of operating profit
into free cash flow across both years was very strong
at 96%.
Working capital increased by £168.7 million which
includes the expected reversal of one-off timing
benefits in the prior year, a decrease in the utilisation
of supply chain financing in DCC Technology and a net
investment in working capital across the Group. The
increase in energy prices during the period drove a
reduction in working capital in DCC Retail & Oil and
an increase in working capital in DCC LPG and the
remaining modest net investment in working capital
across the Group reflected increased stock holdings
across each division which ensured customers were
serviced as effectively as possible given the volatile
supply chain environment.
Net capital expenditure amounted to £170.8 million
for the year and this reflects continued investment
in organic initiatives across the Group, supporting the
Group’s continued growth and development.
FY23 outlook and aims
Cash generation and working capital management
will remain a key focus of the Group.
Read more: Financial Review on pages 52 and 53
DCC plc Annual Report and Accounts 2022
45
Strategic Report
Key Performance Indicators
Non-financial
The Group employs non-financial key performance indicators (‘KPIs’) to assess the activities that we see
as important in conducting our operations responsibly and achieving our strategic objective of building
a sustainable business which delivers long-term value to stakeholders.
Carbon intensity
(Scope 3)
76.4gCO2e/MJ
Carbon emissions
(Scope 1 and 2)
104kts
Gender diversity
63%/37%
2022
2021
2020
76.4
76.5
79.3
2022
2021
2020
104kts
96kts
94kts
2022
2021
2020
63
65
65
37
35
35
Description and basis of calculation
The Group’s carbon intensity metric is calculated by
dividing the total Scope 3 emissions in a given period
(as defined in the Greenhouse Gas Criteria document
at www.dcc.ie) by the energy content of fuel sold,
calculated using standard conversion factors. The
result is expressed in grams of CO2e per megajoule
of energy sold.
Strategic linkage
The carbon intensity metric is one of the key
measures the Group uses to measure progress
in energy transition.
FY22 comment
Three main factors contributed to a decline in
the carbon intensity of the fuel we sell: increased
biogenic content in liquid fuels, a rise in the sale
of low and zero carbon fuels such as HVO, and the
increase in renewable energy as part of the overall
mix of energy sales. In FY22 these favourable
factors were counterbalanced by increased volumes
of energy products sold from both existing and
newly-acquired businesses.
FY23 outlook and aims
The Group has this year set a target to reach net zero
across Scopes 1, 2 and 3 by 2050 or sooner. The
reduction in carbon intensity will be a key indicator
of progress in this area.
Read more: Sustainable Business Report on
pages 83 to 85
Description and basis of calculation
Total Scope 1 and 2 carbon emissions expressed
in kilotonnes (kts) of CO2e.
Strategic linkage
The Group has put in place Scope 1 and 2 carbon
reduction targets and is also assisting customers
to decarbonise their activities by introducing more
renewable forms of energy.
FY22 comment
Overall, there was an 8% increase in absolute carbon
emissions. This increase was driven by acquisitions
and increased activity levels as Covid-19 restrictions
have eased, offset by the Group’s existing businesses
achieving significant reductions in their Scope 1 and 2
emissions, through better operational efficiencies.
When Scope 2 emissions are calculated on a market
basis, rather than on a location basis, Group emissions
fell by 5.5%, reflecting a significant increase in the
purchase of renewable electricity. See page 83 for
further details.
FY23 outlook and aims
The Group will continue to procure renewably sourced
electricity and put in place energy-saving and
carbon-reduction measures in order to meet our
carbon emission reduction targets, including the
increased use of biofuels in our own fleet.
Read more: Sustainable Business Report on
pages 83 to 85
Male
Male
Female
Female
Description and basis of calculation
The percentage split of the overall workforce between
female and male employees.
Strategic linkage
The Group benefits from attracting and developing a
workforce with diverse skills, qualities and experiences.
FY22 comment
We are encouraged to see that the overall gender
diversity of our workforce has improved in FY22.
At 31 March 2022, female employees accounted
for 37% of the overall workforce, 19% of senior
management and 42% of Board members.
FY23 outlook and aims
The Group is committed to better gender balance
at all levels of the organisation and actively supports
the development of our high potential female talent.
We continue to focus on supporting the progression
of our female talent through our annual talent review
process which creates visibility of all talent across
the Group.
Read more: People section on pages 36 to 39
Strategic Linkages
Market leading
positions
Operational
excellence
Innovation
Extend our
geographic footprint
Development
of our people
Financial
discipline
Linked to Directors’
Remuneration
46
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Health and Safety
LTIFR
0.96
2022
2021
2020
Health and Safety
LTISR
25 days
0.96
1.04
1.07
2022
2021
2020
25 days
25 days
18 days
Description and basis of calculation
Lost Time Injury Frequency Rate (‘LTIFR’)
measures the number of lost time injuries
per 200,000 hours worked.
Description and basis of calculation
Lost Time Injury Severity Rate (‘LTISR’) measures
the number of calendar days lost due to injury per
200,000 hours worked.
Strategic linkage
The safety of our employees and the wider
community is one of our core values and central
to everything we do. A continually improving
occupational and process safety culture is a key
element in delivering on our strategic objectives.
Strategic linkage
The safety of our employees and the wider
community is one of our core values and central
to everything we do. A continually improving
occupational and process safety culture is a key
element in delivering on our strategic objectives.
FY22 comment
The improvement in LTIFR continues a reduction
in frequency rate across the Group over the past
number of years, despite growth in the scale of the
Group and reflects an ongoing commitment to
performance improvement through robust risk
controls, a proactive safety culture and learning
from events.
FY23 outlook and aims
The Group will continue to strengthen risk control
measures, focusing on leading indicators and
identifying further improvement opportunities as
part of a new Three Year HSE Plan. Our promotion
of a strong safety culture will continue, with added
emphasis on cross-business collaboration and
sharing of good practice. We will aim to reduce the
LTIFR level further and to remain below 1.0, and to
further mitigate the impact of accidents when they
do happen.
Read more: Sustainable Business Report on
pages 86 to 88
FY22 comment
The LTISR is in line with the prior year and was
influenced by four incidents in our Technology division
and three in Retail & Oil, which resulted in prolonged
periods of absence. Most injuries continue to be
relatively minor and involve short recovery times.
FY23 outlook and aims
The Group will continue to strengthen risk control
measures, focusing on leading indicators and
identifying further improvement opportunities as
part of a new Three Year HSE Plan. Our promotion
of a strong safety culture will continue, with added
emphasis on cross-business collaboration and
sharing of good practice. We will aim to further
mitigate the impact of accidents when they
do happen.
Read more: Sustainable Business Report on
pages 86 to 88
DCC plc Annual Report and Accounts 2022
47
Financial Review
we are excited
about the
opportunities ahead
Kevin Lucey, the Group’s Chief Financial Officer, reflects on a year
of continued strong growth and development.
The year ending 31 March 2022 saw a new
set of challenges thrown at economies and
societies globally. Pandemic related restrictions
ebbed and flowed during the year and then
eased generally. Volatility and uncertain supply
chains really began to disrupt and in recent
months the tragic events in Ukraine have seen
uncertainty escalate further.
These challenges have continued to impact
all businesses. DCC is no different. However,
the last two years have demonstrated that
our talented and committed teams really are
differentiators for DCC. Our agile and devolved
business model has ensured that our
businesses in general have performed for their
customers, suppliers and other stakeholders.
DCC has continued to enable people and
businesses to grow and progress, despite all of
the uncertainty. And DCC itself has continued
to grow and progress. The financial year
under review saw no let-up in the strategic
development of the Group, with very significant
capital committed to further expansion.
Highlights
An excellent organic performance was a notable
feature of the year under review. The acquisition
of Almo by DCC Technology, the Group’s largest
acquisition to date, was also very significant.
As was the unveiling of an updated strategy
for our energy business and related Scope 3
net zero ambition. Another year of progress
for DCC included the following highlights:
• Growing our operating profit on a constant
currency basis by 15.1% to £589.2 million;
• Organically delivering 6.1% operating profit
growth, well ahead of our 3%-4% track
record;
• Committing £600 million to new acquisitions
during the period, including the further
expansion of the Group in North America
with the acquisition of Almo, our largest
to date;
• Delivering ROCE of 16.5% and ending the
year in a very strong financial position;
48
DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
Table 1: Trading Overview
Revenue
Adjusted operating profit
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
Group adjusted operating profit
Share of equity accounted investments’ profit after tax
Finance costs (net)
Profit before net exceptionals, amortisation of intangible assets and tax
Net exceptional items before tax and non-controlling interests
Amortisation of intangible assets
Profit before tax
Taxation
Profit after tax
Non-controlling interests
Net earnings
2022
£’m
2021
£’m
17,732.0
13,412.4
237.7
169.4
100.4
81.7
589.2
0.3
(54.1)
535.4
(45.3)
(84.4)
405.7
(79.7)
326.0
(13.6)
312.4
231.3
144.8
81.7
72.4
530.2
0.2
(59.3)
471.1
(39.1)
(66.9)
365.1
(62.3)
302.8
(10.2)
292.6
Adjusted earnings per share (pence)
430.11p
386.62p
Change on
prior year
%
+32.2%
+2.8%
+17.0%
+22.9%
+12.8%
+11.1%
+13.7%
+11.1%
+6.8%
+11.2%
• Updating our strategy for the energy
sector to ensure we lead our customers
in transition and setting a net zero target
for Scope 3 carbon emissions by 2050
or sooner, including interim targets;
• Launching our first Sustainability-linked
Revolving Credit Facility of £800 million,
a significantly larger facility for DCC which
will enable us to further evolve our funding
options but also demonstrates our
commitment to excellence in sustainability
and ESG generally; and
Increasing the dividend for the year by
10.0% to 175.78 pence per share, our
28th consecutive year of dividend growth.
•
Looking Forward
As the uncertainty caused by the direct impact
of the pandemic recedes, it has been replaced
with a new set of challenges for global supply
chains. The war in Ukraine has exacerbated this
uncertainty further, particularly in Europe.
However, DCC can continue its growth and
development into the future. We are excited
by the opportunities in front of us across our
energy, healthcare and technology sectors. Our
very strong financial position allows us to look
forward with confidence and we continue to
believe that DCC can grow organically, identify
new platforms for growth through acquisitions
in line with our capital allocation priorities,
deliver very strong returns on capital employed
and continue to make demonstrable progress
across our four Sustainability pillars.
We expect that the year ending 31 March 2023
will be another year of profit growth and
development, notwithstanding the challenging
macro environment at present.
Reporting Currency
The Group’s financial statements are
presented in sterling, denoted by the symbol ‘£’.
The principal exchange rates used for the
translation of results into sterling are set out
in note 5.1, Foreign Currency, on page 210.
The net impact of currency translation on
the Group Income Statement versus the
prior period was significant, accounting
for a headwind of approximately 4.0%,
or £20.9 million against the reported growth
in operating profit. Average sterling exchange
rates strengthened against most relevant
currencies, including the US dollar and euro.
Revenue
Overall, Group revenue increased by 32.2% to
£17.7 billion primarily driven by the higher energy
commodity prices that prevailed during the year
and also by the recovery in energy volumes
across both DCC LPG and DCC Retail & Oil.
Volumes in DCC LPG increased by 15.8% to
2.6 million tonnes, driven by the reopening of
economies and acquisitions completed during
the year in the US and Ireland. Organically,
volumes increased 6.8% due to strong recovery
and growth of commercial and industrial demand.
DCC Retail & Oil volumes of 11.6 billion litres
were 14.0% ahead of the prior year, and 10.9%
organically, driven by a strong recovery in
commercial, retail and fuel card volumes, which
had been adversely impacted by Covid-19
restrictions in the prior year.
Combined revenue in DCC Healthcare and
DCC Technology was £5.4 billion, an increase
of 5.3%, reflecting strong revenue growth in
DCC Healthcare and DCC Technology’s North
American businesses.
Group Adjusted Operating Profit
Group adjusted operating profit increased by
11.1% (15.1% on a constant currency basis)
to £589.2 million. On a constant currency basis,
operating profit increased by 6.1% organically
and acquisitive growth was 9.0%. The overall
growth represents a very strong performance
in the context of well-documented challenges
in global commodity prices, supply chain
shortages and labour availability.
DCC LPG performed strongly during the
year despite the backdrop of very substantial
increases and volatility in the wholesale cost
of product. Operating profit increased by
2.8% (6.7% on a constant currency basis)
to £237.7 million benefiting from modest
organic growth and bolt-on acquisitions
completed in Ireland and the US.
DCC plc Annual Report and Accounts 2022
49
Strategic Report
Financial Review continued
Table 2: Adjusted Operating Profit and Earnings per Share
Adjusted operating profit*
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
Group
Adjusted EPS* (pence)
H1
£’m
48.4
70.0
50.2
27.2
195.8
134.2
FY22
H2
£’m
189.3
99.4
50.2
54.5
393.4
295.9
FY
£’m
237.7
169.4
100.4
81.7
589.2
430.1
H1
£’m
45.6
65.2
39.8
25.5
176.1
FY21
H2
£’m
185.7
79.6
41.9
46.9
354.1
FY
£’m
231.3
144.8
81.7
72.4
530.2
H1
%
+6.2%
+7.4%
+26.0%
+6.5%
Growth
H2
%
+2.0%
+24.8%
+19.9%
+16.2%
FY
%
+2.8%
+17.0%
+22.9%
+12.8%
+11.2%
+11.1%
+11.1%
117.9p
268.7p
386.6p
+13.8%
+10.1%
+11.2%
* Excluding net exceptionals and amortisation of intangible assets
Profit before net Exceptional Items,
Amortisation of Intangible Assets and Tax
Profit before net exceptional items,
amortisation of intangible assets and tax
increased by 13.7% to £535.4 million.
Net Exceptional Charge and Amortisation
of Intangible Assets
The Group incurred a net exceptional charge
after tax and non-controlling interests of
£43.8 million (2021: net exceptional charge of
£35.0 million) as follows:
Adjustments to contingent
acquisition consideration
Restructuring and integration
costs and other
Acquisition and related costs
IAS 39 mark-to-market gain
Tax attaching to exceptional items
Net exceptional charge
£’m
(19.9)
(16.7)
(9.9)
1.2
(45.3)
1.5
(43.8)
There was a net cash outflow of £29.5 million
relating to exceptional items.
Adjustments to contingent acquisition
consideration of £19.9 million reflects
movements in provisions associated with
the expected earn-out or other deferred
arrangements that arise through the
Group’s corporate development activity.
The charge in the year primarily reflects
increases in contingent consideration
payable in respect of acquisitions in DCC
Technology where the trading performance
of acquisitions in North America has been
very strong and ahead of expectations
and also in respect of an acquisition in DCC
Retail & Oil where performance has also been
ahead of expectations.
Restructuring and integration costs and other
of £16.7 million relates to the restructuring and
integration of operations across a number of
businesses and acquisitions. The significant
items during the year include costs related to
the integration of acquisitions in DCC LPG and
DCC Technology. These include the integration
of Primagaz in the Netherlands, acquired during
the financial year and where integration with
DCC’s existing operations is continuing in line
with expectations. It also includes the
integration of Almo and combination with DCC
Technology’s existing Pro-AV business in North
America. It also includes the final stage of the
consolidation of the UK infrastructure in DCC
Technology and a project underway in France to
enhance the efficiency of the LPG operating
infrastructure.
Acquisition and related costs include the
professional fees and tax costs relating to the
evaluation and completion of acquisition
opportunities and amounted to £9.9 million.
The level of ineffectiveness calculated under
IAS 39 on the hedging instruments related to
the Group’s US private placement debt is
charged or credited as an exceptional item. In
the year ended 31 March 2022, this amounted
to an exceptional non-cash gain of £1.2 million.
The cumulative net exceptional credit taken in
respect IAS 39 ineffectiveness is £0.5 million.
This, or any subsequent similar non-cash
charges or gains, will net to zero over the
remaining term of this debt and the related
hedging instruments.
The charge for the amortisation of acquisition-
related intangible assets increased to
£84.4 million from £66.9 million in the prior
year reflecting acquisitions completed during
the second half of the prior year and in the
current year.
Operating profit in DCC Retail & Oil increased
to £169.4 million, 17.0% ahead of the prior year
(20.1% on a constant currency basis), the vast
majority of which was organic. The excellent
organic performance reflects the strong
volume recovery, continued growth in non-fuel
profits and a very good operational and cost
performance.
DCC Healthcare generated excellent operating
profit growth of 22.9% (25.5% on a constant
currency basis) to £100.4 million, two thirds
of which was organic. The very strong organic
performance was driven by DCC Vital, which
generated excellent organic profit growth
across Britain, Ireland and the DACH region.
DCC Vital also benefited from the acquisition
of Wörner in April 2021.
Operating profit in DCC Technology increased
to £81.7 million, 12.8% ahead of the prior year
(19.9% on a constant currency basis). The very
strong operating profit growth was driven by
the contributions from acquisitions completed
during the year. The business in North America
performed very strongly and benefited from
the notable acquisition of Almo, completed in
December 2021.
Finance Costs (net)
Net finance costs and other decreased to
£53.8 million (2021: £59.1 million). The
decrease primarily reflects a lower interest
charge due to lower average gross debt
balances, following private placement debt
repayments in May 2021.
Average net debt, excluding lease creditors,
was £428 million, compared to an average net
debt of £215 million in the prior year, and
reflects substantial acquisition activity during
the year and also increased investment in
working capital. The Group’s average private
placement debt, which is the primary driver of
finance costs, decreased versus the prior year
reflecting the repayment of private placement
debt and the strengthening of sterling against
the euro and US dollar. Interest was covered
16.1 times by Group adjusted operating profit
before depreciation and amortisation of
intangible assets (2021: 13.2 times).
50
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Table 3: Performance Metrics
Growth:
Adjusted operating profit growth (%)
Adjusted operating profit growth (constant currency) (%)
Volume growth DCC LPG (%)
Volume growth DCC Retail & Oil (%)
Revenue growth – excluding DCC LPG and DCC Retail & Oil (%)
Adjusted operating profit margin – excluding DCC LPG and DCC Retail & Oil (%)
Adjusted earnings per share growth (%)
Adjusted earnings per share growth (constant currency) (%)
Return:
Return on capital employed – excluding IFRS 16 (%)
Return on capital employed – including IFRS 16 (%)
Operating cash flow (before add-back for depreciation on right-of-use leased assets) (£’m)
Free cash flow (after IFRS 16) (£’m)
Conversion of adjusted operating profits to free cash flow (%)
Working capital days (days)
Debtor days (days)
Financial Strength/Liquidity/Financial Capacity for Development:
EBITDA: net interest (times)
Cash balances (net of overdrafts and short-term debt) (£’m)
Net (debt)/cash – excluding lease creditors (£’m)
Net debt – including lease creditors (£’m)
Net debt (excluding lease creditors) as a % of total equity (%)
Net debt: EBITDA (times)
Profit before Tax
Profit before tax increased by 11.1% to
£405.7 million.
Taxation
The effective tax rate for the Group increased
to 18.3% (2021: 17.0%). The Group’s effective
tax rate is influenced by the geographical mix
of profits arising in any year and the tax rates
attributable to the individual territories. The
increase in the year was driven by the expansion
of the Group in recent years into certain higher
tax geographies and the increasing corporate
tax rate environment generally.
Adjusted Earnings per Share
Adjusted earnings per share increased by
11.2% (15.2% on a constant currency basis)
to 430.1 pence, reflecting the increase in
profit before exceptional items and goodwill
amortisation.
Dividend
The Board is proposing an 11.2% increase in
the final dividend to 119.93 pence per share,
which, when added to the interim dividend of
55.85 pence per share, gives a total dividend
for the year of 175.78 pence per share. This
represents a 10.0% increase over the total
prior year dividend of 159.80 pence per share.
2022
2021
+11.1%
+15.1%
+15.8%
+14.0%
+5.3%
3.4%
+11.2%
+15.2%
16.5%
15.3%
560.6
382.6
65%
2.8
34.3
16.1x
1,326.6
(419.9)
(756.6)
14.1%
0.6x
+7.3%
+6.6%
+3.8%
-12.3%
+14.4%
3.0%
+6.6%
+6.0%
17.1%
15.7%
842.3
687.8
130%
(4.3)
35.7
13.2x
1,716.9
165.0
(150.2)
n/a
n/a
The dividend is covered 2.4 times by adjusted
earnings per share (2021: 2.4 times). It is
proposed to pay the final dividend on 21 July
2022 to shareholders on the register at the
close of business on 27 May 2022.
Over its 28 years as a listed company, DCC has
an unbroken record of dividend growth at a
compound annual rate of 13.7%.
DCC plc Annual Report and Accounts 2022
51
Strategic Report
Financial Review continued
Table 4: Summary of Cash Flows
The Group generated operating and free cash flow during the year as set out below:
Year ended 31 March
Group operating profit
(Increase)/decrease in working capital
Depreciation (excluding right-of-use leased assets) and other
Operating cash flow (pre add-back for depreciation on ROU leased assets)
Capital expenditure (net)
Depreciation on right-of-use leased assets
Repayment of lease creditors
Free cash flow
Interest and tax paid
Free cash flow (after interest and tax payments)
Acquisitions
Dividends
Exceptional items/disposals
Share issues
Net (outflow)/inflow
Opening net debt
Translation and other
Closing net debt (including lease creditors)
Free cash flow conversion
Analysis of closing net debt (including lease creditors):
Net (debt)/cash at 31 March (excluding lease creditors)
Lease creditors at 31 March
Closing net debt (including lease creditors)
2022
£’m
589.2
(168.7)
140.1
560.6
(170.8)
389.8
67.8
(75.0)
382.6
(114.2)
268.4
(720.1)
(167.5)
(29.5)
0.4
(648.3)
(150.2)
41.9
(756.6)
65%
(419.9)
(336.7)
(756.6)
2021
£’m
530.2
177.7
134.4
842.3
(146.9)
695.4
61.4
(69.0)
687.8
(108.9)
578.9
(272.6)
(148.3)
(29.4)
–
128.6
(367.1)
88.3
(150.2)
130%
165.0
(315.2)
(150.2)
Cash Flow
The Group’s operating cash flow amounted to
£560.6 million, compared to £842.3 million in
the prior year.
Working capital increased by £168.7 million
which includes the expected reversal of
approximately £80 million of one-off timing
benefits in the prior year which were highlighted
in the Results Announcement in May 2021.
A decrease in the utilisation of supply chain
financing in DCC Technology accounted for
£65 million, with the remaining outflow
reflecting net investment in working capital
across the Group. The increase in energy prices
during the period drove a reduction in working
capital in DCC Retail & Oil and an increase in
working capital in DCC LPG. The movements
reflect the respective underlying negative and
positive working capital characteristics of each
division. The remaining modest net investment
in working capital across the Group reflected
increased inventory holdings which ensured
customers were serviced as effectively as possible
given the volatile supply chain environment.
DCC Technology selectively uses supply chain
financing solutions to sell, on a non-recourse
basis, a portion of its receivables relating to
certain larger supply chain/sales and marketing
activities. As anticipated, the level of supply
chain financing at 31 March 2022 was lower
than the prior year at £168.0 million (2021:
£232.6 million), with the decrease of £65.0 million
reflecting the lower volume throughput in the
UK business as a result of product supply
disruption and warehouse system upgrades.
Supply chain financing had a positive impact
on Group working capital days of 2.3 days
(31 March 2021: 4.9 days).
Overall working capital days were 2.8 days sales,
compared to negative 4.3 days sales in the prior
year, primarily reflecting the acquisition activity
in the year in DCC Technology, DCC Healthcare
and DCC LPG.
As illustrated in the table overleaf, net capital
expenditure amounted to £170.9 million for the
year (2021: £146.9 million) and was net of disposal
proceeds of £23.5 million (2021: £15.9 million).
The level of net capital expenditure reflects
continued investment in organic initiatives
across the Group, supporting the Group’s
continued growth and development.
Capital expenditure in DCC LPG primarily
comprised development expenditure on tanks,
cylinders and installations, supporting new
business, the conversion of oil customers to
LPG, and the continued rollout of bioLPG
cylinders and ‘Click and Collect’ services. There
was also continued development spend in
relation to the Avonmouth LPG storage facility
in the UK. In the Retail & Oil division, there was
continued investment in new retail sites and site
upgrades, including adding further lower
emission product capability such at HVO in a
number of markets and E85 in France, EV fast
charging and related services. It also included
capital expenditure in relation to the ongoing
project to optimise the depot network in the UK
to bring greater network and capital efficiency
over time. In DCC Healthcare, the capital
expenditure primarily related to increased
manufacturing capability across DCC Health
& Beauty Solutions in both Europe and the US,
through the installation of new machines
across multiple businesses to facilitate the
strong growth in customer demand. The
majority of the capital expenditure in DCC
Technology related to the new warehouse
management system which is now live in the
UK, solar panel installation on the roof of the
UK national distribution centre, along with
52
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
development spend in Ireland to relocate to
a new, larger, office and warehouse facility
during the period. Net capital expenditure for
the Group exceeded the depreciation charge
(excluding depreciation on right-of-use leased
assets) in the year by £32.9 million.
The Group’s free cash flow amounted to
£382.6 million versus £687.8 million in the prior
year. The cumulative conversion of operating
profit into free cash flow across both years was
very strong at 96%.
Committed Acquisition
and Net Capital Expenditure
Committed acquisition spend since the prior
year preliminary results statement and net
capital expenditure in the current year
amounted to £774.2 million. An analysis by
division is shown below.
DCC continues to be very active from a
development perspective. Since the results
announcement for the year ended 31 March
2021 in May 2021, DCC has committed
approximately £600 million to new acquisitions
across Europe and North America. The Group
has the platforms, opportunities and capability
to build the Group into a global leader in its
chosen sectors. Recent acquisition activity of
the Group includes:
DCC Technology
Almo Corporation
DCC Technology completed the acquisition
of Almo Corporation (‘Almo’) on 14 December
2021. The acquisition was based on an initial
enterprise value of approximately $610 million
(£462 million) on a cash-free, debt-free basis.
Almo is one of the largest specialist Pro AV
businesses in the United States and is a leading
national distributor of consumer appliances,
consumer electronics and lifestyle products
selling to integrators, resellers, dealers, retailers
and e-tailers nationwide.
The business is headquartered in Philadelphia
and employs approximately 660 people across
the United States. In the financial year ended
30 April 2021, the business recorded revenues
of approximately $1.3 billion (£1.0 billion)
and had underlying EBITA of approximately
$75 million (£57 million).
The transaction represents DCC’s largest
acquisition to date and is a major step in the
continuing expansion of both DCC and DCC
Technology in North America. Since entering
the market in 2018, DCC Technology has
expanded significantly, through strong organic
growth and acquisition activity. Together with
DCC Technology’s existing platform, the
acquisition of Almo will create the leading
specialist Pro AV business in North America.
Further details on the acquisition can be found
in DCC’s stock exchange announcement of
15 December 2021.
During the year DCC Technology also acquired
a small business in the Nordic region which
distributes AV and security camera equipment,
further enhancing DCC Technology’s service
offering to its customers in the region.
DCC LPG
Naturgy Ireland
In December 2021, DCC LPG acquired
Naturgy’s Irish power and gas marketing
operations. The business is a service-led
supplier of electricity and gas to large B2B
energy customers and also provides a range
of services including demand side
management, lighting as a service, solar PV
and PPA management. Founded in 2004, the
business has a long track record of sourcing
and supplying renewable power to industrial
and commercial customers and was the first
company in Ireland to supply 100% renewable
electricity. The acquisition enhances DCC’s
presence in the Irish electricity and gas markets
and represents an important step in its strategy
to expand its energy solutions offering across
the island of Ireland.
DCC LPG also completed a number of small
bolt-on acquisitions in Colorado and Kentucky,
further expanding its presence in the US
propane market and also completed a number
of modest acquisitions in the German and
Austrian markets.
DCC Retail & Oil
DCC Retail & Oil completed a number
of bolt-on acquisitions during the year. In
September 2021, DCC Retail & Oil acquired
a network of 19 retail convenience sites in
Luxembourg. The locations, which DCC will
operate, have a leading convenience offering
utilising the Cactus Shoppi brand. The network
contains well-located, urban sites, suitable for
investment in EV fast charging infrastructure
in the future. In Denmark, the business also
recently committed to acquire a stake in a
biogas production facility. The transaction will
secure the supply of the offtake from the plant
and further expand the range of renewable
products available to customers in the market.
In Britain, DCC Retail & Oil completed a number
of complementary bolt-on acquisitions
including a HGV service business, offering
multiple services to hauliers including secure
parking, fuel provision, truck washing facilities
and accommodation.
DCC Retail & Oil also completed a small bolt-on
acquisition in the bulk fuels and lubricants
market in Norway.
DCC Healthcare
Since its initial market entry into Germany
through the Wörner acquisition in April 2021,
DCC Healthcare has completed a primary care
bolt-on acquisition and has also now agreed to
acquire another, further developing its presence
in a fragmented and growing market.
Total Cash Spend on Acquisitions
The total cash spend on acquisitions
completed in the year was £720.1 million. The
spend primarily reflects acquisitions committed
and completed during the current year, but also
includes the acquisition of Wörner in DCC
Healthcare, Primagaz and Solewa in DCC LPG,
Jones Ireland in DCC Retail & Oil and Azenn in
DCC Technology which were announced in the
prior year Results Announcement in May 2021.
Payment of deferred and contingent acquisition
consideration previously provided amounted to
£52.0 million.
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
Total
Acquisitions
£’m
39.1
53.9
10.1
500.3
603.4
Capex
£’m
91.9
43.9
24.3
10.8
170.9
Total
£’m
131.0
97.8
34.4
511.1
774.3
DCC plc Annual Report and Accounts 2022
53
Strategic Report
Financial Review continued
Impact of Climate-Related Issues
on Investments
DCC has a clear process and set of priorities
for the deployment of capital, both for organic
growth and acquisitions, which take account
of the impact of climate-related risks and
opportunities.
As a Group, our key priorities when making
capital deployment decisions are:
• Scaling our DCC Health & Beauty platform in
high-growth markets and building DCC Vital
into a European leader;
• Scaling the specialist capability of DCC
Technology;
• Energy transition capability to accelerate
decarbonisation for customers; and
• Consolidating customer bases in North
American and European energy markets.
The Group communicated these priorities
publicly in December 2021. They reflect our
general preference for investments in areas
that provide a long-term and sustainable
growth opportunity and align with, or can
transition towards, DCC’s commitment to
be net zero across Scopes 1, 2 and 3 by 2050
or sooner.
The updated energy strategy that we have set
out in this year’s Report on pages 22 to 27
explains the principal transition paths of our
customers that we see and intend to follow.
That strategy provides a more detailed
framework for the allocation of capital within
the Energy division.
The Group-wide capital deployment priorities
and the Energy division’s strategy are reflected
in individual capital investment decisions taken
over the course of the year.
The Group intends to further develop its
processes for the assessment of climate-
related risks in individual investment proposals
in the future, to take account of, for instance,
the risk of more frequent extreme weather
events over the longer term.
Return on Capital Employed
The creation of shareholder value through the delivery of consistent, sustainable long-term
returns well in excess of its cost of capital is one of DCC’s core strategic aims. The return on capital
employed by division was as follows:
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
Group
2022
excl. IFRS 16
2021
excl. IFRS 16
2022
incl. IFRS 16
2021
incl. IFRS 16
15.8%
24.8%
20.5%
9.1%*
16.5%
17.4%
19.2%
18.7%
12.3%
17.1%
15.1%
21.0%
19.2%
8.5%
15.3%
16.6%
16.9%
17.0%
11.0%
15.7%
* The ROCE in DCC Technology reflects the acquisition impact of Almo occurring later in the financial year. On a pro-forma
basis the ROCE in DCC Technology excluding IFRS 16 was 10.7%.
The Group continued to generate very strong returns on capital employed, notwithstanding the
substantial increase in the scale of the Group in recent years. The modest decrease in return on
capital employed versus the prior year reflects the substantial acquisition spend during the year
of £720 million and the timing of the acquisition of Almo, the Group’s largest acquisition to date,
which occurred later in the year and seasonally had a dilutive impact. It also reflects recent
investment in development capital expenditure and working capital which will deliver good organic
growth for the Group in the future.
Financial Strength
An integral part of the Group’s strategy remains the maintenance of a strong and liquid balance
sheet which, amongst other benefits, enables it to take advantage of development opportunities
as they arise. The increasing scale and geographic diversity of DCC is enabling the Group to evolve
its approach somewhat, leveraging a broader array of funding options and, over time, reducing the
relative level of gross cash held on the balance sheet. At 31 March 2022, the Group had net debt
(including lease creditors) of £756.6 million, net debt (excluding lease creditors) of £419.9 million,
cash resources (net of overdrafts) of £1.3 billion and total equity of £3.0 billion.
In March 2022, DCC entered into a new Sustainability-linked Revolving Credit Facility with its
banking group of 10 leading international banks. The facility, at £800 million, is significantly larger
than the Group’s previous facility of £400 million and is committed for five years. The facility is the
Group’s first sustainability-linked funding arrangement and contains a number of sustainability
metrics and targets, demonstrating DCC’s commitment to excellence in its approach to
Sustainability and ESG generally. The increased scale of the facility will also enable the Group
to continue to evolve its funding options into the future.
Substantially all of the Group’s term debt has been raised in the US private placement market and
has an average maturity of 4.7 years.
Key financial ratios
Net debt:EBITDA (times)
EBITDA:net interest (times)
Total equity (£’m)
Kevin Lucey
Chief Financial Officer
16 May 2022
2022
Actual
Lender
covenants
0.6x
16.1x
2,970.6
3.5x
3.0x
425.0
2021
Actual
n/a
13.2x
2,705.6
54
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Financial Risk Management
Group financial risk management is governed
by policies and guidelines which are reviewed
and approved annually by the Board of
Directors, most recently in February 2022.
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,
in conjunction with Group Commodity Risk
Management, manage commodity price
exposures, within approved policies and
guidelines. Monitoring of compliance with
the policies and guidelines is managed by
the Group Risk Management function.
Further detail in relation to the Group’s
financial risk management and its derivative
financial instrument position is provided in
note 5.7 to the financial statements.
Foreign Exchange Risk Management
DCC’s presentation currency is sterling.
Exposures to other currencies, principally
euro and US dollar, arise in the course of
ordinary trading.
A significant proportion of the Group’s profits
is denominated in currencies other than
sterling. Approximately 75% (2021: 65%) of
the Group’s adjusted operating profit for the
year ended 31 March 2022 was denominated
in currencies other than sterling, primarily
euro, US dollar and Scandinavian currencies.
DCC does not hedge the translation exposure
on the profits of non-sterling subsidiaries.
The strengthening of the average translation
rate of sterling against most currencies, in
particular the euro and the US dollar, resulted
in a negative impact of approximately £20.9
million on the Group’s adjusted operating
profit in the year ended 31 March 2022.
The Group has investments in non-sterling,
primarily euro and US dollar denominated,
operations which are cash-generative and a
significant proportion of the cash generated
from these operations is reinvested in
development activities rather than being
repatriated into sterling. The Group seeks
to manage the resultant foreign currency
translation risk through borrowings
denominated in (or swapped utilising cross
currency interest rate swaps into) the relevant
currency or through currency swaps related
to intercompany funding, although these
hedges are offset by the strong ongoing cash
flow generated from the Group’s non-sterling
operations, leaving DCC with a net
investment in non-sterling assets. The gain
of £26.5 million arising on the translation of
DCC’s non-sterling denominated net asset
position at 31 March 2022 as set out in the
Group Statement of Comprehensive Income
mainly reflects the weakening in the value of
sterling against the US dollar, with the impact
of movements against other currencies
largely offsetting against each other.
Where sales or purchases are invoiced in
currencies 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.
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 our relationship banks and borrows at
both fixed and floating rates of interest. At
31 March 2022, 69% of the Group’s term debt,
including drawn committed credit lines, was
at or swapped to floating interest rates, using
interest rate and cross currency interest rate
swaps which qualify for fair value hedge
accounting under IAS 39. The Group mitigates
interest rate risk on its borrowings by
matching, to the extent possible, the maturity
of its cash balances with the interest
rate reset periods on the swaps related
to its borrowings.
Commodity Price Risk Management
DCC, through its activities in the energy
sector, procures, markets and sells LPG,
natural gas, electricity and oil products and,
as such, is exposed to changes in commodity
cost prices.
In general, market dynamics are such that
commodity cost price movements are
promptly reflected in sales prices.
In certain markets, short-term or seasonal
price stability is preferred by certain customer
segments which requires hedging a
proportion of forecasted transactions, with
such transactions qualifying as ‘highly
probable’ for IAS 39 hedge accounting
purposes. DCC uses both forward purchase
contracts and derivative commodity
instruments to support its pricing strategy for
a portion of expected future sales, typically for
periods of less than 12 months.
Fixed price supply contracts may be provided
to certain customers for periods typically less
than 12 months in duration. DCC fixes its cost
of sales on contracted future volumes where
the customer contract contains a take-or-pay
arrangement that permits the customer to
purchase a fixed amount of product for a fixed
price during a specified period and requires
payment even if the customer does not take
delivery of the product.
Where a take-or-pay clause is not included in
the customer contract, DCC hedges a portion
of forecasted sales volume recognising that
certain sales, such as natural gas and
electricity in particular, are exposed to
volumetric risk in the form of an uncertain
consumption profile arising from a range
of factors, including supply dynamics and
the weather.
DCC does not hold significant amounts of
commodity inventory relative to purchases
and sales; however, for certain inventory, such
as fuel oil and natural gas, DCC may enter
hedge contracts to manage price exposures.
Across its energy activities, DCC enters into
commodity hedges to fix a portion of own
fuel costs.
The net debt balance at 31 March 2022
includes a mark-to-market asset relating
to the fair value of the derivative financial
instruments used by the Group to hedge
commodity price risk exposures.
Certain activities of individual businesses
are centralised under the supervision of the
DCC Group Commodity Risk Management
function. Divisional and subsidiary
management, in conjunction with the Group’s
Commodity Risk Management function,
manage commodity price exposures within
approved policies and guidelines.
All commodity hedging counterparties are
approved by the Chief Executive and the
Chief Financial Officer and are reviewed
by the Board.
DCC plc Annual Report and Accounts 2022
55
Strategic Report
Operating Review
DCC LPG
Progress
Continued expansion of lower
carbon product & service
offerings and consolidation
of fragmented markets
What we do
DCC LPG is a leading liquefied petroleum gas (‘LPG’)
sales and marketing business, supplying LPG in cylinder
and bulk format to residential, commercial and industrial
customers. In addition, DCC LPG continues to develop
a broader customer offering through the supply of
natural gas, power and renewable products, including
solar installations, plus a range of specialty gases such
as refrigerants and medical gases.
56
DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
Performance for the Year
Ended 31 March 2022
DCC LPG performed strongly during the year
with operating profit increasing by 2.8% (6.7%
on a constant currency basis) to £237.7 million.
The profit growth was achieved despite the
backdrop of both very substantial increases and
volatility in the wholesale cost of product, with
average product cost almost doubling during
the year. Notwithstanding this backdrop, DCC
LPG delivered modest organic profit growth
and also benefited from bolt-on acquisitions
completed in the current and prior year.
Volumes increased by 15.8% driven by the
reopening of economies and acquisition
activity in the US and Ireland. Organic volumes
increased by 6.8% due to the strong recovery
in commercial and industrial demand. As
expected, operating profit per tonne was lower
due to the mix impact of the significant
increase in lower margin commercial and
industrial customer demand and the impact of
the lower margin UPG and Naturgy acquisitions.
The French business performed well, benefiting
from continued good domestic demand and
growth in the cylinder sector, where it has
increased its market share over the last two
years. The recent acquisitions and expansion
of the business into the solar sector has
been successful and performed ahead of
expectations, driven by strong demand for the
design, build and maintenance solution offering.
In B2B gas and power, the business continued
to expand its customer base and range of
energy solutions, although the higher wholesale
cost of energy and associated volatility was a
headwind throughout the year. The business
continues to broaden the energy transition
solutions it offers to customers in France and,
amongst other initiatives, has launched an
innovative service that provides energy
efficiency and management, renewable
power and EV charging capability to large
offices and shopping centres. The business
also delivered strong growth in its’ other
European markets of Scandinavia, Germany
and Benelux, benefiting from good organic
growth and the acquisition of Primagaz in the
Netherlands earlier in the year.
In Britain and Ireland, the business experienced
a strong recovery in commercial volumes. It also
grew its market share through oil to LPG
conversions that lower customer carbon
emissions by approximately 20%. In Ireland, the
off-grid LPG business performed well, although
similar to the experience in France, the on-grid
gas and power business faced significant
volatility and increased wholesale cost of
product for natural gas and electricity. In
December 2021, DCC acquired Naturgy’s power
and gas marketing operations in Ireland. The
acquisition adds innovative energy transition
expertise in biomethane, direct renewable
electricity power purchase agreements and
solar solutions, and has performed in line with
expectations since acquisition.
The US business delivered strong volume and
operating profit growth during the year, driven
by the full year contribution from the prior year
acquisitions of NES (September 2020) and UPG
(January 2021) as well as three smaller bolt-on
acquisitions completed in recent months in
Kentucky and Colorado. The US business now
operates across 22 states serving 310,000
customers. In Hong Kong & Macau, the
business performed well during a difficult year
for the region and continued to grow its
customer base, adding several new large
residential estates.
Volume (tonnes)
+15.8%
Adjusted operating profit
+2.8%
Adjusted operating profit per tonne
Strategic objective:
Drive increase in sales volumes
Strategic objective:
Drive for enhanced operational performance
Strategic objective:
Grow adjusted operating profit per tonne
2.6m
2022
2021
2020
£237.7m
£90.89
2.6m
2.3m
2.2m
2022
2021
2020
£237.7m
£231.3m
£228.2m
2022
2021
2020
£90.89
£102.36
£104.87
Return on capital employed (excl. IFRS 16)
Operating cash flow
10-year adjusted operating profit CAGR
Strategic objective:
Deliver superior shareholder returns
15.8%
2022
2021
2020
Strategic objective:
Generate cash flows to fund organic and
acquisition growth and dividends
£160.6m
Strategic objective:
Deliver superior shareholder returns
29.4%
15.8%
17.4%
18.4%
2022
2021
2020
£160.6m
£341.1m
£331.1m
2022
2021
2020
29.4%
24.4%
21.7%
DCC plc Annual Report and Accounts 2022
57
Strategic Report
Operating Review continued
Markets and Market Position
LPG
DCC LPG supplies LPG (propane and butane)
in both cylinder and bulk formats to
commercial, domestic, agricultural and
industrial customers across ten countries in
Europe, the US, and Hong Kong and Macau
in Asia.
DCC LPG has a leading position in each
European market in which it operates, as well as
a leading position in Hong Kong and Macau, and
has progressed to a number six position in the
fragmented US market.
LPG volumes by geography
22%
5%
20%
53%
Continental Europe
Britain
Ireland
Rest of world
Natural Gas and Electricity
DCC LPG supplies natural gas and electricity
to industrial, commercial, agricultural and
domestic customers in France and Ireland, and
represents 35% of equivalent total volumes.
Speciality Gases
DCC LPG supplies refrigerant gases
throughout Europe through TEGA (in Germany
and Austria), Butagaz (in France), Benegas (in
the Netherlands) and through agents in other
countries. Benegas also supplies LPG as an
aerosol propellant to industrial businesses
throughout Europe, and Flogas Britain supplies
medical gases throughout the UK.
France
Butagaz is the second largest LPG distribution
business in France where the market size is
approximately 1.7 million tonnes. Butagaz has
a market share of approximately 21% and
operates from 50 depots nationally, distributing
to 150,000 bulk customers, 16,000 points of
sale (cylinder resellers) and 9,000 B2B cylinder
customers. We estimate that Butagaz cylinders
are used by approximately 4.4 million end-user
customers annually. Butagaz has a strong
supply base and sources LPG from several
supply points across France and from Belgium,
Spain and Germany.
Butagaz is pursuing a multi-energy and
multi-services strategy as evidenced through
the recent acquisitions of Soltéa and Solewa,
two solar photovoltaic installation companies.
Gaz Européen is a specialist retailer of natural
gas and electricity, focused on supplying
energy management solutions to companies,
apartment blocks (with collective heating
systems), public authorities and the service
sector in France. Gaz Européen supplies
approximately 9.2 TwH of natural gas and
power to c.33,000 B2B sites across France.
A key aim of the company is to improve energy
efficiency for its customers by providing a range
of innovative services. During the year, Gaz
Européen successfully launched Ekivolt,
a new innovative partnership delivering
distributed electricity supply management
services to commercial properties and their
tenants. This provides balanced individual billing
in compliance with French energy regulations.
Britain
Flogas Britain is the clear number two LPG
distributor in Britain with a market share of
c.33% of the addressable market of at least
1 million tonnes, served through a nationwide
infrastructure of 60 operating locations. Flogas
Britain has successfully grown the LPG market
by switching oil consumers in several industrial
sectors to LPG, and by supplying LPG to
support the generation of biomethane, which is
injected into the gas grid. In addition to LPG, the
business has continued to develop its position
as the leading distributor of liquefied natural gas
(‘LNG’) as an energy solution primarily to large
industrial businesses. Flogas Britain distributes
medical gas to regional health authorities and
also distributes a wide range of LPG fuel
appliances such as mobile heaters and
barbecues, as well as renewable products.
USA
DCC Propane is headquartered in Illinois with
annual sales of 322,000 tonnes of LPG to over
310,000 customers with a presence in 22 states.
The business is now the number six LPG business
in the US by volume following the successful
integration of the UPG business acquired in
December 2020 and is actively looking to
extend its footprint further in what is still a
relatively unconsolidated market. DCC Propane
completed several bolt-on acquisitions during
the year.
The business trades under seven key regional
brands – Hicksgas, Pacer Propane, Propane
Central, Pacific Coast Energy, Saveway
Petroleum, Northeast Oil and United Propane
Gas – and has a well-invested asset base
supporting the business through a fleet of
over 800 company-owned LPG delivery vehicles
operating from 141 customer service locations.
Ireland
Flogas Ireland is the number two LPG supplier
on the island of Ireland, with a 44% share
of the addressable market of approximately
200,000 tonnes. It supplies bulk and cylinder
LPG to a wide range of industrial, commercial,
and domestic customers, serviced by
a developed network of authorised distributors
and six depots. The LPG business has
experienced strong growth in customer
numbers in recent years, as new off-grid
customers switch from oil to LPG to avail of
the increased energy efficiencies and reduced
carbon emissions offered by LPG.
Flogas Ireland has organically developed a
natural gas and electricity business for both
domestic and commercial customers. Following
the acquisition of Budget Energy in FY21,
Flogas recently completed the acquisition
of Naturgy’s Irish business (now ‘Flogas
Enterprise’), which is a market leading supplier
of renewable electricity, natural gas, biogas and
energy services to large energy users in Ireland
and Northern Ireland. Today, Flogas Ireland
has a platform for a carbon neutral dual fuel
offering to residential, SME and large
commercial customer segments throughout
Ireland. In the year to 31 March 2022, the
business supplied 3.1 TWh of natural gas and
electricity to approximately 160,000 customers
across Ireland.
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Building on recent
success, we will continue to
target growth by promoting
LPG to commercial and
residential energy consumers
looking to switch to more
environmentally friendly
and competitively priced
energy sources.”
Sweden and Norway
In Sweden and Norway, Flogas operates
from five locations, which include two key
importation facilities. Flogas is the market
leader in both of these markets, distributing
LPG predominantly to large steel and industrial
customers, and has 48% and 55% market
shares in Sweden and Norway respectively.
The addressable market is estimated to be
approximately 310,000 tonnes in Sweden
and 215,000 tonnes in Norway.
The Netherlands and Belgium
In the Netherlands, where DCC LPG’s business
trades under the Benegas brand, the business
has an estimated overall market share of 44%
of the addressable market of approximately
270,000 tonnes. Operating from five depots
and several third-party locations, the business
delivers to commercial, industrial, agricultural
and domestic customers in the Netherlands
and Belgium, and is also a significant player in
the sale of LPG for aerosol and autogas use.
The acquisition of SHV’s LPG business in the
Netherlands, Primagaz B.V., was completed in
July 2021 with the combined business securing
a market leading position.
Hong Kong and Macau
DSG Energy is the market leader in Hong Kong,
supplying piped LPG under long-term supply
agreements and continues to expand its
operations and service offering. The business
has a customer footprint of over 110,000
households based in very large residential
complexes. DSG Energy has a number one
position in the cylinder market and supplies
autogas through Shell’s retail network. It also
has a market leading position in the smaller
Macau market.
The business is supplied via the Shell terminal
on Tsing Yi Island located next to DSG’s filling
and storage facility and distributes c.50,000
tonnes of Shell-branded LPG annually under
a long-term Shell brand licence agreement.
Germany
TEGA is an LPG and refrigerant gas distribution
business with six operating sites based largely in
southern Germany, delivering c.50,000 tonnes
of LPG and c.2,500 tonnes of refrigerants
annually. TEGA completed a number of small
LPG bolt-on acquisitions during the year, and
continues to review opportunities in the
fragmented German market. The refrigerants
business supplies OEMs, wholesalers and
service contractors related to air-conditioning,
commercial cooling systems and refrigerators,
whereas the LPG business services c.30,000
domestic and commercial customers.
DCC plc Annual Report and Accounts 2022
59
Strategic Report
Operating Review continued
Strategy and Development
From 1 April 2022, DCC LPG will form part of
DCC Energy. DCC Energy’s strategy is outlined
in the Energy Strategy section on page 22.
DCC LPG’s strategy during the year was to:
• Demonstrate the benefits of LPG as a
cleaner, more efficient fuel, and thereby
convert commercial and residential oil
consumers to LPG;
• Cross-sell complementary green/renewable
energy products and services;
• Leverage our strong brands by selling
related products, including natural gas,
electricity and solar installations;
• Optimise the customer interface and supply
chain across our business, supported by
the use of digital technology; and
• Build scale through bolt-on acquisitions
and expanding into new geographies.
Our strategy as part of DCC Energy is to
accelerate the net zero journey of our
customer by leading the sales, marketing and
distribution of low carbon energy solutions.
Building on recent success, we will continue
to target growth by promoting LPG to
commercial and residential energy consumers
looking to switch to more environmentally
friendly and competitively priced energy
sources. We will also be extending our
distribution of speciality products such
as refrigerants via our current networks.
Expansion will continue through acquisition
and consolidation in fragmented markets,
as evidenced by the completed acquisition
of SHV’s LPG business in the Netherlands
and US bolt-on acquisitions completed
during the year. We will also continue to
expand our adjacency offerings as part of
our energy transition strategy. This has been
demonstrated recently by the acquisition
of Naturgy’s Ireland business, now Flogas
Enterprise, which is a market leading supplier
of renewable electricity, natural gas, biogas
and energy services to large energy users
in Ireland and Northern Ireland. In addition,
our solar acquisitions in France provide
opportunities for growth in this renewable
energy segment.
We will also look to further expand into
adjacencies such as natural gas and power
to add to our operations in France and
Ireland, and refrigerants, which are now
offered to our Butagaz and Benegas
customers as we leverage the expertise in
TEGA, and solar in France and other markets.
Further information on the Group’s energy
strategy is included on pages 22 to 27 and our
website www.dcc.ie includes a recording of our
Capital Markets Event on 17 May 2022 which
provided an update on our energy strategy.
How we create
value for our
stakeholders
•
Identify alternative lower carbon
solutions including oil2gas and
green/renewable energy products
to fulfil the energy transition
requirements of our residential
and commercial customers.
• Provide ancillary product and
service offerings, including
natural gas, electricity and
solar installations.
Invest in enhanced digital
solutions to continuously improve
the customer interface and deliver
supply chain efficiencies.
• Drive efficiencies and growth
•
through consolidating fragmented
markets with bolt-on acquisitions
and expanding geographical
footprint.
• Delivered by passionate, engaged,
and diverse teams.
• Committed to sustainable goals
around safety, the environment
and compliance.
Our strategy is to lead the
energy transition, bringing
decarbonisation closer for
our customers through
domestic and commercial
energy solutions.”
60
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Case study
Affordable
green power
for businesses
DCC LPG recently completed the
acquisitions of Solewa and Soltéa, two
French regional businesses focused on the
installation and maintenance of rooftop solar
photovoltaic systems for commercial and
industrial customers. These two subsidiaries
employ more than 100 staff and have a
15-year track record of delivering high quality
products and services.
Strong Government policies intended to
tackle climate change and growing interest
from businesses concerned with rising
energy prices is driving demand for
alternative energy solutions. The two
businesses are ideally positioned to benefit
from this demand. Average power capacity
per project has grown from 90kW to 150kW
and there is also fast growth in the customer
order book.
Segmental reporting
From 1 April 2022, the Group will organise
and report all of its energy activities
(previously DCC LPG and DCC Retail & Oil)
as one reportable segment, DCC Energy.
Further information on DCC Energy and its
strategy is set out in the Energy Strategy
section on page 22.
Customers
DCC LPG has a very broad customer base,
selling directly to approximately 1 million
customers across the geographies in
which the businesses operate, and also has
access to a broad range of retail and cylinder
consumers, supplying cylinders to over
(cid:24)(cid:124)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)(cid:68)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:17)(cid:3)(cid:38)(cid:88)(cid:86)(cid:87)(cid:82)(cid:80)(cid:72)(cid:85)(cid:86)(cid:3)
are primarily spread over the commercial,
industrial, domestic, retail and agricultural
markets. DCC LPG has no material customer
dependencies.
LPG volumes by customer segment
2% 4%
20%
Suppliers
As with its customer base, DCC LPG’s
supplier portfolio is broadly based. The top
five suppliers represent less than 60% of
total volumes supplied, with no one individual
supplier accounting for more than 20%
of volumes supplied in the current year.
The major suppliers to the division are BP,
Equinor, Esso, Gunvor, Philips66, Shell, SHV,
Sinopec, Total and Valero Energy. We have
built long-term strategic partnerships over
many years with our suppliers and we have
undertaken a strategic review of our
procurement practices during the year as
we look to strengthen these relationships
for the future.
Key Brands
74%
Commercial and industrial
Domestic
Retail
Agriculture and other
Benegas*, Butagaz*, Flogas*, Gaz de Paris*, TEGA*, Hicksgas*, Propane Central*,
Pacer Propane*, Pacific Coast Energy*, Saveway Petroleum*, Northeast Oil*,
United Propane Gas* and Shell**.
* DCC-owned brands.
** Operated under a long-term brand licence agreement.
DCC plc Annual Report and Accounts 2022
61
Strategic Report
Operating Review
DCC RETAIL & OIL
EVOLVING
Working with our customers
and suppliers to lead in the
marketing and distribution
of lower emission energy
What we do
DCC Retail & Oil is a leading provider of transport and
heating energy, lower emission fuels, biofuels and related
services to consumers and businesses across Europe,
and has a key focus on being a market leader in providing
sustainable energy solutions to consumers.
62
DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
Performance for the Year
Ended 31 March 2022
DCC Retail & Oil delivered excellent growth, with
operating profit increasing to £169.4 million,
17.0% ahead of prior year (20.1% on a constant
currency basis). The vast majority of the growth
was organic, reflecting strong volume growth and
an excellent operational and cost performance.
In addition, the business continues to deliver
significant growth in non-fuel profits, particularly
in lubricants and HGV and fleet services.
DCC Retail & Oil sold 11.6 billion litres of
product, an increase of 14.0% on the prior year.
The significant volume increase was driven
by a strong recovery in commercial, retail and
fuel card volumes, which had been adversely
impacted by Covid-19 restrictions in the prior
year. The business experienced particularly
strong demand in Scandinavia, France and Britain.
The business in Britain and Ireland recorded
very strong organic operating profit growth, in
part due to the recovery in commercial activity,
which drove fuel and fuel card usage. In Britain,
the business also delivered good growth in its
company owned retail network, with non-fuel
sales performing strongly. The business
delivered good growth across lubricants,
truck stop, roadside services and heating
services, with the growth in the increased range
of customer solutions continuing to broaden
the activities of the British business. Recently,
the business acquired a new HGV bunker site
in the Port of Felixstowe, further strengthening
its network of HGV service coverage to
26 strategically located facilities across Britain.
The business in Ireland delivered very strong
organic growth, benefiting from the integration
of the two recent bolt-on acquisitions and
from strong demand from the power
generation sector.
The Scandinavian business performed robustly
following an excellent performance in the prior
year. The business in Denmark performed
particularly well and generated strong growth
across the retail, agricultural and commercial
sectors. In Scandinavia, the business continued
to deploy capital into lower emissions fuels and
EV charging infrastructure, including winning
a significant tender for a transport mobility
hub in Norway. In Denmark, the business has
partnered with Shell Re-Charge to provide
customers with EV charging solutions in the
home, office, forecourts and public spaces.
In France, the business recorded very strong
growth, as restrictions were eased and retail
mobility consumers were increasingly active.
The business made good progress during the
year in further developing its products and
solution offerings to mobility customers. The
business has partnered with ENGIE to deploy
EV chargers on 16 motorway sites. It also rolled
out the infrastructure to enable the sale of E85
biofuel (85% ethanol content) across 59 sites
on its network. E85 offers a significantly lower
carbon alternative product for customers. In
September 2021, the business also acquired
a synergistic network of 19 convenience-led
retail sites in Luxembourg, which are
performing in line with expectations. Although
modest, the acquisition has added a strong
company-operated convenience retailing
capability. DCC Retail & Oil has also recently
entered into a major lubricants distribution
agreement to the auto franchise and
independent workshop segments in France,
establishing a platform to develop further
organic revenue opportunities in the lubricants
sector in Europe.
Volume (litres)
+14.0%
Adjusted operating profit
+17.0%
Adjusted operating profit per litre
Strategic objective:
Drive increase in sales volumes
Strategic objective:
Drive for enhanced operational performance
Strategic objective:
Grow adjusted operating profit per litre
11.6bn
2022
2021
2020
£169.4m
1.46p
11.6bn
10.2bn
11.6bn
2022
2021
2020
£169.4m
£144.8m
£140.3m
2022
2021
2020
1.46p
1.42p
1.21p
Return on capital employed (excl. IFRS 16)
Operating cash flow
10-year adjusted operating profit CAGR
Strategic objective:
Deliver superior shareholder returns
24.8%
2022
2021
2020
Strategic objective:
Generate cash flows to fund organic and
acquisition growth and dividends
£357.9m
24.8%
2022
2021
2020
£148.3m
19.2%
18.5%
£357.9m
£333.8m
Strategic objective:
Deliver superior shareholder returns
12.0%
2022
2021
2020
4.8%
7.5%
12.0%
DCC plc Annual Report and Accounts 2022
63
Strategic Report
Operating Review continued
Markets and Market Position
Retail & Oil is evolving to be a leader in low
emission liquid fuels and energy, and related
products and services. With operations based
in nine countries and a platform to grow the
business across Europe, Retail & Oil is a
significant consolidator of markets, with over
30 years of industry experience. With scale and
access to customers, Retail & Oil is a partner
of choice for energy distribution.
DCC Retail & Oil operates 1,173 retail stations,
supplies 1,445 dealers and operates extensive
fuel cards business for retail and commercial
customers in nine European countries. In
addition to the extensive retail portfolio, the
business has high market share in bulk liquid
fuel distribution for transport, heating, industrial
and agricultural processes and in domestic
heating fuels. The business continues to
develop significant positions in adjacencies
such as road-side services, electric vehicle fast
charging, lubricants and heating services.
Britain
In Britain, DCC Retail & Oil has been a
consolidator of the fragmented oil distribution
market since 2001 and has grown to become,
by far, the largest oil distributor in this market.
Our customers are mainly in mobility and
heating energy in the commercial, industrial,
domestic, agricultural, retail and fuel card
sectors. In the year ended 31 March 2022, DCC
Retail & Oil’s retail and oil distribution business
(cid:76)(cid:81)(cid:3)(cid:37)(cid:85)(cid:76)(cid:87)(cid:68)(cid:76)(cid:81)(cid:3)(cid:86)(cid:82)(cid:79)(cid:71)(cid:3)(cid:23)(cid:17)(cid:22)(cid:124)(cid:69)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:79)(cid:76)(cid:87)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:15)(cid:3)(cid:74)(cid:76)(cid:89)(cid:76)(cid:81)(cid:74)(cid:3)
it a market share of approximately 15% of the
addressable market. In addition to fuels, the
business has a significant market presence
in lubricants manufacturing, marketing and
distribution for a number of leading brands
and in AdBlue.
Ireland
Emo is one of the leading oil distributors in
Ireland, with a market share of 14%. DCC’s
addressable oil market in Ireland is estimated
to be 6.4 billion litres. Following the acquisition
of Campus in the prior year, Emo further grew
its business in Ireland by acquiring Jones Oil,
increasing its commercial and domestic
customer base. With the successful roll-out
of 22 Certa-branded forecourts in partnership
with Tesco in 2020, Emo has become the
leading unmanned forecourt operator in Ireland
with 41 unmanned sites all re-branded to Certa.
France
The Esso Retail France business comprises
an extensive network of 276 Esso-branded,
unmanned retail petrol stations (64 of which
include car washes), 43 Esso motorway
stations and a further 126 Esso-branded
dealer-owned stations. The business sold
approximately 1.6 billion litres of fuel to
consumers across France in the year. During
the year, the business established a partnership
with ENGIE to roll out electrical chargers on
16 strategically located motorway sites in
France, continuing our commitment to invest in
lower emission energy. The business operates
from its office in Paris, with pricing, supply and
back office support provided by the retail hub
based in Drogheda, north of Dublin, Ireland.
Esso Retail France’s market share in terms of
volumes is approximately 4% in a market where
hypermarkets have 60% market share;
however, it is the market leader in France in
terms of unmanned petrol stations.
Luxembourg
During the year, DCC acquired a network of
(cid:20)(cid:28)(cid:124)(cid:83)(cid:72)(cid:87)(cid:85)(cid:82)(cid:79)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:47)(cid:88)(cid:91)(cid:72)(cid:80)(cid:69)(cid:82)(cid:88)(cid:85)(cid:74)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)
consists of 11 company-owned, company-
operated (‘COCO’) sites, three company-
owned, dealer-operated (‘CODO’) sites and
five dealer-owned, dealer-operated (‘DODO’)
sites, primarily operating under the Gulf brand.
The COCO shops all operate Shoppi branded
convenience stores. Shoppi is part of the
Cactus Group, the largest grocery retailer in
Europe. The sites are mainly in urban locations
with a number being identified as suitable for an
EV charging offering, leveraging our experience
in Norway and France.
The business operates from its office in
Marnach, Luxembourg, with pricing, supply and
back office support provided by the retail hub
based in Drogheda, north of Dublin, Ireland.
Denmark
DCC Energi Denmark has a market share of
16%, making it the number two liquid fuels
distributor. DCC Energi Denmark, in partnership
with Shell, is also the second largest operator in
the Danish aviation market, operating in seven
of the eight largest Danish airports. The retail
operation is the fifth largest player in the Danish
retail petrol station market with a market
share of approximately 11%. The business is
deploying capital into a significant roll-out of
electric vehicle chargers in partnership with
Shell, and can offer e-mobility solutions from
home, office, forecourt and public spaces.
64
DCC plc Annual Report and Accounts 2022
Sweden
DCC’s Swedish oil distribution business, QStar
Energi (formerly Swea), is the market leader
in Sweden with a share of approximately 18%
of the addressable market. QStar Energi is a
leading distributor of HVO with approximately
26% market share in Sweden. The QStar
network is the fifth largest petrol retailer in
Sweden and holds approximately 12% of the
total share of sites in the market. The four
largest players (Circle K, Preem, St1 and OKQ8)
hold a combined market share of approximately
74% in terms of site numbers.
Norway
Activities in Norway include a well located Esso
branded retail network and an Esso branded bulk
distribution business. The Esso retail network in
(cid:49)(cid:82)(cid:85)(cid:90)(cid:68)(cid:92)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:76)(cid:86)(cid:72)(cid:86)(cid:3)(cid:20)(cid:20)(cid:28)(cid:124)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:16)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)
stations with convenience stores operated in
partnership with Norgesgruppen, the largest
grocery retailer and wholesaler in Norway, a
growing unmanned network of 51 stations and
78 Esso-branded dealer-owned stations. DCC
Retail & Oil has a market share of approximately
18%, based on retail volume. In addition, the
business has been successfully deploying
electric vehicle charging stations, with 80
chargers currently operating across 19 sites
with a strong pipeline of additional locations.
The business operates from its office in
Sandvika in Norway, with pricing, supply and
back office support provided by the retail hub
based in Drogheda, north of Dublin, Ireland.
Austria and Germany
The Austrian and German activities managed
by Energi Direct and are in bulk distribution
and retail, with its own company-owned and
operated portfolio with a strong convenience
offer on a modest number of sites under the
Spritkonig brand. Energie Direct is number two
in this market, with a share of 16% of the
addressable market. Energie Direct also
includes Bronberger & Kessler, a distribution
business in Bavaria, Germany.
Retail & Oil volumes by geography
9%
47%
44%
Continental Europe
Britain
Ireland
Strategic Report
Governance
Financial Statements
Supplementary Info
Case study
DCC Retail & Oil
partners with Shell
to offer e-mobility
solutions in
Denmark
In January 2022 DCC Retail & Oil
Denmark entered a partnership with Shell
for a solution for e-Mobility under the
Shell Recharge brand. It is the first time
Shell have licensed the Shell Recharge
brand for a solution including both public,
workplace and home charging as well
as a roaming solution. Since 2016 DCC
has been the licensee for the network
of 242 Shell branded petrol stations in
Denmark. DCC’s ability to foster strong
relationships with third party brands and
our proximity to our customers was a key
reason Shell chose DCC as the partner for
e-Mobility in Denmark.
Strategy and Development
From 1 April 2022, DCC Retail & Oil will form
part of DCC Energy. DCC Energy’s strategy
is outlined in the Energy Strategy section
on page 22.
DCC Retail & Oil’s strategy during the year
was to be a leader in the supply of low-
emission liquid fuels and energy and related
products and services to consumers and
businesses, and to be market leading in
providing sustainable energy solutions
to consumers.
The division aimed to achieve this by:
• Building impactful connections – as a
distributor we are at the heart of the supply
chain connecting the producers of products
with consumers. We are a trusted provider
building long-term and deeply embedded
partnerships with our customers and
our suppliers;
• Creating sustainable growth and superior
value over the long-term;
• Applying a consistent strategic objective
to build a growing, sustainable and cash-
generative business which consistently
provides returns on capital employed
significantly ahead of our cost of capital.
The strategy is to grow in existing markets
and expand into new geographies in Western
Europe and lead our customers through the
energy transition. This growth will be
achieved via:
• Continuing to consolidate existing markets,
driving greater customer density and
logistics efficiencies;
•
• Leveraging relationships with suppliers and
other asset owners to expand geographic
reach initially in Europe;
Investing in a portfolio of energy, including
differentiated and lower emission liquid fuels
and EV charging, and related products and
services, such as lubricants, fuel cards and
road-side services.
Our actions are clear and purposeful in the
energy transition:
• Continuous customer focus: we leverage
our long-term customer relationships and
understanding of discrete energy markets
to target our energy offerings;
• Multi-energy solutions: we deliver real,
practicable decarbonising solutions.
We help educate customers on their
transition pathways;
• Key partnerships: as a distributor, we are
the orchestrator of the customer solution
working with a range of partners with
distinct capabilities;
• Market agility: there is no one-size fits all
transition. Our devolved operations ensure
tailored solutions for local markets;
• Significant opportunity: new, high growth
energies as the world transitions to
net zero; and
• Remaining disciplined: Retail & Oil has an
experienced management team focused
on achievable decarbonisation.
Further information on the Group’s energy
strategy is included on pages 22 to 27 and our
website www.dcc.ie includes a recording of our
Capital Markets Event on 17 May 2022 which
provided an update on our energy strategy.
DCC plc Annual Report and Accounts 2022
65
Strategic Report
Operating Review continued
Retail & Oil total volumes by business type
8%
55%
37%
Oil
Retail
Fuel Card
Retail & Oil total volumes by customer segment
8%
2%
5%
5%
7%
38%
35%
Commercial & industrial
Retail
Fuel card
Domestic
Agricultural
Marine
Other
Customers
DCC Retail & Oil has a very broad customer
base selling directly to millions of customers
across the geographies in which the
businesses operate. Customers are primarily
spread over the commercial, retail, industrial,
domestic, agricultural and marine markets.
DCC Retail & Oil has no material customer
dependencies.
Suppliers
As with its customer base, DCC Retail & Oil’s
supplier portfolio is broadly based. The top
five suppliers represent approximately 54%
of total volumes supplied, with no one
individual supplier accounting for more than
21% of volumes supplied in the current year.
The major suppliers to the division are BP
Crossbridge, Equinor, Essar, Esso, Ineos,
Greenergy, Mabanaft, Neste, OMV, Philips66,
Prax, Preem, Puma Energy, Shell, St1, Total
and Valero Energy. We have built long-term
strategic partnerships over many years with
our suppliers and we have continued to
strengthen these relationships during
the year.
Segmental reporting
From 1 April 2022, the Group will organise
and report all of its energy activities
(previously DCC LPG and DCC Retail & Oil)
as one reportable segment, DCC Energy.
Further information on DCC Energy and
its strategy set out in the Energy Strategy
section on page 22.
How we create
value for our
stakeholders
• Strong health and safety ethos,
delivering potentially hazardous
products safely and reliably.
• Passionate, experienced and
committed team of people.
• We are customer focused.
• We believe in providing a
high quality of service at
competitive prices.
• With our market position, our
scale and experience provides
security of supply and ability to
tailor contracts
to customers’ requirements.
• Focusing on environmental
sustainability by working with
customers, suppliers and other
partners to reduce emissions.
• Driving returns on capital
employed.
• We believe great performance
comes from preparation,
focus on the detail, relentless
determination, a sense of urgency
and a genuine hunger for success.
The strategy is to grow in
existing markets and expand
into new geographies in
Western Europe and lead
our customers through the
energy transition.”
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Governance
Financial Statements
Supplementary Info
Case study
Certas Energy France
and ENGIE Solutions
accelerate electric
charging on the
French motorway
network
Certas Energy France and ENGIE Solutions
have established an investment partnership
to jointly build and operate a network of
electric vehicle superchargers at Certas
motorway service stations (operated under
the Esso brand) in France. The company,
controlled by Certas France, will make an
initial investment of around €10 million for a
first phase of deployment of the network of
electric vehicle charging stations. Benefiting
from both Certas Energy France and ENGIE
Solutions’ expertise in the deployment
and operation of decentralised energy
infrastructure, the company will deploy up to
(cid:26)(cid:20)(cid:124)(cid:86)(cid:88)(cid:83)(cid:72)(cid:85)(cid:16)(cid:70)(cid:75)(cid:68)(cid:85)(cid:74)(cid:72)(cid:85)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:20)(cid:25)(cid:3)(cid:80)(cid:82)(cid:87)(cid:82)(cid:85)(cid:90)(cid:68)(cid:92)(cid:3)(cid:86)(cid:72)(cid:85)(cid:89)(cid:76)(cid:70)(cid:72)(cid:3)
stations operated by Certas across all three
major motorway networks in France. For
Certas Energy France, this is the most
important initiative to date, to provide
greener mobility solutions to its customers
and builds on the roll-out of lower emissions
fuels including E85 that is now available on
(cid:24)(cid:28)(cid:124)(cid:82)(cid:73)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:16)(cid:82)(cid:90)(cid:81)(cid:72)(cid:71)(cid:3)(cid:86)(cid:76)(cid:87)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:41)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:17)
Key Brands
Retail Brands
Esso, Gulf, Shell, QStar*, Great Gas*, Emo*, Certa*, Spritkonig.
Fuel Card Brands
Certas*, BP, Diesel Direct, Esso, Fastfuels, UK Fuels, Allstar, Gulf, Shell, QStar*, TruXtop*.
Bulk/B2B Brands
Brogan*, Bronberger & Kessler*, Butler Fuels*, Carlton Fuels*, Certas*, DCC Energi*, Emo Oil*, Campus*, Energie Direct*, Gulf, Jones*, QStar*,
Scottish Fuels*, Shell, Swea*, Texaco, Top Oil* (in Austria).
* DCC-owned brands.
DCC plc Annual Report and Accounts 2022
67
Strategic Report
Strategic Report
Operating Review
DCC HEALTHCARE
LEADING
Increased capacity, increased
capability, and ready for the
next phase
What we do
DCC Healthcare is a leading healthcare business,
partnering with consumer brands to create and
manufacture high quality health and beauty products,
and supplying primary and secondary care providers
with essential products and services to care for patients.
(cid:423) Read more about DCC Healthcare at dcc.ie
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Strategic Report
Governance
Financial Statements
Supplementary Info
Performance for the Year
Ended 31 March 2022
DCC Healthcare delivered an excellent
performance, generating operating profit
growth of 22.9% (25.5% on a constant
currency basis), approximately two-thirds of
which was organic. The very strong organic
performance was driven by DCC Vital, which
generated excellent organic profit growth
across Britain, Ireland and the DACH region.
DCC Health & Beauty Solutions performed well
against a challenging operational backdrop.
The strong result also benefited from the
first-time contribution of Wörner, acquired in
April 2021, which traded ahead of expectations.
DCC Vital, which is focused on the sales and
marketing of medical products to healthcare
providers, generated excellent revenue and
operating profit growth. Although the
pandemic continued to impact on the level of
routine hospital procedures and in-person
GP consultations, DCC Vital continued to
service the healthcare systems with the supply
of pandemic-related products across all its
markets. PPE sales were particularly strong
in Scotland and Ireland and the business also
benefited from the distribution of antigen
tests to the nursing home sector in Germany.
DCC Vital is very well positioned to benefit
when activity levels normalise across the
healthcare systems.
DCC Health & Beauty Solutions, which provides
outsourced solutions to international nutrition
and beauty brand owners performed well in
an environment of supply chain and labour
availability challenges. Following excellent
growth in the prior year, the US businesses were
impacted by supply chain and labour availability
challenges as the economy re-opened; and
by a small number of customers adjusting
their demand to reflect market growth rates
normalising back towards longer-term growth
trends. The European businesses generated
very good profit growth, driven by strong
growth with nutrition brands in Germany,
Scandinavia and Iberia and in premium
skincare products for leading international
and digital brands.
It was also another year of strategic progress.
Reflecting its strong organic and acquisitive
growth expectations, DCC Healthcare
strengthened its management resources
including establishing a new DCC Health &
Beauty Solutions divisional team in the US.
DCC Health & Beauty Solutions expanded its
capacity and capability across its manufacturing
facilities, including adding manufacturing
capability in nutritional gummies in Britain and
commencing a capital investment project at its
Florida facility which will add this capability in
the US market in 2023. Gummies is the fastest
growing product format in the nutritional
market. The acquisition of Wörner by DCC Vital,
established a new growth platform in Primary
Care in Europe. DCC Vital is pursuing an active
pipeline of opportunities to further expand its
footprint in the Primary Care sector and has
already completed or committed to acquire
two bolt-on acquisitions in Germany.
Revenue
+16.8%
Adjusted operating profit
+22.9%
Operating margin
Strategic objective:
Drive for enhanced operational performance
Strategic objective:
Drive for enhanced operational performance
Strategic objective:
Grow operating margin
£765.2m
£100.4m
13.1%
2022
2021
2020
£765.2m
£655.4m
£578.1m
2022
2021
2020
£100.4m
£81.7m
£60.5m
2022
2021
2020
13.1%
12.5%
10.5%
Return on capital employed (excl. IFRS 16)
Operating cash flow
10-year adjusted operating profit CAGR
Strategic objective:
Deliver superior shareholder returns
20.5%
2022
2021
2020
Strategic objective:
Generate cash flows to fund organic
and acquisition growth and dividends
£106.8m
Strategic objective:
Deliver superior shareholder returns
18.5%
20.5%
18.7%
2022
2021
2020
14.7%
£106.8m
£110.2m
2022
2021
2020
£77.6m
18.5%
16.7%
14.3%
DCC plc Annual Report and Accounts 2022
69
Strategic Report
Operating Review continued
DCC Vital provides its customer base of
c.9,000 British GP surgeries with excellent
service which is increasingly focused on digital
capabilities. In recent years, DCC Vital has
strengthened its leading position in Britain
through complementary bolt-on acquisitions.
In April 2021, DCC Vital established a European
growth platform with the acquisition of Wörner,
a leading supplier of medical and laboratory
products to the primary care sector in
Germany, Europe’s largest healthcare market,
and Switzerland. Wörner sells a broad product
range to approximately 20,000 customers
annually, including GPs, primary care centres,
specialist medical centres and laboratories.
Wörner provides an excellent platform for
growth across the DACH region and since
joining DCC Vital Wörner has already
completed two bolt-on acquisitions.
DCC Vital is focused on expanding its portfolio
and its range of own brand medical products,
through investing in new product development
and complementary acquisitions. DCC
Vital’s endoscopy/operating theatre product
range includes Espiner (tissue retrieval bags
for minimally invasive surgery), Skintact
(electrodes and electro surgical equipment),
VacSax (disposable suction devices used
in operating theatres and hospital wards),
Fannin IV sets and a range of equipment used
to support anaesthetics. These products are
marketed by DCC Vital’s sales teams in Britain
and a range of international distributors in
other geographies. DCC Vital also continually
expands its portfolio of third-party agency
products.
Competitors in this market include global
healthcare companies as well as the large
number of smaller medical, surgical and pharma
brand owners and distributors.
DCC Health & Beauty Solutions
Our services for health and beauty
brand owners
DCC Health & Beauty Solutions provides
outsourced product development,
manufacturing, packing and related services
to Health and Beauty brand owners, specialist
retailers and direct sales organisations in
Europe and the US, principally in the areas
of nutrition (health supplements) and beauty
products. It operates eight high-quality
contract manufacturing facilities. Our
manufacturing capability encompasses soft
gels, tablets, capsules, effervescents, gummies,
creams, liquids, powders and sprays across
a range of packaging formats.
The business operates high quality, well-
invested facilities – five Good Manufacturing
Practice (‘GMP’) certified facilities in Britain,
four of which are licensed by the Medicines
and Healthcare Products Regulatory Agency
(‘MHRA’) and three facilities in the US which
comply with FDA current Good Manufacturing
Practices (‘cGMP’) standards and are also
certified by leading third-party regulatory bodies
including NSF and USDA Organic.
The business has strong market shares in
Britain, Scandinavia and Benelux, and is building
market share in the US and Continental Europe.
The development of our presence in the
US nutritional contract manufacturing market
has been a key strategic focus in recent years.
The US is the world’s largest nutritional
supplements market, is experiencing strong
growth and the contract manufacturing base
is highly fragmented; these features provide
significant opportunities to a growth orientated,
acquisitive business like DCC Health & Beauty
Solutions for organic growth (supported by
capital investment) and further acquisitions.
Markets and Market Position
DCC Vital
Offering sales, marketing and distribution
to healthcare providers
DCC Vital is a leader in the sales, marketing and
distribution of medical products in the British, Irish,
German and Swiss markets. DCC Vital markets
and sells a broad range of high quality own and
third-party products and has comprehensive
market coverage in Ireland and the UK across
hospitals, community and primary care, and other
fragmented healthcare settings; and, through the
Wörner Group, is a leader in the supply of products
into the primary care sector in Germany and
Switzerland. DCC Vital’s own-brand medical device
portfolio encompasses products across the areas
of laparoscopic surgery, theatre consumables,
cardiac monitoring, wound care and urology. In
addition, DCC Vital has long-standing agency
distribution relationships with a range of leading
international medical device companies.
The primary and secondary care markets in which
DCC Vital operates are large, growing and typically
government funded. The Covid-19 pandemic and
the significant re-purposing of already constrained
healthcare systems to urgently respond to
Covid-19 resulted in the curtailment of normal
healthcare activity including medical consultations
and elective surgery. As countries recover, capacity
of health systems are experiencing pressure from
a backlog of procedures and pent-up demand for
treatment. Additionally, public healthcare policy has
been moving towards shifting the point of care to
the most cost-effective location, usually away from
expensive hospital settings to primary and
community care settings. The adoption of digital
technology across DCC Vital’s customer and
supplier base has accelerated over the past year.
DCC Vital is very well placed to benefit from these
trends given its scale, its investments in technology
and people, the strength of its relationships with
international suppliers and manufacturers and its
deep understanding of the supply chain.
DCC Vital is the market leader in the supply of
medical consumables, equipment and services
to GPs in Britain and has a growing presence
in other fragmented healthcare settings.
DCC Vital gross profit by brand
DCC Vital gross profit by channel
DCC Health & Beauty Solutions
revenue by geography
37%
25%
40%
41%
63%
59%
Third-party
Own brand
35%
Hospitals
Primary care
Retail/wholesale/other
Britain
US
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Strategic Report
Governance
Financial Statements
Supplementary Info
Public healthcare policy
has been moving
towards shifting the
point of care to the
most cost-effective
location, usually away
from expensive hospital
settings to primary
and community care
settings.”
DCC Health & Beauty Solutions has three
facilities in the US:
• Amerilab Technologies, Inc. (‘Amerilab’),
based in Minnesota, a specialist
manufacturer of effervescent nutritional
products, a higher growth product category,
with attractive demographic characteristics
and environmental credentials;
Ion Labs, Inc. (‘Ion’) based in Florida, which
has a broad product format capability
encompassing tablets, capsules, gummies,
powders and liquids; and
•
• Elite One Source Nutritional Services, Inc.
(‘Elite’), based in Montana, a specialist
manufacturer of complex formulations in
capsule and tablet formats.
With three well-invested facilities in the US and
additional management capability to support
our growth, DCC Health & Beauty Solutions
is leveraging its broad and complementary
nutritional products strengths to pursue
cross-selling and other synergy opportunities.
DCC continually invests in its manufacturing
facilities to expand capacity, add flexibility and
enhance its service offering to customers.
Gummy nutritional products represent a high
growth category within the nutritional market
and DCC Health & Beauty Solutions is investing
to expand its gummy manufacturing and
production capability in the US and Britain. These
investments will enable the business to meet
growing demand for gummies and support our
customers to develop more innovative and
complex products. DCC Health & Beauty
Solutions also made multiple investments to
support organic growth during the year, including
increased tableting and coating capacity to
support higher customer demand in both the
US and Europe. The business has a strong
programme of continuous capital investment
to enhance capability and improve operational
efficiencies across all our facilities.
Competitors in the nutritional products sector
include International Wellness Group, Aenova
and many smaller manufacturers in Europe and
the US. Competitors in the beauty products
sector include Meiyume, KDC/One and
numerous smaller manufacturers of cosmetic
creams and liquids in Britain.
DCC Healthcare revenue by business
DCC Healthcare revenue by geography
47%
53%
10%
16%
19%
55%
DCC Vital
DCC Health & Beauty Solutions
Britain
US
Ireland
Germany and Switzerland
DCC plc Annual Report and Accounts 2022
71
Strategic Report
Operating Review continued
Case study
Scaling for the
future
A culture of efficiency and effectiveness is
embedded across DCC. We continuously
challenge ourselves to create sustainable
practices, to simplify and automate more
of our systems and to optimise business
performance. Over the past number
of years, Williams Medical Supplies has
grown its UK GP supplies business
through a combination of organic and
acquisitive growth.
To support this growth and improve
efficiencies, we invested in an innovative
and expansive warehouse reconfiguration
programme. This 18-month project,
which commenced in late 2019, focused
on increasing productivity, agility and
doubling the facility’s original capacity.
The delivery of the project was
significantly tested with the arrival of the
Covid-19 pandemic, which put additional
strain on the project management and
operations. In addition, the business had
to satisfy increased volumes of essential
Personal Protection Equipment (PPE) to
support key healthcare workers while
maintaining operational performance.
The project had three core objectives:
• Sustainability – Reducing the
carbon footprint through introducing
paperless picks, optimising box size
(reduce empty space), eliminating
the use of polystyrene insulation and
move to sheep’s wool for cold chain,
and integrating packaging
automation to reduce the use of
corrugate. These changes reduced
paper, packaging, provided improved
utilisation of transport and provided
customers with a fully recyclable
solution. Current performance
would indicate that Williams is on
track to reduce its packaging by
c.60% on a like-for-like basis.
• Automation – Implementing
digital technology to improve the
•
customer service offering and
improve warehouse efficiency.
The introduction of vertical storage
units, packaging automation and a
fully integrated three tier conveyor
delivered a paperless operating
solution, enabling more efficient
use of resources.
Scalability – The improved
processes, better utilisation
of footprint and increased speed
of operation enabled Williams to
increase its potential capacity
through its existing warehouse
by a factor of three, including
an additional 25,000 sq. ft. for
product storage and 12,000 new
product locations.
Strategy and Development
DCC Healthcare’s vision is to build a substantial
global healthcare business focused on the
provision of contract manufacturing and related
services to the health and beauty sector and on
the sales, marketing and distribution of medical
products. The division is focused on driving
continued strong profit growth combined with
returns on capital in excess of the DCC Group’s
cost of capital.
DCC Vital
DCC Vital has a strong track record of
growth, operating margin improvement and
increasing returns on capital employed. This
has been achieved through improving the
sales mix (increasing the proportion of higher
value-added products and company owned
brands), exiting lower margin activities,
consolidating support function activities and
relentlessly driving efficiency in its operations.
Targeted acquisition activity by DCC Vital
coupled with strong valuation discipline and
integration execution has resulted in:
• An unrivalled position in the supply of
healthcare products in Ireland;
72
DCC plc Annual Report and Accounts 2022
• A leading position in the supply of medical
consumables, equipment and services to
GPs and other primary care providers in
Britain, Germany and Switzerland; and
• A growing portfolio of own-brand surgical
products for the acute care sector in the
British and international markets.
DCC Vital aims to continue this track record
of sales growth through:
• Expanding our own-brand medical products
range organically (through new product
development) and by acquisition;
• Growing our portfolio of third party
agency products;
• Continuing to grow our international
presence and infrastructure, including
through acquisitions;
• Continuing to invest in technology; and
• Developing our talent and empowering
our team to drive growth in DCC Vital.
DCC Health & Beauty Solutions
DCC Health & Beauty Solutions partners with
brands to develop opportunities for greater
health and wellbeing, and has an excellent track
record of growth. The scale of the business
has increased significantly in recent years with
operating profits growing strongly through
a combination of highly complementary
acquisitions, new product development
for existing customers, new customer
acquisitions and a focus on higher value,
more complex products.
DCC Health & Beauty Solutions aims to
continue this growth through:
• Continuing to offer industry-leading service
levels which builds long-term partnerships
with customers;
• Further expanding the geographic footprint
of our operations in the US, Europe and
selectively targeting other regions;
• Driving continued organic sales growth with
existing and new customers through our
innovative product development capability,
well invested facilities and highly responsive,
flexible customer service;
Investing in our facilities to expand both
our capability and capacity as demand for
our services increases; and
•
• Enhancing and expanding the service
offering, organically and by acquisition, with
a particular focus on nutritional gummies
and soft gels (in the US), and on beauty
products, particularly skincare.
Strategic Report
Governance
Financial Statements
Supplementary Info
Suppliers
DCC Vital represents leading medical,
surgical and diagnostics device brands such
as Smith & Nephew, Nova Biosciences and
Smiths medical and works with innovative
and generic pharma companies such as CSL
Behring, Martindale Pharma and Rosemont.
DCC Health & Beauty Solutions sources from
high-quality raw materials and ingredients
suppliers across the globe in order to provide
customers with high-quality, innovative and
cost-effective solutions, with an increasing
focus on sourcing sustainably and ethically
sourced raw materials.
DCC Healthcare’s supplier portfolio is
broadly based, with the top 10 suppliers
representing approximately 16% of cost of
sales in the year ended 31 March 2022.
Customers
DCC Vital services in excess of 30,000
customers across all channels to market.
These channels include public and private
hospitals, procurement groups, community
healthcare providers, GPs, retail pharmacies,
emergency services including ambulance,
police and fire services and occupational
healthcare settings) in Britain, Ireland,
Germany and Switzerland, as well as over
50 international distributors. DCC Vital has
significantly enhanced its market coverage
in recent years to offer unmatched primary
and secondary care access in Britain and
Ireland. Following the Wörner acquisition,
our primary care reach now extends to
Germany and Switzerland.
DCC Health & Beauty Solutions principally
focuses on providing services to a broad
customer base of UK, Continental European,
US and international brand owners, direct
sales companies and specialist retailers in the
areas of nutrition and beauty products. DCC
Health & Beauty Solutions works with leading
brand owners (such as Elemis, Estée Lauder,
Eve Lom, Nature’s Way, Nestlé Health
Science, Omega Pharma, Quincy Bioscience,
P&G, Unilever, and Vitabiotics), direct selling
and e-commerce companies (such as GOLO,
Healthspan, Nature’s Best and Whole Body
Research), specialist retailers (such as
Apoteket, Holland & Barrett and Walgreen
Boots Alliance) and consumer healthcare/
pharma companies (such as Alliance Pharma,
Dermal Laboratories and GSK).
DCC Healthcare has a broad customer base
and our 10 largest customers account for
approximately 29% of revenue in the year
ended 31 March 2022.
How we create
value for our
stakeholders
• Full range of contract
•
manufacturing and related
services (including product
development, formulation,
regulatory support and packing)
for international health and beauty
brand owners from high-quality,
well invested facilities.
Innovative and responsive
product development capability
that generates great ideas and
turns them into high quality
products which can improve
health and wellbeing.
Industry leading, flexible and
responsive customer service.
• Specialist, highly trained sales
•
teams providing coverage across
multiple healthcare channels,
including hospitals, community
care, primary care and other
fragmented healthcare settings
in Britain, Ireland, Germany
and Switzerland.
• Broad range of high quality own
and third-party medical products.
• Efficient operations with scalable
IT platforms.
• Career development
opportunities and training to
enable our people to progress
across business functions
and geographies.
Key Brands
DCC Vital
BioRad, Carefusion, CSL Behring, Comfi*, Diagnostica Stago, Espiner Medical*, Fannin*, ICU Medical, LIP Diagnostics*, Martindale Pharma,
Medisource*, Mölnlycke, Nova, Rosemont, Siemens, Skintact*, Smiths Medical, Smith & Nephew, Williams Medical*, VacSax*.
DCC Health & Beauty Solutions**
Alliance Pharma, Apoteket, Elemis, Estée Lauder, Golden Hippo, GOLO, Glanbia, Groupe Rocher, GSK, Healthspan, Holland & Barrett, Iovate
Health Sciences, Lintbells, Nature’s Way (Schwabe Group), Nestlé Health Science, Omega Pharma, P&G Health (Seven Seas, Nature’s Best,
Lamberts), Quincy Bioscience, Unilever, Space NK, Target, Vitabiotics.
* DCC-owned brands.
** brands we serve.
DCC plc Annual Report and Accounts 2022
73
Operating Review
DCC TECHNOLOGY
CONNECTING
A leading specialised
distribution partner for
global technology brands
and customers
What we do
DCC Technology is a leading specialist distribution partner for
global technology and appliance brands and customers, providing
reach, simplicity and scale which enables our partners’ businesses
to grow and progress. DCC Technology provides a broad range
of consumer, business and enterprise technology products and
services to retailers, resellers and integrators and domestic
appliances and lifestyle products to retailers and consumers.
Read more about DCC Technology at dcc.ie
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DCC plc Annual Report and Accounts 2022
Strategic Report Strategic Report
Governance
Financial Statements
Supplementary Info
Performance for the Year
Ended 31 March 2022
DCC Technology delivered very strong operating
profit growth of 12.8% (19.9% on a constant
currency basis), driven by the contributions
from acquisitions completed during the year.
The very strong performance was achieved
despite a challenging supply chain environment.
In December 2021, DCC Technology completed
the acquisition of Almo. Combined with DCC
Technology’s existing business, the acquisition
has created the leading specialist Pro AV
value-added distributor in North America. It has
also expanded the business into the attractive
appliance and lifestyle product categories. Since
acquisition Almo has integrated well into the
Group and has traded in line with expectations.
The North American business performed
strongly throughout the year. The business
delivered very strong organic revenue and
operating profit growth and also benefited from
the first-time contribution of Almo. Sales of Pro
AV products recovered significantly as Covid-19
restrictions eased and spending on large event,
conference and other at-work locations
resumed. Demand for Pro Audio and music
products and entertainment-at-home products,
including consumer electronics, remained
robust, with supply constraints in certain product
categories. The two complementary bolt-on
acquisitions (The Music People and JB&A)
completed in the prior year both performed
well and have strengthened DCC Technology’s
developing market presence and product
portfolio in North America.
In the UK, the business experienced a significant
level of supply constraints and reduced demand
for consumer products as the pandemic eased.
As previously reported, and although now
operating effectively, the business was also
impacted during the year by the implementation
of a new warehouse management system.
These factors contributed to a decline in both
revenue and operating profit in the year. The
business in Ireland performed very well, with
good organic revenue and operating profit
growth driven by demand for consumer and
mobile products and a recovery in demand in the
B2B sectors. The business successfully relocated
to a new facility during the year which will enable
continued growth in the medium term.
In Continental Europe, the business generated
good organic revenue and operating profit
growth. The business benefited from the
recovery in demand for B2B products,
particularly in the DACH region and Italy.
As anticipated, demand for consumer and
working-from-home products began to
normalise as the year progressed, while the
business also experienced some restrictions
in supply, particularly for certain consumer
products. In Scandinavia, the business achieved
strong revenue and profit growth, particularly in
the e-tail and retail channels. In France, the B2B
business performed well, driven by good growth
in its range of own-brand accessories. In April
2021, the business completed the acquisition
of Azenn which has performed strongly since
acquisition and has further broadened the B2B
product and customer base in France.
Revenue
+3.6%
Adjusted operating profit
+12.8%
Operating margin
Strategic objective:
Drive for enhanced operational performance
Strategic objective:
Drive for enhanced operational performance
Strategic objective:
Grow operating margin
£4.6bn
2022
2021
2020
£81.7m
1.8%
£4.6bn
£4.5bn
£3.9bn
2022
2021
2020
£81.7m
£72.4m
£65.3m
2022
2021
2020
1.8%
1.6%
1.7%
Return on capital employed (excl. IFRS 16)
Operating cash flow
10-year adjusted operating profit CAGR
Strategic objective:
Deliver superior shareholder returns
Strategic objective:
Generate cash flows to fund organic
and acquisition growth and dividends
Strategic objective:
Deliver superior shareholder returns
9.1%*
2022
2021
2020
£3.2m
2022
£3.2m
9.1%
12.3%
11.0%
2021
2020
£118.6m
£166.9m
7.0%
2022
2021
2020
7.0%
7.2%
7.2%
* The return on capital employed (ROCE) of 9.1% reflects
the acquisition of Almo occurring later in the financial year.
On a pro-forma basis ROCE was 10.7%.
DCC plc Annual Report and Accounts 2022
75
Strategic Report
Operating Review continued
Markets and Market Position
DCC Technology partners with many of the
world’s leading technology brands to market
and sell a range of consumer, business and
enterprise products and services to a broad
geographical customer base. Our strong
relationships with suppliers and customers
allow us to win business on both a national and
international basis. DCC Technology is the
leading distributor of appliances, Pro Audio
products and musical instruments in North
America, and the fourth largest distributor of
technology products in Europe with leading
positions in the UK and Ireland, France and the
Nordic region.
While the overall market remains quite
fragmented, in the last year there has been a
continued trend towards concentration in key
markets, with the larger players consolidating
and gaining share at the expense of smaller
competitors, DCC Technology has maintained
or grown its share in its key markets. Covid-19
resulted in a significant increase in demand for
consumer and working from home products
and demand continued to be strong through
the past year with some softening in the
second half of the year. DCC Technology was
successful in leveraging its strong supply chains
and market presence to grow volumes in these
segments but was not immune to the impact
of global supply constraints on certain products
and to some disruption of supply chains. There
was a rebound of demand in B2B segments
which had suffered in the first year of the
pandemic with North America somewhat
ahead of Europe in this regard. By the end of
the year, there were indications of a resumption
in activity relating to live events as restrictions
were relaxed across the world. DCC
Technology’s strategy of retaining expertise
and infrastructure yielded benefits as the
bounce back in demand gathered pace.
The pandemic has also led to the acceleration
in the growth of e-tail at the expense of
traditional retail. DCC Technology has been
successful in growing its share of e-tail business
by making it easy for suppliers and customers
to trade, for example through managing the
relationship with key providers such as Amazon
and through the provision of innovative
drop-ship services for direct-to-consumer
deliveries. While traditional retail has recovered,
the long-term trend of e-tail growth is set to
continue with traditional retail becoming the
showroom for e-commerce activity.
DCC Technology’s principal addressable
markets are the retail, e-tailers and reseller
channels for consumer and business
technology products in Europe and North
America. The value of the technology
distribution market in these territories is
estimated to be £190 billion.
Acquisition of Almo
During the year, DCC Technology completed
the acquisition of Almo Corporation (‘Almo’),
which represented DCC’s largest acquisition
to date and a major step in the continuing
expansion of both DCC and DCC Technology
in North America. Almo is a leading specialist
sales, marketing and value-added distribution
business in the United States, selling to
integrators, resellers, dealers, retailers and
e-tailers nationwide. Almo is the leading
distributor of appliances in the United States
with long-standing established relationships
with market-leading brands such as LG,
Samsung, Frigidaire and Midea as well as a
range of premium appliances such as Zephyr,
Liebherr and Hestan. Almo has a nationwide
warehouse footprint providing timely delivery
to customers coast-to-coast. Almo is also one
of the largest Pro AV businesses in the United
States and is a leading national distributor of
consumer appliances, consumer electronics
and lifestyle products, The business is
headquartered in Philadelphia and employs
approximately 700 people across the United
States. The combination of Almo’s strong
presence in Pro AV with DCC Technology’s
similar share of this market creates the leading
added-value distributor in the Pro AV sector in
the United States. Almo also further develops
DCC Technology’s e-commerce offering in
the United States, partnering with all the key
e-tailers in providing appliances and lifestyle
products direct to consumers.
DCC Technology also acquired Azenn,
a French distributor of structured cabling and
network devices. Azenn provides logistics,
refurbishment and staging services for network
devices to some of the largest telecoms
operators in France and supplies installers and
contractors delivering infrastructure projects in
the public and private sector. Headquartered in
Montauban de Bretagne, Brittany, the business
employs approximately 200 people across five
locations in France, including a large distribution
centre in Lyon.
76
DCC plc Annual Report and Accounts 2022
The combination of
Almo’s strong presence
in Pro AV with DCC
Technology’s
similar share of this
market creates the
leading added-value
distributor in the
Pro AV sector in the
United States.”
DCC Technology revenue by product category
13%
19%
5%
6%
7%
9%
18%
9%
14%
Audio visual
Consumer electronics
Computing (tablet/PC/notebook)
Communications & mobile
Networking, security and components
Server & storage
Gaming hardware
Professional services
Other
Strategic Report
Governance
Financial Statements
Supplementary Info
Increasingly, technology
products are following the
trend towards working from
home, blurring the boundaries
between consumer and
business segments.”
DCC Technology is the market leading
distributor of Pro Audio products and musical
instruments in North America. This market has
performed very strongly through the pandemic
with professional audio and music increasingly
migrating to ‘at home’ environments. Demand is
expected to level off as the impact of Covid-19
subsides, but there remains a degree of pent-up
demand as a result of supply constraints over
the past year. Increased demand for products
associated with live events will compensate for
any softening in demand in the ‘at home’ sector.
Reflecting the global nature of the technology
supply chain, DCC Technology also provides
global supply chain services through its
dedicated supply chain operations. Services
include product sourcing and procurement,
supplier hubbing, consignment stock
programmes, supplier identification and
qualification, quality assurance and compliance,
supplier and customer fulfilment and pan-EU
fulfilment services for Amazon, and are designed
to minimise cost, capital and complexity for its
global partners.
DCC Technology provides consumer, business
and enterprise technology products and
services to retailers, e-tailers, resellers and
integrators.
Consumer technology products include
consumer electronics, televisions, wearable
technology, musical instruments, gaming
consoles software and accessories.
Business and enterprise technology products
include computing hardware, components
and accessories, large format displays, network
and security products and communications
products including smartphones. Increasingly,
technology products are following the trend towards
working from home, blurring the boundaries
between consumer and business segments.
DCC Technology provides technology brand
owners and manufacturers with an
exceptionally broad customer reach and
proactively markets their products through
product and customer focused sales teams.
The business provides a range of value-added
services to its customers and suppliers,
including end-user fulfilment, digital
distribution, product lifecycle solutions,
category management and merchandising.
DCC Technology also provides product
customisation and cross supplier bundling,
third-party logistics and website/web-shop
development and management. Key to the
provision of these services is access to, and
interpretation of, relevant data from across
the technology supply chain.
DCC Technology total revenue by geography
27%
22%
51%
UK and Ireland
North America
Continental Europe/Rest of World
DCC Technology revenue by specialisms
8%
3%
6%
9%
25%
15%
18%
16%
Consumer
B2B
Enterprise
Pro AV
Mobile
Pro Audio & Musical Instruments
Appliances & Lifestyle
Other
DCC plc Annual Report and Accounts 2022
77
Strategic Report
Operating Review continued
Strategy and Development
DCC Technology’s vision is to become the
leading specialist integrated technology
distribution and supply chain services business,
delivering an industry-leading service offering,
whilst realising consistent long-term growth
in both profit and return on capital employed.
DCC Technology has already become the
leading specialist distributor of Pro AV in North
America with a strong presence in the major
European markets. The acquisition of Almo
also makes the business the leading distributor
of premium appliances in North America and
provides an entry into a wider portfolio of
lifestyle products, many of which are own brand
and attract higher margins. We are also the
leading distributor of Pro Audio and musical
instruments in North America with a strong
portfolio of vendor relationships, many with
channel exclusivity, supplemented by a growing
range of own brand products.
Our strategic objectives are focused on:
• creating an integrated, multi-country
operating model, with best-in-class
infrastructure;
• expanding our channel and geographic
presence in specialist areas developing
ever deeper specialisms and own brand
offerings; and
• establishing the business as the industry
leader in providing end-to-end market
development and channel optimisation
services.
DCC Technology will grow organically by
attracting new suppliers, opening new channels
and routes to market for our suppliers’ products
and by continuing to develop value-added
services. The business will also grow through
acquisition, particularly through leveraging
our infrastructure and geographic footprint
to bolt-on similar businesses and realising
operational synergies. DCC Technology will
also seek to develop a global organisation
focused on a range of specific product
sectors with services tailored to the needs
of the SME and consumer markets. DCC
Technology’s supply chain operations are
focused on ensuring that it delivers solutions
that minimise cost, capital and complexity
for its global clients.
The business continues to scale its platforms
and develop its IT infrastructure around the
world as part of a long-term strategy to upgrade
and consolidate our ERP and ICT infrastructure,
and to realise the efficiencies and operational
benefits of newer technologies. DCC
Technology also continues to add new robotic
process automation and run data integration
projects, the benefits of which have started to
be realised, with further development planned.
Covid-19 accelerated the digital
transformation in the regions in which we
operate, with the business providing the
necessary infrastructure and solutions to
our suppliers to keep ahead of the changes in
the operating environment. DCC Technology
has continued to invest in digital, cloud,
and e-commerce solutions to support
our suppliers and customers, and help
our partners benefit from this strong
e-commerce growth.
How we create
value for our
stakeholders
• Proactive sales and marketing
approach reaching a very broad
customer base across Europe,
North America and beyond.
• Excellent vendor portfolio
providing market access and
extended reach for suppliers
into key global markets.
• Range of specialisms where DCC
Technology’s detailed knowledge
and market leading position
generates additional
opportunities for vendors and
enhanced service for customers,
including some on a vendor
exclusive basis or through our
own-brand portfolio.
• Agile, responsive and service-
focused specialist sales
organisation, leveraging our
infrastructure and geographic
footprint to provide customers
with what they need.
• Cost-effective and tailored
solutions, including e-commerce
and direct-to-consumer offerings,
for customers and suppliers.
• Technical, digital, supply chain and
value-added service expertise,
simplifying the complex.
• Continuous re-investment in the
business scaling our platforms to
facilitate organic growth for the
benefit of all stakeholders.
• Safe, ethical and compliant work
environment for our workforce.
DCC Technology has continued
to invest in digital, cloud, and
e-commerce solutions to support
our suppliers and customers and
help our partners benefit from
strong e-commerce growth.”
78
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Case study
Discover the
logistic power
of Amacom
We need to have the right product in
the right place at the right time in order
to win with customers. As an all-round
distribution and fulfilment partner,
Amacom made considerable investments
during the year to optimise its processes
and expand its vehicle fleet. As a result,
we have further strengthened our
customer service by offering enhanced
logistical solutions.
From four strategic locations, with more
than 15,000 m² of available warehouse
space, Amacom supplies retail and
e-stores, central warehouses and
consumers via drop shipments,
on a daily basis.
Access to a wide range of products,
detailed product knowledge, unbeatable
stock availability and speed of delivery
are key factors in our success. Orders
are delivered directly to the desired
delivery address within 24 hours (or
faster if required); even outside normal
trading hours.
Amacom offers its partners ‘real time’
insight into stocks, deliveries and the
status of orders via its own online
ordering and information system
Quecom. Partners are also offered
assistance in automating processes
via API and EDI connections.
Together with our partners, we do
everything we can, every day, to
continuously improve our service
performance. Our own ‘purple’ delivery
service plays an important role in this
process. We guarantee a high degree
of reliability, fast delivery, less transport
damage and shortages, personal contact
with a trusted professional and service
far beyond the customer’s doorstep.
Customers
The business has an extensive customer
base, selling to approximately 63,000
customers globally. In the year ended
31 March 2022, DCC Technology’s largest
customer accounted for approximately 9%
of revenue and the 10 largest customers
together accounted for 27% of total revenue.
The acquisition of Almo has extended the
customer base in the United States to
encompass independent appliance retailers
as well as adding scale to our existing Pro AV
and e-tail customer base.
DCC Technology seeks to provide an
excellent standard of customer service by
combining an extensive range of services
with a commitment to identifying the most
cost-effective and flexible solutions to meet
our customers’ requirements. By constantly
focusing on building the breadth of the
reseller and retail customer base, DCC
Technology ensures that our service offering
is always developing to adapt to their growing
demands, as well as delivering an exceptional
route-to-market for our suppliers. The business
is investing in the expansion of our digital
offering providing an increasing number of B2B
and direct-to-consumer platforms to support
our vendor base and reach a wider cohort
of potential customers.
Our supply chain services customers include
outsourced equipment manufacturers, IT,
consumer electronics and telecommunications
equipment manufacturers. The business also has
customers in the industrial and pharma sectors.
Suppliers
DCC Technology has a diverse supplier base
and partners with thousands of suppliers,
including many of the world’s leading
technology and appliance brands. The
largest supplier represented 12% of total
revenue in the year ended 31 March 2022
and the top 10 suppliers represented 40%
of total revenue.
The business adopts a proactive approach
to the identification and recruitment of new
suppliers and technologies and seeks to
position itself as the obvious choice for
owners of growing brands to access the
retail and reseller channels. In addition, DCC
Technology seeks to ensure that we have
a position of strategic relevance with our
principal partners. In North America, many
of the relationships involve channel or
geographic exclusivities.
When providing supply chain services to
technology manufacturers and brand
owners, a core element of the service
provided by the business is the identification
of appropriate component and supply chain
partners for the manufacturer or brand
owner and carrying out the quality assurance
on those suppliers to ensure that they
comply with required quality, regulatory
and ethical standards.
Key Brands
Acer, Allen & Heath, Apple, Asus, Dell, Electrolux (Frigidaire), Epson, Focusrite,
HP, Honeywell, Huawei, Intel, Lenovo, LG, Logitech, Microsoft, Midea, Netgear,
Oculus (Facebook), Poly, Samsung, Seagate, Sharp NEC, Toshiba, U-Line, Zephyr.
DCC plc Annual Report and Accounts 2022
79
Strategic Report
Sustainable Business Report
Aligning Purpose,
Strategy and
Sustainability
Our purpose, our strategy and
our values support the creation
of long-term stakeholder
partnerships. This makes
our business model resilient
and sustainable.
Highlights of the year
• Net zero target put in place for Scope
3 carbon emissions, based on a clear
energy transition strategy.
• Progress made against our existing
Scope 1 and 2 reduction targets.
• New Scope 1 and 2 target set: to
achieve a 50% reduction by 2050.
• Climate change impacts assessed
and TCFD framework adopted
in our reporting.
• AAA rating from MSCI retained.
CDP rating upgraded to B.
• Strong safety performance, with
Lost Time Injuries (LTIs) down.
• Sustainability-linked RCF put
in place.
Our Sustainability Reporting Framework
Climate Change
and Energy
Transition
Safety and
Environmental
Protection
Our objectives
We will reduce our own Scope 3
emissions to net zero by 2050
or sooner.
Our objective
We will decarbonise our
operations – to net zero by 2050
or sooner and by 50%, against a
2019 baseline, by 2030.
Our objective
We keep our people safe.
Our objective
We protect the environment in
communities we serve.
Key metrics
Carbon intensity of energy sold
(gCO2e/MJ).
Biogenic content of fuels sold (%).
Scope 3 emissions (mtCO2e).
Key metric
Scope 1 and 2 carbon emissions,
adjusted to reflect acquisitions.
Key metrics
Lost Time Injuries (LTIs).
Serious Safety Events.
Key metric
Spills requiring remediation.
Why this is important to DCC and our stakeholders
We are actively helping our customers move their homes
and businesses to low and zero carbon energy. While this is
happening, we ensure their existing energy supplies are safe,
reliable and efficient.
Why this is important to DCC and our stakeholders
Our people drive trucks and operate machinery. They work in energy
facilities and warehouses. Some of the products we sell can be dangerous if
not stored and transported carefully. We are therefore focused on keeping
our people and those who could be affected by our operations, including
the communities where we operate, safe at all times.
Read more: Energy Strategy on page 22
Sustainable Business Report on page 83
Stakeholder Engagement on page 40
80
DCC plc Annual Report and Accounts 2022
Read more: Sustainable Business Report on page 86
Stakeholder Engagement on page 40
Strategic Report
Governance
Financial Statements
Supplementary Info
In this year’s Sustainable Business Report, we are
pleased to report further progress, building on the
steps taken last year. Highlights this year include:
• We set a goal of reaching net zero, for Scope
• We put in place an £800m sustainability-
linked Revolving Credit Facility, with targets
linked to core areas of our strategy and
Sustainability Programme.
1, 2 and 3 by 2050 or sooner;
• This year we reached our 2025 Scope 1 and
2 reduction target and therefore set a new
target to achieve a 50% reduction on the
2019 baseline by 2030;
• We analysed a number of carefully chosen
scenarios to assess the transitional and
physical risks of climate change to our
operations;
In order to demonstrate progress against
the net zero target outlined above, we
enhanced our reporting on Scope 3 carbon
emissions and also improved our CDP rating
from C to B; and
•
Governance
Sustainability in DCC is governed by the Board
with support from the Governance and
Sustainability Committee and Executive
Sustainability Committee.
The Governance and Sustainability Committee
is chaired by the Chairman of the Board, and its
activities are outlined in the Governance and
Sustainability Committee Report on page 117.
The Executive Sustainability Committee (‘ESC’)
is chaired by the Chief Executive. Its members
include the Group CFO and all divisional
Managing Directors. The ESC meets six times
each year and is responsible for coordinating
sustainability matters at management level,
monitoring sustainability performance and
supporting reporting to the Governance and
Sustainability Committee and the Board.
Sustainability Reporting Framework
Our Sustainability Reporting Framework, which
is set out below, reflects the questions that are
most material to our stakeholders and the
long-term success of the Group. Its pillars are
directly supportive of key components of our
Group strategy, of divisional strategies (most
notably in relation to energy transition), to the
UN Sustainable Development Goals (‘SDGs’)
and relevant GRI and SASB reporting standards.
People and
Social
Governance
and Compliance
Our objective
We actively support the
development of our people.
Our objective
We actively support inclusion
and diversity.
Our objective
We protect
human rights.
Our objective
We prevent
corruption.
Our objective
We sell safe
products.
Key metrics
Employee turnover.
Performance reviews
completed.
Training provided.
Key metrics
Gender diversity.
Incidents of discrimination.
Key metric
Human rights
problems in our
operations or our
supply chain.
Key metric
Incidents of bribery
and corruption in our
operations or our
supply chain.
Key metric
Product safety
failures.
Why this is important to DCC and our stakeholders
DCC is a people business and developing our people is critical to our
current and future success. We do this by investing in training, actively
developing careers and building a supportive culture that values
diversity and innovation. We also value the relationships that we have
with the many local communities where we operate and that we serve.
Our businesses will thrive if they help these communities prosper too.
Read more: People section on page 36
Stakeholder Engagement on page 40
Why this is important to DCC and our stakeholders
Good governance and high standards of compliance with the laws
and ethical standards that apply to our activities are a fundamental
part of how we do business. We also recognise the contribution that
working with suppliers and customers who share these values can
make to society more generally.
Read more: Corporate Governance Statement on page 108
Sustainable Business Report on page 90
Stakeholder Engagement on page 40
DCC plc Annual Report and Accounts 2022
81
Strategic Report
Sustainable Business Report continued
United Nations Sustainable Development Goals
We support the UN SDGs. In the diagram below, we summarise the main links between our Sustainability Reporting Framework and
the SDGs. While our business activities touch many of the goals, we have identified six SDGs where we have an opportunity to make
the greatest difference. These are:
While the energy transition is
taking place, customers have
an ongoing need for efficient
and reliable sources of energy.
We will continue to provide
energy, while also investing in
the partnerships, systems and
infrastructure needed to achieve
a just transition to net zero.
The safety of our employees
and contractors is of primary
importance, and safety is a core
value of the Group. It is part of our
purpose that our people and
businesses are enabled to grow
and progress. This growth helps us
to create job opportunities and to
be a valuable economic contributor
to the communities we serve.
Equality in all its forms is closely linked to our purpose.
It is a key element of our HR strategy. We welcome and
encourage greater levels of diversity across the Group
and recognise the benefits that this brings to our decision
making and culture. The people aspects of our policy,
strategy and performance are covered in more detail
in the People section on page 36.
As a distributor of energy, DCC
plays a key role in transitioning end
customers to cleaner energy
sources. As outlined in the Energy
Strategy section on page 86, our
Energy division will be a key enabler
of the energy transition.
DCC encourages responsible
consumption of energy and
promotes energy efficiency
solutions as well as cleaner forms
of energy. Where we are
manufacturers and suppliers of
products, we have procedures
to ensure that our products are
safe and compliant before going
to market.
82
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
The four pillars of our Sustainability Reporting Framework are aligned with our purpose, Group
and divisional strategy, the UN Sustainable Development Goals and relevant GRI and SASB standards.
They reflect the importance we place on building long-term partnerships with our stakeholders.
Pillar One:
Climate Change
& Energy Transition
Scope 1 and 2 Carbon Emissions
(000’s tonnes)
FY22
FY21
FY20
FY19
FY18
20
84
14
2
19
14
16
16
77
78
78
73
16
Scope 1 (Direct – Road transport and heating
fuels, fugitive emissions)
Scope 2 (Indirect – Electricity) Location-Based
Scope 2 (Indirect – Electricity) Market-Based
(cid:3)(cid:53)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:60)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:3)(cid:21)(cid:23)(cid:24)
(cid:411)(cid:3)(cid:3)
Scope 1 and 2 Carbon Emissions
Reduction Target
In 2021, DCC committed to implement a 20%
reduction in our Scope 1 and 2 emissions by
2025 relative to a 2019 baseline.
116
2
2
6
1
8
7
111
106
6
1
8
7
4
1
7
7
101
2
4
8
97
93
Scope 1 and 2 Carbon Emissions
Scope 1 and 2 emissions are those that arise
from our use of heating and transport fuels
and electricity use. All DCC businesses record
their energy data which are then converted
into greenhouse gas (‘GHG’) emissions by
CDP-accredited software.
The data collated is subject to a limited
assurance audit, conducted by EY, whose
assurance opinion is set out on page 245.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:81)(cid:74)(cid:79)(cid:72)(cid:3)(cid:86)(cid:92)(cid:80)(cid:69)(cid:82)(cid:79)(cid:3)(cid:11)(cid:411)(cid:12)(cid:3)(cid:76)(cid:86)(cid:3)(cid:88)(cid:86)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:75)(cid:68)(cid:85)(cid:87)(cid:86)(cid:3)
below to denote the data that has been
subject to EY assurance this year.
Scope 1 and 2 Carbon Emissions
by Source Category
13% <1%
18%
69%
Mobile combustion
Electricity
Stationary combustion
Fugitive emissions
The charts above show DCC’s absolute Scope
1 and 2 GHG emissions. We use both location-
based and market-based approaches to the
calculation of Scope 2 emissions, as set out
in the GHG Protocol. The location-based
approach uses the national grid average to
calculate Scope 2 emissions. The market-
based approach uses supplier provided
emissions factors, allowing companies to
reflect the actual emissions associated with
procured electricity.
FY19
FY20
FY21
FY22
FY23
FY24
Target Line
Scope 1
Scope 2
Re-base for acquisitions
(cid:411)(cid:3) (cid:53)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:60)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:3)(cid:21)(cid:23)(cid:24)
In accordance with the GHG Protocol, we adjust
the baseline to reflect material acquisitions and
disposals undertaken in years since 2019. This
means that as the Group grows by acquisition,
we have to achieve the same percentage
reduction in our carbon emissions. In the year
under review, we adjusted the baseline to
reflect a number of acquisitions, including the
acquisition by DCC Propane of UPG and NES,
the acquisition of Almo Corporation by DCC
Technology and the acquisition of Wörner by
DCC Healthcare. The adjustments to our initial
baseline to reflect acquisitions and disposals
since 2019 is represented by the grey bar
in the chart above. More detail on our
methodology in this area can be found
in our Greenhouse Gas Reporting Criteria
on www.dcc.ie.
In the year under review, substantial progress
has been made towards achieving our Scope 1
and 2 target. Our total Scope 1 and 2 emissions
were 5.5% lower this year compared to the prior
year. By 31 March 2022 we achieved a 25%
reduction against the 2019 baseline, exceeding
the target of a 20% reduction by 2025. We have
now therefore established a new target to
achieve a 50% reduction against the 2019
baseline by 2030.
DCC plc Annual Report and Accounts 2022
83
Strategic Report
Sustainable Business Report continued
Case study
Successful Certas Energy UK HVO fleet trial scales up
A trial of Hydrotreated
Vegetable Oil (‘HVO’) in Certas
Energy UK’s own vehicles
proved so successful in
contributing to the company’s
20% carbon reduction target
by 2025 that HVO is being
rolled out to more depots.
FAME, sulphur and fossil free, this renewable
fuel can reduce carbon emissions by up to
90% compared to conventional diesel.
Manufactured from 100% renewable and
sustainable waste vegetable fats and oils,
HVO can be used as a direct replacement
for diesel.
Emma Wordsworth, Operations Director,
explains why this HVO trial was so important:
“We’re viewing HVO as a transitional fuel,
a way to reduce carbon from our operations
immediately while we explore longer-term
clean energy alternatives for our fleet and
operations. It’s one of many decarbonisation
initiatives we are implementing.”
Like many companies reliant on fleet logistics,
fuel is the biggest contributor to Certas
Energy UK’s carbon emissions. And from the
initial trial results, it’s clear that HVO can play
a significant role in decarbonising Certas
Energy’s fleet as well as customer fleets
across the UK.
“The HVO trial has allowed us to review how
HVO performs across our fleet in a controlled
way. It’s evident that introducing HVO will be
transformational in reducing our vehicles’
carbon emissions, and fast. It’s a great way to
demonstrate to our customers the benefits
of HVO too.”
The majority of this has been achieved through
a programme to procure renewable electricity,
reducing Scope 2 emissions. In the year under
review, we took further steps to switch our
electricity use to renewable sources, both
directly from suppliers or through the
procurement of Green-e® certified Renewable
Energy Credits in the United States. This
generated a reduction in market-based Scope
2 emissions: 80% of electricity purchased by
DCC Group businesses is now renewable. The
transition to renewable electricity is supported
by other initiatives being taken by Group
businesses, such as the installation of PV solar
facilities at Exertis UK warehouses in the UK.
Additional energy efficiency measures and
transport fuel switching have also contributed
to reductions achieved to date.
Group businesses are actively looking at further
steps to reduce their Scope 1 and 2 emissions,
in line with our new target to achieve a 50%
reduction by 2030. We have not put in place
an internal carbon price, as we consider that
existing management processes are working
effectively to reduce our use of carbon.
Energy Use
As noted above, reducing energy use is an
important element in reducing our own carbon
emissions. DCC used 1,646 million gigajoules
of energy during the year, which was a 13.5%
increase over the prior year. However, this
reflected increased volume sales by our energy
businesses, as well as other growth in the
Group. This increase is partially offset by
increased energy efficiency measures
mentioned below.
84
DCC plc Annual Report and Accounts 2022
Just over three-quarters of this energy was
used by our LPG and Retail & Oil divisions
in making deliveries to customers using our
transport fleet. Transport fleet efficiencies will
play an important role in reducing our own
energy use. They are achieved from better
driving techniques, more efficient vehicles,
and more efficient routing.
Additional energy saving initiatives are targeted
to reduce electricity and heating fuels through
more efficient lighting, heating controls and
equipment.
Energy Usage
(000’s gigajoules)
Two categories account for over 90% of our
Scope 3 emissions:
• Category 3 – Fuel and Energy Related
Activities not included in Scope 1 and 2. These
are the upstream (often called well-to-tank)
emissions associated with the energy sold by
the Group’s energy businesses.
• Category 11 – Use of Sold Products. These
are the emissions generated when the
energy products sold by the Group’s energy
businesses are used by customers.
Reducing these emissions, while continuing
to meet our customers’ need for reliable and
efficient forms of energy, is a core component
of our energy strategy, outlined in the Energy
Strategy section on page 22.
2022
2021
2020
2019
2018
1,646
1,450
1,420
1,422
1,352
Under the GHG Protocol, biogenic emissions
are not included in Scope 3 emissions. Biogenic
emissions are emissions from biofuels which
have been blended with regular diesel and
petrol fuels. DCC Energy sells a range of
biofuels and more detail on the biogenic
content of those fuels is contained overleaf.
Scope 3 Emissions
Scope 3 emissions are indirect emissions
generated upstream and downstream
of a company’s own operations. For most
organisations, Scope 3 emissions account for
the very large majority of total value chain
emissions and DCC is no exception. So, while
it is important to continue to reduce Scope 1
and 2 emissions, we are also focused on
working in partnership with our suppliers and
customers to identify opportunities to reduce
emissions in the wider value chain.
CDP Reporting
In the year under review, DCC’s rating by
CDP improved from C to B. This reflects
recent improvements in our reporting on
carbon emissions, including setting
targets and making progress against
them, and the Group’s overall focus on
climate change.
Strategic Report
Governance
Financial Statements
Supplementary Info
Our Scope 3 emissions performance is measured by three key metrics:
• Absolute Scope 3 emissions (Category 3 and 11 emissions from the Group’s energy businesses).
• Carbon intensity of the energy that we sell.
• Biogenic content of the fuel we sell.
The table below shows how each of these metrics has developed over the last four years:
Metric
Unit
Absolute Scope 3 mtCO2e
Carbon intensity
Biogenic content
gCO2e/MJ
% biogenic content by energy
FY19
41.5
81.2
FY20
39.8
79.3
FY21
35.9
76.5
3.2%
3.2%
4.0%
FY22
41.2
76.4
4.0%
(cid:411)(cid:3) (cid:53)(cid:72)(cid:73)(cid:72)(cid:85)(cid:3)(cid:87)(cid:82)(cid:3)(cid:40)(cid:60)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:3)(cid:21)(cid:23)(cid:24)
Absolute Scope 3 Emissions
Our absolute Category 3 and 11 Scope 3
emissions increased in the year under review,
reflecting sales volume increases in our energy
divisions following two years in which volumes
were reduced by Covid-19 restrictions.
Carbon Intensity
This metric illustrates the progress we are
making in the energy transition because it
shows how the renewable proportion of the
energy we sell is developing over time. As the
biogenic content of fuel and the volume of
renewable electricity sold increases, the carbon
intensity metric declines, illustrating the delivery
of lower carbon energy to our customers.
As shown in the table above, carbon intensity
has been decreasing over recent years, as the
biogenic content of fuel sold and the level of
renewable electricity sold have increased.
Carbon intensity in the year to 31 March 2022
was similar to the prior year largely because
increased sales of traditional road fuels, as
Covid-19 restrictions eased over the year
under review, offset the lower carbon forms
of energy. We do not expect this to recur in
future years.
Scope 3 Biogenic Content
DCC Group businesses sell a range of biofuels.
The blend of these depends on local regulatory
requirements. In Europe for example, the blend
is generally B7 and E5 for diesel and petrol road
fuels respectively. However some countries,
such as Sweden, have significantly higher
biofuel percentage blends. Group businesses
also sell 100% renewable fuels, such as HVO.
The table shows that the biogenic content of
the fuels we sold in the year to 31 March 2022
was similar to the prior year. As in the case of
carbon intensity, this largely reflects increased
sales of road fuels, as Covid-19 restrictions
eased over the year, which offset improved
biogenic content of many other forms of
energy sold. We do not expect this impact to
recur in future years.
Scope 3 Emission Reduction Target
This year, the Group has set a target to achieve
net zero carbon emissions across Scopes 1, 2
and 3 by 2050 or sooner. For this purpose, net
zero means the complete or very substantial
removal of carbon from the energy that we sell,
with offsetting used only for residual emissions.
The Science-based Targets Initiative (‘SBTi’)
is currently developing detailed guidance for
businesses that sell oil and gas. Until this is
available, it is not open to businesses in those
industries to seek SBTi accreditation. We will
consider our eligibility for SBTi accreditation
once the relevant guidance is in place. We will
also consider setting an interim target for
Scope 3 emissions as the regulatory
environment develops.
Full details of the methodology underpinning
our reporting on Scope 3 are set out in our
Greenhouse Gas Reporting Criteria at
www.dcc.ie.
Taskforce for Climate-related Financial
Disclosure (‘TCFD’)
In last year’s report, we assessed our alignment
with TCFD disclosure recommendations for
the first time. In this report we build on that
foundation by adding further detail on our
assessment of climate-related risks and
opportunities, the development of our strategy
and governance to reflect the importance
of climate change and the development of
our reporting, including the expansion of our
targets and metrics. One very notable
development in this regard in the year was
our commitment to achieve net zero across
Scopes 1, 2 and 3 by 2050 or sooner. A detailed
table setting out our approach to the TCFD
disclosure recommendations is provided in the
Additional Sustainability Information section
on page 247.
The impact of climate is embedded within
the governance and management processes
of the Group. In the Corporate Governance
Statement on page 108, we describe the
Board’s oversight of climate-related issues, and
in the Risk Report on page 92, we describe how
climate-related risk is integrated into the risk
processes that operate throughout the Group.
We also describe there our assessment of the
physical and transitional impacts, in terms of
both risks and opportunities, of climate change
on the Group’s operations.
Our assessment of climate risks is based in
large part on climate scenario analysis (‘CSA’)
work undertaken over the last year. We began
this work by conducting a qualitative analysis
to identify the most material climate risks to
our operations and opportunities. We then
undertook a further quantitative analysis to
develop our understanding of a carefully
selected group of risks and opportunities.
The CSA process looked at climate-related
effects on our business under two scenarios,
both consistent with the scenario assumptions
used by the IPCC (Intergovernmental Panel
on Climate Change). The first was a scenario
where decarbonisation is achieved consistent
with a 1.5°C temperature rise scenario. The
second scenario assumed a temperature rise
of 4°C, to help illustrate physical climate-related
risks. These scenarios align with the two key
frameworks used by the climate science
community: Shared Socio-Economic Pathways
(’SSP‘), which describe different socio-
economic futures, and Representative
Concentration Pathways (’RCP‘), which model
different emission pathways and the associated
impact on climate.
The first scenario we used is based on SSP1
and RCP1.9. Our second scenario is based on
SSP5 and RCP8.5.
The risks identified covered both the transitional
risk associated with energy transition and our
response to it, as well as physical risks from
assets that could be affected by changing
weather conditions. The CSA process also
assessed the opportunity available to our
Technology division as the market for recycled
technology products develops.
The results of the CSA were assessed within
our wider Group risk management framework
which is used to assess the potential impact
of risks of all types across the Group.
TCFD also requires the development of
relevant metrics and targets. The targets
and metrics that we have selected form a
prominent part of the Sustainability Reporting
Framework covered on page 80 of this Report.
From this year, this framework covers all scopes
of emissions. Further detail on our approach to
reporting on Scope 1, 2 and 3 carbon emissions
is set out earlier in this section of the Report.
DCC plc Annual Report and Accounts 2022
85
Strategic Report
Sustainable Business Report continued
Key roles and responsibilities are:
• The DCC plc Board has overall responsibility
for the Group, including HSE matters. The
Board devolves executive responsibility
to the Chief Executive and the Group
Management Team for the management of
the Group. From there, different executive
bodies have a role in overseeing and
managing different but complementary
aspects of the HSE discipline;
• The Managing Director of each Group
business and their management teams
are responsible for operational HSE
performance in that business in accordance
with local laws, for the implementation
of Group HSE policies and for their
performance against a set of shared HSE
KPIs. Each business is also responsible
for having processes by which it keeps up
to date with changes in the law;
• The Group HSE function is responsible
for developing policy, setting expectations,
identifying relevant KPIs and sharing
best practice; and
• HSE assurance takes place within
businesses in the Group, supplemented by
Group level audits using the International
Sustainability Rating System (‘ISRS’)
protocol. The nature and complexity of the
HSE issues faced by a business determines
the frequency and intensity of HSE
assurance measures.
The Group Health & Safety and Environmental
Policies, which link directly to the DCC Code of
Conduct, are available on our website, and set
out clear expectations in key areas including
leadership, risk management, and compliance.
Every business has in place a HSE management
system, reflecting the specific risks related
to its operations. These are aligned with the
expectations set out in the DCC Group policies.
Several businesses are certified to the ISO45001
and or ISO14001 standard (e.g. Certas Energy,
Exertis Supply Chain Services, Flogas Sweden
and Norway, and Laleham Health & Beauty).
Learning from Events processes and
performance metrics support the development
of a positive and proactive safety culture across
all our businesses. Our Group Health & Safety
Policy expectations extend to contractor
organisations working on our behalf or at our
facilities, and specific standards are defined for
activities in hazardous process areas.
We maintain a rolling Three-Year Plan specifically
for HSE, which lays out our continuous
improvement actions in the areas of Leadership,
Culture & Governance, Operational Execution,
Competence & Training, Knowledge Sharing,
and Management Reporting. These actions are
derived from operational performance reviews,
outputs from the Executive Sustainability
Committee and HSE Steering Group, and our
HSE Governance Review.
Good progress has been made in the
implementation of our current HSE Three-Year
Plan, with the introduction of a new Working
Group for manufacturing operations, acquisition
onboarding assessments, a practitioner
resource hub and peer review audits, among
the steps taken.
The introduction of a HSE Performance Review
process across DCC was another of our
Three-Year Plan actions. These reviews are
conducted annually within each Group business,
coordinated at Group level, and comprise
a review of prior year commitments, HSE
performance, and a focus on future challenges
and improvement actions. The review at
divisional level promotes learning from
experience and sharing of good practice.
These reviews are central to the production
of HSE Three-Year Plans within each Group
business, Progress against these plans is
tracked through divisional management reviews.
Covid-19
Successful implementation of our business
continuity plans means Group businesses have
been able to meet customer needs during the
Covid-19 pandemic while also protecting their
employees’ health and safety. Our businesses
implemented remote and hybrid working
arrangements, made changes to workplace
layouts and facilities, and modified shift patterns
and changeover processes. While the Group
was impacted by staff absences, this was largely
attributable to community rather than
workplace transmission.
Several of our businesses experienced
regulatory Covid-19 spot-check inspections,
with good outcomes, and we successfully
switched governance processes such as site
inspections and Group HSE audits to a virtual
format, combining offline document reviews
with videoconference interviews and remote
site inspections. As providers of key products
and services, Group businesses worked hard
to manage their operations so that the impact
of the pandemic was minimised both for our
employees and customers.
Pillar Two:
Safety &
Environmental
Protection
Safety Governance
Safety is a core value of DCC. We believe
that a successful approach to safety must be
grounded in a culture that encourages every
DCC employee and contractor to identify and
raise concerns, whether it is about safety or any
other aspect of operating responsibly.
‘HSE’ refers to the management of health,
safety, and environmental protection issues
within all aspects of Group activities. It covers
the processes by which we ensure a safe
working environment for all our colleagues and
partners, and the management and mitigation
of potentially negative environmental impacts
from our operations, for example from loss
of containment.
In areas of higher environmental risk our HSE
governance and operational processes are
supplemented by additional processes.
Our HSE governance structure reflects the
varied nature of our Group businesses, both
within and across divisions, and reflects
the need to cover different HSE functions
such as policy development and oversight,
operational HSE management, assurance,
and people development.
86
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Process Safety
Process safety management is a disciplined
framework for managing the integrity of
hazardous operating systems and processes
by applying good design principles, engineering
controls and operating practices. It deals with
the prevention and control of incidents involving
the release of hazardous materials or energy,
such as fire or explosion during the movement
of fuel, fire within fuel vapour recovery systems,
loss of containment leading to the formation of
a vapour cloud, or a hydrocarbon spill.
Process safety risks are managed through
detailed risk analysis, asset management, high
reliability engineering controls and employee
awareness training. Our process safety
performance indicator data is aligned to the
API-754 reporting framework, which
represents best practice in this area. Process
Safety Performance Indicators are used to
provide assurance that process safety risks
continue to be managed appropriately. These
KPIs are routinely discussed in management
review meetings at company, divisional and
Board level.
This year, there were no API-754 Tier 1 or Tier 2
process safety incidents. Vehicle-related
incidents, such as roll-over, loss of load and
combustion, were low in number and severity.
Tier 3 indicators, which capture challenges to
our safety systems such as equipment reliability
and process alarm activations were stable. Tier
4 indicators measure operating discipline and
management system performance, including
on-time maintenance completion, safety
inspections and tests, false alarms, and
emergency drills. These indicators were broadly
stable through the year under review.
In response to the Covid-19 pandemic, our
Process Safety training for senior managers
moved online last year, and we continue to
deliver the training this way to ensure our focus
on process safety leadership, the understanding
of risks, controls, and monitoring systems,
is maintained.
Occupational Safety
All incidents, including personal injuries, product
spills, road traffic accidents and near misses, are
recorded to evaluate potential consequences
and identify underlying causes, control
weaknesses and learnings. Both qualitative and
quantitative HSE information is included in
monthly reporting processes at all levels of the
Group, including in HSE reporting to the Board.
Our Learning from Events process is a key tool
for sharing knowledge and driving improvement
in safety management across the DCC Group.
Events with significant actual or potential
consequences are discussed to identify
improvements and these are communicated
to relevant members of management. We
operate a formal Learning from Events process
to share knowledge and drive improvement
in safety management across the Group.
We maintain platforms for sharing good
practices within the HSE community and share
communication tools to drive improvement
in safety systems and culture more widely.
Overdue General Maintenance Tasks
3
4
3
8
6
8
7
2
8
9
2
9
2
9
4
7
6
1
1
5
9
5
1
8
1
2018
2019
2020
2021
2022
<30d
>30d
Safety Critical Assets Failure on Test/Inspection
2
0
1
1
9
4
7
2
6
5
6
2018
2019
2020
2021
2022
Case study
Investments that improve efficiency, safety and diversity
We invest continually in renewing and modernising our warehouses and recognise
the wider benefits this creates.
In 2021, Exertis Ireland invested in the
sustainable design of their new warehouse
facility in Dublin, Ireland, to enhance our
competitiveness, while also adding value
for employees and our customers.
The Dublin facility operates on 100%
renewable electricity meeting our Scope 2
emission objective. In addition, we also focus
on a range of environmentally conscious
initiatives including motion sensors and
LED lighting systems, and electric vehicle
chargers. The future facility investments
will see solar power adopted to reduce our
national grid usage. We also introduced
new sustainable technologies around
packaging management and recycling, which
increase automation around our logistics
processes, and improve carbon efficiency.
Our employees benefit from this as well, as
these innovations ease their workload.
The implementation of these sustainability
initiatives coupled with training courses
resulted in more women joining our
warehouse operations. While traditionally,
warehouse roles are synonymous with a
male workforce, our initiative has seen the
number of women working in our Dublin
warehouse increase in the past year. DCC is
committed to diversity and inclusion across
all its businesses and we are proud to
represent 23 nationalities across our Exertis
Ireland, MacroEV and Exertis Supply Chain
Services teams based in Ireland, Poland
and China.
DCC plc Annual Report and Accounts 2022
87
Strategic Report
Sustainable Business Report continued
Case study
EuroCaps and Friend of the Sea®
Environmental sustainability
is an important and relevant
issue for the fish oil Omega 3
industry. Many consumers,
brands and manufacturers
increasingly wish to make a
sustainable choice of fish oil.
Friend of the Sea® is the only sustainable
certification process recognised and
supervised globally by national accreditation
bodies for fisheries, aquacultures and
nutraceutical products. It is the leading
international standard for producers of fish
oil, fishmeal and Omega 3 supplements.
Friend of the Sea® criteria for sustainable
nutraceutical products require:
• well-managed sources of fish oil
and fishmeal ingredients;
traceability from certified origin; and
•
• social accountability.
Friend of the Sea® Omega 3 producers verify
that their suppliers implement sustainable
fishing practices. In this way, they can provide
the best reliable third-party assurance to
consumers worldwide.
At its softgel nutritional supplement
manufacturing site in Tredegar, South Wales,
EuroCaps is certified and approved by Friend
of the Sea® and has manufactured softgels
using Friend of the Sea® sustainable fish oil
since 2017. In 2021 79% of their fish oil
purchased was Friend of the Sea® certified.
In doing so, EuroCaps offers its customers
and their customers a sustainable and
certified choice for fish oil derived Omega 3
supplements. EuroCaps’ customers are also
permitted to use the Friend of the Sea® logo
on their product packs to demonstrate the
sustainability of their products.
Lost Time Injury (‘LTI’) Rates
9
2
6
1
.
1
4
2
0
2
.
1
8
1
7
0
.
1
5
2
5
2
4
0
.
1
6
9
.
0
2018
2019
2020
2021
2022
LTI severity rate
LTI frequency rate
Lost Time Injuries (’LTIs‘), defined as an accident
resulting in at least one day lost after the date of
the accident, remain an important indicator of
overall HSE performance. Injury reporting
requirements apply to all employees (full time,
part time and temporary) and workers who have
a contract with a third party but work under the
direction and supervision of DCC. Although
injuries to independent third-party contractors
may be recorded, they are not included in the
Group’s safety performance figures.
There were no employee or contractor fatalities
this year. The LTI frequency rate, defined as
the number of lost time accidents per 200,000
hours worked, continued in a long-term
downward trend against a background of
continued company growth. Reflecting our
continued focus on this area, the frequency rate
dropped below one injury per 200,000 hours
worked during the year under review. We will
continue to work on further improvement
in our LTI performance in the current year.
The LTI severity rate was was in line with last year.
The majority of LTIs recorded across the
Group are relatively minor including slips, trips,
and manual handling injuries such as sprains
and strains.
The Total Recordable Injury Rate (‘TRIR’) in the
year under review was 1.12. A recordable injury
for this purpose is one that results in a fatality,
days away from work, restricted work or job
transfer, medical treatment beyond first aid,
loss of consciousness or a diagnosed significant
injury/illness. The Near Miss Frequency Rate per
200,000 hours worked was 18.2.
Our LTI frequency rate dropped below one
injury per 200,000 hours worked during
the year under review.“
88
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Pillar Three:
People & Social
The People section on page 36 covers
progress in the implementation of our HR
strategy over the course of the year,
including the development of our people
and steps taken to increase diversity. This
reflects the fundamental importance of
people to DCC’s purpose, to the delivery
of strategy and to the overall performance
of the Group.
Our aim is to
create a shared,
cohesive culture
with a high
performing
workforce
of engaged
employees.“
Environmental Protection
The most material risk to the environment in the
communities where Group businesses operate
is the occurrence of a material spill of liquid fuel,
such as home heating oil, petrol or diesel.
In contrast, the loss of LPG can present a
significant safety risk, but does not typically
result in damage to the local environment.
Similarly, operations in our Healthcare
and Technology divisions do not generate
material risks of local environmental damage.
A spill is defined as any unplanned release to
the environment. All spills, and near misses, in
connection with our operations, are recorded
regardless of quantity in order that we can learn
lessons from such events. Spills are categorised
using a risk matrix, which considers spill
quantity, substance and receptor, with low level
spills classified as ‘events’ and any other more
significant spills classified according to severity.
In the year ended 31 March 2022, there were in
total 791 spills of all levels of significance, or
(cid:22)(cid:17)(cid:24)(cid:124)(cid:86)(cid:83)(cid:76)(cid:79)(cid:79)(cid:86)(cid:3)(cid:83)(cid:72)(cid:85)(cid:3)(cid:87)(cid:72)(cid:81)(cid:3)(cid:87)(cid:75)(cid:82)(cid:88)(cid:86)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:17)(cid:3)(cid:50)(cid:73)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:15)(cid:3)
(cid:23)(cid:23)(cid:124)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:70)(cid:68)(cid:87)(cid:72)(cid:74)(cid:82)(cid:85)(cid:76)(cid:86)(cid:72)(cid:71)(cid:3)(cid:68)(cid:69)(cid:82)(cid:89)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)
reporting level, a rate of 0.19 per ten thousand
deliveries. This is an improvement over the
prior year when there were 0.61 spills per
(cid:87)(cid:72)(cid:81)(cid:124)(cid:87)(cid:75)(cid:82)(cid:88)(cid:86)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:76)(cid:72)(cid:86)(cid:3)(cid:68)(cid:69)(cid:82)(cid:89)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:76)(cid:81)(cid:76)(cid:80)(cid:88)(cid:80)(cid:3)
category. The proportion of spills rated above
the minimum risk category is lower in the year
under review versus the prior year at 6%. Any
spills of significance are reported to the relevant
environmental authorities and are cleared to
their standards resulting in no long-term
environmental impact. This year, one spill
required remediation.
Spills per ten thousand deliveries
4
0
.
1
5
9
.
0
4
8
.
0
1
6
.
0
9
1
.
0
2018
2019
2020
2021
2022
DCCDCC plplcc AnnAnnualual ReReporport at andnd AccAccounountsts 20220222
DCC plc Annual Report and Accounts 2022
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Sustainable Business Report continued
Pillar Four:
Governance
& Compliance
Governance
DCC is committed to operating in accordance
with the highest standards of corporate
governance. For more detail on our governance,
please see the Corporate Governance
Statement on page 108.
Protecting Human Rights
We have had internal controls in place for a
number of years to ensure that human rights
are protected within our own operations and
in our supply chains. These include measures
to identify and prevent modern slavery and
human trafficking.
Our Supply Chain Integrity Policy requires
businesses in the Group to have a suitable
process to assess their supply relationships
from the perspective of both product quality
and supplier integrity, to carry out additional due
diligence where this risk assessment requires,
and to maintain where needed suitable
preventative controls to ensure, insofar as
practicable, that human rights abuses, including
modern slavery and among other compliance
breaches, do not arise.
Our Supply Chain Integrity Policy and our
Human Rights Policy are available on our
website www.dcc.ie.
We provided online training covering the
importance of protecting human rights to
almost 4,000 employees across the Group over
the course of the year. Further training will be
provided during the year ending 31 March 2023.
The large majority of this training was designed
to maintain and raise awareness of where
human rights risks can exist, especially where
products are sourced from other countries.
DCC Group businesses maintain suitable HR
policies and procedures to ensure that the
rights of employees in those businesses are
fully respected. The People section on page 36
deals with our approach to standards of pay.
DCC has issued a statement under section 54
of the UK Modern Slavery Act 2015 covering
the year ended 31 March 2022. This year’s
statement and those issued in prior years are
available on our website www.dcc.ie. A number
of DCC Group businesses are subject to that
reporting provision in their own right and have
issued statements on their own websites.
Those statements note where the activities
of Group businesses or their suppliers present
particular risks and the measures taken to
reduce those risks.
No breaches of human rights were identified
during the year under review.
We provided training covering
the importance of protecting
human rights to almost 4,000
employees across the Group
over the course of the year.”
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Governance
Financial Statements
Supplementary Info
We will continue to ensure
that a robust approach is
taken to operating within all
of the laws and regulations
that apply to our activities.“
Prevention of Bribery
DCC has a detailed Anti-Bribery and Corruption
Policy in place, which states that no employee or
representative of any Group business is to offer
or accept any bribe, including small facilitation
payments, or to engage in any other form of
corrupt practice. The Policy which is available
on our website www.dcc.ie. is provided to every
employee of the Group as part of their induction.
Training on the key provisions of the Policy is also
provided to relevant employees. In addition to
prohibiting involvement in bribery and other
forms of corruption, the Policy requires that
every business in the Group maintains suitable
policies, procedures and records in relation
to the provision and acceptance of gifts,
hospitality and sponsorship and the disclosure
of conflicts of interest, and employs enhanced
due diligence and controls when doing business
with a party in a country where corruption
is a particular problem, in particular, when
appointing representatives.
No Group business was involved in any public
legal case regarding corruption during the year
under review.
Inclusion and Diversity
The Group actively supports the development
of a diverse and inclusive workplace. Details
on our Inclusion and Diversity Policy and the
other measures we take in this area are set
out in the People section on page 36. Where
allegations of discrimination are made they
are investigated and suitable action is taken
in response.
Governance of Compliance
Businesses in the Group report twice a year
on their compliance controls. A report on these
performance indicators is then provided to
the Executive Risk Committee and Audit
Committee. More detail on how compliance
risks are addressed within the Group is set out
in the Corporate Governance Statement on
page 108.
DCC will continue to ensure that a robust
approach is taken to operating within all of the
laws and regulations that apply to our activities.
Monetary loss as a result of legal proceedings
associated with employment discrimination,
covering inclusion and diversity and related
issues was less than £0.5m in the year under
review.
Product Safety
Group businesses have suitable processes and
procedures in place that are designed to ensure
that the products that they sell are safe and
meet applicable regulatory requirements. There
was no monetary loss from legal proceedings
associated with product safety during the year.
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Strategic Report
Risk Report
Aligning Risk
with Growth
We seek to manage risk through a culture that reflects the Group’s purpose and values,
in addition to formal risk management and internal control processes, with the active
involvement of colleagues in every area of our activities.
Risk Management Framework
DCC plc Board
Audit Committee
HSE Report
Legal and
Compliance
Report
Risk Report,
including
Group Risk
Register
Group Internal
Audit Report
Executive Risk
Committee
First line of defence
Subsidiary and
Divisional Management
Second line of defence
Group Sustainability
(including HSE),
Group Legal & Compliance,
Group IT, Group Finance,
Group HR
Third line of defence
Group Internal Audit and
other Independent
Assurance Providers
Risk Management Policies
The Board is responsible for setting the Group’s
risk appetite and ensuring that appropriate risk
management and internal control systems,
designed to identify, manage and mitigate
material risks to the achievement of the Group’s
strategic and business objectives, are in place.
The Board has approved a Risk Appetite
Statement specifying the levels of risk that the
Group is prepared to accept in relevant areas of
activity in achieving its strategic objectives. This
Statement informs the risk management and
internal control systems that are maintained in
those areas.
The Board has also approved a Risk
Management Policy which sets out delegated
responsibilities and procedures for the
management of risk across the Group.
Risk Management Framework
The Group’s risk management framework
has been designed using a three lines of defence
model, as shown in the adjacent diagram,
and is embedded within the Group’s
organisational structure.
Risk management processes are in place across
the Group to enable risk-informed strategic
planning and decision making. We took steps
during the year under review to further integrate
our strategic planning and risk management
processes and intend to make further progress
in this area in the present year.
The Group’s risk management framework
covers climate-related risks, including their
assessment through carefully selected
scenarios. This risk assessment process
informs strategic planning at business,
divisional and Group levels.
A more detailed description of roles,
responsibilities and reporting structures under
our risk management framework is set out on
the opposite page.
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Supplementary Info
Roles, responsibilities and reporting under the risk management framework
Oversight
Board
• Approves the Group’s Risk Appetite Statement and the Risk Management Policy.
• Monitors the Group’s risk management and internal control activities including through the review of a Risk Report which focuses on the Group’s
principal risks, as set out in the Group Risk Register, on emerging risks, on risk mitigation activities and on developments in risk management practice.
• Receives a briefing from the Chairman of the Audit Committee at each Board meeting on risk management and internal control matters.
• Recognising that health and safety is a significant risk area for the Group, particularly in the Energy division, the Board takes specific responsibility
for this area through direct quarterly reporting to it by the Head of Group Sustainability, who is responsible for the Group HSE function.
Audit
Committee
• Assists the Board by taking delegated responsibility for risk identification and assessment and for reviewing the Group’s risk management and
internal control systems and making appropriate recommendations to the Board.
• Oversees the Group Risk Register, including principal risks, emerging risks and risk mitigation activities.
• Reviews regular reports from Group Internal Audit and from second line assurance providers, including Group Legal & Compliance.
• Oversees the annual review of the effectiveness of the Group’s risk management and internal control systems, which is undertaken by Group
Internal Audit, and reports on this to the Board.
• Further detail on the activities of the Audit Committee is set out in its Report on page 123.
Executive Risk
Committee
• Chaired by the Chief Executive and comprised of senior members of Group management.
• Maintains the Group Risk Register, the Integrated Assurance Report and the emerging risks watchlist.
• Analyses on a continuous basis the principal risks facing the Group, including emerging risks, the controls in place to manage those risks and related
monitoring procedures.
First line
Subsidiary
and Divisional
Management
Second line
Group
Sustainability
(incorporating
HSE)
Group Legal
& Compliance
• Responsible for day-to-day risk management activity including maintaining risk registers, identifying emerging risks and designing, implementing
and maintaining effective internal controls to address the risks on those registers.
• Subsidiary risk registers are regularly reviewed and updated by both subsidiary and divisional management.
• Divisional management consider subsidiary risk registers and emerging risks in preparing and updating divisional risk registers.
• Operates a risk-based HSE audit programme which provides independent assurance on key HSE management processes and controls, focused
on process safety, occupational safety and environmental management.
• Sets policies and standards, facilitates the exchange of best practice and supports a number of HSE working groups, which are focused on key
areas, including transport safety and process safety and manufacturing.
• Supports Group businesses and divisions in assessing climate risks and mitigating them as part of their strategic planning.
• Further detail on these activities is set out in the Sustainable Business Report on page 80.
• Maintains a structured compliance programme which is designed to provide reasonable assurance that all of the Group’s operations comply
with applicable legal and ethical standards.
• The Group Legal & Compliance function assists Group businesses through the identification of relevant requirements and the development
and implementation of suitable controls, such as policies and training.
• Carries out compliance audits in Group subsidiaries and reports on these to the Executive Risk Committee and Audit Committee.
• More detail on the Group Compliance Programme is contained in the Corporate Governance Statement on page 108 and in the Sustainable
Business Report on page 90.
Group IT
• Responsible for setting the Group’s IT strategy, for major IT and digital initiatives and the management of IT security risks.
• Supports Group businesses in meeting the Group Information Security Policy and related IT Standards, which cover areas such as cybersecurity
and business continuity.
• Provides ongoing technical support, user security training and network penetration testing.
• Supports the Group’s strategic IT agenda and the deployment of relevant cross-business platforms.
• Provides support to key projects and change management programmes.
Group Finance • Group Finance comprises the Group reporting, corporate finance, treasury, taxation, corporate control, financial planning and analysis and
commodity risk management functions, which are responsible for implementing appropriate risk management practices and oversight of
subsidiary activities in their areas of operation.
Group HR
Group
Strategy
Third line
Group Internal
Audit
• Responsible for the Group HR Strategy.
• Reports to the Board on leadership development and succession planning.
• Supports the review of relevant risks as part of strategy development and business planning processes at business-, divisional- and Group-levels.
• Reviews the risk management and internal control processes identifying areas for improvement and provides independent and objective
assurance on risk matters to senior management and the Audit Committee.
• Develops an annual, risk-based internal audit programme, which is approved by the Audit Committee.
•
Incorporates a dedicated IT Assurance function which is focused on ensuring the Group Information Security Policy and related IT Standards
are consistently applied and key risks with respect to IT, cybersecurity and business continuity are regularly reviewed.
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Risk Report continued
Risk Management Process
Risk Registers
Our risk process is based on a common,
Group-wide approach to the identification and
assessment of risks and the manner in which
they are managed and monitored.
Risk registers, covering strategic, operational,
financial and compliance risks are completed,
with the impact and likelihood of occurrence
for each risk assessed. New risks are added
to the risk registers when they are considered
to have become material. Emerging risks are
monitored for this purpose and this process
is outlined below.
The risk register process, as set out in the
diagram below, is embedded in the Group’s
businesses and forms part of ongoing
management processes. This facilitates
the frequent review and updating of
divisional and Group risk registers and
related assurance reports.
The principal risks to the attainment of
the Group’s strategic priorities, which were
confirmed by the risk register process,
are set out on pages 97 to 101.
Emerging Risks
The Group recognises that it faces certain
emerging risks and uncertainties that have the
potential to become principal risks in the future.
In some cases, there may be insufficient
information available now to fully understand
the impact, scale or likelihood of these. This
may limit management’s ability to define a
strategy for the mitigation of such emerging
risks. As noted above, a watchlist of emerging
risks that may become principal risks in the
future is maintained, regularly reviewed and
updated and reported on. Changes to the
impact, scale or likelihood of these risks are
monitored and where appropriate, risks are
added to the Group Risk Register.
Integrated Assurance
An Integrated Assurance Report (‘IAR’) is
maintained to identify the assurance activities,
both current and planned, across the three lines
of defence, that are intended to address the key
risks identified by the risk register process. The
IAR is updated and discussed by the Executive
Risk Committee at each meeting. The Group
Risk Register and the IAR are then reviewed by
the Audit Committee and the Board.
Climate-related Risk Management
Processes
There are three principal elements to
our process for identifying, assessing
and managing climate-related risks:
• Each business in the Group considers
climate risks (including physical risks and
transitional risks such as changes in
regulation) as part of our general risk
management process;
Climate Change Risk Management
Overview of our Approach
We assess the impact of climate change on
our activities principally by considering both
transitional and physical effects over short-
term (within three years), medium-term
(between three and ten years) and long-term
(more than ten years) periods.
Within this framework, we consider scenarios,
using reasonable assumptions as to how certain
factors, such as regulation, product availability
and customer demand are likely to develop, to
estimate the impact of climate change on our
activities. This analysis in turn informs strategic
choices we make regarding the future
development of the Group and the divisions.
In the year under review, this approach resulted
in an updated strategy for the energy sector,
which is covered in the Energy Strategy section
on page 22 and in a revised capital allocation
framework described in the Financial Review
on page 48. In taking these steps, the Group is
focused on the need to achieve a just transition
to net zero across Scope 1, 2 and 3 carbon
emissions by 2050 or sooner.
• Businesses in the Group then reflect on
their assessment of climate (and other risks)
in their strategic planning;
• The impact of climate risks , including their
potential scale and scope and their
significance relative to other risks, is also
considered when risk and strategy is
considered at divisional and Group level.
We have put in place common risk definitions
as part of our overall risk process (covering
both the likelihood and impact/materiality
of particular risks) and these are applied
to climate-related risks.
Responses to climate-related risks (including
their mitigation, transfer, acceptance or control)
are considered as part our strategic planning
processes, which involve an annual review
of strategy at business, divisional and
Group level. Progress against strategy and the
implementation of specific actions agreed as
part of these processes is monitored as part
of our existing management processes.
The Board maintains oversight of the
Company’s response to climate change as part
of this process. The overall role of the Board in
this respect is summarised in the Governance
Report on page 102.
Subsidiary risk registers
Risk survey
Divisional risk registers
Group Risk Register
Each subsidiary is required to
maintain a risk register, including
details of key controls and
mitigation activities. The registers
are regularly reviewed and
updated as required to reflect
changing circumstances and
emerging risks by both subsidiary
and divisional management.
Each subsidiary completes a
bi-annual online risk survey as
an additional review of current
and emerging risk trends.
Divisional management is
responsible for regularly reviewing
the subsidiary risk registers,
subsidiary risk survey results and
emerging risks and then updating
the divisional risk registers, which
are submitted to the Executive
Risk Committee.
Maintained by the Executive
Risk Committee, the Group
Risk Register is updated
regularly to reflect any significant
changes in the divisional risk
registers, in Group-level risks
or in emerging risks.
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Analysis of Key Climate Scenarios
We considered the resilience of our Group and divisional strategies against a range of climate-related scenarios during the year. This process involved
an initial qualitative assessment of climate-related risks and opportunities. More detailed qualitative assessments were then undertaken on four
relevant scenarios. The results of this are summarised in the following table. In each case, our analysis was supported by suitable external expert advice.
Risk/Opportunity
Principal Scenario
Impact Assessment
Actions
Transitional
impacts of climate
change on our
energy activities.
Physical impacts
of climate change
on our energy
activities.
We undertook a detailed assessment
of the likely evolution of each of the
principal energy markets in which we
operate (both geographic and customer
markets), including a transition
compatible with 1.5°C warming. This
scenario was based on SSP1/RCP 1.9.
This work included an assessment
of the evolution of our policy and legal
environment (such as the level of
carbon pricing), the evolution of
technology (such as improvements in EV
technology) and the introduction of new
forms of energy (such as biofuels and
hydrogen). We also then considered how
these and other relevant factors would
influence the markets where we operate
over the short, medium and long-term.
We assessed the impact that an
extreme 4°C warming scenario would
have on the operation of two of our
energy facilities, an LPG import terminal
and an oil import terminal, both located
in coastal regions. This scenario was
based on SSP5/RCP8.5.
This work focused on assessing the risk
of physical damage to those assets. We
also considered the disruption to our
wider operations that could be caused if
they were inoperable for a certain period.
Physical impacts
of climate change
on our healthcare
activities.
We assessed the impact that an
extreme 4°C warming scenario would
have on the operation of one of our
healthcare businesses in the USA. This
scenario was based on SSP5/RCP8.5.
Transitional
impacts of a move
to a circular use
of technology
products.
This work focused on assessing the
risk of physical damage to those assets
as a result of wind or flooding. We also
considered the disruption to our
operations that could be caused if they
were inoperable for a certain period.
We assessed the possible timing and
scale of a change in the global technology
market from the purchase of products
to their supply as a service, as steps
are taken to increase the reuse of the
materials used in their manufacture. This
scenario was based on SSP1/RCP 1.9.
This work included an assessment of the
evolution of the relevant policy and legal
environment (such as more compulsory
recycling of technology products) and
the evolution of technology (including
manufacturers designing products to
support increase reuse of materials).
We also then considered how these and
other relevant factors, such as demand
from retailers and end users, would
influence the technology markets where
we operate over the short, medium and
long-term.
We concluded that there is a significant opportunity
available to the Group to support existing and new
customers as they reduce their use of fossil fuels over
the next few decades. We can achieve this by adding to
the range of products and services that we offer, while
continuing to use the assets we have today to serve
existing markets. It is clear that the transition to lower
carbon forms of energy will, over the medium to
long-term, see a reduction in demand for fossil fuels.
A failure to adopt to this change would clearly create
a material risk to our existing energy operations in the
long-term.
Businesses in our Energy
division are actively involved in
decarbonising their own
operations and helping their
customers move to lower-
carbon forms of energy. We
updated our energy strategy
over the course of the year
under review to support and
accelerate this. More detail on
this is set out in the Energy
Strategy section on page 22.
In the medium to long-term, these facilities are slightly
more likely to experience acute physical impacts
because of adverse weather and/or sea level rises.
If no mitigation measures were taken and no insurance
was in place, the financial impact of one of these sites
being rendered wholly inoperable is likely to be less
than £10m, in current values. This is not a material
amount in the context of the Group.
Assuming mitigation measures are taken and
insurance is in place, the financial impact of these
events will be substantially less.
DCC Energy’s wider strategic resilience to climate
change is addressed above and in the Energy Strategy
section on page 22.
In the medium to long-term, this facility is somewhat
more likely to experience acute physical impacts from
adverse weather and/or sea level rises.
If no mitigation measures were taken and no insurance
was in place, the financial impact of one of these sites
being rendered wholly inoperable is likely to be less
than £10m, in current values. This is not a material
amount in the context of the Group.
Assuming mitigation measures are taken and
insurance is in place, the financial impact of these
events will be substantially less.
DCC Healthcare’s strategy is considered highly resilient
to climate-related risks and opportunities.
We consider that a significant market for recycled
technology products and related services is likely to
develop over the medium to long-term. The evolution
of this market represents an opportunity for our
Technology division, because technology suppliers
and customers are likely to need support in moving
products back up the supply chain for reuse. However,
the scale and timing of this change, particularly within
individual geographic markets, are subject to very high
levels of uncertainty.
DCC Technology’s strategy is considered highly
resilient to climate-related risks and opportunities.
These impacts can, within the
timeframes considered, be fully
mitigated through increased
physical mitigation measures
and business continuity
planning. In particular, alternative
means of obtaining product are
likely to be available. In addition,
the Group maintains insurance
against physical damage and/or
business interruption.
These impacts can, within the
timeframes considered, be fully
mitigated through increased
physical mitigation measures and
business continuity planning. In
particular, alternative means of
obtaining product are likely to be
available. In addition, the Group
maintains insurance against
physical damage and/or business
interruption.
We will continue to closely
monitor developments in the
markets where we operate,
including through discussions
with our suppliers, customers
and relevant policy makers.
We will update the scenarios outlined above to take account of changes in regulation, market demand and other relevant factors. We also intend to
undertake further scenario analysis on other impacts of climate change on our activities in due course.
DCC plc Annual Report and Accounts 2022
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Risk Report continued
Going Concern and the Viability Statement
In accordance with the relevant provisions
set out in the UK Corporate Governance
Code, the Board has taken account of the
principal risks and uncertainties, as set
out in the table on pages 97 to 101, in
considering the statements to be made
in regard to the going concern basis of
accounting and the viability statement.
These statements are set out below:
31 March 2025. The Directors’ assessment
has been made with reference to the
resilience of the Group and its strong
financial position, the Group’s current
strategy, the Board’s risk appetite and the
Group’s principal risks and how these are
managed and, again, with regard to ongoing
economic and political uncertainty globally.
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 Strategic Report.
Period of Viability Statement
In accordance with Provision 31 of the
UK Corporate Governance Code, the
Directors have considered the length of
time to be reviewed in the context of the
Viability Statement.
The financial position of the Company, its
cash flows, liquidity position and borrowing
facilities are described in the Financial
Review on page 48. In addition, note 5.7
to the financial statements includes the
Company’s objectives, policies and
processes for managing its capital, its
financial risk management objectives,
details of its financial instruments and
hedging activities and its exposures to
credit risk and liquidity risk.
The Company has very 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 notwithstanding
the turbulent economic and political
environment.
Viability Statement
The Directors confirm that they have a
reasonable expectation that the Group will
continue to operate and meet its liabilities,
as they fall due, for the next three years to
The Directors believe that the three-year
period to 31 March 2025 represents an
appropriate period. The length of this period
aligns with the Group’s annual strategic
review period, which is a bottom-up review,
prepared business by business, which
considers the risks, opportunities and
development plans for each business and
is ultimately approved by the Board. The
period also aligns with the period used for
a number of other Group matters, including
the performance period for the Group’s
Long-term Incentive Plan. Finally, inherent
uncertainty increases with regard to
longer-term financial forecasting as time
horizons extend. A three-year period is
deemed to provide an appropriate balance
between near term and longer-term
influences.
Approach to Assessing Viability
In making a viability statement, the
Directors are required to consider DCC’s
ability to meet its liabilities as they fall due,
taking into account the Group’s current
position and principal risks.
The Group operates a devolved operational
structure and has sales, marketing and
support services operations across a diverse
mix of industry sectors. The Group has
an extremely broad spread of customers
and suppliers across 21 countries, three
continents and distinct market sectors.
Importantly, the Group is supported by
a very well-funded and liquid balance sheet
and strong operational cash flows.
A robust financial model of the Group is built
on a business-by-business basis. This model
is subjected to sensitivity analysis and those
sensitivities are reviewed on an ongoing
basis to ensure they remain appropriate
given changing circumstances in the
business, markets and economies. This
sensitivity review focuses on the Group’s
liquidity, solvency and gearing metrics, with
particular consideration given to the Group’s
principal debt covenants, including its Net
Debt:EBITDA and Interest Cover covenants.
Given the diverse nature of the Group’s
activities, the principal sensitivities
considered in the review are those where
negative economic and other impacts could
be experienced across the entire range of
the Group’s activities. These sensitivities
consider situations from depressed activity
levels globally to a material and persistent
rebasing of the Group’s profitability due to a
range of factors. The Group also reviewed a
sensitivity to consider the potential impact
of a very material ‘shock’ which would have a
significant and immediate impact on
profitability and cash flows and where
recovery would take a number of years.
Finally, the review considered a ‘reverse’
stress test to determine what level of
disruption would need to be experienced
before a breach of the Group’s debt
covenants was unavoidable.
This review and analysis also considers
the principal risks facing the Group, as
described on pages 97 to 101 and the
potential impacts these risks would have
on the Group’s business model, future
performance, solvency or liquidity over
the assessment period.
The Board considers that the diverse nature
of the sectors and geographies in which the
Group operates acts significantly to mitigate
the impact any of these risks might have on
the Group.
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Principal Risks and Uncertainties
The principal risks and uncertainties that have
the potential, in the short to medium term,
to have a significant impact on the Group’s
strategic objectives are set out below, together
with an indication of the particular strategic
priorities to which they relate, the principal
mitigation measures in place in each case,
developments in the year under review and
areas of focus for the year to March 2023.
The Board has reviewed these risks and
uncertainties by reference to relevant external
and internal factors such as the impact of
Russia’s invasion of Ukraine, the continued
effects of Covid-19, ongoing supply chain
disruption and inflationary pressures, together
with the continued growth and evolution
of the Group.
This report sets out the Board’s view of the
principal risks at this point in time and does not
represent an exhaustive list of all the risks that
may impact the Group. There may be other
matters that are not currently known to the
Board or are currently considered of low
likelihood or impact which could emerge or
evolve and give rise to material consequences.
The overall business environment is currently
subject to greater risk and uncertainty than has
been the case for some time.
The mitigation measures that are in place in
relation to identified risks are designed to provide
a reasonable and proportionate, and not an
absolute, level of protection against the impact
of the events in question, in line with the Group’s
agreed risk appetite.
The Board and management will continue to
actively monitor the Group’s risk environment
and available mitigation measures over the
course of the current year.
Principal Group Risks: Key focus areas during the year
Changing markets
and supply chains
Continued effects
of the pandemic
Climate change
and energy transition
Project and change
management
The recent Russian invasion of Ukraine has increased pressure on global supply chains and added to wider
inflationary pressures which had been caused in part by the disruption created by the pandemic. Heightened
political and economic risks are likely to remain a feature of the business environment in the current year. The
resilience created by core elements of the Group’s strategy and business model – including our diversity, our
focus on essential products and services, devolved management structure, excellent cash conversion and
robust financial position – is additionally valuable in this environment.
While the strong performance of the Group during a year of continued disruption demonstrates the resilience
of DCC’s business model, the Board recognises the risk of new variants developing and has therefore at this
time not changed its assessment of this risk.
The impacts of transitional and physical climate risks on the Group’s operations were assessed in detail during
the year and are outlined on page 99. The Group will continue to carefully monitor these risks and take steps to
mitigate their impacts, in addition to actively reducing our own and our customers’ carbon emissions.
There are several significant projects and change management programmes ongoing in the Group, including
the steps being taken to support our customers’ energy transition outlined in the Energy Strategy section on
page 22. While we consider the risk in this area to be slightly increased as a result, the Group has a strong track
record of managing change and the necessary expertise and resources are accordingly in place to manage
this risk.
Attracting and retaining
the right people
A range of factors have resulted in a shortage of available personnel at some levels and in some markets where
the Group operates. The Group and individual Group business maintain a constant focus on this area in keeping
with our purpose and strategy. More detail on our approach is set out in the People section on page 36.
DCC plc Annual Report and Accounts 2022
97
Strategic Report
Risk Report continued
Strategic Linkages
Market leading
positions
Operational
excellence
Innovation
Extend our
geographic footprint
Development
of our people
Financial
discipline
Risk and Impact on Strategy
Principal Mitigation Measures
Developments and Areas of Focus
Major HSE or environmental
incident
The Group is subject to safety
and environmental laws, regulations
and standards across multiple
jurisdictions.
The principal risks faced relate to fire,
explosion or multiple vehicle accident,
an incident resulting in significant
environmental damage and a HSE or
security event requiring the activation
of our crisis management plan.
Such risks may give rise to injuries
or fatalities, legal liability, significant
costs and damage to the Group’s
reputation.
HSE management systems are maintained in
proportion to the nature and scale of applicable
risks. Inspection and auditing processes in relation
to HSE management systems are conducted by
subsidiary management, by Group Sustainability,
incorporating HSE, and by external assurance
providers, as appropriate.
There is a strong focus on process safety and ongoing
communication with the relevant safety authorities,
particularly within the LPG and Retail & Oil divisions.
Emergency response and business continuity plans
are in place and tested to minimise the impact of any
significant incidents.
Insurance cover is maintained at Group level for
significant insurable risks.
While there have been no significant
changes to the assessment of these risks,
management continued to evolve HSE
practices during the year. For more detail, see
the Sustainable Business Report on page 80.
Further development of HSE controls and
management systems will continue in the
year ending March 2023 in line with our
Three Year HSE Plan, with a particular focus
on the onboarding of recent acquisitions,
increased use of leading performance
indicators to drive continuous improvement
and the implementation of a peer-to-peer
HSE performance review process.
Global pandemic
Global public health emergencies,
such as the Covid-19 pandemic
and any new variants and viruses in
the future, could have a significant
impact on the Group’s employees,
customers and business operations.
There is a continued risk of sustained
economic impacts arising from this
or future pandemics, which could
significantly impact on performance.
Group, divisional and local management are
continuing to actively review and respond to the risks
and uncertainties arising from the Covid-19 crisis and
to monitor the risk of future pandemics. A broad range
of preventative measures have been implemented
and are regularly re-assessed to help ensure the
safety of our employees, customers, suppliers and
other stakeholders. There is a focus on communications
with employees to ensure their continued well-being.
Regular reporting is in place to facilitate tracking of key
metrics, such as absence levels, by Group management.
The Group’s crisis management and business
continuity plans would be implemented in response to
any future pandemics, taking lessons learned during
the Covid-19 crisis into account.
The diversity and resilience of the Group’s
activities was again a feature of the year under
review. The Board and management will
continue to monitor the Covid-19 situation
and ensure that the Group’s response and
mitigation measures evolve as required. The
Group’s businesses will continue to focus on
the health and well-being of employees and
on maintaining essential business activities.
Changes to the environment in which our
businesses operate will continue to be
addressed as they arise and the Group has
and will continue to adapt as required to new
ways of working and doing business, while
protecting the safety of our employees,
customers, suppliers and other stakeholders.
98
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Strategic Report
Governance
Financial Statements
Supplementary Info
Risk and Impact on Strategy
Principal Mitigation Measures
Developments and Areas of Focus
Acquisitions and project/
change management
A failure to identify, execute or
properly integrate acquisitions or
to effectively complete change
management programmes or other
significant projects could impact
on profit targets and impede the
strategic development of the Group.
Compliance with legal
and ethical standards
A material failure to comply with
applicable legal and ethical standards
could result in penalties, costs,
reputational harm and damage
to relationships with suppliers
or customers.
Climate change
Transitional climate change risks and
opportunities, including changes in
policy, regulation, technologies and
societal views have the potential to
impact on demand for some of the
Group’s products.
Physical climate change risks,
such as extreme weather events,
could affect the operation of
our businesses.
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
well in excess of the cost of capital and of their
strategic fit within the Group.
The Group conducts a stringent internal evaluation
process and due diligence prior to completing
any acquisition.
Performance against original acquisition proposals
is reported to the Board annually and account is taken
of lessons learned from this.
Projects and change management programmes are
resourced by dedicated and appropriately qualified
internal personnel, supported by external expertise,
and significant projects or programmes are subject to
oversight by the Group Chief Information Officer, the
Group Project Management Office, by divisional and
Group management and by the Board.
The Group promotes a culture of compliance and
‘Doing the Right Thing’ in all activities, consistent with
our value of Integrity.
An assessment of our compliance culture is included
in staff surveys and questions in online training.
A Code of Conduct is in place and is supported by
more detailed policies where needed, including a
Supply Chain Integrity Policy, a Human Rights Policy,
an Anti-Bribery and Corruption Policy and a Data
Protection Policy.
Training programmes are provided for employees
on key compliance risks.
All employees can raise concerns using the Group’s
whistleblowing facilities.
The Group Legal & Compliance function performs
compliance audits and a range of compliance
controls are reviewed by Group Internal Audit
as part of their audits.
The Group has relationships and structures in place
to be well-positioned to enable energy transition,
including introducing lower carbon forms of energy
as these emerge. Detail on our revised approach to
the energy sector is available in the Energy Strategy
section on page 22.
Key sustainability initiatives are overseen
by the Board, the Governance and Sustainability
Committee and the Executive Sustainability
Committee.
The Group’s businesses have appropriate business
continuity and crisis management plans in place.
The Group continues to be active from
a development perspective including the
recent acquisition by DCC Technology
of Almo Corporation.
Acquisition activity in the current financial year
will continue to be subject to robust internal
evaluation processes and due diligence.
The implementation of the Group’s updated
energy strategy, as outlined in the Energy
Strategy section on page 22, will be a priority
in the current year.
The response to the Russian invasion of
Ukraine has included a significant number
of legal and compliance changes that are
relevant to the Group’s operations, including
the significant extension of sanctions and
trade controls, some measures to address
increased energy prices and a greater need to
monitor and support vulnerable consumers.
Group businesses are actively managing
compliance with these requirements within
the framework of our existing compliance
procedures. The Group and individual
businesses will continue to monitor the
regulatory environment over the coming
year to ensure our legal obligations are met
as they evolve.
Significant analysis on the transitional and
physical implications of climate change on the
Group’s operations was undertaken during
the year. More detail on our approach to the
assessment of this risk is set out on page 94.
Management will continue to monitor
transitional and physical climate change risks
to consider their impact on the Group and
to put in place appropriate mitigation.
DCC plc Annual Report and Accounts 2022
99
Strategic Report
Risk Report continued
Risk and Impact on Strategy
Principal Mitigation Measures
Developments and Areas of Focus
IT system failure/cybercrime
Data security
Our IT systems and infrastructure
may be affected by loss of service
or system availability, significant
system changes or upgrades or
cybercrime, which could result in
financial or reputational damage.
The personal data we hold may be
affected by accidental exposure
or deliberate theft of sensitive or
personal information, which could
result in a regulatory breach or
financial or reputational damage.
Ability to attract and retain people
The Group’s devolved management
structure has been fundamental
to the Group’s success. A failure to
attract, retain and develop talent,
particularly in new markets and in
recent acquisitions could impact
on the attainment of strategic
objectives.
Dedicated IT personnel in Group subsidiaries
implement IT standards, oversee IT security and
are provided with technical expertise and support
from Group IT.
Cybersecurity reviews are performed by a dedicated
internal IT Assurance team and external technical
experts to provide independent assurance.
The Group’s businesses have appropriate business
continuity, IT disaster recovery and crisis management
plans in place. DCC centrally maintains a level of cyber
insurance.
Our Group Data Protection Policy, which is supported
by detailed guidelines, requires Group businesses
to ensure appropriate controls are in place over
personal data.
The Group maintains a constant focus on this area
in line with our purpose and strategy, supporting the
development of our people and ensuring that our
workplaces are inclusive and diverse environments.
Key mitigation measures include our:
• Annual succession planning cycle which focuses
on business continuity risk;
• Talent review process which identifies high
•
performing and high potential talent for the future;
International mobility practices which support the
transfer of talent across our global group for
professional development purposes as well as
business need; particularly supporting the
integration of new acquisitions;
• Core leadership development programmes
which support development at key career stages;
• Annual remuneration cycle which ensures
incentives are competitive from a retention
perspective, and aligned with the Group’s culture
of long-term performance.
These programmes form part of the overall Group
Talent and People Strategy which is reviewed regularly
by the Head of Group Human Resources, Divisional
management, the Chief Executive and the Board.
The potential impact of IT system failure
or cybercrime is limited by the devolved
structure of the Group.
While global cybercrime trends continue to
evolve, the Group continues to strengthen
its mitigation measures and resources in
this area. A specific review of ransomware
protection measures was undertaken in
certain businesses during the year under
review. Mandatory cybersecurity training
was also enhanced.
Group IT and Group IT Assurance will
continue to focus on raising awareness of
cyber threats in the current financial year and
on ensuring that the Group’s IT standards and
policies, including in relation to the security
of personal data, are consistently applied.
The Group will continue to focus on
developing and embedding its HR
programmes and strategy in the current
financial year, particularly in recently acquired
businesses, and on adapting to new ways
of working.
The Group is focused on ensuring DCC
continues to be a great place to work for
all of our colleagues with HR initiatives
supporting key areas of culture and
engagement, inclusion and diversity and
employee experience.
The talent requirements resulting from
recent acquisitions have been assessed
and addressed.
The development of our people has been
included in the sustainability targets and
metrics set during the year and described
in more detail in the Sustainable Business
Report on page 80. More detail on our overall
approach to supporting our people is set out
in the People section on page 36.
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Risk and Impact on Strategy
Principal Mitigation Measures
Developments and Areas of Focus
Corporate reporting
Failure to accurately report or
forecast financial or non-financial
results through error or fraud could
result in regulatory sanctions and
damage the Group’s reputation.
Group financial risk management is governed by
policies which are reviewed and approved annually
by the Board.
Standard reporting packs are prepared, including
weekly forecasts and monthly submissions, and
are subject to review by local, divisional and Group
management as well as Group Internal Audit.
This Annual Report contains some significant
developments in the Group’s non-financial
reporting, notably in relation to Scope 1, 2,
and 3 carbon emissions. We are developing
our internal processes and reporting systems
so that the Group can efficiently meet
additional corporate reporting and assurance
requirements.
The Group is actively developing its non-financial
reporting, including as part of the Group Sustainability
Programme. A key objective in this area is to
ensure a clear alignment between Group and
divisional strategies, while also meeting applicable
regulatory requirements.
The impact of external factors is mitigated through
a focus on strong financial management, a broad
spread of products and customers across the
Group and careful geographic expansion.
The Group’s diversity, in terms of sectoral
focus, customer and supplier breadth and
geographic mix, and the essential nature of
our products and services, have continued
to contribute to our resilience as market
dynamics evolve. The impact of geo-political
developments, notably the invasion of Ukraine
by Russia in February 2022, and the Covid-19
pandemic on the global economy and on
individual markets and supply chains continue
to be monitored.
Changing markets and
supply chains
External factors outside the direct
influence of the Group, such as
economic cycles and technological
changes, can significantly impact on
performance. Specifically, the impact
of inflation, rising energy prices,
and geo-political developments
can result in supply chain disruption
including logistics, freight costs,
availability of labour and product,
plant and machinery.
DCC plc Annual Report and Accounts 2022
101
Governance
Governance
Chairman’s Introduction
Board of Directors
Group Management Team
Corporate Governance Statement
Governance and Sustainability Committee Report
Audit Committee Report
Remuneration Report
Report of the Directors
103
104
106
108
119
123
128
154
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DCC plc Annual Report and Accounts 2022
Chairman’s Introduction
DCC’s purpose, culture and
values are reflected in our
commitment to high standards
of corporate governance.
Dear Shareholder,
On behalf of the Board, I am pleased to present
our Governance Report for the year ended
31 March 2022.
As a Board, we take our compliance with the
UK Corporate Governance Code seriously.
I am happy to confirm that we are in compliance
with the Code other than provision 18 in relation
to the re-appointment of Jane Lodge as a
Director at the 2021 Annual General Meeting
(‘AGM’), which is addressed on page 122.
Maintaining and promoting high standards
of corporate governance is essential to
supporting the delivery of our strategy. It is also
a vital element of an effective board, whose
primary role is to promote the long-term
purpose and success of the Group for the
benefit of all our stakeholders.
Our Culture
DCC has a strong purpose, culture and set of
values which collectively anchor our strategic
priorities, decision-making and actions,
especially during difficult times such as these.
Our clearly defined values of Safety, Integrity,
Partnership and Excellence are embedded in
our business and guide our day-to-day work.
Our people are central to our business and
colleague engagement is therefore high on the
agenda for the Board. Of equal importance is
engagement with our wider stakeholders. The
Board received updates on how the application
of the Group’s culture and values are
embedded for colleagues and the Group’s
wider stakeholders during the year. More detail
on this is provided on page 111.
Sustainability, including Climate Change
The pandemic and the recent invasion
of Ukraine have not distracted from the
challenges presented by climate change. The
positive role that DCC will play in this area is
described in the Energy Strategy section on
page 22 and our Sustainable Business Report
on page 80. While building a sustainable
business has been part of DCC’s strategy
for many years, as a Board, we have, and will
continue to, give the subject a good deal of
consideration and emphasis. Consistent with
this, the Board has oversight of sustainability
matters. Details of our work to comply with the
requirements of the Task Force for Climate-
related Financial Disclosures (‘TCFD’) are set
out on page 85.
Board Composition and Diversity
The year under review was a particularly busy
year for Board and Committee changes. At the
2021 AGM, I was appointed Chairman of the
Board, following the retirement of John
Moloney as Chairman and non-executive
Director. On the same date, Caroline Dowling
succeeded me as the Company’s Senior
Independent Director, and we welcomed Lily Liu
and Laura Angelini as non-executive Directors.
The sudden death in July 2021 of Cormac
McCarthy, who had been a non-executive
Director since 2016, led to Jane Lodge
withdrawing her resignation in advance of
the 2021 AGM and subsequently retiring on
31 March 2022. Cormac was a valued Board
member, and I would like to acknowledge
his great insight, generosity and experience
in his role as Director. In a further change to
the Board’s composition, Alan Ralph joined
the Board in November 2021 and became
Chairman of the Audit Committee in March
2022. Pam Kirby, who has been a Director
since 2013, will retire from the Board at our
AGM in 2022.
On behalf of the Board, I wish to extend my
sincere appreciation to John, Jane and Pam
for their contribution to the Board during their
respective tenures as Directors and I wish them
all the best for the future. Lily, Laura and Alan’s
extensive experience, as outlined on pages 104
to 105, complements and further expands the
broad range of skills on the Board. The Board
actively promotes inclusion and diversity across
the Group. The Board continues to meet the
requirements of the Hampton-Alexander
Review and the Parker Review.
Board Committees
In the year under review, the Board and
Committees again adopted a virtual setting for
the majority of our meetings. We found that
this did not restrict the Board’s discussions
in any way. But, nonetheless, as soon as
restrictions allowed, physical meetings were
conducted. All of our Board Committees
continued to perform very effectively during
the year. You will find, on pages 119 to 153,
individual reports, introduced by the Chairman
of each Committee, giving details of their
activities during the year.
Board Evaluation
The Board and its Committees review their
performance each year and examine how
improvements could be made. As detailed on
page 117, we conducted an internal evaluation
in 2022 and I am pleased to report that the
results of the process were positive.
Board Development
We continued the development of our Board,
with a number of virtual and physical visits to
Group businesses over the course of the year.
Where possible, these visits included a virtual
tour of facilities as well as a discussion with
the management team on the performance of
their business, development areas, risks and
opportunities, safety and compliance and
employee engagement. We also received a
number of external presentations offering valuable
insights on DCC’s strategy and operations.
Priorities for the Year Ahead
As a Board, we have a busy year ahead with
a number of governance priorities including
overseeing the implementation of our growth
and net zero strategy for the energy sector,
continued progress on our overall sustainability
including the development of a diverse group of
leaders, and maintaining robust internal control
at a time of increased external turbulence. The
changes made to the Board over the last year
will support this.
Mark Breuer
Chairman
16 May 2022
DCC plc Annual Report and Accounts 2022
103
Supplementary InfoFinancial StatementsGovernanceStrategic Report
Board of Directors
1.
4.
2.
5.
3.
6.
1. Mark Breuer
Non-executive Chairman
2. Donal Murphy
Chief Executive
G
3. Kevin Lucey
Chief Financial Officer
Date of appointment: Mark joined the Board in
November 2018 and was appointed non-executive
Chairman in July 2021.
Expertise: Mark is a highly experienced corporate
financier and has operated at senior levels in the UK and
abroad. He worked in investment banking for 30 years, the
last 20 of which were for J. P. Morgan, where he served in
numerous client facing and management roles, delivering
mergers and acquisitions and broader corporate finance
advice to both domestic and international clients. Mark’s
wide-ranging corporate finance experience is particularly
relevant given DCC’s acquisition focus.
Key external appointments: Chairman and
non-executive director of Derwent London plc.
Date of appointment: December 2008
Expertise: Donal joined DCC in 1998 and has a
detailed knowledge of the operations of the Group,
having held a number of senior leadership roles,
including Managing Director of DCC Technology from
2004 to 2006 and Managing Director of DCC Energy
from 2006 to 2017. He led the very significant growth
of the Energy division and its transition from a small
UK and Irish business to a substantial international
business operating in 12 countries.
Donal was appointed Chief Executive in July 2017.
Key external appointments: None.
4. Laura Angelini
Non-executive Director
5. Caroline Dowling
Non-executive Director,
Senior Independent Director
G
A R
Date of appointment: July 2021
Expertise: Laura has extensive knowledge of the
healthcare sector in Europe and the US. She has more
than 30 years of experience in medical devices across
multiple therapies and business models, including
hospital products, consumer MedTech and home
therapies. In 2021, Laura retired as General Manager
of Baxter International’s global Renal Care business,
having joined Baxter in 2016 in this role. She previously
held senior roles in Johnson & Johnson from 1991
to 2016.
Laura’s leadership experience, healthcare expertise and
knowledge of the North American markets enhances
the Board’s knowledge in key areas.
Key external appointments: Member of the Board
of Trustees of Jacksonville University.
Date of appointment: May 2019
Expertise: Caroline is a highly experienced business
leader with extensive global knowledge in the technology
sector, specifically electronic, technical and logistic services.
Caroline was, until her retirement in February 2018, the
Business Group President of Flex, an industry-leading,
Fortune Global 500 company with operations in 30
countries. In this role, she led the Telecommunications,
Enterprise Compute, Networking and Cloud Data Centre
and was also responsible for managing the Global Services
Division, supporting complex supply chains. Caroline was
previously a non-executive director of the Irish Industrial
Development Agency.
Caroline’s leadership experience and areas of
expertise are particularly relevant to key sectors in
which DCC operates.
Key external appointments:
Non-executive director of CRH plc and IMI plc.
Date of appointment: July 2020
Expertise: Kevin joined DCC in 2010 as Finance &
Development Director of the Technology division and
since then has held a number of senior Group finance
roles, including, most recently, Head of Capital Markets.
Kevin is a Chartered Accountant and has extensive
international M&A, capital markets and operational
finance experience. Prior to joining DCC, Kevin was
CFO and a principal of a leading Irish private equity firm.
Kevin was appointed Chief Financial Officer in July 2020.
Key external appointments: None.
6. Tufan Erginbilgic
Non-executive Director
G R
Date of appointment: April 2020
Expertise: Tufan was BP’s Downstream Chief Executive
and a member of its executive team from 2014 to March
2020 with responsibility for BP’s global fuels, lubricants and
petrochemicals businesses. Prior to that, Tufan was Chief
Operating Officer of BP’s Downstream segment, Chief of
Staff to the Group Chief Executive, Chief Executive of
Castrol Lubricants and held several other management
and executive roles within BP. Tufan previously held various
management roles in Mobil Oil. Tufan is a former
non-executive director of GKN plc.
Tufan’s detailed knowledge and leadership experience
in global fuels businesses and new energy technologies
are of particular relevance to DCC.
Key external appointments: Partner at Global
Infrastructure Partners. Non-executive director of
Türkiye Petrol Rafinerileri A.Ş. (‘Tüpraş’) and IVECO
Group N.V. and member of the strategic advisory board
of the University of Surrey.
Committee Membership Key:
A Audit Committee Chair
A Audit Committee Member
104
DCC plc Annual Report and Accounts 2022
G Governance and Sustainability Committee Chair
R Remuneration Committee Chair
G Governance and Sustainability Committee Member
R Remuneration Committee Member
Governance
7.
8.
9.
10.
11.
12.
7. David Jukes
Non-executive Director
8. Pamela Kirby
Non-executive Director
R
G R
9. Lily Liu
Non-executive Director
A
Date of appointment: March 2015
Expertise: David has over 40 years of international
chemical distribution experience. In May 2018, he was
appointed President and CEO and a director of Univar
Solutions Inc. Prior to this appointment, he held a
number of senior positions with Univar across global
locations including President and Chief Operating
Officer. Other previous roles include Senior Vice
President of Global Sales, Marketing and Industry
Relations for Omnexus and VP Business Development
for Ellis & Everard Plc.
David’s distribution experience brings valuable
perspective to the Board.
Key external appointments: President and Chief
Executive Officer of Univar Solutions Inc.
10. Jane Lodge
Non-executive Director
A
Date of appointment: October 2012
Expertise: Jane was a senior audit partner with
Deloitte, where she spent over 25 years, advising
multinational manufacturing companies including
businesses in the food and automotive sectors. Her
extensive experience with manufacturing companies
and her strategic work with Deloitte has given her an
international business perspective. She was a member
of the CBI Manufacturing Council until 2011. Other
previous roles include non-executive director of Sirius
Minerals plc, Devro plc and Costain Group PLC.
Jane brought substantial audit, risk and audit
committee experience to the Board. Jane retired from
the Board and as Chairman of the Audit Committee on
31 March 2022.
Key external appointments: Non-executive
director of Glanbia plc and Bakkavor Group plc.
Date of appointment: September 2013
Expertise: Pamela has more than 30 years’
experience in the international healthcare sector. She
was the CEO of Quintiles Transnational Corporation
and previously held senior executive positions at
AstraZeneca plc and F. Hoffman-La Roche.
Pamela was chairman of Scynexis Inc and Oxford
Immunotec Ltd and she has held a number of
non-executive director roles at companies including
Hikma Pharmaceuticals plc, Novo Nordisk A/S and Smith
and Nephew plc. Pamela was a senior independent
director at Informa plc and Victrex plc.
Through her executive and non-executive roles,
Pamela brings a wealth of international experience to
the Board of DCC.
Key external appointments: Non-executive
director of Reckitt Benckiser Group plc and member of
the supervisory board of Akzo Nobel N.V.
11. Alan Ralph
Non-executive Director
A
Date of appointment: November 2021
Expertise: Alan is a very experienced business and
finance leader having spent almost 20 years with UDG
Healthcare plc (formerly United Drug plc). Alan spent
10 years leading UDG’s largest business unit before
supporting its strategic transformation as Chief
Financial Officer for five years.
Alan’s financial expertise, business leadership
experience and knowledge of the healthcare sector
complements the Board’s knowledge.
Key external appointments: None.
Date of appointment: July 2021
Expertise: Lily has more than 20 years’ experience in
finance roles and is the current Chief Financial Officer
of Essentra plc, a leading global provider of essential
components and solutions and a member of the FTSE
250. Lily joined Essentra plc in 2018 as Chief Financial
Officer, having previously been Chief Financial Officer
of Xaar plc and Smiths Detection.
Lily’s current role as CFO in a global business brings
international financial experience to the Board and
Audit Committee.
Key external appointments: None.
12. Mark Ryan
Non-executive Director
A G
Date of appointment: November 2017
Expertise: Mark is a highly experienced board director
and business leader who has successfully operated at
senior management levels in Ireland and internationally.
Mark was Country Managing Director of Accenture in
Ireland between 2005 and 2014. During his career with
Accenture, he spent extended periods working in the
US and UK. Mark served in numerous management
and executive roles in delivering major strategy, IT and
business change programmes both locally and
internationally. Mark was previously a non-executive
director of Immedis and Wells Fargo Bank International.
Mark brings a strong understanding of commercial
leadership and business perspective to the Board.
Key external appointments: Chairman of
Publicis and Kefron Group and non-executive director
of Econiq.
DCC plc Annual Report and Accounts 2022
105
Supplementary InfoFinancial StatementsGovernanceStrategic Report
2.
5.
8.
3.
6.
9.
Group Management Team
1.
4.
7.
10.
106
DCC plc Annual Report and Accounts 2022
Governance Strategic Report
Governance
Financial Statements
Supplementary Info
1. Donal Murphy
Chief Executive
2. Kevin Lucey
Chief Financial Officer
3. Henry Cubbon
Managing Director, DCC LPG
See Donal’s biography on page 104.
See Kevin’s biography on page 104.
Henry has been Managing Director of DCC’s LPG
division since 2018, having joined DCC in 2008 as
Managing Director of Flogas Britain. Prior to joining
DCC, he was Managing Director of Antalis from 2000
to 2008, overseeing its paper distribution business
in the UK, Ireland and South Africa. Previously, he
held a strategic planning role at paper manufacturer
Arjo Wiggins Appleton and was a senior manager
at Barclays Bank, Paris, having started his career on
their graduate programme.
4. Eddie O’Brien
Managing Director, DCC Retail & Oil
5. Conor Costigan
Managing Director, DCC Healthcare
6. Tim Griffin
Managing Director, DCC Technology
Eddie has been the Managing Director of DCC Retail
& Oil since 2018. Eddie joined DCC in 2012 as the
Managing Director of Oil and was subsequently
Managing Director of Retail & Fuel Cards. Prior to joining
DCC, Eddie was CEO at Topaz Energy, Ireland’s largest
fuel and convenience brand. Before this, he spent
13 years at Statoil across a number of finance, pricing,
commercial and leadership roles, including Vice
President Finance and Vice President Retail Operations
at Statoil Fuel and Retail in Oslo.
Conor has been the Managing Director of DCC
Healthcare since 2006. Conor joined DCC in 1997 and
has held a number of senior leadership roles within the
Group, including in the Food & Beverage division and
Investor Relations. Conor moved into the Healthcare
division in 2003, initially as Finance & Development
Director before being appointed Managing Director
in 2006.
Tim has been the Managing Director of DCC
Technology since he joined DCC in 2018. Having spent
over a decade of his 30-year career in roles based in
Australia and Singapore for NCR and Dell, Tim has
extensive experience in performing regional and global
functional, operational and general management roles.
At Dell, he led Global Services & Solutions for Consumer
& Small Business and was General Manager of Displays
& Client Peripherals, before being appointed CEO &
Senior Vice President of Dell’s business in the UK.
7. Darragh Byrne
General Counsel & Company Secretary
8. Nicola McCracken
Head of Group Human Resources
9. Conor Murphy
Director of Group Finance
Darragh was appointed General Counsel & Company
Secretary in October 2020, having previously been
Head of Group Legal & Compliance. Darragh joined
DCC in 2012. Before that, he held a number of senior
in-house legal positions in other organisations.
Darragh is qualified as a solicitor in Ireland and in
England and Wales.
Nicola has been the Head of Group Human Resources
since she joined DCC in May 2016. Prior to joining
DCC, Nicola was the HR Director responsible for
Talent and Reward at CRH plc from 2007 to 2016.
Prior to that, she enjoyed a consulting career with
PricewaterhouseCoopers in Europe and North
America, where she helped global organisations from
multiple industry sectors adapt their human capital
strategies to improve business performance.
Conor assumed the role of Director of Group Finance
in July 2020 from his previous role, Head of Group
Financial Planning & Control, which he held since
July 2017. Conor joined DCC in 1998 and has held
a number of senior financial leadership roles across
the Group, including Finance Director of DCC Energy,
Finance & Development Director DCC Technology
and Investor Relations Manager. Prior to joining DCC,
Conor trained as an accountant with KPMG.
10. Peter Quinn
Chief Information Officer
Peter has been Chief Information Officer since he
joined DCC in 2004. He also spent three years as
Chief Operating Officer of DCC’s largest oil distribution
business, Certas Energy UK. Prior to joining DCC,
Peter worked as an IT consultant with an international
firm where he specialised in the delivery of complex IT
solutions across a range of business sectors. He had
previously worked in the food and transport industries
in a variety of IT leadership roles.
DCC plc Annual Report and Accounts 2022
107
Governance
Corporate Governance Statement
DCC is subject to the UK Corporate Governance Code. This statement details how DCC applied the principles and met the provisions of the Code
during the year under review.
Governance at a Glance
Highlights
• Significant Board renewal, with the appointment of a new Chairman and three non-executive Directors
• Continued focus on the key strategic opportunities and risks facing the Group, including the evolution of the Group’s energy activities
• Further growth in the Group, including with the acquisition of Almo Corporation in December 2021
Experience and Skills of the Non-executive Directors
Enterprise Leadership
Relevant Industry
Other Supply Chain / Distribution
Sustainability / ESG
Financial Expertise
Capital Markets
Mergers & Acquisitions
Digital
Remuneration
Other Board Experience
Executive and Non-
executive Directors
Executive
Non-executive
Gender
diversity
Female
Male
17%
7
6
4
4
5
5
5
9
9
Geographic location
of Directors
Ireland
UK
USA
16%
42%
10
Board
independence
Independent
Non-independent (Chairman
and Executive Directors)
25%
42%
83%
58%
42%
75%
All of the above charts are as at 31 March 2022.
UK Corporate Governance Code – Statement of Compliance
The Board continues to assess its approach to
corporate governance by reference to the UK
Corporate Governance Code (‘the Code’).
The Board believes that the spirit of the
Code continues to be upheld throughout its
work and that of its Committees. It reports
one instance of non-compliance during
the year with the Code. This was in relation
to the annual re-election of directors
(Provision 18). Jane Lodge was due to retire
at the 2021 AGM and was therefore not
proposed for re-election.
A decision that Jane would remain as
a Director and as Chairman of the Audit
Committee following the sudden death of
Cormac McCarthy was made following the
publication of the Notice of the AGM.
Further details can be found on page 122.
As set out above, this Corporate Governance
Statement has been structured to allow
shareholders to consider how the Code’s
Principles have been applied.
108
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Corporate Governance Framework
Board of Directors
The Board is collectively responsible for the long-term success of the Group. Its role is to provide leadership, to establish purpose, values
and strategy, 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. It is also responsible for establishing a framework to assess and manage risk,
including climate risk.
The Board receives reports at its meetings from the Chairmen of each of the Committees and from the Workforce Engagement Director
on their current activities.
Governance and
Sustainability Committee
• Responsible for considering the
composition and structure of the
Board and succession planning
• Reviewing leadership needs of the
organisation, both executive and
non-executive
• Monitoring the Company’s
compliance with legal and
regulatory requirements in relation
to corporate governance
• Oversight of the Group’s
sustainability activities
Audit
Committee
• Assisting the Board in assessing
the principal and emerging risks
facing the Company and
monitoring the effectiveness of
risk management and internal
control systems
• Monitoring the integrity of the
Group’s financial statements,
including reviewing significant
financial reporting judgements
contained in them
• Reviewing the operation of the
Group Internal Audit function
• Overseeing the relationship with
the external auditor
Remuneration
Committee
• Determining the Remuneration
Policy
• Determining the remuneration
packages of the Chairman,
executive Directors and senior
management
• Oversight of other Group and
subsidiary remuneration
structures
• Operation of the Company’s
long-term incentive schemes
Further details of the activities of the
Governance and Sustainability
Committee are set out in its Report
on pages 119 to 122.
Further details of the activities of the
Audit Committee are set out in its
Report on pages 123 to 127.
Further details of the activities of the
Remuneration Committee are set
out in the Remuneration Report on
pages 128 to 153.
Chief Executive
The responsibilities of the Chief Executive are set out on page 110.
Executive Risk Committee
The responsibilities of the Executive
Risk Committee are set out in the
Risk Report on page 92.
Group Management Team
Supports the Chief Executive in
executing his responsibilities.
Reports to the Chief Executive at
weekly management meetings.
Executive Sustainability
Committee
Supervises and makes operational
decisions in relation to the Group’s
sustainability activities.
DCC plc Annual Report and Accounts 2022
109
Governance
Corporate Governance Statement continued
Role and Responsibilities
Chairman
A clear division of responsibility exists
between the Chairman, who is non-executive,
and the Chief Executive.
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.
Non-Executive Directors
The Board consists of an appropriate
combination of a non-executive Chairman,
two executive Directors and nine independent
non-executive Directors, such that no one
individual or small group of individuals
dominates the Board’s decision making.
There is a clear division of responsibilities
between the leadership of the Board and the
executive leadership of the business.
Non-executive Directors scrutinise and
hold to account the performance of
management and individual executive
Directors against agreed performance
objectives. The Chairman holds meetings
with the non-executive Directors without
the executive Directors present.
p
e
In d
e n d ent oversig
h
t
Board of
Directors
Chief
Executive
Leaders h i p
Senior Independent Director
The Senior Independent Director acts as an
intermediary for other Directors, if necessary,
and is available to shareholders who may have
concerns that cannot be addressed through
the Chairman or Chief Executive.
The Senior Independent Director led the
annual Board evaluation process, as detailed
under ‘Board Performance Evaluation’ on
page 117.
Company Secretary
The Directors have access to the advice
and services of the Company Secretary,
whose responsibilities include, assisting
the Chairman in relation to corporate
governance matters and ensuring
compliance by the Company with applicable
legal and regulatory requirements.
Chief Executive
The Chief Executive is responsible for
day-to-day management of the Group’s
operations, for the implementation of
Group and divisional strategy, and instilling
the Company’s purpose, values and culture
standards throughout the Group.
Schedule of Matters Reserved for Board Decision
The Schedule of Matters Reserved for Board Decision is regularly reviewed to ensure it meets with current best practice. During the year it was
updated to confirm the Board’s oversight of sustainability matters.
The table below summarises the key matters that are required to be considered by the Board:
Group strategy and investment
• The Group’s strategic aims and objectives
• Annual operating and capital expenditure
budgets
• Material acquisitions
Structure and capital
• Changes to the Group’s capital structure
including reduction of capital, share
issues and share buybacks
• Changes to the Company’s listing
arrangements
Corporate reporting
• Final and interim results announcements
• Annual Report and Accounts
• Dividends
• Significant changes in accounting policies
or practices
• Oversight of internal control and risk
management frameworks, including
to reflect climate-related risks
Leadership and people
• Composition of the Board, including
the CEO and CFO
• Succession planning for the Board
and senior management
• Board Committee constitution
• Appointment of the Company Secretary
Shareholders and stakeholders
• Oversight of engagement with
shareholders and other stakeholders
• Reviewing mechanisms for engagement
with other stakeholders
• Designating a non-executive Director
for engagement with the workforce
Sustainability, including climate change
• Oversight of the Group Sustainability
Programme, including considering
recommendations from the Governance
and Sustainability Committee in respect
of the key sustainability issues and related
objectives that are material to the Group
as a whole, including climate change and
energy transition
• Considering climate-related issues when
reviewing and guiding Group and divisional
strategy, investment proposals, budgets,
and management objectives
110
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Strategy
DCC’s Group strategy is set out on pages 8
and 9, with detail on divisional strategies
provided on pages 22 to 27, 56, 62, 68 and 74.
The Board’s responsibilities in regard to strategy
are summarised on page 112.
Board meetings
The table of Board attendance is set out on
page 116. Due to restrictions as a result of
Covid-19, the majority of Board meetings
held during the year were virtual.
Site visits
It has been the Board’s practice to hold
a number of Board meetings at subsidiary
locations each year in order to provide
Directors with the opportunity to meet local
teams, see operations on the ground and have
presentations on current operations, projects
and future plans.
Due to Covid-19 restrictions, Board meetings
could not be physically held at subsidiary
locations in the year under review. Therefore,
Directors attended virtual site visits in
EuroCaps, Flogas Ireland, Certas Energy UK,
DCC Energi Denmark and Certas Energy
France. Where possible, these visits included
a virtual tour of the business as well as a
presentation from local management teams,
allowing time for questions and answers. In
advance of the meetings, the Directors were
provided with information on the business
covering financial performance, development
areas, risks and opportunities, safety and
compliance, employee engagement and the
impact of Covid-19.
Following the lifting of Covid-19 restrictions,
certain Directors made physical site visits to Ion
Laboratories, DCC Vital and Certas Retail Ireland.
H o w t h e B o ard monitors culture
E m p l oyee surveys
Reports on the following
matters are provided to the Board to
provide insights on the Group’s culture:
• Employee engagement surveys
• Compliance surveys
• Reports from and discussions with management,
both in Board meetings and on site visits
• Reports from the Workforce Engagement Director
• Audits conducted by Group Internal Audit, Group
Sustainability (on HSE) and Group Compliance teams
• Whistleblowing reports
• Training completion rates, including training
S
i
t
e
v
i
s
i
t
s
on the Code of Conduct
• Succession and talent development,
with a focus on diversity
• Safety incidents and performance
• Disputes and regulatory investigations
x
t
e
r
n
al audit
t
I n
e r n al audits
nt Director
e
m
e
g
a
g
n
E
e
c
r
o
f
k
r
o
W
E
Board of Directors
Leadership
The Board’s leadership responsibilities involve
working with management to monitor the Group’s
purpose and values, and to develop strategy,
including deciding which risks it is prepared to
take in pursuing its strategic objectives.
Oversight
The Board’s oversight responsibilities involve
it constructively challenging the management
team in relation to operational aspects of the
business, including the approval of budgets,
and probing whether risk management and
internal controls are sound. It is also responsible
for ensuring that accurate, timely and
understandable information is provided about
the Group to investors, regulators and the
Group’s other stakeholders.
Purpose, Values and Culture
DCC’s purpose is enabling people and
businesses to grow and progress. The Board
promotes the Group’s purpose and values
through ongoing virtual and physical site visits
to Group companies throughout the year,
through meetings with members of senior
management teams and at Board meetings
where members of senior management
presented to the Board.
The Board supports, and strives to operate
in accordance with, the Group’s purpose and
values at all times, and challenges management
as to whether strategic decisions are aligned
to the purpose and values of the Group.
The Board monitors the Group’s culture to
ensure it is aligned with DCC’s purpose, values
and strategy. During the year, the Board
considered detailed reports on the results of
the Group-wide employee engagement survey,
through senior management briefings. A number
of Board and individual Director visits to Group
companies were also conducted during the
year, which allowed the Directors to engage
with local management teams and members
of the workforce. The ongoing activities of the
Workforce Engagement Director are another
key means of monitoring culture.
Further details on the relationship between
the Company’s purpose, values, strategy
and business model and how these affect
the Group’s stakeholders are set out in the
Strategic Report on page 6.
DCC plc Annual Report and Accounts 2022
111
Governance
Corporate Governance Statement continued
Board activities during the year
A detailed Board calendar is in place to ensure that the Directors discuss a suitable range of topics throughout the year. This is reviewed by the Governance
and Sustainability Committee and by the Board in advance of the commencement of the financial year. Board papers are circulated one week in advance
of meetings.
The Board met nine times during the year. Additional meetings are arranged if necessary for the Board to properly discharge its duties.
Areas of focus
Strategy and
financing
• Reviewed the strategy of each of the Group’s divisions during the year, with a particular focus on the Group’s approach
to the energy sector.
• At a two-day Board meeting in December, Group strategy was considered in detail.
• Reviewed the Group’s financial structure and position.
• Approved an £800 million Revolving Credit Facility.
• Regularly considered the impact of Covid-19, supply chain and labour issues and political uncertainty on our business
and strategy.
Acquisitions and
development
• Approved the Group’s largest acquisition to date – Almo Corporation.
• Approved the acquisition of Wörner.
• Received a detailed presentation from the Corporate Finance team on the Group’s development priorities.
• Received regular updates on the corporate development pipeline.
• Reviewed post-acquisition business performance.
Risk management
and internal control
• Received reports from the Chairman of the Audit Committee on its risk management activities.
• Considered reports on the Group’s principal and emerging risks, including climate-related risks, including a review
Leadership and
succession planning
Stakeholder
engagement
Governance
of the Group Risk Register and Integrated Assurance Report.
• Received a quarterly report from the Head of Group Sustainability covering sustainability and HSE matters.
• Received regular reports from the General Counsel & Company Secretary on relevant legal and regulatory matters,
including the operation of the Group Compliance Programme.
• Considered and approved the Statement of Principal Risks and Uncertainties to be set out in the Annual Report.
• Approved the appointment of Mark Breuer as Chairman.
• Approved the appointment of three new non-executive Directors: Lily Liu, Laura Angelini and Alan Ralph.
• Received reports from the Chairman of the Governance and Sustainability Committee on its activities.
• Reviewed the Board’s composition, diversity and succession plans.
• Considered detailed presentations from the Chief Executive and Head of Group HR on management development
and succession planning.
• Supported the professional development of Board members.
• Hosted the Annual General Meeting via audio conference and webcast on 16 July 2021.
• Reviewed the results of a Group-wide employee engagement survey.
• The Chairman met with a number of the Company’s leading shareholders during the year.
• Received regular reports from the Group Investor Relations function.
• Reviewed regular reports from the Company’s brokers and from analysts.
• Received reports on and discussed relevant regulatory developments.
• Oversaw an internally-facilitated Board evaluation process.
• Received a report at each meeting from the Chairman of the Remuneration Committee on its activities.
• Received reports from the Workforce Engagement Director on his activities.
• Reviewed and discussed quarterly updates on Sustainability.
Donal Murphy, Chief Executive, and Mark Breuer, Chairman.
112
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Induction and Development
New non-executive Directors undertake a
structured 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 Board encourages overseas Board meetings
which are instrumental in gaining a better
understanding of the Group’s diverse businesses
and the environments in which they operate.
Due to Covid-19 restrictions, scheduled visits
for the new Directors to key Group companies
were limited but took place at a number of our
subsidiaries in Ireland and the US. Virtual meetings
with senior management in other businesses
were also arranged for all the Directors.
External experts are invited to attend certain
Board meetings to address the Board on
relevant industry and sectoral matters, and
on developments in relevant areas such as
corporate governance, risk management
and executive remuneration.
Non-executive Directors are expected to meet,
outside of Board meetings, with members of
senior management throughout the Group and
meet with a number of subsidiaries to familiarise
themselves with the business in more detail than
is possible during Board meetings.
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, and Directors are encouraged to
undertake appropriate training on relevant
matters. In addition, all Directors have access
to online resources, which are regularly updated
with relevant publications.
All Directors are encouraged to avail of
opportunities to hear the views of and meet
with the Group’s shareholders and analysts.
There is an established procedure for Directors
to take independent professional advice in the
furtherance of their duties, if they consider this
to be necessary.
Board Induction Programme
The Board welcomed three new non-
executive Directors during the year, including
Laura Angelini, who is based in the US. Her
induction programme covered a range of
relevant areas, including the Group’s
governance, risk management and internal
control and operations. Many of the induction
meetings were held virtually due to the
ongoing pandemic. However, Laura was able
to visit a number of our operational sites once
restrictions were lifted. Two areas of particular
focus in Laura’s induction were developing
her knowledge of the Group’s healthcare
activities, given her background in the sector,
and matters relevant to her membership of the
Governance and Sustainability Committee.
My induction with DCC was very
comprehensive. The move to virtual
meetings caused by the pandemic
meant that I was able to get to know
many members of management from
across the Group. And, as Covid-19
restrictions were lifted, I was also able
to visit some of Group’s businesses,
both in the US, where I live, and in
Europe. A real highlight was meeting
our people, who show such
commitment to DCC’s purpose and
serving our customers every day.”
Laura Angelini
Areas
Board and
governance
Group Management
Team
Provided by
Areas covered
Mark Breuer, Caroline Dowling,
Tufan Erginbilgic, David Jukes, Pam Kirby,
Lily Liu, Jane Lodge, Mark Ryan
Donal Murphy, Chief Executive Officer
Kevin Lucey, Chief Financial Officer
Conor Murphy, Director of Group Finance
Nicola McCracken, Head of Group Human Resources
Darragh Byrne, General Counsel & Company Secretary
Peter Quinn, Chief Information Officer
Henry Cubbon, Managing Director, LPG
Eddie O’Brien, Managing Director, Retail & Oil
Conor Costigan, Managing Director, DCC Healthcare
Tim Griffin, Managing Director, DCC Technology
• Overview of Board and Committee matters
• Priority areas for the Board
• Governance framework
• Group strategy and Company performance
• Company purpose and culture
• People strategy
• Governance processes
• Risk, compliance and legal processes
• Business performance
• Divisional strategy
Group functions
Heads of Group functions
• Key internal controls and risk management
processes
Significant Group
businesses
Butagaz, DCC Propane, Certas Energy UK, Fuel Card
Services, DCC Vital, Ion Labs, Exertis International
• Business performance; strategy; internal controls,
including safety; and development of people
DCC plc Annual Report and Accounts 2022
113
Governance
Corporate Governance Statement continued
Reflecting stakeholder views in our Board decision making
The Board recognises the importance of clear communication and engagement with all of DCC’s stakeholders. Details on how both the Company
and Board engaged with stakeholders and outcomes as a result of that engagement during the year are outlined on pages 40 to 43 of the Strategic
Report. Below we offer further insights from our Workforce Engagement Director on workforce engagement and on the opposite page, we also give
a more detailed account of how stakeholder interests were reflected in Board decision making during the year.
How the Board engaged with
investors during the year
The Board actively seeks and encourages
engagement with investors, including the
Company’s major institutional shareholders and
shareholder representative bodies. The Group
engaged with investors in a very active manner
during the year. The charts opposite set out the
number of meetings held with investors by the
Executive Directors, Group Management and
our Investor Relations team. These meetings
include one-to-one meetings, group and
conference meetings.
In addition to these meetings, the Group held
three separate capital markets events over
the last year. The first, held in September
2021 focused on our Healthcare division.
In February, a similar event, focused on DCC
Technology, was held. In May, the Group hosted
an event that outlined our progress in the
energy transition, including an updated strategy
for our energy activities. These events were well
attended and offered an important opportunity
for investors to fully understand DCC’s
approach in the sectors where we operate.
Number of meetings held during the year
5%
28%
67%
Executive Directors and Investor Relations
Investor Relations
Group management and Investor Relations
Engagements with institutional investors
Meetings
378
Capital market conferences 17
(cid:54)(cid:68)(cid:79)(cid:72)(cid:86)(cid:3)(cid:71)(cid:72)(cid:86)(cid:78)(cid:3)(cid:69)(cid:85)(cid:76)(cid:72)(cid:428)(cid:81)(cid:74)(cid:86)(cid:3)(cid:3)12
Strengthening engagement
with our employees
Q&A with Mark Ryan, Workforce
Engagement Director
How have you found your first few months
as the Board’s Workforce Engagement
Director and what benefit has it brought
to Board discussions?
I have enjoyed my role as the Workforce
Engagement Director since my appointment
in November 2021. To date I have spent time
reviewing and discussing the results of the
Group-wide employee engagement survey.
This has enabled me to get a better insight
and understanding of what is on the minds of
our employees and what are the things that
matter most to them. I have also engaged
with the Group HR Director Nicola McCracken
to understand what the businesses across
the Group are doing to address any key issues
that have been raised in the survey. This has
enabled me to support the interests of
employees at Board level and ensure the
Board are informed on both the survey results
and any actions that may be taken. The Board
hugely values the direct employee feedback
coming from the survey as it is an essential
component of our culture.
114
DCC plc Annual Report and Accounts 2022
Engagement During the Year
• The Board was kept informed of the views
of shareholders through the executive
Directors’ attendance at the investor
relations events held during the year.
Relevant feedback from investor meetings,
investor relations reports, brokers notes and
feedback from DCC’s investor perception
study were provided to the Board.
• The Board received briefings from the
Company’s brokers and the Investor
Relations team on topics such as
fundraising, market perception and
shareholder activism.
• The Company Secretary engaged with
proxy advisors in advance of the Company’s
AGM which provides shareholders with the
opportunity to question the Chairman, the
Committee Chairmen and the Board. All of
the resolutions put to shareholders at the
2021 AGM were strongly supported.
Following two years of disruption as a result
of Covid-19, the Board hopes that no
restrictions on attendance will be necessary
at this year’s AGM.
• The Chairman of the Remuneration
Committee led a process of engagement
with major shareholders and proxy advisory
firms in respect of proposed changes to our
Remuneration Policy, which was approved
at our 2021 AGM.
What makes the role of the Workforce
Engagement Director effective?
The purpose of the role is to ensure that there
is a direct link between the employees and the
Board to ensure that we can get a better
understanding of their views and any
concerns that they may have. My role and
objective is to ensure that I get an accurate
understanding of our employee’s views and to
then share this information directly with the
members of the Board.
How do you report back to the Board?
I provide a separate update at each Board
meeting around any relevant employee
feedback (e.g. survey), an update on any
people initiatives in progress and a quick
summary of work I have undertaken since
the last meeting.
Strategic Report
Governance
Financial Statements
Supplementary Info
How the Board considered stakeholders during the decision-making process, and how the stakeholder
engagement fed into this process
During the year, the Board was closely involved in all key decisions of the Company. As well as providing rigorous oversight of the Group’s operations,
risk management and reporting, the Board also had regard to the impact on the Company’s stakeholders in making significant decisions.
Our revised energy strategy
During the year, the Board reviewed and approved the Group’s new
strategy for the energy sector, which combines continued growth
with a commitment to decarbonisation. By enabling our customers to
decarbonise their transport, homes and businesses, we will meet their
need for energy today and in the future. This change will positively
impact not only our customers, but also our communities and the wider
environment, while maintaining returns for our shareholders. The change
is also positive for the Group’s employees, who wish to work in a business
that takes its environmental responsibilities seriously and acts in
accordance with its purpose. The process also reflects the Group’s
careful assessment of and response to the transitional risks that climate
change presents to its operations.
Growth in North America, including the acquisition of Almo
In December 2021, the Board approved the acquisition of Almo, a leading
specialist sales, marketing and value-added distribution business in the
US. The acquisition of Almo is a major step in the continuing expansion of
both DCC and DCC Technology in North America. The North American
market is the largest B2B and consumer technology market in the world
and the acquisition enhances DCC Technology’s presence and capability
in the consumer channel, where Almo is also the largest national
distributor of consumer appliance and lifestyle products. As part of the
evaluation of the transaction, the Board considered its impact on the
Group’s employees, including the opportunities created for career
development, the impact on existing suppliers and customers, and the
benefits of the acquisition for shareholders. Following a detailed
assessment, the Board determined to proceed with the investment.
For more information on our energy strategy, see pages 22 to 27.
For more information on the Almo acquisition, see page 32.
Response to the invasion of Ukraine
Since the invasion of Ukraine began on 24 February 2021, the Board
has considered how DCC could assist the millions of people who have
been adversely affected. Therefore, in addition to reviewing impacts on
the Group’s operations and wider risks, the Board supported a donation
by the Company to UNICEF to support its work in Ukraine and also
supported steps by Group businesses in a number of European
countries to support Ukrainians displaced by the war.
Growing our dividend
DCC’s record of unbroken dividend growth has few peers and reflects
the Group’s operational excellence and disciplined approach to capital
allocation. Reflecting both our strong financial performance in the year
ended 31 March 2022 and the importance of our progressive dividend
policy to shareholders, the Board recommended a final dividend of
119.93 pence per share, which when added to the interim dividend
of 55.85 pence per share, resulted in a total dividend for the year of
175.78 pence per share. Our record of 28 years of uninterrupted dividend
growth illustrates the Group’s longstanding and continuing commitment
to delivering for shareholders.
For more information on our community initiatives, see page 43.
For more information on our dividend, see page 51.
DCC plc Annual Report and Accounts 2022
115
Governance
Corporate Governance Statement continued
Composition
The Board of DCC currently comprises
the non-executive Chairman, nine other
non-executive Directors and two executive
Directors, including the Chief Executive.
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 Code, namely whether
the Directors are independent in character and
judgement and free from relationships or
circumstances which are likely to affect, or could
appear to affect, the Directors’ judgement.
The Board is satisfied that each of the
current non-executive Directors fulfils the
independence requirements of the Code.
Mark Breuer was appointed Chairman of the
Company on 16 July 2021. On his appointment
as a non-executive Director in 2019, the
Board were satisfied he was independent.
While Mr Breuer holds a number of other
directorships outside of the DCC Group, the
Board is satisfied that these have not interfered
with the discharge of his duties to DCC.
Appointment of Directors
The Governance and Sustainability Committee
agrees criteria for new non-executive Director
appointments, including experience of the
industry sectors and geographies in which the
Group operates, and professional background,
and has regard to the need for a balance in
relation to diversity. The detailed appointment
process is set out in the Governance and
Sustainability Committee Report on page 121.
Following appointment by the Board, all
Directors are, in accordance with the Articles
of Association, subject to election at the
following AGM.
In accordance with the provisions of the Code,
all Directors submit to re-election at each AGM.
Jane Lodge did not submit to re-election at the
2021 AGM as she was due to retire at the AGM.
Following the sudden death of Cormac
McCarthy, the decision to extend Jane’s term
as a Director was made after the the publication
of the Notice of the AGM. Therefore, the
resolution to re-elect Jane was not passed.
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 Governance and Sustainability
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 AGM.
116
DCC plc Annual Report and Accounts 2022
Board of Directors: Attendance at meetings during the year ended 31 March 2022
Board
Audit
Committee
Remuneration
Committee
Governance
and
Sustainability
Committee
Meetings held during the year
ended 31 March 2022
Mark Breuer1
Laura Angelini2
Caroline Dowling
Tufan Erginbilgic
David Jukes
Pamela Kirby
Lily Liu3
Jane Lodge4
Kevin Lucey
Donal Murphy
Alan Ralph5
Mark Ryan6
John Moloney7
Cormac McCarthy8
9
9
6
9
9
9
9
6
9
9
9
4
9
3
2
4
2
–
4
–
–
–
2
4
–
–
1
4
–
1
4
–
–
4
4
4
4
–
–
–
–
–
–
1
–
6
6
4
–
6
–
6
–
–
–
–
–
1
2
1
1. Mark Breuer left the Audit Committee and was appointed as Chairman and a member of the Governance
and Sustainability Committee on 16 July 2021.
2. Laura Angelini was appointed as a non-executive Director and a member of the Governance and
Sustainability Committee on 16 July 2021.
3. Lily Liu was appointed as a non-executive Director and a member of the Audit Committee on 16 July 2021.
4. Jane Lodge retired as non-executive Director and Chairman of the Audit Committee on 31 March 2022.
5. Alan Ralph was appointed as a non-executive Director and a member of the Audit Committee on
8 November 2021. He was appointed as Chairman of the Audit Committee on 31 March 2022.
6. Mark Ryan was appointed as a member of the Governance and Sustainability Committee on 8 November 2021.
7. John Moloney retired as Chairman and non-executive Director on 16 July 2021.
8. Cormac McCarthy passed away on 5 July 2021.
There was full attendance at all Board and Committee meetings during the year.
Length of Tenure on Board (Years) as at 31 March 2022
Non-executive
Mark Breuer
3.4
Laura Angelini
0.7
Caroline Dowling
2.8
Tufan Erginbilgic
2.0
David Jukes
Pamela Kirby
Lily Liu
0.7
Jane Lodge
Alan Ralph
0.4
Mark Ryan
Executive
Donal Murphy
Kevin Lucey
1.7
4.5
7.0
8.5
9.5
13.3
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 AGM of
the Company.
Details of the length of tenure of each Director
on the Board as at 31 March 2022 are set out in
the chart above.
Strategic Report
Governance
Financial Statements
Supplementary Info
Board Performance Evaluation
The Board conducts an annual evaluation of its
own performance, that of each of its principal
Committees, the Audit, Remuneration and
Governance and Sustainability Committees,
and that of the Chairman, Committee
Chairmen and individual Directors.
Arising from the evaluation process, a number of actions were agreed by the Board which are set
out below and will be implemented during the current year.
2022 Board Evaluation
Topic
Findings and agreed actions
In 2021, the entire performance evaluation was
conducted by Heidrick & Struggles, in accordance
with the requirement under the Code to have it
externally facilitated every three years.
Board Diversity
Agenda Items
In 2022, the performance evaluation process
was conducted internally.
Continue to improve diversity at Board and senior management
levels.
It was agreed that a number of additional external presentations
on matters of importance would be provided to the Board.
It was agreed that progress had been made in regard to achieving
an appropriate balance between operational and strategic/
development items.
It was agreed that further work should be done to ensure that
Board discussions are focused on issues of strategic importance
to the Group.
Board Papers
It was agreed to continue the practice of providing detailed
pre-read material in advance of Board meetings, with shorter
papers being presented at meetings.
Senior Management
Succession
It was agreed to place a particular focus on succession planning
for senior Group executives.
Compliance
Compliance Programme
The key message of the Group compliance
programme is that directors, managers and
employees across the Group should be ‘Doing
the Right Thing’ at all times. This means not
merely following the laws and policies that
apply to their work, but also ensuring that their
actions are fair and ethical.
Code of Conduct
Our current Group Code of Conduct, which
is available on our website, was introduced in
2017. The Code sets out the standards that
are expected in a range of areas, including
anti-bribery and corruption, supply chain
integrity, the protection of personal information
and competition law. The Code also explains
how employees can ask questions about
compliance issues and raise concerns if they
believe that something wrong is happening,
including through a confidential and
independent service available 24 hours a day,
every day of the year. A copy of the Code is
provided to every employee when they join.
Compliance Policies and Training
The Group also maintains more detailed
policies on a range of relevant areas,
complementing the general requirements set
out in the Code of Conduct. The areas covered
by more detailed policies include health and
safety, anti-bribery and corruption, supply chain
integrity, human rights, competition law, data
protection, information security, diversity and
inclusion and share dealing. Depending on the
nature of their role, employees of the Group
may receive more detailed training on those
policies.
Whistleblowing
Employees across the Group are required to
raise a concern if any of our activities are being
undertaken in a manner that may not be legal
or ethical and are supported if they do so.
Concerns can be raised with a member of
management in the business where the
employee works, with the General Counsel &
Company Secretary or externally with SafeCall,
a third-party facility which is independent of
DCC and available in multiple languages on a
24-hour basis. Employees may raise concerns
anonymously if they wish. Our internal policies
make clear that retaliation against any
employee who raises a concern is prohibited.
Our Human Rights Policy also sets out the ways
in which non-employees can raise concerns in
relation to any breach of human rights that may
have occurred within our operations or our
supply chains. Where concerns are raised,
they are investigated in an appropriate and
independent manner.
The Audit Committee has oversight responsibility
for our whistleblowing facilities and how they
operate. This is referred to on page 125, as part
of the Audit Committee Report.
DCC plc Annual Report and Accounts 2022
117
The various phases of the internal
performance evaluation process, which
commenced in early January and
concluded in April, were:
A questionnaire covering key aspects of
Board effectiveness, including the
composition of the Board, the content
and conduct of Board and Committee
meetings, and the Directors’ continuing
education process, was circulated to all
Directors.
Completed questionnaires, including
views on performance and
recommendations for improvement,
were returned to Caroline Dowling, as
the Senior Independent Director.
Further discussions were held with each
of the Directors individually.
The Senior Independent Director then
prepared separate summary reports on
the Board and its Committees.
The Chairman, on behalf of the Board,
conducted evaluations of performance
individually with each of the non-
executive and executive Directors.
The Senior Independent Director
conducted an evaluation of the
performance of the Chairman.
The non-executive Directors also
evaluated the performance of each
executive Director.
Each of the Audit Committee, the
Remuneration Committee and the
Governance and Sustainability
Committee considered the summary
report as part of the review of its own
performance and terms of reference and
recommended any changes it
considered necessary to the Board for
approval.
Governance
Corporate Governance Statement continued
Share Ownership and Dealing
Details of the Directors’ interests in DCC
shares are set out in the Remuneration Report
on page 147.
The DCC Share Dealing Code (‘the Dealing Code’)
applies to dealings in DCC shares by the Directors
and Company Secretary of DCC and certain
employees. Under the Dealing Code, 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 Dealing Code.
In addition, the Dealing Code 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
AGM), the interim results announcement in
November and the Interim Management
Statement in February.
Risk Management and Internal Control
The Board is responsible for the Group’s
system of risk management and internal
control. It is designed to manage rather
than eliminate the risk of failure to achieve
business objectives and provides reasonable
but not absolute assurance against material
misstatement or loss. Details in relation to the
Group’s risk management structures
are set out in the Risk Report on page 92.
The Board has delegated responsibility for the
detailed 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 page 125.
There is an ongoing process for identifying,
evaluating and managing any significant
risks faced by the Group, including climate-
related risks, which has been in place
for the year under review and up to the date
of approval of the financial statements. This
process is regularly reviewed by the Board.
The Board 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. Further details on
this annual assessment are set out in the
Risk Report on page 92 and in the Audit
Committee Report on page 124.
The consolidated financial statements are
prepared subject to the oversight and control
of the 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.
Compliance Statement
DCC has complied, throughout the year ended
31 March 2022, with the provisions set out in
the Code other than provision 18 regarding
the reappointment of Jane Lodge at the 2021
AGM, which is addressed on page 122.
Mark Breuer, Donal Murphy
Directors
16 May 2022
118
DCC plc Annual Report and Accounts 2022
Governance and Sustainability
Committee Report
Developing the Board and its Committees to support
the sustainable success of the Group.
the Board. Lily joined the Board and the Audit
Committee, and Laura jointed the Board and
the Governance and Sustainability Committee
on 16 July 2021.
Board Diversity
The Board supports and values the benefits of
a diverse board and the evolution of the Board
during the year reinforced our commitment in
this area. DCC meets the recommendations of
the Hampton-Alexander Review and the Parker
Review in relation to Board diversity.
Board Evaluation
Following an externally-facilitated evaluation
in 2021, the Committee oversaw an internal
evaluation of the effectiveness of the Board
and its Committees in early 2022. More
information on Board evaluation, including
an update on actions identified last year and
further improvements to be implemented
this year, is set out on page 117 as part of the
Corporate Governance Statement.
Sustainability
There are four pillars to DCC’s sustainability
framework, which address the sustainability
questions that are most important to the
Group and our stakeholders:
• Climate Change and Energy Transition;
• Health and Safety;
• People and Social; and
• Governance and Compliance.
During the year under review, the Committee
considered reports on work undertaken in each
of these areas, with a particular focus on meeting
reporting requirements, such as TCFD. Detailed
reports were also provided to the Board on
activities within each pillar, with a particular focus
on the transitional effects of climate change on
the Company’s energy businesses. This reflects
the materiality of each of the subjects to the
Group and the overall responsibility of the Board
for sustainability matters.
More details on the governance of sustainability,
including climate change, is set out on page 122.
The Sustainable Business Report on page 80,
the Energy Strategy section on page 22 and the
People section on page 36 address our progress
in those key areas in more detail.
The Governance and Sustainability Committee
is responsible for monitoring the composition
and development of the Board, reviewing the
leadership needs of the Group, supporting the
Group’s sustainability activities and monitoring
the Company’s compliance with corporate
governance requirements. This report
summarises the Committee’s activities during
the year ended 31 March 2022 and sets out the
Committee’s priorities for the current year
ending 31 March 2023.
Board Composition
In the year under review, there were a number
of important changes to the Board. I succeeded
John Moloney as Chairman at our AGM on
16 July 2021. Caroline Dowling replaced me as
Senior Independent Director with effect from
the same date. My appointment as Chairman
and that of Caroline’s as Senior Independent
Director took place following a detailed process
overseen by the Governance and Sustainability
Committee and was considered by the Board.
Neither Caroline nor I were involved in
discussions regarding our appointment to
these roles.
As mentioned in my Chairman’s Statement
and in Donal’s Chief Executive’s Review, we as
a Board and our fellow colleagues across DCC
were deeply saddened by the sudden death
of Cormac McCarthy in July 2021. The
Committee acted to ensure that a suitable
candidate was identified and we were pleased
to welcome Alan Ralph to the Board in
November. Jane Lodge kindly agreed to remain
on the Board until March 2022 to facilitate
Alan’s appointment and induction. Following a
recommendation from the Committee, Alan
was then appointed as Chairman of the Audit
Committee with effect from Jane’s retirement.
Cormac had been the member of the Board with
responsibility for workforce engagement, under
provision 5 of the UK Corporate Governance
Code. Following a recommendation from the
Committee, the Board appointed Mark Ryan with
effect from 8 November 2021. Mark was also
appointed to the Governance and Sustainability
Committee on the same date.
In addition to overseeing the appointment of a
new Chairman, Senior Independent Director,
Chairman of the Audit Committee and
Workforce Engagement Director, the Board
oversaw processes for the appointment of two
other new non-executive Directors to the
Board. Following a detailed search process and
interviews with a number of candidates, the
Committee were pleased to recommend the
appointment of Lily Liu and Laura Angelini to
DCC plc Annual Report and Accounts 2022
DCC plc Annual Report and Accounts 2022
119
119
Length of Tenure on the Governance
and Sustainability Committee
as at 31 March 2022 (years)
Mark Breuer (Chairman)
0.7
Laura Angelini
0.7
Tufan Erginbilgic
2.0
Pamela Kirby
Mark Ryan
0.4
5.7
The Board supports and
values the benefits of a
diverse board and the
evolution of the Board
during the year reinforced
our commitment in this
area. ”
Supplementary InfoFinancial StatementsGovernanceStrategic Report Governance
We measure our overall sustainability by the
value we generate for our stakeholders and
the Corporate Governance Statement on
pages 114 to 115 sets out how the Board
considered stakeholder interests during
the year.
Corporate Governance
In addition to considering emerging
regulatory developments in relation to
sustainability reporting, the Committee also
considered developments in relation to
corporate governance more generally. These
included the proposals set out in the UK
Department for Business, Energy and
Industrial Strategy’s (‘BEIS’) White Paper
Restoring Trust in Audit and Corporate
Governance (which were also considered
by the Audit Committee).
Priorities
The priorities for the Committee in the
financial year ending 31 March 2023 will be:
Implementing the recommendations of
•
this year’s Board evaluation process;
• Supporting the development of the
Group’s sustainability reporting, with
oversight by the Board;
• Monitoring the continued evolution of the
Board and its Committees, although the
degree of change at Board level will not be
as considerable as it has been over the
last two years; and
• Monitoring developments in the Group’s
corporate governance environment,
notably any changes introduced following
the recent BEIS White Paper.
On behalf of the Governance and
Sustainability Committee.
Mark Breuer
Chairman
Governance and Sustainability Committee
16 May 2022
120
DCC plc Annual Report and Accounts 2022
Governance
Committee Composition,
Attendance and Tenure
The members of the Governance and
Sustainability Committee are Mark Breuer
(Chairman) and four independent non-
executive Directors: Laura Angelini, Tufan
Erginbilgic, Pamela Kirby and Mark Ryan.
The Committee is satisfied that the existing
external commitments of the Directors do
not conflict in any way with their duties and
commitments to the Company and that all
Directors dedicate appropriate time to their
responsibilities to the Company and are also
available at short notice for any unscheduled
Board meetings.
Mark Breuer became Chairman of the
Committee on 16 July 2021 on the retirement
of John Moloney. Laura Angelini joined the
Committee on the same date. Mark Ryan
joined the Committee on 8 November 2021.
Biographical details for the members of the
Committee are set out on pages 104 to 105.
The Company Secretary is the Secretary to the
Governance and Sustainability Committee.
Meetings
The Governance and Sustainability Committee
met six times during the year ended 31 March
2022. Attendance details are set out in the
table on page 116 of the Corporate
Governance Statement.
The Chief Executive is invited to attend all
meetings of the Committee. Other Directors,
executives and external advisors are invited to
attend as necessary.
The Committee may also meet separately,
as required, to discuss matters in the absence
of any invitees. No such meetings took place
during the year under review.
External Commitments
Directors can bring valuable perspectives to
the Board as a result of other appointments,
such as directorships of other companies.
In accordance with the UK Corporate
Governance Code, Directors must seek
the prior approval of the Board in advance
of accepting any additional external
appointments. This requirement has been
included in all letters of appointment and in
the list of Matters Reserved for Board Decision.
Before the Board approves any additional
external appointment, the Committee
considers the impact on the Company,
including the time required for the role and any
conflicts of interest that might arise from it.
Roles and Responsibilities
The role and responsibilities of the Committee
are set out in full in its Terms of Reference
which are available on the Company’s website.
During the year, these were slightly amended to
set out the respective roles of the Committee
and the Board in relation to sustainability
matters and to allow an increase in the
membership of the Committee.
Annual Evaluation of Performance
The Board conducts an annual evaluation of its
own performance and that of its Committees,
Committee Chairmen and individual Directors
in accordance with the UK Corporate
Governance Code. In 2022, this evaluation was
internally-facilitated. The last external evaluation
was conducted by Heidrick & Struggles in 2021.
A report on the implementation of
recommendations of the evaluation undertaken
in 2021 and the principal findings of the 2022
evaluation is contained on page 117, as part of
the Corporate Governance Statement.
The Committee as part of the Board evaluation
process reviewed its own performance and
Terms of Reference during the year. No further
change to the Committee’s Terms of Reference
was considered necessary, following this review.
Reporting
The Chairman of the Governance and
Sustainability Committee reports to the Board at
each meeting on the activities of the Committee.
The Chairman of the Committee is available
at the Annual General Meeting to answer
questions on the report on the Committee’s
activities and matters within the scope of the
Committee’s responsibilities.
Strategic Report
Governance
Financial Statements
Supplementary Info
Following the sudden death of Cormac
McCarthy in July 2021, the Committee
appointed Russell Reynolds Associates to
identify suitable candidates to replace him.
Shortlisted candidates were interviewed by
members of the Committee. Following a
recommendation from the Committee,
Alan Ralph was appointed to the Board and
the Audit Committee on 8 November 2021.
Mr Ralph brings additional financial expertise,
recent experience as a CFO and extensive
knowledge of the healthcare sector to the
Board and Audit Committee.
The Committee separately considered the
appointment of a Chairman of the Audit
Committee in advance of Jane Lodge’s
retirement. Mr Ralph was considered by the
Committee to have the financial expertise,
business experience and availability to take on
the role. His appointment was confirmed by the
Board, following a recommendation from the
Committee, in February 2022 and took effect
from 31 March on Ms Lodge’s retirement.
Finally, the Committee reviewed candidates
from within the Board in place of Cormac
McCarthy as the Director with responsibility for
workforce engagement. Following this review,
the Board appointed Mark Ryan to the position
and as a member of the Governance and
Sustainability Committee on 8 November 2021.
Mr Ryan’s general management experience and
experience as a director of other organisations
supported his appointment.
Extensive and tailored induction programmes
for each new Director were put in place at the
time of their appointment. These inductions
included reviewing information on the
Company, meetings with fellow Directors,
members of the Group Management Team
and the senior management in significant
Group businesses.
Pam Kirby will not be seeking re-election at
the Annual General Meeting on 15 July 2022,
as she is approaching nine years’ service as
a Director. Pam will retire from the Board as
a non-executive Director and as a member of
the Governance and Sustainability Committee
and Remuneration Committee. We have
commenced a process with MWM Consulting
to identify a suitable replacement.
Russell Reynolds Associates and MWM
Consulting do not have any connection with
the Directors or the Company.
Principal Activities
Board Composition and
Renewal
The Governance and Sustainability Committee
reviews the composition of the Board and its
Committees to ensure that they have an
appropriate balance of skills, knowledge,
experience, gender, and ethnicity, taking account
of the nature, scale, and location of the Group’s
operations and the tenure of existing Directors.
In 2021, the Committee oversaw a detailed
process for the selection of a new Chairman to
succeed John Moloney. This included advice from
MWM Consulting, reviewing a list of possible
external candidates, and conducting interviews.
The Committee identified that Mark Breuer’s
extensive business and capital markets
experience, together with his knowledge of the
Group, were suited to the position. Following a
recommendation from the Committee, the Board
appointed Mr Breuer as Chairman with effect
from the conclusion of the Company’s AGM on
16 July 2021. Mr Breuer did not participate in
discussions at the Committee or the Board in
relation to the selection of the Chairman.
Following the recommendation to appoint
Mr Breuer as Chairman, the Committee
considered his replacement as Senior
Independent Director. Following this review,
the Committee recommended the
appointment of Caroline Dowling to the
position, based on her knowledge of the
Group together with her management and
non-executive director experience.
On 17 May 2021, Lily Liu was appointed to the
Board and the Audit Committee with effect
from the conclusion of the Company’s AGM
on 16 July 2021. This followed an extensive
search led by the Committee, with advice from
Russell Reynolds Associates. Members of
the Committee reviewed a list of potential
candidates and conducted interviews with
a number of them before making a
recommendation to the Board. Ms Liu brings
financial expertise and experience as a sitting
CFO in a large international group to her role.
On 15 July 2021, Laura Angelini was also
appointed to the Board and as a member of the
Governance and Sustainability Committee with
effect from 16 July 2021. Her appointment
followed a search process overseen by the
Committee, with advice from Russell Reynolds
Associates. Again, a detailed list of candidates
was reviewed and interviews conducted
before a recommendation was made by the
Committee to the Board. Ms Angelini adds
considerable experience in the healthcare
sector, with particular insights to the US,
to the Board.
Diversity
In reviewing the composition of the Board and
giving consideration to the appointment of new
non-executive Directors, the Committee takes
into account the benefits that diverse skills,
experience and backgrounds, as well as gender
and ethnic diversity, bring to the Board.
The Board is currently comprised of 36%
female Directors and has one Director from
an ethnic minority background. This meets
the current requirements of the Hampton-
Alexander Review and Parker Review.
DCC plc Annual Report and Accounts 2022
121
Governance
Governance and Sustainability Committee Report continued
The Committee considered a detailed report
on the Company’s compliance with the TCFD
reporting framework. An overview of the
Company’s compliance with TCFD this year is
contained in the Sustainable Business Report
on page 80 with further detail provided in
the Additional Sustainability Information on
page 247. Our 2022 Annual Report includes
disclosures that meet all 11 recommended
disclosures of the TCFD framework.
Corporate Governance
The Committee advises the Board on
significant developments in corporate
governance and monitors the Company’s
compliance with corporate governance
best practice.
During the year, the Committee considered
a number of corporate governance
developments, including the proposals
set out in the BEIS White Paper. The same
developments were also considered by
the Audit Committee and are addressed
in its report on page 123. Following these
discussions, the Company made a detailed
submission to BEIS on a number of the
proposed reforms.
The Committee will continue to consider
the impacts of corporate governance
developments on the Company in the present
year, including any UK reforms introduced
following the BEIS report and also technical
developments such as the removal of share
certificates under Irish law.
The Company operated in full compliance
with the Code during the year ended 31 March
2022 other than provision 18 in relation to the
reappointment of Jane Lodge, which is
addressed above.
Succession Planning
In addition to its work on the development of
the Board, the Governance and Sustainability
Committee specifically considers succession
planning for executive Director positions. This is
done within the context of the Group’s overall
talent development and succession planning
structures. Those structures have been
developed over the last few years to reflect the
Group’s greater scale and geographic diversity.
The Directors receive a detailed update annually
from the Head of Group HR on Group talent
development and succession planning process.
This covers succession planning for senior
management roles in detail.
Tenure of Directors
Following the sudden death of Cormac
McCarthy in July 2021, Jane Lodge agreed to
withdraw her resignation as a Director, which
had been due to take effect at the end of the
Company’s AGM on 16 July 2021. This was
done to facilitate the appointment of a new
Director and to identify a suitable successor
to Ms Lodge as Chairman of the Audit
Committee. As a result, Ms Lodge’s term
continued until her retirement from the Board
on 31 March 2022. It was not feasible to issue
an amended notice to shareholders in advance
of the AGM to facilitate the re-election of
Ms Lodge. As a result, Ms Lodge’s continued
membership of the Board was not put to a
shareholder vote. This represented a non-
compliance with provision 18 of the UK
Corporate Governance Code.
A number of recommendations in respect of
renewed Board and Committee membership
were also made to the Board by the Committee
during the year.
The tenure of the Directors on the Board is
set out on page 116. The tenure of members
of Committees is dealt with in the relevant
Committee reports.
Sustainability, including
Climate Change
The Board oversees sustainability matters,
including climate-related issues. The
Governance and Sustainability Committee
supports the work of the Board by reviewing
the development of the Group’s sustainability
activities, including steps taken to meet
regulatory requirements.
The Governance and Sustainability Committee
is updated at every meeting on sustainability-
related work within the Group, including the
work of the Executive Sustainability Committee.
The Chairman of the Governance and
Sustainability Committee briefs the Board on
the work of the Committee after each meeting.
In addition to updates from management, the
Committee received a briefing on sustainability
reporting developments from a third party
during the year. An external update to the Board
on sustainability matters will be provided in the
current financial year.
The Board receives a report every quarter
from the Head of Group Sustainability on key
developments in the Group Sustainability
Programme, with a particular focus on pillar 1
(Climate Change and Energy Change) and pillar
2 (Health and Safety). The Board also receives
separate updates on the matters covered
by pillar 3 (People and Social) from the Head
of Group HR and those covered by pillar 4
(Governance and Compliance) from the
Group General Counsel.
In addition to considering these reports, the
Board devoted considerable time during the
year to the review of the Company’s strategy
for the energy sector, which is outlined in the
Energy Strategy section on page 22. That
updated strategy is based on a detailed review
of the transitional impact of climate change
on the Group’s energy activities. The Board
continues to allocate significant time to climate
change and energy transition matters, including
the evolution of the Company’s operations in
the energy sector.
Other risks and opportunities resulting from
climate change were also reviewed during the
year and reported to the Governance and
Sustainability Committee and the Board as part
of the reporting cycles described above. Those
risks and opportunities are described in the Risk
Report on page 92. The Risk Report goes on to
describe how climate risks are considered as
part of the Group’s risk management and risk
reporting processes.
122
DCC plc Annual Report and Accounts 2022
Audit Committee Report
Length of Tenure on the Audit Committee
as at 31 March 2022 (years)
Jane Lodge (Chairman)
Caroline Dowling
9.5
1.8
Lily Liu
0.7
Alan Ralph
0.4
Mark Ryan
4.0
The Committee’s primary
focus for the year ahead
will remain the Group’s risk
management and internal
control processes.”
Maintaining the integrity of the Group’s financial reporting, risk
management and assurance processes continues to be a key priority
of the Committee.
The Committee also considered the impacts
of climate change during the year, including the
Company’s reporting in accordance with the
recommendations of the Taskforce on the
Climate-related Financial Disclosures. While
our reporting in this area will develop further in
future years, our report this year meets all of
the recommendations of the TCFD framework.
Further detail on the areas to which the
Committee devoted time during the year
is set out on page 124.
Priorities for the Year Ahead
The Committee’s primary focus for the year
ahead will remain the Group’s risk management
and internal control processes, taking account
of the impact of the conflict in Ukraine,
inflationary pressures, supply chain disruption
and increased cybersecurity risks. The external
environment will remain volatile and the Board
and management therefore remain fully
committed to the ongoing enhancement of risk
and financial management across the Group.
Composition of the Committee
During the year, there were a number of
changes to the Committee’s membership,
details of which are set out on page 124. I would
like to thank Jane Lodge for her exemplary
stewardship of the Audit Committee for the
past nine years. I would also like to acknowledge
the valued contribution made to the Audit
Committee by Cormac McCarthy before his
sudden death in July 2021.
On behalf of the Audit Committee.
Alan Ralph
Chairman, Audit Committee
16 May 2022
I am pleased to present the report of the
Committee for the year ended 31 March 2022.
The report summarises the work of the
Committee during the year and also sets out
a number of priorities for the year ahead.
Role of the Committee
The Committee supports the Board in fulfilling
a number of its principal corporate governance
responsibilities, including reviewing the Group’s
risk management and internal control
frameworks, overseeing the activities of the
Group Internal Audit function, and monitoring
financial reporting including the external audit
process and the Company’s Annual Report
and Accounts.
Areas of Focus
The Committee continued to engage in detail
with Group management during the year to
ensure that robust internal controls and risk
management systems were maintained,
and that the Group Internal Audit function
continued to operate effectively, while
recognising the continued pressure on the
management and employees of the Group’s
businesses as a result of the pandemic and,
more recently, turbulence generated by the
invasion of Ukraine.
Following a detailed planning process, KPMG
conducted the largely onsite audit across the
Group and ensured all necessary standards and
requirements were adhered to and maintained.
For the audit in respect of the year ended
31 March 2022, Patricia Carroll replaced
Conall O’ Halloran as the Group lead audit
engagement partner. The Committee would
like to take this opportunity to thank Conall
for his work as lead audit partner over the past
two years.
During the year, the Committee discussed the
impact of the audit and corporate governance
reforms proposed in a White Paper: Restoring
Trust in Audit and Corporate Governance
published by the UK Department for Business,
Energy and Industrial Strategy. As part of the
consultation process, the Company made a
submission to the Department on a number
of the proposals made in the White Paper.
The Committee remained vigilant to the
impacts on the Group and on our stakeholders
regarding the invasion of Ukraine and will
continue to monitor its indirect impact on
inflation and certain supply chains.
DCC plc Annual Report and Accounts 2022
123
Supplementary InfoFinancial StatementsGovernanceStrategic Report Governance
Governance
Committee Composition,
Attendance and Tenure
The Audit Committee currently comprises four
independent non-executive Directors: Alan Ralph
(Chairman), Caroline Dowling, Lily Liu, and Mark
Ryan. During the year, there were a number of
changes to the Committee’s composition.
Following the sudden death of Cormac McCarthy
on 5 July 2021, Jane Lodge agreed to continue as
non-executive Director and Chairman of the
Audit Committee. On 16 July 2021, Mark Breuer
resigned as a member of the Committee due to
his appointment as Chairman of the Board and
Lily Liu was appointed as a member of the
Committee. On 8 November 2021, Alan Ralph
was appointed as a member of the Committee.
Following Jane Lodge’s retirement on 31 March
2022, Alan Ralph also became Chairman of
the Committee.
Biographical details for the current members
of the Committee are set out on pages 104 to
105. The Board is satisfied that the members
of the Audit Committee bring a wide range of
skills, expertise and experience in commercial,
financial and audit matters arising from the
senior positions they hold or held in other
organisations, and that Alan Ralph and Lily Liu
meet the specific requirements for recent and
relevant financial experience set out in the UK
Corporate Governance Code. The Board is also
satisfied that the Committee as a whole has
competence relevant to the sectors in which
DCC operates.
The Committee met four times during the year
ended 31 March 2022 and there was full
attendance by all members of the Committee.
The Company Secretary is the Secretary to the
Audit Committee.
Meetings
The Chief Executive, Chief Financial Officer,
Director of Group Finance, Head of Group
Internal Audit, Head of Group IT Assurance
and representatives of the external auditor are
typically invited to attend all meetings of the
Committee. Other Directors and executives
are invited to attend as necessary.
The Committee meets separately a number
of times each year with the external auditor and
with the Head of Group Internal Audit, without
other executive management being present.
The Committee may also meet in private, as
required, to discuss matters in the absence of
any invitees.
Annual Evaluation of Performance
The conclusion of the internally-facilitated 2022
Board evaluation process was that the Audit
Committee and the Chairman of the
Committee operated effectively. All actions
from the 2021 evaluation process were
implemented during the year.
Reporting
The Chairman of the Audit Committee reports
to the Board at each meeting on the activities
of the Committee since the previous meeting.
The Chairman of the Audit Committee attends
the Annual General Meeting to answer
questions on the report on the Committee’s
activities and matters within the scope of the
Committee’s responsibilities.
Role and Responsibilities
The role and responsibilities of the Committee
are set out in full in its Terms of Reference,
which are available on the Company website.
Principal Activities in 2022
Risk management
On behalf of the Board, the Committee reviews
and ensures oversight of the processes by which
risks are managed, including the Group Risk
Register, through regular functional reports and
presentations from the Head of Group Internal
Audit and other members of management.
The Group Risk Report includes an assessment
of emerging risks and ensures, through an
Integrated Assurance Report, changes to
the Group’s risk profile are matched by
enhancements to risk assurance activities. In
the financial year under review, the Committee
continued to monitor emerging risks, both
through the review of external reports, and
discussions with Group management and
Group Internal Audit (‘GIA’). The Risk Report on
pages 92 to 101 sets out the detailed steps in
the process and the Group’s principal risks.
Internal Control
The Committee monitors the effectiveness of
internal controls and compliance with the UK
Corporate Governance Code as detailed on
page 108. The Committee also briefs the Board
on the operation of the Group’s risk mitigation
processes and the control environment over
financial risk. The Committee discussed the
findings from audits and other reviews
completed by the GIA function and appropriate
responses were agreed. To facilitate this, the
papers relating to risk management and internal
control which are reviewed by the Committee are
also made available to all Directors. In addition,
the Board receives a report at each of its
meetings on health, safety and environmental
matters and is briefed on these matters directly
by the Head of Group Sustainability every quarter.
124
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
IT Assurance
The IT Assurance team forms part of the wider
GIA team. In addition to IT audit reports, the
Head of GIA and Head of IT Assurance report
to the Audit Committee on initiatives being
undertaken around the Group in relation to
IT security, cybersecurity and IT project
management. This includes compliance with
the Group Information Security Policy and the
implementation of the Group cybersecurity
programme and Target IT Standards within the
framework of that Policy.
During the year, this included providing updates
to the Audit Committee on the implementation
of ‘IT Essentials’ early warning dashboards in
conjunction with the Group IT team which
assist management in monitoring and
managing their cybersecurity risks and other IT
compliance requirements; the completion of
a review of common themes around IT issues
raised during the year and recommendations
to address their underlying root causes; and
the results of Target IT Standards reviews in
recently acquired businesses during the year.
A dedicated resource continues to develop the
GIA function’s data analytics expertise. Various
data analytics tools, including ACL and QlikView,
are used to support the audit process.
Review of Risk Management
and Internal Control
Details of the Group’s system of risk
management and internal control are set
out in the Risk Report on pages 92 to 101.
The Audit Committee conducted during the
year, on behalf of the Board, an assessment
of the operation of the Group’s system of
risk management and internal control. This
assessment was based on a detailed review
carried out by GIA, including of the risk register
process described in the Risk Report on
page 94. This review took account of the
principal business risks facing the Group, the
controls in place to manage those risks and
the procedures in place to monitor them.
Where areas for improvement were identified,
the necessary actions have been or are
being taken.
The Chairman of the Audit Committee
reported to the Board on the findings and
agreed actions from this annual assessment
of Risk Management and Internal Control.
The Board statement on Risk Management and
Internal Control is included in the Corporate
Governance Statement on page 108.
Compliance and Whistleblowing
The General Counsel & Company Secretary
provides an update on legal and compliance risks,
on related assurance activities and on broader
developments in his area of responsibility, at each
meeting of the Committee.
The Board has delegated responsibility to the
Audit Committee for ensuring that the Group
maintains suitable whistleblowing arrangements
for employees. Those arrangements are outlined
in the Corporate Governance Statement on page
117 and are also described in our Code of Conduct,
which is available on the Company’s website.
The Committee reviewed the operation of the
Group’s whistleblowing facilities, including the
matters raised and how they were resolved, on
the basis of a report from the General Counsel
& Company Secretary.
Group Internal Audit
The Audit Committee agrees GIA plans and
reviews reports of Internal Audit work. The
Committee also monitors the effectiveness of
the Internal Audit function and reviews the
control observations made by the Head of GIA,
the adequacy of management’s response to
recommendations and the status of any
unremediated actions. The Head of GIA and
the Head of IT Assurance, together with other
executives from the GIA function as needed,
report to each meeting of the Committee on:
the findings from each audit, IT audit and
•
any special investigations completed;
reviews undertaken on newly acquired
subsidiaries;
•
• audits in progress;
•
the timely implementation of agreed audit
actions; and
• progress on other projects including the
implementation of improvements agreed
under the most recent External Quality
Assessment.
Internal audit continued to be conducted
remotely during the year because of continued
Covid-19 restrictions. The Committee received
regular updates from the Head of GIA on how
the remote audits performed in comparison to
an in-person audit and were satisfied that the
appropriate standards were being met. Remote
auditing carried out by the GIA team continued
to work satisfactorily with no delay in the
internal audit plan. However, the GIA team has
resumed in-person audits where possible.
Issues arising from audits completed and
related corrective action plans are tracked.
The Audit Committee reviews progress on
these corrective actions with the Head of GIA
at each of its meetings.
External Quality Assessments (‘EQAs’)
by independent external consultants are
conducted at least every five years to confirm
compliance by the GIA function with the
International Standards for the Professional
Practice of Internal Auditing (‘IIA Standards’).
An internal review against the same standards
is completed on an annual basis. The most
recent EQA was completed in 2021 by EY.
The Audit Committee ensures co-ordination
between GIA and the external auditor
with regular meetings being held each year
to maximise the benefits from clear
communication and co-ordinated activities.
The Head of GIA has direct access to the
Chairman of the Audit Committee and the
Audit Committee meets with the Head of GIA
on a regular basis without other members
of management.
DCC plc Annual Report and Accounts 2022
125
Governance
Audit Committee Report continued
External Auditor
The Audit Committee oversees the relationship
with the external auditor, KPMG, including
approval of the external auditor’s fee. In the
year ended 31 March 2022, the Committee
engaged with KPMG to ensure a smooth
transition to Patricia Carroll as the Group’s
lead audit engagement partner.
The Audit Committee reviewed KPMG’s
external audit plan at its meeting held in
November 2021 and received an update at its
meeting in April 2022, at the commencement
of the audit.
This review focused on key audit risks identified
by KPMG, materiality thresholds, the background
and experience of the KPMG audit partners
responsible for the largest local teams, and
the extent of oversight and review by the Irish
firm, including of the small number of Group
components not audited by KPMG. Following
the audit, the Audit Committee met with KPMG
to review the findings from their audit of the
Group financial statements.
The Audit Committee meets with the external
auditor without the presence of management.
In addition, the Audit Committee discusses
with the external auditor their approach to
audit quality.
In accordance with its Terms of Reference,
the Audit Committee is required to make
a recommendation to the Board on the
appointment, reappointment and removal
of the external auditor.
Effectiveness
KPMG were appointed as the Group’s external
auditor on 17 July 2015. As part of its review of
the effectiveness of an external audit process,
the Committee reviewed the results of an
external audit effectiveness questionnaire,
which was completed by relevant members
of management.
Audit vs Non-Audit Fees
This process involved the Chief Financial Officer
obtaining the views of Group and subsidiary
finance executives. Their responses were
summarised by management in a report to the
Audit Committee. Based on its consideration
of this report and its own interaction with
KPMG, in the form of reports and meetings,
the Audit Committee noted that the overall
feedback was positive and that a number of
areas for improvement had been agreed.
The Audit Committee’s conclusion that the
external audit process was effective was
conveyed to the Board.
Independence
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 an annual review
of fees paid to the external auditor for audit and
non-audit work and seeking confirmation from
the external auditor that they are in compliance
with relevant ethical and professional guidance
and that, in their professional judgement, they
are independent from the Group. On the basis
of this process, the Committee is satisfied that
KPMG remain independent.
The Audit Committee has approved a policy on
the employment of employees or former
employees of the external auditor. This policy
provides that the Chief Executive will consult
with the Chairman of the Audit Committee
prior to appointing to a senior financial
reporting position, to a senior management
role or to a Company officer role 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.
No such appointments were made in the year
ended 31 March 2022.
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
Non-Audit
as % of Audit
3,594
140
4%
3,267
111
2,930
86
2,740
46
3%
3%
3%
2%
2,241
42
2022
2021
2020
2019
2018
Audit £’000
Non-Audit £’000
126
DCC plc Annual Report and Accounts 2022
perceived to be, in conflict with auditor
independence, providing they have the
competence to carry out the work and are the
most appropriate to undertake it. In addition,
a number of specific types of non-audit
services are prohibited under the policy.
The policy also provides that any non-audit
work that would result in the aggregate of
non-audit fees paid to the external auditor
exceeding 50% of annual audit fees must be
approved in advance by the Chief Executive
and the Chairman of the Audit Committee.
The Committee is kept informed by
management of all non-audit assignments
being undertaken by the external auditor
and the aggregate level of fees to be paid for
such assignments is pre-approved by the
Audit Committee.
Details of the amounts paid to the external
auditor during the year for non-audit services
are set out in note 2.3 on page 177. The chart
below sets out the audit and non-audit fees
paid to the external auditor over the five-year
period from 2018 to 2022 inclusive.
Financial Reporting
An important part of the Committee’s role is
to ensure that the Company’s disclosures are
supported by suitably detailed analysis and are
subject to challenge. The Committee reports
its findings and makes recommendations to
the Board accordingly.
The statutory auditor supports the Committee
in this role. In the course of the audit, it
considers whether accounts have been
prepared in accordance with IFRS and whether
adequate accounting records have been kept.
Furthermore, the GIA function also contributes
to the assurance process by reviewing
compliance with internal processes. The
statutory auditor presents its findings to the
shareholders as the owners of the business,
and its report can be found on pages 159
to 163.
In relation to the 2022 Annual Report and
Accounts, the Committee assessed whether
suitable accounting policies had been adopted
and whether management had made
appropriate estimates and judgements. The
Committee obtained support from the external
auditor in making these assessments.
The Committee focused on matters it
considered to be important by virtue of their
impact on the Group’s results and particularly
those which involved a relatively higher level
of complexity, judgement or estimation by
management. The table on page 127 sets
out the significant issues considered by
the Committee in relation to the financial
statements for the year ended 31 March 2022.
Strategic Report
Governance
Financial Statements
Supplementary Info
Management confirmed to the Committee
that they were not aware of any material
misstatements in the financial statements and
KPMG confirmed that they had found no material
misstatement in the course of their work.
The Committee reviewed the position regarding
distributable reserves in order to recommend
payment of the interim and final dividends.
Impact of Climate Change
The Committee considered the Company’s
approach to the reporting of the impact of climate
change on its activities in the 2022 Annual Report
and Accounts, including compliance with the
recommendations of the Taskforce on Climate-
related Financial Disclosures. More detail on
compliance with TCFD is contained in the
Sustainable Business Report on page 80.
Fair, Balanced and Understandable
As required by the Code, the Board should
present a fair, balanced and understandable
assessment of the Company’s position and
prospects, and specifically confirm that it
considers that 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.
preparation of the 2022 Annual Report and
Accounts, in particular planning, co-ordination
and review processes. The Committee also
noted the formal review undertaken by KPMG.
This enabled the Committee, and then the
Board, to conclude that the Annual Report
and Accounts, taken as a whole, is fair, balanced
and understandable and that it provides the
necessary information for shareholders to
assess the Group’s performance, business
model and strategy.
At the request of the Board, the Committee
considered whether the 2022 Annual Report
and Accounts met these requirements.
The Committee considered and discussed with
management the established and documented
processes put in place by management for the
Going Concern and Viability Statement
The Audit Committee reviewed the draft Going
Concern and Viability Statements prior to
recommending them for approval by the Board.
These statements are included in the Risk
Report on page 92.
Significant Issues in relation to the Financial Statements for the Year Ended 31 March 2022
Goodwill and Intangible Assets
As set out in note 3.3 to the Group financial
statements, the Group had goodwill and
intangible assets of £2,634.4 million at
31 March 2022. In order to satisfy itself that
this balance was appropriately stated, the
Committee considered the impairment
reviews carried out by management. The
Group’s annual impairment review was
carried out using the carrying values of
subsidiaries at 28 February and the latest
Three Year Plan information.
In performing their impairment reviews,
management determined the recoverable
amount of each cash generating unit (‘CGU’)
and compared this to the carrying value at
the date of testing. The recoverable amount
of each CGU is defined as the higher of its
fair value less costs to sell and its value in
use. Management uses the present value
of future cash flows to determine the value
in use. In calculating the value in use,
management judgement is required in
forecasting cash flows of CGUs, in
determining the long-term growth rate
and selecting an appropriate discount rate.
Management reported to the Committee
that future cash flows of each CGU had been
estimated based on the most up to date
Three Year Plan as approved by the Board,
and discounted using discount rates that
reflected the risks associated with each
CGU. Sensitivity analysis was performed by
adjusting the discount rate, cash flows and
the long-term growth rate. The Committee
discussed with management the impact
of the revised energy organisational and
reporting structure and was satisfied that
the goodwill attaching to CGUs which were
previously separately reviewed for goodwill
impairment purposes, should now be
reviewed as a combined CGU, consistent
with the level at which the CGU is being
managed. The Committee considered
and discussed with management the key
assumptions to understand their impact
on the CGUs recoverable amounts. The
Committee in particular considered
and discussed with management the
assumptions in relation to one CGU where
the sensitivity analysis, under certain
scenarios, indicated that the value in use
was lower than the carrying value. The
Committee was satisfied that the significant
assumptions used for determining the
recoverable amounts had been appropriately
scrutinised, challenged and were sufficiently
robust. The Committee agreed with
management’s conclusion that the cash
flow forecasts supported the carrying value
of goodwill and intangible assets.
Business Combinations
As set out in note 5.2 to the Group financial
statements, the Group completed a number
of acquisitions during the year, the most
significant of which were the acquisitions
of Almo and Wörner. The Group committed
£715.5 million in total consideration to
acquisitions completed during the year.
This total consideration was satisfied by
a net cash outflow of £668.1 million and
acquisition related liabilities of £47.4 million.
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, being the date the
Group obtains control of the acquiree. 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.
Management reported to the Committee
that in conducting their review of the fair
values of the acquired assets and liabilities
at the date of acquisition, identifiable net
assets of £492.4 million, non-controlling
interests of £0.9 million and goodwill of
£224.0 million were acquired. Management
engaged independent experts to assist with
the valuation of intangible assets on the
Almo and Wörner acquisitions. In addition,
the Committee discussed and agreed with
management’s recommendations on the
estimated useful lives of intangible assets
arising on the Group’s acquisitions.
The Committee considered and discussed
with management the key assumptions used
in determining the fair value of assets and
liabilities acquired and was satisfied that
the process and assumptions used in
determining the fair values of assets and
liabilities had been appropriately scrutinised
and challenged and were sufficiently robust.
The Committee agreed with management’s
assessment of the fair values of assets
and liabilities acquired through business
combinations and was satisfied that the
related disclosures required under IFRS 3
were complete, accurate and understandable.
Other Matters
In addition, the Committee considered
and is satisfied with a number of other
judgements which have been made by
management including revenue recognition,
exceptional items, lease accounting,
provisioning for impairment of trade
receivables and inventories, tax provisioning
and the carrying amounts of the Parent
Company’s investments in subsidiary
undertakings and the amounts owed by
these subsidiary undertakings.
DCC plc Annual Report and Accounts 2022
127
Remuneration Report
Length of Tenure on the
Remuneration Committee
as at 31 March 2022 (years)
David Jukes (Chairman)
3.5
Caroline Dowling
2.8
Tufan Erginbilgic
2.0
Pam Kirby
7.8
The Remuneration
Committee continues
to align remuneration
structures with the
Company’s long term
strategic goals and
the creation of
shareholder value.”
128
DCC plc Annual Report and Accounts 2022
Executive Remuneration continues to reflect
a strong business performance.
Chairman’s Introduction
I am pleased to present the Remuneration
Report for the year ended 31 March 2022.
As usual, the Report includes the following
sections:
• This Chairman’s Introduction
• Remuneration at a Glance (page 131)
• Remuneration Policy Report (pages 132
to 138)
• Annual Report on Remuneration (pages 139
to 153)
The purpose of DCC’s Remuneration Policy,
which was renewed at the 2021 AGM with
strong shareholder support, is to incentivise
executive Directors and other senior Group
executives to create shareholder value on a
consistent and sustainable basis. Consequently,
their remuneration is weighted towards
performance, both in terms of financial and
non-financial objectives.
Performance for the Year
DCC delivered a strong performance in the
year ended 31 March 2022,
• Group adjusted operating profit was 11.1%
ahead of the prior year.
• Adjusted earnings per share grew by 11.2%
and it is proposed that the total dividend for
the year will be increased by 10.0%.
• Return on capital employed, a key metric for
DCC, was 16.5% and was again substantially
in excess of the Group’s cost of capital.
• DCC generated a strong shareholder return
over the last ten years, as illustrated in the
chart below.
The Committee is satisfied that the executive
Directors’ short- and longer-term remuneration,
as described next, properly reflects the Group’s
strong performance in the year.
DCC’s TSR versus the FTSE 100 over the
last 10 years
600
500
400
300
200
100
377%
92%
0
2012 2013
2014 2015
2016
2017 2018
2019 2020
2021
2022
DCC
FTSE 100
Remuneration of Executive Directors
for the Year
Salaries
As reported in last year’s Remuneration Report,
salary increases were awarded to the executive
Directors in respect of the year ended 31 March
2022.
Donal Murphy’s salary increased by 3%, which
was broadly in line with increases across the
Group as a whole.
Kevin Lucey was appointed to the Group
CFO role in 2020 on a salary of €450,000.
In recognition of Kevin’s contribution in the CFO
role since his appointment, the Committee
approved an increase in his salary of 5% for
the year to March 2022 and, more recently,
a further increase for the present year to March
2023, which is described on the following page.
The Committee will keep this matter under
review and, in this context, future increases may
be higher than the workforce average and will
be fully explained fully in the relevant
Remuneration Report.
Further details in relation to remuneration
arrangements for the year ended 31 March
2022 are set out on page 139.
Bonuses
The annual bonuses for the executive Directors
in respect of the year ended 31 March 2022 were
based on performance against targets for growth
in Group adjusted earnings per share (up to 70%
of maximum potential) and overall contribution
and attainment of strategic and sustainability
targets (up to 30% of maximum potential).
Group and individual Director performance
against these targets has been reflected in
bonus outcomes for each of the executive
Directors, Donal Murphy and Kevin Lucey, of
187.1% and 157.6% of salary respectively
(compared to maximum potentials of 190%
for Donal Murphy and 160% of salary for
Kevin Lucey).
The Committee reviewed the calculated
outcomes under agreed bonus structures and,
based on the strong performance of the Group,
determined that the bonus payout was
appropriate at that level and concluded that no
discretion was required when approving the
bonus outcome.
Further details of the performance targets and
achievement against those targets are set out
on pages 139 to 141.
Governance Strategic Report
Governance
Financial Statements
Supplementary Info
Long-Term Incentives
The extent of vesting of the LTIP awards
granted in November 2019, which is based on
DCC’s ROCE, EPS and TSR performance over
the three-year period ended 31 March 2022 will
be formally determined by the Remuneration
Committee in November 2022. The earliest
exercise date will be November 2024.
The Committee recently assessed the outcome
of the 2019 LTIP cycle against the original
targets and concluded that, whilst the formulaic
outcomes against the ROCE and TSR measures
were a fair reflection of shareholder experience,
the EPS outcome misrepresents DCC’s strong
underlying annualised EPS growth of 6.5% p.a.
over the three years ended 31 March 2022. As
originally set, vesting of the EPS component was
based on outperforming UK RPI, a benchmark
which has subsequently been removed from the
EPS targets for LTIP cycles, as it has been also for
the majority of other FTSE100 companies, given
the lack of correlation between DCC earnings
and UK RPI. The very significant increase in RPI
over the final year of the performance period
(with annualised RPI growth increasing from
2.9% at the start of the year to 9% by March
2022) meant that the inflationary benchmark
to our earnings growth was far in excess of that
expected when the 2019 LTIP EPS targets were
originally set (note: annualised RPI growth had
averaged 2.8% over the ten years prior to the
start of the 2019 LTIP performance period).
Consequently, the Committee unanimously
agreed that the nil vesting of the EPS
component, as suggested by the formulaic
outcome against the inflation-linked targets,
was not a fair reflection of the strong underlying
earnings growth over this period.
The Committee reflected on guidance provided
by major shareholders and their representative
bodies in recent years around adjustments and
considered that the application of discretion at
the end of the three-year performance period,
taking into account all relevant information,
was the best approach. Consequently, the
Committee concluded the most appropriate
basis on which to determine vesting of the EPS
component, which accounts for 40% of the
2019 LTIP award, is to use the EPS range set for
the 2021 LTIP (i.e. 3% to 9% p.a.), which delivers
LTIP vesting of 27.5%, compared to nil vesting
had the original targets been used.
The Committee supports the view that
adjustments to incentives should be done only
in exceptional circumstances and is satisfied
that the recent exceptional increase in UK RPI
is such a circumstance. Furthermore, the
Committee is satisfied that the adjustment
made is appropriate, given the following
considerations:
• DCC’s annualised EPS growth over the
period, of 6.5% p.a., is strong, being around
the 65th percentile when compared to other
FTSE100 companies over the same period.
• UK RPI is wholly uncontrollable by the
management team, and making no
adjustment for the recent significant
increase in RPI would significantly reduce the
credibility of the LTIP, on which DCC relies to
provide alignment with shareholders and
reinforce longer-term goals.
• The expectations for RPI at the time the
2019 LTIP EPS targets were set were
significantly lower than that which has been
observed over the 2019 LTIP performance
period; making no adjustment for this
material external factor would be
inconsistent with DCC’s philosophy that
incentives are designed to reinforce high
performance and an entrepreneurial culture.
• Removing RPI as a benchmarking for EPS
growth is consistent with market practice,
whereby only two of the 40 FTSE100
companies who use EPS in their LTIPs
benchmark EPS growth against RPI.
The adjustment to the 2019 LTIP cycle results
in a modest uplift in vesting, from 37% to 64.5%
of maximum, equivalent to an increase of
c.45% of salary for the CEO and c.20% of salary
for the CFO. The Committee concluded that
this outcome was fair, proportionate, and
consistent with its remuneration principles of:
incentivising sustained strong financial
performance; aligning rewards with delivery of
the Group’s strategy; and ensuring employee
alignment with the interests of shareholders.
The Remuneration Committee is consulting
with major shareholders on the approach taken
in relation to the vesting of the 2019 LTIP award,
as described above.
The 2020 LTIP EPS targets are also based on
a real growth range vs UK RPI; consequently,
at the time of vesting in 2023, the Committee
will assess the formulaic outcome against
these targets in relation to the underlying EPS
growth and determine whether any similar
discretionary adjustment is appropriate, taking
into account all available information at that
time such as the actual RPI growth over the
performance period and DCC’s underlying
earnings growth.
In terms of the prior year, the Remuneration
Committee determined that the LTIP awards
granted in November 2018 would vest at
64%, based on DCC’s ROCE, EPS and TSR
performance over the three-year period ended
31 March 2021. This was consistent with the
estimated vesting of 64% disclosed in last year’s
Report. The earliest exercise date will be
November 2023. The Committee concluded
that no discretion was required when
determining the vesting of the 2018 LTIP awards.
Further details on these vestings are set out on
page 142.
Details of LTIP awards granted to the executive
Directors in November 2021 are set out in the
table on page 148. These were granted under
a new LTIP (the DCC plc Long Term Incentive
Plan 2021) which was put to shareholders on an
advisory, non-binding basis at the 2021 AGM,
with 99% voting in favour. The primary change
in the new Plan is that awards have a three-year
vesting period, with a two-year post-vest sale
restriction for executive Directors, rather than
the five-year vesting period used previously.
Details of the performance conditions are set
out in last year’s Annual Report on page 132.
Remuneration for the Year Ahead
Salaries
For the year ending 31 March 2023, the Committee
agreed to increase the CEO’s salary by 3%. The
Committee took into account the projected salary
increase for the general workforce.
The Committee also agreed to increase the
CFO’s salary by 8% in recognition of his
demonstrated development in role and full
contribution at Board level. As noted above, the
Committee will keep this matter under review.
Bonuses
The executive Directors will continue to
participate in the bonus plan for the year
ending 31 March 2023, consistent with the
Remuneration Policy, with bonuses based
70% on growth in Group adjusted EPS and
30% on strategic objectives; the maximum
award opportunity for the year will be 200% of
salary for the CEO (the maximum opportunity
under the Remuneration Policy) and 160% for
the CFO.
The Committee wishes to use the full award
opportunity for the year ending 31 March 2023
made available under the approved Remuneration
Policy for the CEO (which implies a small increase
of 10% of salary compared to his opportunity for
the year ended 31 March 2022), having reviewed
market practice for bonus opportunities and
the current positioning of the CEO’s overall
remuneration levels, which are around market
median for a company the size of DCC. The
increase will also help to ensure that the bonus
maximises, under the current Remuneration
Policy, the focus on EPS growth and key strategic
goals such as the implementation of the
Company’s energy strategy.
Long-Term Incentives
The executive Directors will be granted LTIP
awards in the year ending 31 March 2023
consistent with the Remuneration Policy. The
performance conditions will continue to be
based on ROCE, EPS and TSR performance
over three years. The grant value will be consistent
with that in the year ended 31 March 2022 at up to
200% of salary for the CEO and CFO.
DCC plc Annual Report and Accounts 2022
129
Conclusion
I am satisfied that the Remuneration
Committee has implemented the Group’s
existing Remuneration Policy in the year ended
31 March 2022 in a manner that properly
reflects the performance of the Group in the
year. I strongly recommend that shareholders
vote in favour of the 2022 Remuneration
Report at the 2022 AGM.
We welcome and will consider any shareholder
feedback on the implementation of the
Remuneration Policy and the 2022
Remuneration Report.
On behalf of the Remuneration Committee
David Jukes
Chairman, Remuneration Committee
16 May 2022
Governance
Remuneration Report continued
Non-executive Director Fees
With effect from 1 April 2022, the non-
executive Director’s basic fee and the total
Chair fee will increase by 3%, in line with the
average workforce increase.
Full details of these fees are set out on page 151.
Shareholder Engagement
The Committee engages in dialogue with
major shareholders on remuneration matters,
particularly in relation to planned significant
changes in Policy. In 2021, we engaged with
the Company’s major shareholders and offered
to hear their views on last year’s proposed
changes to our Remuneration Policy, which
were overall very positive. The Committee also
takes into account the views of shareholder
organisations and proxy voting agencies. The
Committee acknowledges that shareholders
have a right to have a ‘say on pay’ by putting the
Remuneration Report and the Remuneration
Policy, as required, to advisory votes at the
AGM. At the 2022 AGM, a resolution on the
Remuneration Report, excluding the
Remuneration Policy, will again be put to
shareholders, on an advisory rather than on
a binding basis. As we are not making any
changes to the Remuneration Policy, which was
approved by shareholders at the 2021 AGM,
we will not be putting this to a shareholder vote.
Details of shareholders’ proxy votes on the
2021 Remuneration Report and Remuneration
Policy are set out in the chart below, along with
a history of votes on Remuneration Reports
and Policies since 2017.
AGM Votes on Directors’ Remuneration
Report and Policy
Remuneration
Policy 2021
Remuneration
Report 2021
Remuneration
Policy 2020
Remuneration
Report 2020
Remuneration
Report 2019
Remuneration
Report 2018
Remuneration
Policy 2017
Remuneration
Report 2017
% For
% Against
98.6
1.4
98.1
1.9
99.2
0.8
99.9
0.1
98.3
1.7
94.4
5.6
97.8
2.2
98.5
1.5
Employee Engagement
The Committee is conscious of the provisions
in the UK Corporate Governance Code on
taking account of workplace remuneration
in setting policy for executive Director
remuneration. The Committee’s approach to
this matter is detailed on page 135. A copy of
the Annual Report is issued to every business
in the Group. Internal communication events,
such as town halls, then allow employees to
raise any questions that they may have on this
and other issues.
Energy Strategy
The Group undertook a detailed review of its
energy strategy during the year under review.
That resulted in an updated strategy for the
sector and a new target to get the Group to
net zero at Scope 1, 2 and 3 by 2050 or sooner.
The Group’s updated energy strategy is
summarised in the Energy Strategy section on
page 22. The implementation of that strategy
will be reflected in executive Director bonuses
for the year ending 31 March 2023, and the
Committee will consider during the present
year how Executive Director remuneration can
be further adapted to reinforce the steps the
Group is taking in relation to energy transition
and decarbonisation.
UK Companies (Miscellaneous Reporting)
Regulations 2018 and Shareholders Rights
Directive II
As an Irish-incorporated company, DCC is not
subject to the 2018 Regulations. However,
given our listing on the London Stock Exchange,
we continue our established practice of
substantially applying these regulations on
a voluntary basis.
Following the implementation of the EU
Shareholder Rights’ Directive II (‘SRD II’) into
Irish law in March 2020, Irish company law
now requires an advisory shareholder vote
on remuneration reports and remuneration
policies at AGMs. However, the SRD II
requirements only apply to companies whose
shares are admitted to trading on an EU
regulated market, which, following Brexit,
does not include DCC. Nonetheless, we have
in this year’s Report, substantially reported
against SRD II requirements as a matter of
good practice.
Retirement of Committee member
Pam Kirby, who has been a Director since
2013 and a member of the Remuneration
Committee since 2014, will retire from the
Board at our AGM in 2022. On behalf of the
Committee, I would like to thank Pam for
her insightful and valued contribution and
I wish her the very best for the future.
130
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Remuneration at a Glance
How have we performed?
Adjusted operating profit +11.1%
Adjusted EPS +11.2%
Return on capital employed 16.5%
2022
2021
2020
£589.2m
£530.2m
£494.3m
2022
2021
2020
430.1p
386.6p
362.6p
2022
2021
2020
16.5%
17.1%
16.5%
How was this reflected in executive Director pay?
Annual Bonus Outcome for year ended 31 March 2022
EPS growth (+11.2%)
Strategic objectives – CEO
Strategic objectives – CFO
MIN
3%
MAX
10%
MIN
0%
MAX
95%
MIN
0%
Payout: 100%
Payout: 95%
MAX
95%
Payout: 95%
Outcomes
Growth in EPS
Strategic objectives
Overall
Further details on bonus on page 139.
Donal Murphy
Kevin Lucey
% of max.
100.0%
95.0%
98.5%
% of salary
133.0%
54.1%
187.1%
% of max.
100.0%
95.0%
98.5%
% of salary
112.0%
45.6%
157.6%
2019 LTIP award outcome based on results for three-year period ended 31 March 2022
ROCE
EPS Growth
TSR outperformance of FTSE 350 Index
MIN
14%
MAX
17%
MIN
3%
Actual: 16.7%
Extent of vesting
37%
MAX
9%
MIN
Below index
Index
MAX
8%
Actual: 6.5%
Extent of vesting
27.5%
Actual: -6.6%
Extent of vesting
0%
Total amount of November 2019 awards expected to vest: 64.5%
Further details on LTIP on page 142.
Executive Directors’ total remuneration
Executive Directors’ shareholdings
€'000
4,000
3,000
2,000
1,000
0
3,697
3,730
1,566
1,140
2022
2021
2022
2021
12
11
10
9
8
7
6
5
4
3
2
1
0
Multiple of salary
Multiple of salary
Holding =11.8x
Donal
Murphy
Policy requirement
5
4
3
2
1
0
Holding =1.9x
Kevin
Lucey
CFO
Fixed (Salary, Benefits, Retirement Benefit Expense)
Annual Bonus
LTIP
CEO
Further details on remuneration on page 139.
Further details on shareholdings on page 149.
DCC plc Annual Report and Accounts 2022
131
Governance
Remuneration Report continued
Remuneration Policy Report
DCC’s Remuneration Policy (‘the Policy’) is set out below. As an Irish-incorporated company, DCC is not required to comply with UK regulations that
require UK companies to submit their remuneration policies to a binding shareholder vote. In addition, following Brexit, requirements under Irish
company law implemented to give effect to the Shareholders Rights Directive II only apply to companies whose shares are admitted to trading on
an EU regulated market. However, the Board recognises the need for our remuneration policies, practices and reporting to reflect best corporate
governance practice and have substantially applied these regulations.
Accordingly, the Remuneration Policy was submitted to an advisory, non-binding vote at the 2021 Annual General Meeting (‘AGM’).
The 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 executives with those of shareholders, within the framework set out in
the UK Corporate Governance Code (‘Code’). Central to this Policy is the Group’s belief in long-term, performance-based incentivisation and the
encouragement of share ownership.
The basic Policy objective is to have overall remuneration reflect performance and contribution, while maintaining salary rates and the short-term
element of incentive payments that are broadly in line with arrangements for companies of similar size, scale and complexity.
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 are base salary, pension and other benefits, annual performance-related bonuses
and participation in long-term performance plans which promote the creation of sustainable shareholder value.
The Remuneration Committee 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 Remuneration Committee takes external advice from remuneration consultants on market practice within similar-sized UK-listed and Irish
companies to ensure that remuneration remains competitive and structures continue to support the key remuneration policy objectives.
Benchmarking data is used to inform remuneration decisions, but not to drive changes.
The Committee is mindful of managing any conflicts of interest. No individual was involved in determining his/her own remuneration arrangements.
The table below sets out how the principles of the Code relating to the design of executive director remuneration policy and practices have
been applied:
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment to culture
Our remuneration policy and the approach to its implementation is clearly communicated to
shareholders and well understood by participants.
We operate a simple structure of market-aligned salary and benefits, with annual and
long-term performance-based incentives with pay-outs linked to only a small number
of performance measures.
We manage risk by careful setting of performance targets in the context of a wide range of
reference points, and the Committee retains discretion to moderate outcomes in the context
of underlying performance. The senior executive remuneration structure is heavily weighted to
longer-term or deferred elements of pay, helping to ensure our pay structure reinforces a long
time horizon.
There are defined threshold and maximum pay scenarios, which are described on page 137.
Remuneration is weighted towards financial and non-financial performance, measures for which
are selected to align with strategy. We set challenging performance targets that are commensurate
with the incentive opportunities awarded.
Remuneration design aligns closely to DCC’s performance culture and values, which reinforce
longer-term decision making and collective efforts. Our annual bonus plan includes sustainability/
ESG targets.
132
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Element and link to strategy
Operation
Maximum opportunity
Base Salary
Attract and retain skilled and
experienced senior executives.
Base salaries are reviewed annually on 1 April.
The factors taken into account include:
• Role and experience
• Company performance
• Personal performance
• Competitive market practice
• Salary increases across the Group
• Benchmarking versus companies of similar size and complexity
within UK and Irish markets
When setting pay policy, account is taken of movements in pay
generally across the Group.
No prescribed maximum base salary
or maximum annual increase.
General intention that any increases
will be in line with the increase across
the Group’s workforce.
Increases may be higher in certain
circumstances such as changes
in role and responsibility or significant
changes in market practice.
Benefits
To provide market competitive
benefits.
Benefits include the use of a company car, life/disability cover, health
insurance and club subscriptions.
No maximum level has been set as
payments depend on individual
circumstances.
Annual Bonus
To reward the achievement of
annual performance targets.
The maximum bonus potential, for the
executive Directors, permitted under
the Policy is 200% of base salary.
The Remuneration Committee will set
a maximum to apply for each financial
year, which will be disclosed in the
Annual Report on Remuneration.
A defined target level of performance
has been set for which 50% of
maximum bonus is payable.
Bonus payments to executive Directors are based upon meeting
pre-determined targets for a number of key measures, including
Group earnings and overall contribution and attainment of strategic
objectives. The strategic targets are focused on areas such as
delivery on strategy, organisational development, IT, investor
relations, financing, risk management, sustainability/ESG and talent
development/succession planning.
The measures, their weighting and the targets are reviewed on an
annual basis.
Bonus levels are determined by the Committee after the year end
based on actual performance achieved. The Committee can apply
appropriate discretion in specific circumstances in respect of
determining the bonuses to be awarded. In particular, the
Committee has the discretion to reduce bonuses in the event that
a pre-determined target return on capital employed is not achieved.
In regard to the executive Directors, 33% of any bonus earned,
once the appropriate tax and social security deductions have been
made, will be invested in DCC shares which will be made available to
them after three years, or on their employment terminating if
earlier, together with accrued dividends.
A formal clawback policy is in place for the executive Directors,
under which bonuses are subject to clawback for a period of three
years in the event of a material restatement of financial statements
or other specified events. Further details on clawback policy are set
out on page 135.
The Committee has discretion in relation to bonus payments to
joiners and leavers.
DCC plc Annual Report and Accounts 2022
133
Governance
Remuneration Report continued
Element and link to strategy
Operation
Maximum opportunity
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 market value of the shares
subject to the options granted in
respect of any accounting period
may not normally exceed 200%
of base salary.
In exceptional circumstances, the
market value of the shares subject
to the options granted in respect
of any accounting period may not
exceed 300% of base salary. This
higher limit will only be used in
exceptional circumstances, for
example if necessary, in the case
of external recruitment.
The LTIP provides for the Remuneration Committee to grant
nominal cost (€0.25) options to acquire shares to Group
employees, including executive Directors.
The vesting period is normally three years from the date of grant,
with the extent of vesting being determined over three years,
based on the performance conditions set out in the Annual Report
on Remuneration.
There is a two-year hold period as a post vest sale restriction for
the executive Directors.
In addition to the detailed performance conditions, an award
will not vest unless the Remuneration Committee is satisfied
that the Company’s underlying financial performance has shown
a sustained improvement in the three-year period since the
award date.
Vesting will be determined by the Remuneration Committee,
in its absolute discretion, based on the performance conditions
set out in the Annual Report on Remuneration each year.
No re-testing of the performance conditions is permitted.
The performance conditions and their relative weighting may be
modified by the Remuneration Committee in accordance with the
Rules of the LTIP, provided that they remain no less challenging and
are aligned with the interests of the Company’s shareholders.
A formal clawback policy is in place, under which awards are subject
to clawback in the event of a material restatement of financial
statements or other specified events. Further details on this
clawback policy are set out on page 135.
Pension
To reward sustained contribution.
The executive Directors are eligible to participate in a defined
contribution pension scheme (or receive cash in lieu of
contributions to a defined contribution pension scheme).
Pension contributions (paid into the
defined contribution scheme or paid
as cash in lieu) for existing executive
Directors are capped at 15% of base
salary, in line with the broader workforce.
Newly appointed executive Directors
will receive pension contributions
in line with the broader workforce.
Pensionable salary is defined as
base salary.
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Remuneration Committee Discretion
The discretion available to the Committee in respect of the various elements of executive remuneration is summarised below.
Pay element
Discretion available
Bonus
The Committee can apply appropriate discretion in specific circumstances in respect of the financial and non-financial/strategic
targets and, in particular, the Committee has the discretion to reduce bonuses in the event that a pre-determined target return on
capital employed is not achieved.
LTIP
Vesting is determined by the Remuneration Committee, in its absolute discretion, based on certain performance conditions.
Payments from Existing Awards
Subject to the achievement of the applicable performance conditions, executive Directors are eligible to receive payment from any award made prior
to the approval and implementation of the Remuneration Policy detailed in this Report.
Clawback Policy
Bonus payments may be subject to clawback for a period of three years from payment in certain circumstances including:
• a material restatement of the Company’s audited financial statements;
• a material breach of applicable health and safety regulations; or
• business or reputational damage to the Company or a subsidiary arising from a criminal offence, serious misconduct or gross negligence by the
individual executive.
The LTIP allows for the Remuneration Committee to reduce or impose further conditions on awards prior to vesting in some circumstances as
outlined above.
Remuneration Policy for Recruitment of New Executive Directors
In determining the remuneration package for a new executive Director, the Remuneration Committee would be guided by the principle of offering
such remuneration as is required to attract, retain and motivate a candidate with the particular skills and experience required for a role, if it considers
this to be in the best interests of the Company and the shareholders. The Remuneration Committee will generally set a remuneration package which
is in accordance with the terms of the approved Remuneration Policy in force at the time of the appointment, though the Committee may make
payments outside of the Policy if required in the particular circumstances and if in the best interests of the Company and the shareholders. Any such
payments which relate to the buyout of variable pay (bonuses or awards) from a previous employer will be based on matching the estimated fair value
of that variable pay and will take account of the performance conditions and the time until vesting of that variable pay.
For an internal appointment, any variable pay element awarded in respect of the prior role and any other ongoing remuneration obligations existing
prior to appointment would be honoured.
Remuneration Policy for Other Employees
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.
DCC employs 15,400 people in 21 countries. Remuneration arrangements across the Group differ depending on the specific role being undertaken,
the industry in which the business operates, the level of seniority and responsibilities, the location of the role and local market practice.
Consultation with Employees
Wider company pay policies are considered by the Remuneration Committee at various meetings throughout the year. The Committee takes these
and broader pay practices and trends into account when making compensation decisions for executive Directors. The Annual Report sets out the
relationship between executive Director pay and the average remuneration of Group employees and also how salary increases and pension
contributions for executive Directors align with the broader workforce. A copy of the Annual Report is issued to every business in the Group.
Internal communication events, such as town halls, then allow employees to raise any questions that they may have on this and other issues.
Each of our businesses is responsible for engaging with their respective workforces in relation to remuneration. The Committee is of the view that
such an approach is appropriate in light of DCC’s decentralised business model. However, the Committee has oversight of workforce pay and policies
at a Group level and at a business unit executive level, which enables it to ensure that the approach taken to executive remuneration is consistent
with those workforces.
Given the divergent nature of our businesses, the Committee does not believe that a standardised approach to remuneration is appropriate.
However, it does pay particular attention to whether each element of remuneration is consistent with the Company’s remuneration philosophy.
Consultation with Shareholders
The Committee engages in dialogue with major shareholders on remuneration matters, particularly in relation to planned significant changes in
Policy. The Committee also takes into account the views of shareholder organisations and proxy voting agencies.
The Committee acknowledges that shareholders have a right to have a ‘say on pay’ by putting the Remuneration Report and the Remuneration
Policy, as required, to advisory votes at the AGM.
DCC plc Annual Report and Accounts 2022
135
Governance
Remuneration Report continued
Exit Payments Policy
The provisions on exit in respect of each of the elements of pay are as follows:
Salary and Benefits
Exit payments are made only in respect of base salary for the relevant notice period. The Committee may in its discretion also allow for the payment
of benefits (such as payments in lieu of defined contribution pension) for the notice period. In all cases, the notice period applies to both the
Company and the executive.
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.
In relation to deferred bonuses which have been invested in DCC shares, they will be made available on the participant’s cessation date, together with
accrued dividends.
Long-Term Incentive Plan
To the extent that a share award or option has vested on the participant’s cessation date, the participant may exercise the share award or option
during a specified period following such date but in no event may the share award or 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 cessation 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.
The approach for ‘good leavers’ is to pro-rate awards based on time served as a proportion of the three-year vesting period. The extent of vesting
under the performance conditions will be determined in the normal way at the end of the three-year vesting period.
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 contribution pension scheme contain detailed provisions in respect of termination of employment.
Service Contracts
Donal Murphy has a service agreement with the Company with a notice period of six months. This service agreement provides that either he or the
Company could terminate his employment by giving six months’ notice in writing. The Company may, at its sole discretion, require that Mr. Murphy,
instead of working out the period of notice, ceases 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 agreement does not include any provisions for compensation for loss of office, other
than the notice period provisions set out above.
Kevin Lucey has a letter of appointment which provides for a six month notice period. This letter of appointment provides that either he or the
Company could terminate his employment by giving six months’ notice in writing. The Company may, at its sole discretion, require that Mr. Lucey,
instead of working out the period of notice, ceases employment immediately in which case he would receive compensation in the form of base
salary only in respect of the notice period. The letter of appointment also provides for summary termination (i.e. without notice) in a number of
circumstances, including material breach or grave misconduct. The letter of appointment does not include any provisions for compensation for loss
of office, other than the notice period provisions set out above.
136
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Scenario Charts
Set out below is an illustration of the potential future remuneration that could be received by each executive Director for the year ending 31 March 2023
at minimum, median and maximum performance (assuming (i) a constant share price and (ii) an uplift of 50% in the share price).
As the Directors are paid in euro, the Remuneration Committee considers it appropriate that the figures disclosed in this Report continue to be
presented in euro.
Donal Murphy, Chief Executive
Kevin Lucey, Chief Financial Officer
€
6.0m
5.5m
5.0m
4.5m
4.0m
3.5m
3.0m
2.5m
2.0m
1.5m
1.0m
0.5m
0
€5.66m
48%
€4.75m
38%
€2.93m
31%
31%
38%
38%
32%
24%
20%
€1.11m
100%
0
0
Minimum
Median
Maximum
(constant
share price)
Maximum
(share price
+50%)
€
6.0m
5.5m
5.0m
4.5m
4.0m
3.5m
3.0m
2.5m
2.0m
1.5m
1.0m
0.5m
0
€1.54m
33%
27%
40%
€0.62m
100%
0
Minimum
Median
€2.46m
42%
33%
25%
€2.97m
52%
28%
20%
Maximum
(constant
share price)
Maximum
(share price
+50%)
Fixed
Annual Bonus
Long-Term Incentive Plan
Fixed
Annual Bonus
Long-Term Incentive Plan
Notes:
Minimum Performance comprises:
• Fixed pay – base salary, benefits and retirement benefit expense.
• No annual bonus payout.
• No LTIP vesting.
Maximum Performance (constant share price) comprises:
• Fixed pay – base salary, benefits and retirement benefit expense.
• 100% annual bonus payout i.e. 200% of salary for CE and 160% of
salary for CFO.
• 100% vesting of LTIP i.e. 200% of salary.
Median Performance comprises:
• Fixed pay – base salary, benefits and retirement benefit expense.
• 50% annual bonus payout i.e. 100% of salary for CE and 80% of salary
Maximum Performance (share price + 50%) comprises:
• Fixed pay – base salary, benefits and retirement benefit expense.
• 100% annual bonus payout i.e. 200% of salary for CE and 160% of
for CFO.
salary for CFO.
• 50% vesting of LTIP i.e. 100% of salary.
• 100% vesting of LTIP and 50% uplift in share price, equating to 300%
of salary.
Share Ownership Guidelines
DCC’s Remuneration Policy has at its core a recognition that the spirit of ownership and entrepreneurship is essential to the creation of long-term
high performance and that share ownership is important in aligning the interests of executive Directors and other senior Group executives with
those of shareholders.
A set of share ownership guidelines is in place under which the Chief Executive, other executive Directors and other senior Group executives are
encouraged to build, over a five-year period from appointment, 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
(multiple of base salary)
3 x
2 x
1 x
Compliance with the Share Ownership Guidelines is reviewed annually by the Remuneration Committee. The position of the executive Directors as at
31 March 2022 is set out in the Annual Report on Remuneration on page 149.
DCC plc Annual Report and Accounts 2022
137
Governance
Remuneration Report continued
Post-Employment Share Ownership Requirements
In accordance with the requirements of Provision 36 of the UK Corporate Governance Code, the Remuneration Committee has introduced, with
effect from 1 April 2019, Post-Employment Share Ownership Requirements under which the Chief Executive and other executive Directors are
required, after leaving the Group, including through retirement, to maintain a shareholding in the Company for a two-year period, as below:
Executive
Chief Executive
Other executive Directors
Ratio of Share Ownership to Base Salary
3 x
2 x
Base salary will be the base salary of the Director in effect at the date of ceasing employment.
For the purposes of these Requirements, share ownership will include shares, vested share options, unvested options no longer subject to performance
conditions, deferred bonus share awards, restricted stock awards and any other vested or unvested share awards made under incentive plans
operated by the Company which are not subject to performance conditions.
Shares held by a Director’s spouse and/or minor children and shares held in any trust for the benefit of the Director and/or his/her spouse and minor
children will be counted towards the share ownership requirement.
The valuation of the shareholdings in the Company will be reviewed at the end of each year, based on the closing market price of the Company’s
shares. If the required ratio fails to be met due to factors other than a decrease in the market price of the Company’s shares, the Director will be
allowed an additional period of 12 months, or such other period as the Remuneration Committee may determine, to bring the shareholding back
to the required level.
Policy on External Board Appointments
Executive Directors may accept external non-executive directorships with the prior approval of the Board. The Board recognises the benefits that
such appointments can bring both to the Company and to the Director in terms of broadening their knowledge and experience. The fees received
for such roles may be retained by the executive Directors.
Mr. Murphy and Mr. Lucey do not currently hold any external board appointments.
Policy for non-executive Directors
Fees
Operation
Maximum Opportunity
The fees paid to non-executive Directors
reflect their experience and ability and the
time demands of their Board and Board
Committee duties.
A basic non-executive Director fee is paid for
Board membership. Additional fees are paid
to the members and the chairs of Board
Committees, to the Board Chair and to the
Senior Independent Director.
Additional fees may be paid in respect of
Company advisory boards.
The remuneration of the Board Chair is
determined by the Remuneration Committee
for approval by the Board. The Board Chair
absents himself from the Committee meeting
while this matter is being considered.
The remuneration of the other non-executive
Directors is determined by the Board Chair and
the Chief Executive for approval by the Board.
The fees are reviewed annually, taking account
of any changes in responsibilities and the level
of fees in a range of comparable Irish and
UK companies.
No prescribed maximum annual increase.
In accordance with the Articles of Association,
shareholders set the maximum aggregate
ordinary remuneration (basic fees, excluding
fees for committee membership and chair fees).
The current limit of €850,000 was set at the
2019 AGM.
Non-executive Directors do not participate in the
Company’s LTIP and do not receive any pension
benefits from the Company.
Non-executive Directors’ Letters of Appointment
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.
138
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Annual Report on Remuneration
This section of the Remuneration Report gives details of remuneration outcomes for the year ended 31 March 2022, sets out how
the Remuneration Policy will operate in the year ending 31 March 2023, and provides additional information on the operation of the
Remuneration Committee.
Remuneration Outcomes for the Year Ended 31 March 2022
The table below sets out the total remuneration and breakdown of the elements received by each serving Director in relation to the year ended
31 March 2022, together with prior year comparatives. An explanation of how the figures are calculated follows the table.
Executive Directors’ Remuneration Details
Salary
Benefits
Bonus
2022
€’000
2021
€’000
2022
€’000
2021
€’000
2022
€’000
2021
€’000
Donal Murphy
Kevin Lucey1
Fergal O’Dwyer2
883
472
–
857
316
155
67
42
–
65 1,653 1,543
22
10
745
–
473
280
1,355 1,328
109
97 2,398 2,296
198
196
Retirement
Benefit Expense
Restricted
Retirement Stock
LTIP
Audited Total
Sub-Total
of Fixed
Pay
Sub-Total
of Variable
Pay
2022
€’000
132
66
–
2021
€’000
129
44
23
2022
€’000
2021
€’000
2022
€’000
2021
€’000
2022
€’000
2021
€’000
2022
€’000
2022
€’000
–
–
–
–
–
–
962 1,136 3,697 3,730 1,082 2,615
241
285 1,566 1,140
580
986
170
–
385
– 1,023
–
–
170 1,203 1,806 5,263 5,893 1,662 3,601
1. Kevin Lucey was appointed as CFO and to the Board on 17 July 2020. His 2021 remuneration reflected in the above table relates to remuneration for the period 17 July 2020 to
31 March 2021.
2. Fergal O’Dwyer retired as CFO and from the Board on 17 July 2020. His 2021 remuneration reflected in the above table relates to remuneration for the period 1 April 2020 to
17 July 2020.
Fixed remuneration comprises Salary, Benefits, Retirement Benefit Expense and, in the case of Mr. O’Dwyer, Restricted Retirement Stock. Variable
remuneration comprises Bonus and LTIP. The proportion of fixed and variable remuneration for the year ended 31 March 2022 for Mr. Murphy was
29:71 and for Mr. Lucey was 37:63.
Salary
The salaries of the executive Directors for the year ended 31 March 2022 were increased from the prior year as shown in the table below.
Donal Murphy’s salary increased by 3%, which was broadly in line with increases across the Group as a whole. Kevin Lucey was appointed to the
Group CFO role in 2020 on a salary of €450,000. In recognition of Kevin’s development in the CFO role since his appointment, the Committee
approved an increase to his salary of 5%, which benchmarking against other comparable companies suggest remains around the lower quartile.
Donal Murphy
Kevin Lucey
Salary
€
883,019
472,500
Increase
%
3%
5%
Benefits
Benefits include the use of a company car and related costs, life/disability cover, health insurance and club subscriptions.
Determination of Bonuses for the Year Ended 31 March 2022
For the year ended 31 March 2022, the executive Directors participated in the bonus plan, as per the Remuneration Policy. Awards were based 70%
on Group EPS and 30% on strategic measures.
The table below sets out the performance in the year ended 31 March 2022 in terms of growth in Group adjusted earnings per share (‘Group EPS’)
compared to the performance target range set for the year.
Group EPS
Target
Minimum
(below which
nil payout)
3%
Maximum
(full payout)
10%
Outcome
11.2%
On the basis of the Group EPS outcome, the Remuneration Committee determined that there should be payment of 100% of the bonuses related
to this performance target.
DCC plc Annual Report and Accounts 2022
139
Governance
Remuneration Report continued
In regard to the achievement of targets set for strategic and sustainability objectives, the Remuneration Committee considered the following matters:
Executive Director
Alignment to Strategy
and Sustainability
Objective
Measure of Success
Outcome
Donal Murphy Climate Change
& Energy
Transition
Undertake a review of the
Group’s strategy for the energy
sector.
A detailed review was undertaken during the year, in consultation
with the Board, of the Group’s energy strategy. The Group’s
updated strategy is summarised in the Energy Strategy section
on page 22.
Achieve a reduction in the
Group’s Scope 1 and 2 carbon
emissions in line with the
Group’s target of achieving
a 20% reduction by 2025.
Scope 1 and 2 carbon emissions in the year ended 31 March 2022
were 25% lower than the 2019 baseline. As a consequence, the
Group has set a new target to reduce its Scope 1 and 2 emissions
by 50% by 2050, against the same baseline. See the Sustainable
Business Report on page 80 for more detail.
Safety &
Environmental
Protection
Continue to improve HSE
performance including through
reduction in LTIs, appropriate
management of Covid-19 risk
and visible leadership.
Continue to develop the
Group’s culture, including by
actively encouraging diversity.
Review the Group’s policy on
balance sheet management
while maintaining appropriate
flexibility on development.
People & Social
Development
of our People
Financial
Discipline
Operational
Excellence
Innovation
The Group recorded a reduction in LTIs during the year. Covid-19
restrictions continued to be maintained, protecting the Group’s
employees even as the manufacture and delivery of essential
products and services were maintained. The Chief Executive
provided visible and consistent leadership on HSE matters
throughout the year including at management conferences and
site visits. For more on the Group’s safety culture and performance
in the year, see the Sustainable Business Report on page 80.
The Group further developed its talent planning processes during
the year, including processes to support increased diversity. For
more on the steps the Group is taking to embed its culture and
develop diverse talent, see the People section on page 36.
The Group set out its capital framework and financial strategy in
May 2021 and its capital deployment priorities in December 2021.
The Group remains committed to maintaining a strong and liquid
balance sheet. For more detail, see the Financial Review on page 48
and www.dcc.ie.
Continue to support
innovation across the Group,
including through digital
initiatives.
The Group continued to foster innovation and share best practice
across businesses. The Group’s processes were further developed
during the year to support this. For more detail on developments in
this area, see Strategy in Action on page 28.
Fully met
Partially met
Not met
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Executive Director
Kevin Lucey
Alignment to Strategy
and Sustainability
Objective
Climate Change
& Energy
Transition
Undertake a review of the
Group’s strategy for the
energy sector.
Measure of Success
Outcome
A detailed review was undertaken during the year, in consultation
with the Board, of the Group’s energy strategy. The Group’s
updated strategy is summarised in the Energy Strategy section
on page 22.
Achieve a reduction in the
Group’s Scope 1 and 2 carbon
emissions in line with the
Group’s target of achieving
a 20% reduction by 2025.
Scope 1 and 2 carbon emissions in the year ended 31 March 2022
were 25% lower than the 2019 baseline. As a consequence, the
Group has set a new target to reduce its Scope 1 and 2 emissions
by 50% by 2050, against the same baseline. See the Sustainable
Business Report on page 80 for more detail.
Safety &
Environmental
Protection
Continue to improve HSE
performance including through
reduction in LTIs, appropriate
management of Covid-19 risk
and visible leadership.
People & Social
Development
of our People
Governance &
Compliance
Continue to develop the
Group’s culture, including by
actively encouraging diversity.
Review the Group’s internal
control processes to reflect
reporting and corporate
governance developments.
The Group recorded a reduction in LTIs during the year. Covid-19
restrictions continued to be maintained, protecting the Group’s
employees even as the manufacture and delivery of essential
products and services were maintained. The CFO provided visible
and consistent leadership on HSE matters throughout the year
including at management conferences and site visits. For more on
the Group’s safety culture and performance in the year, see the
Sustainable Business Report on page 80.
The Group further developed its talent planning processes during
the year, including processes to support increased diversity. For
more on the steps the Group is taking to embed its culture and
develop diverse talent, see the People section on page 36.
The Group undertook a review of a number of internal reporting
processes to ensure that they meet the continuing needs of the
Group as well as evolving external reporting and wider corporate
governance requirements. This allowed the Group to, for instance,
meet the requirements of the TCFD reporting framework in this
year’s Annual Report and obtain limited assurance over its Scope 3
carbon emissions. For more detail see the Sustainable Business
Report on page 80.
Financial
Discipline
Operational
Excellence
Innovation
Review the Group’s policy on
balance sheet management
while maintaining appropriate
flexibility on development.
The Group set out its capital framework and financial strategy in
May 2021 and its capital deployment priorities in December 2021.
The Group remains committed to maintaining a strong and liquid
balance sheet. For more detail, see the Financial Review on page 48
and www.dcc.ie.
Continue to support
innovation across the Group,
including through digital
initiatives.
The Group continued to foster innovation and share best practice
across businesses. The Group’s processes were further developed
during the year to support this. For more detail on developments in
this area, see Strategy in Action on page 28.
Fully met
Partially met
Not met
Accordingly, the Committee determined that 95% of this element of the bonus should be awarded to both Donal Murphy and Kevin Lucey.
The resultant bonus payout levels for the year ended 31 March 2022 were as follows:
Component
Group EPS
Strategic Performance
Donal Murphy – % of Salary
Kevin Lucey – % of Salary
% of Max
100.0%
95.0%
98.5%
% of Salary
133.0%
54.1%
187.1%
% of Max
% of Salary
100.0%
95.0%
98.5%
112.0%
45.6%
157.6%
In the case of Mr. Murphy and Mr. Lucey, 33% of their bonuses, net of tax and social security deductions, will be invested in DCC shares, which will be
made available to them after three years, or on employment terminating if earlier, together with accrued dividends.
The Remuneration Committee considered the outcomes as set out above and determined that they were appropriate in the circumstances,
reflected the Group’s strong performance in the year and no discretion was applied.
DCC plc Annual Report and Accounts 2022
141
Governance
Remuneration Report continued
Retirement Benefit Expense
Retirement Benefit Expense for Donal Murphy comprised 15% of base salary in the form of a cash allowance, in lieu of contribution to a defined
contribution pension scheme. Kevin Lucey is part of a defined contribution pension scheme in which a 14% employer contribution is in place.
Long-Term Incentive Plan
The values of the LTIP as shown in the table on page 139 for 2022 and 2021 relate to awards made in November 2019 and November 2018
respectively.
LTIP – 2022
(November 2019 grants)
LTIP – 2021
(November 2018 grants)
The LTIP awards granted in November 2019 will vest in November 2024
(five years after the grant date). The extent of vesting will be formally
determined by the Committee in November 2022 and based 40% on
ROCE performance, 40% on EPS performance and 20% on TSR
performance versus the FTSE350 over the three-year period ended
31 March 2022.
The LTIP awards granted in November 2018 will vest in November 2023
(five years after the grant date). The extent of vesting, which has been
determined by the Committee, was based 40% on ROCE performance,
40% on EPS performance and 20% on TSR performance versus the
FTSE350 over the three-year period ended 31 March 2021.
DCC’s average ROCE for the three years ended 31 March 2022 was
16.7% As this was within the range of 14% to 17% set for minimum to
maximum vesting, 92.5% of this portion of the award (37% of the total
award) will vest.
DCC’s average ROCE for the three years ended 31 March 2021 was
16.9%. As this was within the range of 14% to 17% set for minimum to
maximum vesting, 97.5% of this portion of the award (39% of the total
award) will vest.
As outlined in detail in the Chairman’s Introduction on page 129, the
Remuneration Committee concluded that the most appropriate basis on
which to determine vesting of the EPS component was to use the EPS
range set for the 2021 LTIP (i.e. 3% to 9% p.a.), replacing the original
inflation-linked targets in light of the very material change in UK RPI in the
last year of the performance period. DCC’s adjusted EPS increased by
6.5% annualised over the three-year period, within the range of 3% to
9% set for minimum to maximum vesting, thereby warranting vesting
of 68.8% of this portion of the award (27.5% of the total award).
DCC’s TSR performance relative to the FTSE 350 Index over the
three-year period ended 31 March 2022 underperformed that of the
FTSE 350 Index by 6.6%. As such, none of this portion of the award is
expected to vest.
DCC’s adjusted EPS increased by 7.2% annualised over the three-year
period. UK RPI increased by 2.2% annualised over the same period. As
the excess over RPI was greater than the 3% minimum and less than the
7% excess set for maximum vesting, 62.5% of this portion of the award
(25% of the total award) will vest.
DCC’s TSR performance over the three-year period ended 31 March
2021 underperformed that of the FTSE 350 Index by -3.7%. As such,
none of this portion of the award will vest.
Consequently, the Group’s ROCE, EPS and TSR performance is expected
to give rise to a vesting of 64.5%.
Consequently, the Remuneration Committee determined that 64%
of the November 2018 awards will vest in November 2023.
The value of the LTIP for the year ended 31 March 2022 is based on the
expected vesting percentage and the share price at 31 March 2022 of
€70.05 (£59.26) less the amount payable to purchase the shares (i.e. the
exercise cost).
The value of the LTIP for the year ended 31 March 2021 is based on
the vesting percentage and the share price at 31 March 2021 of €73.82
(£62.90) less the amount payable to purchase the shares (i.e. the
exercise cost).
As the share price at the end of the performance period on 31 March 2022
was lower than the share price at the date of grant, there is no value
attributable to a share price uplift to be disclosed.
On this basis, c. 6% of the LTIP value is attributable to share price
appreciation (i.e. €64,045 for Donal Murphy, €16,068 for Kevin Lucey
and €21,694 for Fergal O’Dwyer.)
142
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
LTIP – Vesting
The extent of vesting of awards made under the LTIP since its introduction in 2009 is set out below.
2009 award: vested/lapsed in 2012
2010 award: vested/lapsed in 2013
2011 award: vested/lapsed in 2014
2012 award: vested/lapsed in 2015
2013 award: vested/lapsed in 2016
2014 award: vested/lapsed in 2019
2015 award: vested/lapsed in 2020
Feb 2017 award: vested/lapsed in 2022
Nov 2017 award: to vest/to lapse in 2022
Nov 2018 award: to vest/to lapse in 2023
Nov 2019 award: expected to vest/to lapse in 2024
% vested
% lapsed
25.8%
42.4%
59.4%
100%
100%
100%
100%
80.0%
62.7%
64.0%
64.5%
74.2%
57.6%
40.6%
20.0%
37.3%
36.0%
35.5%
Chief Executive’s Remuneration
The chart below shows the total remuneration for the Director undertaking the role of Chief Executive for the ten years from 1 April 2012
to 31 March 2022. The years 2013 to 2017 inclusive relate to Tommy Breen and the years 2018 to 2022 relate to Donal Murphy.
€000
5,400
4,500
3,600
2,700
€5.32m
100%
€4.78m
100%
€4.29m
100%
€3.16m
59%
€3.09m
80%
100%
€2.92m
100%
€3.73m
64%
€3.70m
64%
€2.61m
63%
100%
98%
88%
84%
53%
€2.39m
42%
100%
1,800
100%
91%
62%
900
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Fixed pay
Variable pay
Long-term pay
Notes:
1. Fixed pay comprises salary, benefits and retirement benefit expense.
2. Variable pay comprises the annual bonus; the percentage shown is the value of the bonus paid as a percentage of the maximum opportunity.
3. Long-term pay comprises the value of awards under the DCC plc Long-Term Incentive Plan 2009; the percentage shown is the value of the awards vested as a percentage of the
maximum opportunity (actual vesting for 2013 to 2021 and expected vesting for 2022).
DCC plc Annual Report and Accounts 2022
143
Governance
Remuneration Report continued
Changes in Remuneration of the Directors
Details of the percentage change in each of the current Director’s salary, benefits and annual bonus, along with the average total remuneration of
Group employees, for each of the last two years, are set out in the table below.
Executive Directors
Donal Murphy
Kevin Lucey1
Non-executive Directors2
Mark Breuer (appointed Chairman on 16 July 2021)
Laura Angelini
Caroline Dowling
Tufan Erginbilgic
David Jukes
Pamela Kirby
Lily Liu
Jane Lodge
Alan Ralph
Mark Ryan
Average remuneration of Group employees3
% change between 2020/2021 and 2021/2022 % change between 2019/2020 and 2020/2021
Salary/Fees
Benefits
Bonus
Salary/Fees
Benefits
Bonus
+3%
+5%
+3%
+35%
+7%
+11%
0%
n/a
-1%
n/a
+89%
n/a
+187%
n/a
+14%
+2%
+7%
+2%
n/a
+2%
n/a
+4%
+4%
+16%
n/a
+19%
n/a
+14%
0%
n/a
0%
n/a
0%
+1%
1. As Mr. Lucey’s 2020/2021 remuneration relates to an 8 1/2 month period (as he was appointed to the Board on 17 July 2020), this remuneration has been annualised for the
2.
purposes of comparison with 2021/2022 remuneration in this table.
In FY22, the basic non-executive Director’s fee increased by 2% and the Chair fee increased by 8%. In FY21, there were no changes to fee levels. As such, the above increases
for the non-executive Directors primarily reflect Committee membership, role changes and appointment of new Chair.
3. This is the average increase for all Group employees as a whole.
Chief Executive’s Remuneration versus EPS and TSR
This graph maps the total remuneration for the Director undertaking the role of Chief Executive against the 10-year trend in EPS and TSR, using
a base of 100 for 2012 for comparative purposes. The Committee is satisfied that, over time, there is a reasonable correlation between the Chief
Executive pay and returns to shareholders.
500
450
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
CEO total pay
TSR
EPS
Base of 100 for 2012
Chief Executive Pay Ratio
The Chief Executive’s total remuneration for the year ended 31 March 2022 is 68 times that of the average Group employee for the same period.
In addition, taking account of the UK Companies (Miscellaneous Reporting) Regulations, we are voluntarily disclosing the ratio of Chief Executive’s
total pay to the average UK employee’s total pay, based on UK gender pay gap data, of 84 times.
144
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Relative Importance of Spend on Pay
The chart below sets out the amount paid in remuneration to all employees of the Group compared to dividends to shareholders, for 2022 and 2021.
£’000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
2022
2021
650.5
566.7
160.6
143.5
Dividends
Remuneration received
by all employees
Total Shareholder Return
The chart below shows the growth of a hypothetical £100 holding in DCC plc shares since 1 April 2012, relative to the FTSE 100 Index.
600
500
400
300
200
100
0
377%
92%
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
DCC
FTSE 100
DCC plc Annual Report and Accounts 2022
145
Governance
Remuneration Report continued
Non-executive Directors’ Remuneration Details
The remuneration paid to the non-executive Directors for the year ended 31 March 2022 is set out below. Non-executive Directors are paid a basic
fee with additional fees paid to the Board Chair, Board Committee Chairs and members, and to the Senior Independent Director.
Mark Breuer1
Laura Angelini2
Caroline Dowling
Tufan Erginbilgic
David Jukes
Pamela Kirby
Lily Liu2
Jane Lodge
Alan Ralph3
Mark Ryan
Cormac McCarthy4
John Moloney5
Leslie Van de Walle6
Total
Basic Fee
Committee Chair and
Membership Fees
Chairman/Senior Independent
Director Fees
Audited Total
2022
€’000
2021
€’000
2022
€’000
2021
€’000
75
53
75
75
75
75
53
75
30
75
19
22
–
73
–
73
73
73
73
–
73
–
73
73
73
22
5
2
13
8
20
8
5
23
3
9
2
2
–
8
–
13
8
5
8
–
23
–
8
9
8
7
7027
679
100
97
2022
€’000
190
–
10
–
–
–
–
–
–
–
–
67
–
267
2021
€’000
13
–
–
–
11
–
–
–
–
–
–
233
4
261
2022
€’000
270
55
98
83
95
83
58
98
33
84
21
91
–
2021
€’000
94
–
86
81
89
81
–
96
–
81
82
314
33
1,069
1,037
1. Mark Breuer was appointed Chairman on 16 July 2021.
2. Laura Angelini and Lily Liu were appointed as Directors on 16 July 2021.
3. Alan Ralph was appointed as a Director on 8 November 2021.
4. Cormac McCarthy passed away on 5 July 2021.
5. John Moloney retired as a Director on 16 July 2021.
6. Leslie Van de Walle retired as a Director on 17 July 2020.
7. Compares to current shareholder limit of €850,000
All of the above fees are considered to be fixed remuneration under the Shareholders Rights
Directive II.
Total Directors’ Remuneration
Executive Directors
Salary
Benefits
Bonus
Retirement Benefit Expense
Restricted Retirement Stock
LTIP
Total executive Directors’ remuneration
Non-executive Directors
Fees
Total non-executive Directors’ remuneration
Total Directors’ remuneration
146
DCC plc Annual Report and Accounts 2022
Audited Total
2022
€’000
2021
€’000
1,355
109
2,398
198
–
1,203
5,263
1,069
1,069
1,328
97
2,296
196
170
1,806
5,893
1,037
1,037
6,332
6,930
Strategic Report
Governance
Financial Statements
Supplementary Info
Executive and Non-executive Directors’ and Company Secretary’s Interests
The interests of the Directors and the Company Secretary (including shares held by connected persons) in the share capital of DCC plc at 31 March 2022
(together with their interests at 31 March 2021) are set out below:
Directors
Mark Breuer
Donal Murphy1
Laura Angelini
Caroline Dowling
Tufan Erginbilgic
David Jukes
Pamela Kirby
Lily Liu
Jane Lodge
Kevin Lucey2
Alan Ralph
Mark Ryan
Cormac McCarthy3
John Moloney4
Fergal O’Dwyer5
Leslie Van de Walle5
Company Secretary
Darragh Byrne
Ger Whyte5
No. of Ordinary
Shares at
31 March 2022
No. of Ordinary
Shares at
31 March 2021
4,697
1,197
148,711
145,334
–
800
–
94
2,500
–
3,000
13,072
1,500
9,696
2,000
2,000
n/a
n/a
6,743
n/a
n/a
500
–
94
2,500
n/a
3,000
10,000
n/a
9,696
2,000
2,000
213,480
670
6,743
160,000
1. Donal Murphy’s 2022 and 2021 holdings include 7,768 and 6,707 shares respectively held under the deferred bonus arrangement as detailed on page 133.
2. Kevin Lucey’s 2022 holdings include 1,035 shares held under the deferred bonus arrangement as detailed on page 133.
3. Cormac McCarthy passed away on 5 July 2021 and his 2022 shareholding is reflected as at that date.
4. John Moloney retired as Director on 16 July 2021 and his 2022 shareholding is reflected as at that date.
5. The FY2021 shareholdings in respect of Fergal O’Dwyer, Leslie Van de Walle and Ger Whyte show the positions at their dates of leaving of 17 July 2020, 17 July 2020 and
2 October 2020 respectively.
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 2022.
There were no changes in the above Directors’ and Secretary’s interests between 31 March 2022 and 16 May 2022.
Details of the share ownership guidelines which apply to the executive Directors are set out on page 137 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 plc Annual Report and Accounts 2022
147
Governance
Remuneration Report continued
Executive Directors’ and Company Secretary’s Long-Term Incentives
DCC plc Long-Term Incentive Plan
Details of the executive Directors’ and the Company Secretary’s awards, in the form of nominal cost (€0.25) options, under the Company’s LTIP are
set out below:
Number of options
At
31 March
2021
Granted in
year
Exercised in
year
Lapsed in
year
At
31 March
2022
Date of
grant
Market
price on
grant
Three-year
performance
period end
Normal exercise period
Market
price at
date of
exercise
£
Executive Directors
Donal Murphy
10,830
9,366
13,041
24,127
21,373
26,715
–
–
–
–
–
Kevin Lucey
–
24,598
105,452 24,598
4,307
3,693
3,270
6,053
5,362
12,270
–
–
–
–
–
–
13,162
–
–
–
–
–
–
–
–
(4,307)
–
–
–
–
–
–
–
–
–
10,830 17.11.15
£57.35 31 Mar 2018
17 Nov 2020–16 Nov 2022
9,366 10.02.17
£67.75
31 Mar 2019
10 Feb 2022–09 Feb 2024
13,041 16.11.17
£70.95
31 Mar 2020
16 Nov 2022–15 Nov 2024
(8,686)
15,441 15.11.18
£60.65
31 Mar 2021
15 Nov 2023–14 Nov 2025
–
–
–
21,373 14.11.19
£68.80
31 Mar 2022
14 Nov 2024–13 Nov 2026
26,715 12.11.20
£57.08
31 Mar 2023
12 Nov 2025–11 Nov 2027
24,598 11.11.21
£61.42
31 Mar 2024 11 Nov 2024–10 Nov 20281
(8,686) 121,364
–
–
–
– 17.11.15
£57.35 31 Mar 2018
17 Nov 2020–16 Nov 2022
£60.59
3,693 10.02.17
£67.75
31 Mar 2019
10 Feb 2022–09 Feb 2024
3,270 16.11.17
£70.95
31 Mar 2020
16 Nov 2022–15 Nov 2024
(2,180)
3,873 15.11.18
£60.65
31 Mar 2021
15 Nov 2023–14 Nov 2025
–
–
–
5,362 14.11.19
£68.80
31 Mar 2022
14 Nov 2024–13 Nov 2026
12,270 12.11.20
£57.08
31 Mar 2023
12 Nov 2025–11 Nov 2027
13,162 11.11.21
£61.42
31 Mar 2024 11 Nov 2024–10 Nov 20281
34,955 13,162
(4,307)
(2,180)
41,630
Company Secretary
Darragh Byrne
2,170
1,889
3,494
3,124
4,674
–
–
–
–
–
–
5,114
15,351
5,114
–
–
–
–
–
–
–
–
–
2,170 10.02.17
£67.75
31 Mar 2019
10 Feb 2022–09 Feb 2024
1,889 16.11.17
£70.95
31 Mar 2020
16 Nov 2022–15 Nov 2024
(1,258)
2,236 15.11.18
£60.65
31 Mar 2021
15 Nov 2023–14 Nov 2025
–
–
–
3,124 14.11.19
£68.80
31 Mar 2022
14 Nov 2024–13 Nov 2026
4,674 12.11.20
£57.08
31 Mar 2023
12 Nov 2025–11 Nov 2027
5,114 11.11.21
£61.42
31 Mar 2024 11 Nov 2024–10 Nov 20281
(1,258)
19,207
1. The LTIP awards made on 11 November 2021 were granted under a new LTIP (the DCC plc Long Term Incentive Plan 2021). All previous years’
awards were granted under the DCC plc Long Term Incentive Plan 2009. The primary change with the new LTIP was that awards have a three-year
vesting period, with a two-year post-vest sale restriction for the executive Directors.
The extent of vesting of the LTIP awards which were granted in November 2021 will be based on the three-year performance period from 1 April
2021 to 31 March 2024. The requirements/ranges set by the Remuneration Committee in respect of these performance conditions were set out
in last year’s Annual Report on page 132.
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Number of options
At
31 March
2021
Granted in
year
Exercised in
year
Lapsed in
year
At
31 March
2022
Date of
grant
Market
price on
grant
Three-year
performance
period end
Normal exercise period
Former CFO
Fergal O’Dwyer1 11,138
9,366
12,672
14,711
13,032
60,919
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Number of options
– 17.11.15
£57.35 31 Mar 2018
17 Nov 2020–16 Nov 2022
– 10.02.17
£67.75
31 Mar 2019
10 Feb 2022–09 Feb 2024
– 16.11.17
£70.95
31 Mar 2020
16 Nov 2022–15 Nov 2024
– 15.11.18
£60.65
31 Mar 2021
15 Nov 2023–14 Nov 2025
– 14.11.19
£68.80
31 Mar 2022
14 Nov 2024–13 Nov 2026
–
At
31 March
2021
Granted in
year
Exercised in
year
Lapsed in
year
At
31 March
2022
Date of
grant
Market
price on
grant
Three-year
performance
period end
Market price at date of exercise
£
Former Company Secretary
Ger Whyte1
3,574
3,006
3,875
5,113
4,530
20,098
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 17.11.15
£57.35 31 Mar 2018
17 Nov 2020–16 Nov 2022
– 10.02.17
£67.75
31 Mar 2019
10 Feb 2022–09 Feb 2024
– 16.11.17
£70.95
31 Mar 2020
16 Nov 2022–15 Nov 2024
– 15.11.18
£60.65
31 Mar 2021
15 Nov 2023–14 Nov 2025
– 14.11.19
£68.80
31 Mar 2022
14 Nov 2024–13 Nov 2026
–
Market
price at
date of
exercise
£
Market
price at
date of
exercise
£
1. Details at 31 March 2021 in respect of Mr. O’Dwyer and Mr. Whyte show the positions at date of leaving of 17 July 2020 and 2 October 2020
respectively.
As at 31 March 2022, the total number of options granted under the LTIP, net of options lapsed, amounted to 1.7% of issued share capital, of which
0.7% is currently outstanding.
Other Information
The market price of DCC shares on 31 March 2022 was £59.26 and the range during the year was £55.00 to £64.86.
Additional information in relation to the DCC plc Long Term Incentive Plan 2009 and the DCC plc Long Term Incentive Plan 2021 appears in note 2.5
to the financial statements on pages 178 to 179.
For the purposes of Section 305 of the Companies Act 2014 (Ireland), the aggregate gains by Directors on the exercise of share options during the
year ended 31 March 2022 was €0.3 million (2021: €3.4 million).
Share Ownership Guidelines
The shareholdings held by the executive Directors as at 31 March 2022 are shown below.
Executive
Donal Murphy
Kevin Lucey
Number of
shares held as at
31 March 2022
148,711
13,072
Shareholding
as a multiple of
base salary for the
year ended
31 March 2022
Share ownership
guideline
(multiple of salary)
11.8
1.9
3
2
The shareholdings in the table comprise the shares held by the executive Directors (including those shares held in trust as part of the deferred bonus arrangement), valued based on the share
price at 31 March 2022 of £59.26 (€70.05). Unvested and unexercised share options are not included. Under the Guidelines, Mr. Lucey has five years from the date of his appointment as CFO in
July 2020 to achieve the level set out.
DCC plc Annual Report and Accounts 2022
149
Governance
Remuneration Report continued
Operation of Remuneration Policy in the year ending 31 March 2023
Salary
The Committee approved the following increases to the executive Directors’ salaries for the year commencing 1 April 2022:
Executive Director
Donal Murphy
Kevin Lucey
Year ending
31 March 2023
€
909,510
510,300
Increase
%
3%
8%
Year ended
31 March 2022
€
883,019
472,500
In agreeing the increase to the CEO’s salary of 3%, the Committee took into account the projected salary increase for the general workforce.
The increase in the CFO’s salary of 8% reflects his demonstrated development in role and full contribution at Board level.
Benefits
Benefits payable to the executive Directors for the year ending 31 March 2023 include the use of a company car and related costs, life/disability cover,
health insurance and club subscriptions.
Bonus
For the year ending 31 March 2023, the executive Directors will continue to participate in the bonus plan, as per the Remuneration Policy, as set
out below:
Executive Director
Donal Murphy
Kevin Lucey
Maximum bonus potential
Deferral of bonus
200% of salary
160% of salary
33% of any bonus earned will be deferred
into DCC shares for three years.
The Committee wishes to use the full award opportunity for the year ending 31 March 2023 made available under the approved Remuneration
Policy for the CEO (which implies a small increase of 10% of salary compared to his opportunity for the year ended 31 March 2022), having reviewed
market practice for bonus opportunities and the current positioning of the CEO’s overall remuneration levels, which are around market median for a
company the size of DCC. The increase will also help to ensure that the bonus maximises, under the current Remuneration Policy, the focus on EPS
growth and key strategic goals such as the Company’s energy transition.
Bonuses will be based 70% on growth in Group adjusted EPS and 30% based on strategic objectives; in addition, the Committee has the discretion
to reduce bonuses in the event that a pre-determined target return on capital employed is not achieved. Growth in Group adjusted EPS will be
measured against a pre-determined range, with zero payment below threshold up to full payment at the maximum of the range. The strategic
objectives are aligned with DCC’s short-and medium-term strategic objectives that promote long-term performance and include sustainability/
ESG targets.
The EPS range and details of the strategic objectives are commercially confidential, but, to the extent no longer commercially confidential, will be
disclosed on a retrospective basis in next year’s Annual Report.
The Committee will keep the performance targets under review in light of acquisition and other development activity during the year ending
31 March 2023.
Retirement Benefits
Donal Murphy’s retirement benefits comprise a cash allowance, paid in lieu of contributions to a defined contribution pension plan, at a rate of 15% of
base salary. Kevin Lucey is entitled to contributions to a defined contribution pension plan at a rate of 14% of base salary.
150
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Long-Term Incentives
For the year commencing 1 April 2022, LTIP awards of up to 200% of salary will be granted to the executive Directors, with vesting based on
performance over the three financial years ending 31 March 2025. Vesting will be based 40% on ROCE, 40% on Adjusted EPS growth and 20% on
TSR vs an appropriate index. The Committee is due to approve the performance targets for these measures at a meeting post the publication of
this report and will therefore disclose the ranges at the time the awards are granted, which is expected to be in November 2022. The Committee
also intends to review the basis of the TSR benchmark for the 2022 awards (being the FTSE100 for recent awards) to ensure it remains a credible
and robust basis against which to compare DCC’s TSR performance; the details of the benchmark will be disclosed at the same time the targets
are announced.
Non-executive Directors’ Remuneration
The Board approved an increase to the non-executive Director’s fee of 3% with effect from 1 April 2022. This change took into consideration both
the average workforce increase across the Group as well the level of fees in a range of comparable Irish and UK companies of comparable scale and
complexity. The Chairman’s fee will also increase by 3%, to €350,200.
Chairman (to include basic and Committee fees)
Basic Fee
Committee Fees:
Audit
Governance and Sustainability
Remuneration
Additional Fees:
Audit Committee Chairman
Remuneration Committee Chairman
Senior Independent Director Fee
Year ending
31 March 2023
€
Year ended
31 March 2022
€
350,200
76,890
340,000
74,650
8,000
3,000
5,000
15,000
15,000
15,000
8,000
3,000
5,000
15,000
15,000
15,000
DCC plc Annual Report and Accounts 2022
151
Governance
Remuneration Report continued
Governance
Committee Composition, Attendance and Tenure
At the date of this Report, the Remuneration Committee comprised four independent non-executive Directors, David Jukes (Chairman), Caroline
Dowling, Tufan Erginbilgic and Pamela Kirby.
The members of the Committee have significant financial and business experience, including in the area of executive remuneration. Each member’s
length of tenure at 31 March 2022 is set out in the chart on page 128. Further biographical details regarding the members of the Remuneration
Committee are set out on pages 104 and 105.
The Committee met four times during the year ended 31 March 2022 and attendance details are set out in the table on page 116 of the Corporate
Governance Statement.
The Company Secretary is the Secretary to the Remuneration Committee.
Meetings
The main activities of the Committee during the year ended 31 March 2022 included (i) reviewing remuneration trends and market practice,
(ii) approving salary/fee increases for the executive Directors/Chairman, (iii) approving incentive outcomes for FY21, (iv) approving incentive
performance ranges for FY22, (v) keeping abreast of general pension developments, (vi) approving awards under the Company’s LTIP,
(vii) reviewing the Company’s gender pay gap reporting, (viii) conducting a formal tender process in respect of remuneration advisors to the
Committee and (ix) approval of this Report.
Typically, the Chief Executive, the Head of Group Human Resources and representatives of advisors to the Committee are invited to attend all
meetings of the Committee. Other Directors and executives 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. Other external advisors are invited
to attend meetings when required.
The Committee also meets separately, as required, to discuss matters in the absence of any invitees.
Reporting
The Chairman of the Remuneration Committee reports to the Board at each meeting on the activities of the Committee.
The Chairman of the Remuneration Committee attends the Annual General Meeting to answer questions on the Report, on the Committees’
activities and matters within the scope of the Committee’s responsibilities and welcomes any feedback from shareholders on this report, the
remuneration structure and policy, or decisions taken by the Committee.
Role and Responsibilities
The role and responsibilities of the Committee are set out in full in its Terms of Reference, which are available on the Company’s website.
Annual Evaluation of Performance
The conclusion from the 2022 Board evaluation process was that the performance of the Remuneration Committee and of the Chairman of the
Committee were satisfactory. The Committee will focus on a small number of agreed actions arising from the 2022 Board evaluation process.
Gender Pay Gap Reporting
Under the UK Gender Pay Gap Regulations, UK employers with more than 250 employees are required to publish key metrics on their gender pay
gap. The Remuneration Committee reviewed the work carried out in our affected UK businesses, which were subject to these Regulations, and
received a full briefing in advance of the publication of their individual reports on the businesses’ websites.
152
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
External Advice
During the year under review, Willis Towers Watson provided advice to the Remuneration Committee in relation to market trends, competitive
positioning and developments in remuneration policy and practice. Willis Towers Watson is a signatory to the Remuneration Consultants Group Code
of Conduct and any advice was provided in accordance with this code. In light of this, and the level and nature of the service received, the Committee
was satisfied that the advice was objective and independent.
In the year ended 31 March 2022, Willis Towers Watson received fees of €23,700 in respect of advice provided to the Committee in regard to
executive Director remuneration. Willis Towers Watson also provided services to the Group on market trends, incentive design, the Remuneration
Report and in relation to the LTIP.
In the year ended 31 March 2022, Mercer received fees of €1,230 as pension advisors to the Committee. Mercer also provides specific advice on
pension practice and developments and act as actuaries and pension advisors to a number of companies in the Group.
Tender Process
During the year, the Committee engaged in a tender process for the external remuneration advisor to the Committee. A number of detailed
proposals were considered by the Committee and presentations were made to a sub-committee comprising the Chairman of the Remuneration
Committee, the Chief Executive, the Head of Group HR and the Company Secretary. Following the process, the Committee unanimously agreed
to appoint Ellason as independent external remuneration advisors to the Committee with effect from March 2022.
2021 Annual General Meeting (‘AGM’) Votes on Remuneration Policy and Annual Report on Remuneration
Vote
Advisory vote on 2021 Remuneration Policy
Total votes cast
Total votes for Total votes against
Total abstentions
54,865,957
54,100,511
765,446
2,063
(98.6%)
(1.4%)
Advisory vote on 2021 Annual Report on Remuneration
54,673,478
53,644,215
1,029,263
194,542
(98.1%)
(1.9%)
This table shows the voting outcome at the 2021 AGM in relation to the Remuneration Policy and the Annual Report on Remuneration.
DCC plc Annual Report and Accounts 2022
153
Governance
Report of the Directors
The Directors of DCC plc present their report
and the audited financial statements for the
year ended 31 March 2022.
Principal Activities
DCC plc is an international sales, marketing and
support services group headquartered in Dublin
with operations in Europe, North America and
Asia. DCC has four divisions – DCC LPG,
DCC Retail & Oil, DCC Healthcare and DCC
Technology. DCC employs 15,400 people in
21 countries. DCC plc’s shares are listed on
the London Stock Exchange and are included
in the FTSE 100 Index.
Results and Review of Activities
Revenue for the year amounted to £17,732.0
million (2021: £13,412.4 million). The profit for
the year attributable to owners of the Parent
Company amounted to £312.3 million (2021:
£292.6 million). Adjusted earnings per share
amounted to 430.11 pence (2021: 386.62
pence). Further details of the results for the
year are set out in the Group Income
Statement on page 164.
The Chairman’s Statement on pages 16 and 17,
the Chief Executive’s Review on pages 18 to 21,
the Operating Reviews on pages 56 to 79 and
the Financial Review on pages 48 to 55 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
2022, of recent events and of likely future
developments. Key Performance Indicators
are set out on pages 44 to 47. Information in
respect of events since the year end is included
in these sections and in note 5.8 on page 221.
Dividends
An interim dividend of 55.85 pence per share,
amounting to £55.2 million, was paid on
10 December 2021. The Directors recommend
the payment of a final dividend for the year
ended 31 March 2022 of 119.93 pence per
share, amounting to £118.3 million (based on
the number of shares in issue at 16 May 2022).
Subject to shareholders’ approval at the AGM
on 15 July 2022, this dividend will be paid on
21 July 2022 to shareholders on the register at
the close of business on 27 May 2022. The total
dividend for the year ended 31 March 2022
amounts to 175.78 pence per share, a total of
£173.5 million. This represents an increase of
10% on the prior year’s total dividend per share.
The profit attributable to owners of the Parent
Company, which has been transferred to
reserves, and the dividends paid during the year
ended 31 March 2022 are shown in note 4.3 on
page 209.
154
DCC plc Annual Report and Accounts 2022
These authorities have not been exercised and
will expire on 15 July 2022, the date of the next
AGM of the Company.
At the 2022 AGM:
• The Directors will seek authority to purchase
up to 10% of its own shares (the issued
share capital (excluding treasury shares))
with a nominal value of €2.47 million.
• The Directors will seek authority to exercise
all the powers of the Company to allot
shares up to an aggregate amount of
€8.22 million, representing approximately
one-third of the issued share capital
(excluding treasury shares).
•
• The Directors will 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 (excluding treasury shares).
In addition, the Directors will seek authority
to allot additional shares for cash other than
strictly pro-rata to existing shareholdings.
This proposed authority is limited to the
allotment of shares for cash up to
approximately 5% of the issued share
capital (excluding treasury shares) and
will only be used in connection with an
acquisition or other capital investment
of a kind contemplated by the Statement
of Principles for the disapplication of
pre-emption rights most recently published
by the Pre-Emption Group prior to the date
of that notice.
The figure of 10% reflects the Pre-Emption
Group 2015 Statement of Principles for the
disapplication of pre-emption rights (the
‘Statement of Principles’). The Directors will
have due regard to the Statement of Principles
in relation to any exercise of this power and
in particular:
• As regards the first 5%, the Directors will
take account of the requirement for
advance consultation and explanation
before making any non-pre-emptive cash
issue pursuant to this resolution which
exceeds 7.5% of the Company’s issued
share capital in any rolling three-year
period; and
• As regards the second 5%, the Directors
confirm that they intend to use this power only
in connection with an acquisition or specified
capital investment of a kind contemplated by
the most recent Statement of Principles for
the disapplication of pre-emption rights most
recently published by the Pre-Emption Group.
Share Capital and Treasury Shares
DCC’s authorised share capital is 152,368,568
ordinary shares of €0.25 each, of which
98,645,900 shares (excluding treasury shares)
and 2,688,004 treasury shares were in issue
at 31 March 2022. 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 2,768,690
(2.81% of the then issued share capital
(excluding treasury shares)) with a nominal
value of €0.692 million.
A total of 80,686 shares (0.08% of the issued
share capital (excluding treasury shares)) with
a nominal value of €0.020 million were re-issued
during the year consequent to the exercise of
share options under the DCC plc Long Term
Incentive Plan 2009 (76,274 shares at a price
of €0.25 per share) and the deferred bonus
arrangements for executive Directors (4,412
shares at a price of €72.36 per share), leaving
a balance held as treasury shares at 31 March
2022 of 2,688,004 shares (2.72% of the issued
share capital (excluding treasury shares)) with
a nominal value of €0.672 million.
At the Annual General Meeting (‘AGM’) held on
16 July 2021:
• The Company was granted authority to
purchase up to 9,861,034 of its own shares
(10% of the issued share capital (excluding
treasury shares)) with a nominal value of
€2.465 million.
• The Directors were given authority to
•
exercise all the powers of the Company to
allot shares up to an aggregate amount of
€8.22 million, representing approximately
one-third of the issued share capital
(excluding treasury shares) of the Company.
They were also given authority to allot
shares for cash, other than strictly pro-rata
to existing shareholdings. This authority was
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 (excluding treasury
shares) of the Company.
In addition, the Directors were given
authority to allot additional shares for cash
other than strictly pro-rata to existing
shareholdings. This authority was limited to
the allotment of shares for cash up to
approximately 5% of the issued share capital
(excluding treasury shares) and would only
be used in connection with an acquisition
or other capital investment of a kind
contemplated by the Statement of
Principles for the disapplication of pre-
emption rights most recently published
by the Pre-Emption Group prior to the
date of that notice.
Strategic Report
Governance
Financial Statements
Supplementary Info
Details of the share capital of the Company
are set out in note 4.1 on page 207 and are
deemed to form part of this Report.
Non-Financial Information
Pursuant to the European Union (Disclosure
of Non-Financial and Diversity Information
by certain large undertakings and groups)
Regulations 2017, the Group is required to
report on certain non-financial information to
provide an understanding of its development,
performance, position and the impact of its
activities, relating to, at least, environmental
matters, social matters, employee matters,
respect for human rights, and bribery and
corruption. Information on these matters can
be found in the following sections of the Annual
Report, which are deemed to form part of this
Report: the Sustainable Business Report on
pages 80 to 91, Our Business Model on pages
10 and 11, the Risk Report on pages 92 to 101
and the Key Performance Indicators on pages
44 to 47.
The Board has approved a formal Board Policy
on Diversity, which applies to the Board of DCC
plc. Details of the policy, its objectives and its
application in the current financial year are set
out in the Governance and Sustainability
Committee Report on pages 119 to 122.
Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies
Act 2014 and Rule 4.1.8 R of the UK Disclosure
Guidance and Transparency Rules, DCC is
required to give a description of the principal
risks and uncertainties facing the Group.
These are addressed in the Risk Report on
pages 92 to 101.
Directors
The names of the Directors and a short
biographical note on each Director appear on
pages 104 and 105. In accordance with the
UK Corporate Governance Code, all Directors
submit to re-election at each AGM. Donal
Murphy has a service agreement with the
Company with a notice period of six months.
Kevin Lucey has a letter of appointment which
provides for a six-month notice period. Details
of the Directors’ and Company Secretary’s
interests in the share capital of the Company
are set out in the Remuneration Report on
pages 128 to 153.
Corporate Governance
The Corporate Governance Statement on
pages 108 to 118 sets out the Company’s
appliance of the principles and compliance
with the provisions of the UK Corporate
Governance Code and the Group’s system
of risk management and internal control.
The Corporate Governance Statement shall
be treated as forming part of this Report.
With the exception of provision 18, DCC plc is
fully compliant with the 2018 version of the UK
Corporate Governance Code, which applied
to the Company for the year ended 31 March
2022. Further details on this are set out on
page 108.
Shareholders may exercise their right to vote
by appointing a proxy/proxies, by electronic
means or in writing, to vote on 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 10% of the issued share capital
of the Company, has the right to requisition
a general meeting.
The AGM will be held at 11.00 am on 15 July
2022 at The Powerscourt Hotel, Powerscourt
Estate, Enniskerry, Co.Wicklow, A98 DR12.
Shareholders should monitor the Company’s
website for further information in this regard.
Memorandum and Articles of Association
The Company’s Memorandum 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.
UK Disclosure Guidance and
Transparency Rules
The UK Disclosure Guidance and Transparency
Rules require certain information to be included
within this Annual Report and Accounts. That
information can be found in the following
sections: the Chairman’s Statement on pages 16
to 17, the Chief Executive’s Review on pages 18
to 21, the Operating Reviews on pages 56 to 79,
the Financial Review on pages 48 to 55, the
Principal Risks and Uncertainties on pages 97 to
101, the Transparency Report in the Statement
of Directors’ Responsibilities on page 158, the
earnings per ordinary share in note 2.11 on page
184, the Key Performance Indicators on pages 44
to 47 and the derivative financial instruments in
note 3.10 on pages 193 and 194.
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 are set out in the
Corporate Governance Statement.
General Meetings
The Company’s AGM provides shareholders
the opportunity to question the Chairman,
the Board and the Chairmen of the Audit,
Remuneration and Governance and
Sustainability Committees. 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 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.
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 21
clear days’ notice.
A quorum for an AGM or an EGM of the
Company is constituted by two persons entitled
to vote upon the business to be transacted,
each being a member or a proxy for a member
or a duly authorised representative of a
corporate member. The passing of resolutions
at a general meeting, other than special
resolutions, requires a simple majority of the
votes cast. 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,
speak, ask questions and vote. Record dates
are specified in the notes to the Notice
convening the meeting.
DCC plc Annual Report and Accounts 2022
155
Governance
Report of the Directors continued
Substantial Holdings
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 2022 and 16 May 2022.
BlackRock, Inc
Allianz Global Investors GmbH
FMR LLC and FIL Limited on behalf of its direct and indirect subsidiaries
Setanta Asset Management
Invesco
These entities have indicated that the shareholdings are not ultimately beneficially owned by them.
As at 31 March 2022
As at 16 May 2022
No. of €0.25
Ordinary Shares
% of Issued Share
Capital (excluding
treasury shares)
No. of €0.25
Ordinary Shares
% of Issued Share
Capital (excluding
treasury shares)
8,673,850
6,717,795
5,685,597
4,070,245
2,968,315
8.79%
8,878,837
6.81%
5.76%
4.13%
3.01%
5,651,520
5,422,381
4,072,171
2,673,736
9.00%
5.73%
5.50%
4.13%
2.71%
Auditors
The auditors, KPMG, who were appointed
on 17 July 2015, will continue in office in
accordance with the provisions of Section 383
of the Companies Act 2014.
As required under Section 381(1) (b) of the
Companies Act 2014, a resolution authorising
the Directors to determine the remuneration of
the auditors will be proposed at the 2022 AGM.
Mark Breuer, Donal Murphy
Directors
16 May 2022
Principal Subsidiaries
Details of the Company’s principal operating
subsidiaries are set out on pages 238 to 241.
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 281 to 285 of the
Companies Act, 2014, are kept by the
Company. The Directors believe that they have
complied with this requirement by providing
adequate resources to maintain proper books
and accounting records throughout the Group,
including the appointment of personnel with
appropriate qualifications, experience and
expertise. The books and accounting records of
the Company are maintained at the Company’s
registered office, DCC House, Leopardstown
Road, Foxrock, D18 PK00, Ireland.
Takeover Regulations
The Company has certain financing 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.
Directors’ Compliance Statement
It is the policy of the Company to comply
with its relevant obligations (as defined in the
Companies Act 2014). The Directors confirm
that there is a Compliance Policy Statement
in place, as defined in Section 225(3)(a) of the
Companies Act 2014.
The Directors confirm that the arrangements
and structures that have been put in place are,
in the Directors’ opinion, designed to secure
a material compliance with the Company’s
relevant obligations and that these
arrangements and structures were reviewed
by the Company during the financial year.
As required by Section 225(2) of the
Companies Act 2014, the Directors
acknowledge that they are responsible for
the Company’s compliance with the relevant
obligations. In discharging their responsibilities
under Section 225, the Directors relied on the
advice of persons employed by the Company
and of third parties, whom the Directors believe
have the requisite knowledge and experience
to advise the Company on compliance with its
relevant obligations.
Audit Committee
The Company has an Audit Committee, the
members of which are set out on page 123.
Disclosure of Information to the Auditors
Each of the Directors individually confirms that:
•
In so far as they are aware, there is no
relevant audit information of which the
Company’s auditors are unaware; and
• That they have taken all the steps that they
ought to have taken (as defined in Section
330(3) of the Companies Act 2014) as
Directors in order to make themselves
aware of any relevant audit information and
to establish that the Company’s auditors are
aware of such information.
156
DCC plc Annual Report and Accounts 2022
Financial Statements
Strategic Report
Governance
Financial Statements
Supplementary Info
FINANCIAL
STATEMENTS
Statement of Directors’ Responsibilities
Independent Auditor’s Report
Group Income Statement
158
159
164
Notes to the Financial Statements
Section 1 Basis of Preparation
Section 2 Results for the Year
Group Statement of Comprehensive Income 165
Section 3 Assets and Liabilities
Group Balance Sheet
Group Statement of Changes in Equity
Group Cash Flow Statement
166
167
168
Section 4 Equity
Section 5 Additional Disclosures
Company Balance Sheet
Company Statement of Changes in Equity
Company Cash Flow Statement
Section 6: Notes to the Company
Financial Statements
169
169
172
185
207
210
230
231
232
233
DCC plc Annual Report and Accounts 2022
157
Financial Statements
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements, in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements each year. Under that law, the Directors are required
to prepare the Group financial statements in accordance with IFRS as adopted by the European Union and have elected to prepare the Parent
Company financial statements in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the
Companies Act 2014.
Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the assets,
liabilities and financial position of the Group and Parent Company and of the Group and Parent Company’s profit or loss for that year.
In preparing each of the Group and Parent Company financial statements, the Directors are required to:
• select suitable accounting policies and 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 as regards the Parent Company, as applied in
accordance with the Companies Act 2014; and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Parent Company
will continue in business.
The Directors are also required by Rule 4.1.8 R of the UK Disclosure Guidance and Transparency Rules to include a Directors’ Report containing
a fair review of the business and a description of the principal risks and uncertainties facing the Group.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy at any time the assets, liabilities,
financial position and profit or loss of the Parent Company and which enable them to ensure that the financial statements comply with the provision
of the Companies Act 2014. The Directors are also responsible for taking all reasonable steps to ensure such records are kept by its subsidiaries
which enable them to ensure that the financial statements of the Group comply with the provision of the Companies Act 2014. They are also
responsible for safeguarding the assets of the Parent Company and the Group, and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. The Directors are also responsible for preparing a Directors’ Report that complies with the requirements
of the Companies Act 2014.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group’s and Parent
Company’s website (www.dcc.ie). Legislation in the Republic of Ireland concerning the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Responsibility Statement as required by the UK Disclosure Guidance and Transparency Rules and UK Corporate Governance Code
Each of the Directors, whose names and functions are listed on pages 104 and 105 of this Annual Report, confirm that, to the best of each person’s
knowledge and belief:
•
the Group financial statements, prepared in accordance with IFRS as adopted by the European Union and the Parent Company financial
statements prepared in accordance with IFRS as adopted by the European Union as applied in accordance with the provisions of Companies Act
2014, give a true and fair view of the assets, liabilities, financial position of the Group and Parent Company at 31 March 2022 and of the profit or
loss of the Group for the year then ended;
the Report of the Directors contained in the Annual Report includes a fair review of the development and performance of the business and the
position of the Group and Parent Company, together with a description of the principal risks and uncertainties that they face; and
the Annual Report and financial statements, taken as a whole, provide the information necessary to assess the Group’s performance, business
model and strategy and is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
•
•
On behalf of the Board
Mark Breuer
Non-executive Chairman
Donal Murphy
Chief Executive
158
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Independent Auditor’s Report to the Members of DCC plc
Report on the audit of the financial statements
Opinion
We have audited the financial statements of DCC plc (‘the Company’) and its consolidated undertakings (‘the Group’) for the year ended 31 March
2022, which comprise the Group Income Statement, the Group Statement of Comprehensive Income, the Group Balance Sheet, the Group
Statement of Changes in Equity, the Group Cash Flow Statement, the Company Balance Sheet, the Company Statement of Changes in Equity,
the Company Cash Flow Statement and related notes, including the summary of significant accounting policies set out in note 5.9. The financial
reporting framework that has been applied in their preparation is Irish Law and International Financial Reporting Standards (IFRS) as adopted by the
European Union and, as regards the Company financial statements, as applied in accordance with the provisions of the Companies Act 2014.
In our opinion:
•
the financial statements give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 March 2022
and of the Group’s profit for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union;
the Company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union, as applied in
accordance with the provisions of the Companies Act 2014; and
the Group and Company financial statements have been properly prepared in accordance with the requirements of the Companies Act 2014.
•
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the audit of the financial statements section of our report. We have fulfilled
our ethical responsibilities under, and we remained independent of the Group in accordance with ethical requirements that are relevant to our audit
of financial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied
to listed entities.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Director’s use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the Director’s assessment of the Group’s and Company’s ability to continue to adopt the going
concern basis of accounting included:
• Obtaining and reviewing management’s viability statement, assessing the stress tests included and drawing conclusions from its results.
• Reviewing business performance, the Groups’ increase in EBITA and the Group’s Cash Flow Statement.
• Obtaining and reviewing Board minutes.
• Recalculating covenants compliance.
•
•
• Reviewing the disclosures set out in the Annual Report for both going concern and viability.
Inquiring about any legal claims with those charged with Governance, Head of Legal, management, as well as local finance teams.
Inquiring as to any subsequent events from those charged with Governance, management, and local finance teams.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group or the Company’s ability to continue as a going concern for a period of at least twelve months
from the date when the financial statements are authorised for issue.
In relation to the Group and the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate
Governance Annex, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about
whether the directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements and include
the most significant assessed risks of material misstatement (whether or not due to fraud) identified by us, including those which had the greatest
effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
Due to the overall level of acquisitions during the year we have included acquisition accounting as a key audit matter in our audit opinion. The remaining
key audit matters have remained unchanged from prior years.
DCC plc Annual Report and Accounts 2022
159
Financial Statements
Independent Auditor’s Report to the Members of DCC plc continued
In arriving at our audit opinion above, the key audit matters, in decreasing order of audit significance, were as follows:
Valuation of goodwill and intangible assets £2,634 million (2021: £2,207 million)
Refer to note 5.9 (accounting policy) and note 3.3 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Group has significant goodwill and
intangible assets arising from acquisitions.
There is a risk that the carrying amounts of
goodwill and intangible assets will be more
that the estimated recoverable amount.
The recoverable amount of goodwill and
intangible assets is arrived at by forecasting
and discounting future cash flows to
determine value in use calculations for each
Cash Generating Unit (‘CGU’). These cash
flows are inherently highly judgemental and
rely on certain significant assumptions
including future trading performance, future
long term growth rates and CGU specific
discount rates.
We have considered the significant judgements made by the Directors in the cash flow forecasts
used in the determinations of the values in use for each CGU. We also considered the manner
in which CGUs were identified.
To assess the Group’s cash flow forecast models’ calculations we:
• evaluated the mathematical accuracy of the cash flow forecasts;
• considered the accuracy of management’s cash flow estimates in previous years by comparing
historical forecasts to actual outturns;
• assessed the appropriateness of the CGU specific discount rates applied in determining the
value in use of each CGU with the assistance of an in-house valuation specialist;
• evaluated and challenged the significant assumptions used to develop the projected financial
information regarding future profitability and the long term economic growth rates applied;
• assessed and challenged the significant assumptions used by management in relation to the
possible impact of longer term energy trends on the projected financial information of specific
CGUs most sensitive to changes in these assumptions;
• performed an overall evaluation of the individual CGU discounted cash flow models based on our
knowledge of the Group and our reading of the Group’s Three Year Plan combined with external
data which we considered relevant;
• compared the value in use for the Group as a whole to the Group’s market capitalisation;
• evaluated the sensitivity analysis carried out by management in relation to the significant
•
assumptions used in developing the projections; and
read the description of the impairment testing of goodwill and intangible assets performed by the
Directors, set out in note 3.3 to the financial statements to assess the accuracy of the Group’s
(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:82)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:88)(cid:81)(cid:70)(cid:72)(cid:85)(cid:87)(cid:68)(cid:76)(cid:81)(cid:87)(cid:92)(cid:15)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:77)(cid:88)(cid:71)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:86)(cid:86)(cid:88)(cid:80)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:124)(cid:80)(cid:68)(cid:71)(cid:72)(cid:17)
Our procedures in respect of this risk were performed as planned. We found that the assumptions
applied in management’s cash flow forecast models used in the determination of value in use
(cid:90)(cid:72)(cid:85)(cid:72)(cid:124)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:83)(cid:85)(cid:76)(cid:68)(cid:87)(cid:72)(cid:17)(cid:3)(cid:58)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:79)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:77)(cid:88)(cid:71)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:80)(cid:68)(cid:71)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:82)(cid:88)(cid:81)(cid:71)(cid:3)(cid:87)(cid:75)(cid:72)(cid:80)(cid:3)(cid:87)(cid:82)(cid:3)
(cid:69)(cid:72)(cid:124)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:83)(cid:85)(cid:76)(cid:68)(cid:87)(cid:72)(cid:17)(cid:3)
Acquisition accounting on business combinations total consideration £716 million (2021: £246 million)
Refer to note 5.9 (accounting policy) and note 5.2 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The Group made a number of acquisitions
in the year ended 31 March 2022 including
a number of individually significant
transactions.
(cid:124)
Due to the overall level of acquisitions
during the year we have included acquisition
accounting as a Key Audit Matter. The total
cost of acquisitions completed during the
(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:81)(cid:71)(cid:72)(cid:71)(cid:3)(cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:79)(cid:72)(cid:71)(cid:3)(cid:127)(cid:26)(cid:20)(cid:25)(cid:124)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)
(cid:124)
Significant judgement has been exercised
by management in establishing the initial
purchase price allocation between
intangible assets and goodwill for significant
acquisitions. We determined that key
assumptions including specific discount
(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:83)(cid:85)(cid:82)(cid:77)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:85)(cid:72)(cid:70)(cid:88)(cid:85)(cid:85)(cid:76)(cid:81)(cid:74)(cid:124)(cid:70)(cid:68)(cid:86)(cid:75)(cid:73)(cid:79)(cid:82)(cid:90)(cid:86)(cid:3)
(cid:74)(cid:76)(cid:89)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:124)(cid:77)(cid:88)(cid:71)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)
For significant acquisitions completed during the year, our audit engagement team supported by
valuation specialists performed procedures which included but were not limited to the following:
• We made inquiries of Group management to develop an understanding of the process for
accounting for business combinations and tested the design and implementation of key controls
in this process;
• With the assistance of our valuation specialists, we considered the appropriateness of the
valuation methods used by comparing the methods to the methods most commonly used in
valuing similar assets;
• With the assistance of our valuation specialists, we compared the key-discount rates and recurring
cashflow projections to independent data when available and challenged management on these
assumptions;
• We read the underlying legal agreements and other transaction-related documents and assessed
the appropriateness of the date of acquisition determined by management and if all potential
accounting implications have been considered and appropriately accounted for.
Based on the evidence obtained, we found management’s judgements relating to the key assumptions
used in the purchase price allocation to be appropriate.
160
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Investment in subsidiary undertakings £1,130 million (2021: £1,142 million)
Refer to note 5.9 (accounting policy) and note 6.4 (financial disclosures)
The key audit matter
How the matter was addressed in our audit
The carrying amount of the Parent Company’s
investments in subsidiary undertakings
represents 83% (2021: 84%) of the Parent
Company’s total assets.
• We obtained and documented our understanding of the process surrounding impairment
considerations and tested the design and implementation of the relevant control.
• We considered management’s assessment of impairment indicators across the Group;
• We compared the carrying value of investments in the Company’s Balance Sheet to the net assets
The investment in subsidiary undertakings is
carried in the Balance Sheet of the Company at
cost less impairment. At 31 March 2022, the
investment carrying value was £1,130 million.
• We considered the audit work performed in respect of the current year results of subsidiaries
and the valuation of goodwill and intangible assets which included consideration of the key
assumptions used including discount rates and forecast future cashflows; and
• We compared the carrying value of subsidiaries to the market capitalisation of the Company
of the subsidiary financial statements;
at 31 March 2022.
We found management’s assessment of the key assumptions used in assessing the carrying value
of investments in subsidiary undertakings to be appropriate.
There is a significant risk in respect of the
carrying value of these investments if the
future cash flows and trading performance of
these subsidiaries are not sufficient to support
(cid:87)(cid:75)(cid:72)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:86)(cid:75)(cid:72)(cid:72)(cid:87)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:17)(cid:3)(cid:58)(cid:72)(cid:124)(cid:73)(cid:82)(cid:70)(cid:88)(cid:86)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:68)(cid:3)
due to the significance of the balance to the
Company Balance Sheet and the inherent
uncertainty involved in the key assumptions
used including discount rates and forecasting
future cash flows for the subsidiary businesses.
Our application of materiality and an overview of the scope of our audit
The materiality for the Group financial statements as a whole was set at £21.4 million. This has been calculated based on 5% of the Group profit
before taxation of £405.7 million which we consider to be one of the principal considerations for members of the Company in assessing the financial
performance of the Group. The materiality for the prior year Group financial statements as a whole was set at £18.3 million. This was calculated
based on 5% of the Group profit before taxation. We report to the Audit Committee all corrected and uncorrected misstatements we identified
through our audit with a value in excess of £1 million (2021: £1 million), in addition to other audit misstatements below that threshold that we believe
warranted reporting on qualitative grounds.
Materiality for the Company financial statements as a whole was set at £12 million (2021: £12 million), determined with reference to a benchmark
of Company total assets of which it represents 0.9% (2021: 0.9%). Our approach to audit scoping is consistent with that applied in previous years.
The components subjected to full scope audit contributed 99.9% (2021: 98.3%) of total revenues and 99.2% (2021: 99.2%) of total assets.
We applied materiality to assist us determine what risks were significant risks and the Group audit team instructed component auditors as to the
significant areas to be covered, including the relevant risks detailed above and the information to be reported back. The Group audit team approved
the materiality for components, which ranged from £2.0 million to £5.5 million, having regard to the mix of size and risk profile of the Group across the
components. The work on all components was performed by component auditors.
The Group audit team liaised extensively with all significant components in order to assess the audit risk and strategy and work undertaken. Video
and telephone conference meetings were held with these component auditors, as well as with auditors of other components across the Group.
At these meetings, the findings reported to the Group audit team were discussed in more detail, and any further work required by the Group audit
team was then performed by the component auditor.
Other information
The Directors are responsible for the preparation of the other information presented in the Annual Report together with the financial statements.
The other information comprises the information included in the Directors’ report and the Strategic Report and Governance sections of the
(cid:36)(cid:81)(cid:81)(cid:88)(cid:68)(cid:79)(cid:124)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:17)(cid:3)
The financial statements and our auditor’s report thereon do not comprise part of the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except as explicitly stated below, any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether, based on our financial statements audit work, the information
therein is materially misstated or inconsistent with the financial statements or our audit knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Based solely on our work on the other information undertaken during the course of the audit, we report that, in those parts of the Directors’ report
specified for our consideration:
• we have not identified material misstatements in the Directors’ report;
•
•
in our opinion, the information given in the Directors’ report is consistent with the financial statements; and
in our opinion, the Directors’ report has been prepared in accordance with the Companies Act 2014.
DCC plc Annual Report and Accounts 2022
161
Financial Statements
Independent Auditor’s Report to the Members of DCC plc continued
Disclosures of principal risks and longer-term viability
Based on the knowledge we acquired during our financial statements audit, we have nothing material to add or draw attention to in relation to:
•
•
the Principal Risks disclosures describing these risks and explaining how they are being managed and mitigated;
the Directors’ confirmation within the Risk Report on pages 92 to 101 that they have carried out a robust assessment of the principal risks facing
the Group, including those that would threaten its business model, future performance, solvency and liquidity; and
the Directors’ explanation in the Risk Report of how they have assessed the prospects of the Group, over what period they have done so and why
they considered that period to be appropriate, and their statement as to whether they have a reasonable expectation that the Group will be able
to continue in operation and meet its liabilities as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
•
Other corporate governance disclosures
We are required to address the following items and report to you in the following circumstances:
• Fair, balanced and understandable: if we have identified material inconsistencies between the knowledge we acquired during our financial
statements audit and the Directors’ statement that they consider that the Annual Report and financial statements taken as a whole is fair,
balanced and understandable and provides the information necessary for shareholders to assess the Group’s position and performance,
business model and strategy;
• Report of the Audit Committee: if the section of the Annual Report describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee;
• Statement of compliance with UK Corporate Governance Code: if the Directors’ statement does not properly disclose a departure from
•
provisions of the UK Corporate Governance Code specified for our review.
if the Directors’ statement relating to going concern required under the Listing Rules of the UK Listing Authority set out on page 96 is materially
inconsistent with our audit knowledge.
We have nothing to report in these respects.
Our opinions on other matters prescribed by the Companies Act 2014 are unmodified
We have obtained all the information and explanations which we consider necessary for the purpose of our audit.
In our opinion, the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited and the
financial statements are in agreement with the accounting records.
We have nothing to report on other matters on which we are required to report by exception
The Companies Act 2014 requires us to report to you if, in our opinion:
•
•
the disclosures of Directors’ remuneration and transactions required by Sections 305 to 312 of the Act are not made.
the Company has not provided the information required by section 5(2) to (7) of the European Union (Disclosure of Non-Financial and Diversity
Information by certain large undertakings and groups) Regulations 2017 for the year ended 31 March 2021 as required by the European Union
(Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) (amendment) Regulations 2018.
We have nothing to report in this regard.
The Listing Rules of the UK Listing Authority require us to review:
•
•
the Directors’ Statement, set out on page 96, in relation to going concern and longer-term viability;
the part of the Corporate Governance Statement on pages 108 to 118 relating to the Company’s compliance with the provisions of the
(cid:56)(cid:46)(cid:124)(cid:38)(cid:82)(cid:85)(cid:83)(cid:82)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:42)(cid:82)(cid:89)(cid:72)(cid:85)(cid:81)(cid:68)(cid:81)(cid:70)(cid:72)(cid:3)(cid:38)(cid:82)(cid:71)(cid:72)(cid:3)(cid:86)(cid:83)(cid:72)(cid:70)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:85)(cid:72)(cid:89)(cid:76)(cid:72)(cid:90)(cid:17)
We have nothing to report in this regard.
Respective responsibilities and restrictions on use
Directors’ responsibilities
As explained more fully in their statement set out on page 158, the Directors are responsible for: the preparation of the financial statements including
being satisfied that they give a true and fair view; such internal control as they determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error; assessing the Group and Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and using the going concern basis of accounting unless they either intend to liquidate the
Group or the Company or to cease operations, or have no realistic alternative but to do so.
162
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but does not guarantee that
an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud,
other irregularities or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial statements. The risk of not detecting a material misstatement resulting from fraud or other
irregularities is higher than for one resulting from error, as they may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control and may involve any area of law and regulation and not just those directly affecting the financial statements.
A fuller description of our responsibilities is provided on IAASA’s website at http://www.iaasa.ie/Publications/Auditing-standards/International-
Standards-on-Auditing-for-use-in-Ire/Description-of-the-auditor-s-responsibilities-for.
The purpose of our audit work and to whom we owe our responsibilities
Our report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has
been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for our report, or for the opinions we have formed.
Patricia Carroll
for and on behalf of KPMG
Chartered Accountants, Statutory Audit Firm
1 Stokes Place
St. Stephen’s Green
Dublin 2
Ireland
16 May 2022
DCC plc Annual Report and Accounts 2022
163
Financial Statements
Group Income Statement
For the year ended 31 March 2022
Revenue
Cost of sales
Gross profit
Administration expenses
Selling and distribution expenses
Other operating income/(expenses)
Adjusted operating profit
Amortisation of intangible assets
Operating profit
Finance costs
Finance income
Share of equity accounted investments’ profit after tax
Profit before tax
Income tax expense
2022
Pre-
exceptionals
£’000
Exceptionals
(note 2.6)
£’000
Note
Total
£’000
Pre-
exceptionals
£’000
2021
Exceptionals
(note 2.6)
£’000
Total
£’000
2.1 17,732,020
(15,694,347)
– 17,732,020 13,412,450
– (15,694,347) (11,592,970)
– 13,412,450
– (11,592,970)
2,037,673
(517,128)
(965,489)
34,178
589,234
(84,340)
504,894
(77,205)
23,075
314
451,078
(81,235)
2.2
2.1
2.1
2.7
2.7
2.8
2.9
–
–
–
(46,534)
(46,534)
–
(46,534)
–
1,192
–
(45,342)
1,501
2,037,673
(517,128)
(965,489)
(12,356)
1,819,480
(499,812)
(814,758)
25,333
542,700
(84,340)
458,360
(77,205)
24,267
314
405,736
(79,734)
530,243
(66,898)
463,345
(85,639)
26,253
233
404,192
(66,382)
–
–
–
(40,495)
(40,495)
–
(40,495)
–
1,384
–
(39,111)
4,104
1,819,480
(499,812)
(814,758)
(15,162)
489,748
(66,898)
422,850
(85,639)
27,637
233
365,081
(62,278)
Profit after tax for the financial year
369,843
(43,841)
326,002
337,810
(35,007)
302,803
Profit attributable to:
Owners of the Parent Company
Non-controlling interests
Earnings per ordinary share
Basic earnings per share
Diluted earnings per share
356,214
13,629
369,843
(43,841)
–
312,373
13,629
327,626
10,184
(35,007)
–
292,619
10,184
(43,841)
326,002
337,810
(35,007)
302,803
2.11
2.11
316.78p
316.36p
297.04p
296.62p
164
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Group Statement of Comprehensive Income
For the year ended 31 March 2022
Group profit for the financial year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation
Movements relating to cash flow hedges
Movement in deferred tax liability on cash flow hedges
Items that will not be reclassified to profit or loss
Group defined benefit pension obligations:
– remeasurements
– movement in deferred tax asset
Other comprehensive income for the financial year, net of tax
Total comprehensive income for the financial year
Attributable to:
Owners of the Parent Company
Non-controlling interests
Note
2022
£’000
2021
£’000
326,002
302,803
2.9
3.15
2.9
26,549
88,776
(16,138)
99,187
(53,527)
67,961
(11,554)
2,880
(748)
210
(538)
254
159
413
98,649
424,651
3,293
306,096
411,485
13,166
424,651
298,172
7,924
306,096
DCC plc Annual Report and Accounts 2022
165
Financial Statements
Group Balance Sheet
As at 31 March 2022
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use leased assets
Goodwill
Intangible assets
Equity accounted investments
Deferred income tax assets
Derivative financial instruments
Current assets
Inventories
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves attributable to owners of the Parent Company
Share capital
Share premium
Share based payment reserve
Cash flow hedge reserve
Foreign currency translation reserve
Other reserves
Retained earnings
Equity attributable to owners of the Parent Company
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Borrowings
Lease creditors
Derivative financial instruments
Deferred income tax liabilities
Post-employment benefit obligations
Provisions for liabilities
Acquisition related liabilities
Government grants
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Lease creditors
Derivative financial instruments
Provisions for liabilities
Acquisition related liabilities
Total liabilities
Total equity and liabilities
Mark Breuer, Donal Murphy
Directors
166
DCC plc Annual Report and Accounts 2022
Note
3.1
3.2
3.3
3.3
3.4
3.14
3.10
3.5
3.6
3.10
3.9
4.1
4.1
4.2
4.2
4.2
4.2
4.3
4.4
3.11
3.12
3.10
3.14
3.15
3.17
3.16
3.18
3.7
3.11
3.12
3.10
3.17
3.16
2022
£’000
2021
£’000
1,253,349
327,551
1,765,961
868,488
26,843
54,494
118,578
1,137,634
308,863
1,527,598
679,137
27,134
30,706
121,671
4,415,264
3,832,743
1,133,666
2,508,613
107,361
1,394,272
685,950
1,689,372
40,181
1,786,556
5,143,912
4,202,059
9,559,176
8,034,802
17,422
883,321
47,436
85,768
87,272
932
1,783,033
2,905,184
65,379
17,422
882,924
40,969
13,130
60,260
932
1,631,797
2,647,434
58,210
2,970,563
2,705,644
1,933,482
273,164
10,330
259,796
(7,745)
284,191
72,650
356
1,553,200
261,617
652
183,220
(8,024)
279,492
62,549
373
2,826,224
2,333,079
3,468,705
59,963
67,668
63,538
28,634
50,279
23,602
2,604,177
44,081
219,659
53,607
9,843
42,859
21,853
3,762,389
2,996,079
6,588,613
5,329,158
9,559,176
8,034,802
Strategic Report
Governance
Financial Statements
Supplementary Info
Group Statement of Changes in Equity
For the year ended 31 March 2022
At 1 April 2021
Profit for the financial year
Other comprehensive income:
Currency translation
Group defined benefit pension obligations:
– remeasurements
– movement in deferred tax asset
Movements 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
Non-controlling interest arising on acquisition
Attributable to owners of the Parent Company
Share
capital
(note 4.1)
£’000
Share
premium
(note 4.1)
£’000
Retained
earnings
(note 4.3)
£’000
Other
reserves
(note 4.2)
£’000
Non-
controlling
interests
(note 4.4)
£’000
Total
£’000
Total
equity
£’000
17,422
882,924 1,631,797
115,291 2,647,434
58,210 2,705,644
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
312,373
–
312,373
13,629
326,002
–
27,012
27,012
(463)
26,549
(748)
210
–
–
–
–
88,776
(16,138)
(748)
210
88,776
(16,138)
–
–
–
–
(748)
210
88,776
(16,138)
311,835
99,650
411,485
13,166
424,651
397
–
–
–
–
–
(160,599)
–
–
6,467
–
–
397
6,467
(160,599)
–
–
–
(6,909)
912
397
6,467
(167,508)
912
At 31 March 2022
17,422
883,321 1,783,033
221,408 2,905,184
65,379 2,970,563
For the year ended 31 March 2021
At 1 April 2020
Profit for the financial year
Other comprehensive income:
Currency translation
Group defined benefit pension obligations:
– remeasurements
– movement in deferred tax asset
Movements 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
Non-controlling interest arising on acquisition
Attributable to owners of the Parent Company
Share
capital
(note 4.1)
£’000
Share
premium
(note 4.1)
£’000
Retained
earnings
(note 4.3)
£’000
Other
reserves
(note 4.2)
£’000
Non-
controlling
interests
(note 4.4)
£’000
Total
£’000
Total
equity
£’000
17,422
882,887 1,482,288
104,096 2,486,693
54,765 2,541,458
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
292,619
–
292,619
10,184
302,803
–
(51,267)
(51,267)
(2,260)
(53,527)
254
159
–
–
–
–
67,961
(11,554)
254
159
67,961
(11,554)
–
–
–
–
254
159
67,961
(11,554)
293,032
5,140
298,172
7,924
306,096
37
–
–
–
–
–
(143,523)
–
–
6,055
–
–
37
6,055
(143,523)
–
–
–
(4,802)
323
37
6,055
(148,325)
323
At 31 March 2021
17,422
882,924 1,631,797
115,291 2,647,434
58,210 2,705,644
DCC plc Annual Report and Accounts 2022
167
Financial Statements
Group Cash Flow Statement
For the year ended 31 March 2022
Operating activities
Cash generated from operations before exceptionals
Exceptionals
Cash generated from operations
Interest paid (including lease interest)
Income tax paid
Net cash flow from operating activities
Investing activities
Inflows:
Proceeds from disposal of property, plant and equipment
Government grants received in relation to property, plant and equipment
Disposal of equity accounted investments
Interest received
Outflows:
Purchase of property, plant and equipment
Acquisition of subsidiaries
Payment of accrued acquisition related liabilities
Net cash flow from investing activities
Financing activities
Inflows:
Proceeds from issue of shares
Net cash inflow on derivative financial instruments
Increase in interest-bearing loans and borrowings
Outflows:
Repayment of interest-bearing loans and borrowings
Repayment of lease creditors (principal)
Dividends paid to owners of the Parent Company
Dividends paid to non-controlling interests
Net cash flow 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 consist of:
Cash and short-term bank deposits
Overdrafts
168
DCC plc Annual Report and Accounts 2022
Note
5.3
3.18
5.2
3.16
4.1
2.10
4.4
2022
£’000
2021
£’000
628,433
(30,270)
598,163
(70,103)
(76,292)
451,768
23,524
–
772
22,759
47,055
(194,353)
(668,123)
(52,006)
(914,482)
(867,427)
397
30,936
372,426
403,759
(149,182)
(65,580)
(160,599)
(6,909)
(382,270)
21,489
(394,170)
3,878
1,716,896
903,659
(29,358)
874,301
(84,342)
(62,191)
727,768
15,898
89
–
27,930
43,917
(162,879)
(236,232)
(36,330)
(435,441)
(391,524)
37
68,554
320,000
388,591
(437,612)
(59,279)
(143,523)
(4,802)
(645,216)
(256,625)
79,619
(47,496)
1,684,773
3.9
1,326,604
1,716,896
3.9
3.9
1,394,272
(67,668)
1,786,556
(69,660)
1,326,604
1,716,896
Strategic Report
Governance
Financial Statements
Supplementary Info
Notes to the Financial Statements
Notes to the financial statements provide additional information required by statute, accounting standards or Listing Rules. For clarity,
each note begins with a simple introduction outlining the purpose of the note.
Section 1 Basis of Preparation
1.1 Statement of Compliance
International Financial Reporting Standards (‘IFRS’) require an entity whose financial statements comply with IFRS
to make an explicit and unreserved statement of such compliance in the notes to the financial statements.
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 Act, 2014 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 Parent Company has availed of the exemption in Section 304(2) of the Companies
Act, 2014 not to present its individual Income Statement and related notes that form part of the approved Parent Company financial statements.
The Parent Company has also availed of the exemption from filing its individual Income Statement with the Registrar of Companies as permitted
by Section 304(2) of the Companies Act, 2014.
The Going Concern Statement on page 96 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. DCC plc’s shares
have a Premium Listing on the Official List of the United Kingdom Listing Authority and are traded solely on the London Stock Exchange.
1.2 Basis of Preparation
This section includes information on new accounting standards, amendments and interpretations, whether they
are effective for the current year or in later years, and how they are expected to impact the financial position and
performance of the Group.
The consolidated financial statements, which are presented in sterling, rounded to the nearest thousand, have been prepared on a going
(cid:70)(cid:82)(cid:81)(cid:70)(cid:72)(cid:85)(cid:81)(cid:124)(cid:69)(cid:68)(cid:86)(cid:76)(cid:86)(cid:3)(cid:88)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:76)(cid:70)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:86)(cid:87)(cid:3)(cid:70)(cid:82)(cid:81)(cid:89)(cid:72)(cid:81)(cid:87)(cid:76)(cid:82)(cid:81)(cid:15)(cid:3)(cid:68)(cid:86)(cid:3)(cid:80)(cid:82)(cid:71)(cid:76)(cid:73)(cid:76)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:72)(cid:68)(cid:86)(cid:88)(cid:85)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:68)(cid:87)(cid:3)(cid:73)(cid:68)(cid:76)(cid:85)(cid:3)(cid:89)(cid:68)(cid:79)(cid:88)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:16)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:83)(cid:68)(cid:92)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:74)(cid:85)(cid:68)(cid:81)(cid:87)(cid:15)(cid:3)
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 via fair value hedges 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 2022 are set out in note 5.9. These
policies have been applied consistently by the Group’s subsidiaries and equity accounted investments 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 detailed in note 1.4.
Adoption of IFRS and International Financial Reporting Interpretations Committee (‘IFRIC’) Interpretations
The following changes to IFRS became effective for the Group during the year but did not result in a material change to the Group’s
(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:124)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:29)
• Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16)
•
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16). See further detail below.
Interest Rate Benchmark Reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (‘IBOR’) is replaced with
an alternative nearly risk-free interest rate (RFR). The amendments include the following practical expedients:
• A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes
to a floating interest rate, equivalent to a movement in a market rate of interest;
• Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship
(cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:124)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:71)(cid:30)(cid:3)(cid:68)(cid:81)(cid:71)
• Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge
of a risk component.
The amendments applied to four interest rate swaps and two cross currency interest rate swaps in place at 31 March 2022 and the hedge documentation
and floating rate calculations were updated accordingly ahead of 31 March 2022. The amendments did not result in a material change to the Group’s
financial statements. There are no other hedge accounting relationships or financial instruments that have yet to transition to an alternative benchmark
rate as at 31 March 2022.
DCC plc Annual Report and Accounts 2022
169
Financial Statements
Notes to the Financial Statements continued
1
n
o
i
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c
e
S
2
3
4
5
6
1.2 Basis of Preparation continued
Standards, interpretations and amendments to published standards that are not yet effective
The Group has not applied certain new standards, amendments and interpretations to existing standards that have been issued but are not yet
effective. These include:
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
• Annual Improvements to IFRS Standards 2018-2020 Amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards,
IFRS 9 Financial Instruments, IFRS 16 Leases, and IAS 41 Agriculture
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
• Reference to the Conceptual Framework (Amendments to IFRS 3)
• Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
•
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• Definition of Accounting Estimates (Amendments to IAS 8)
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)
IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
The impact of these new standards is not expected to result in a material change to the Group’s financial statements.
1.3 Basis of Consolidation
This section details how the Group accounts for the different types of interests it has in subsidiaries and equity
accounted investments.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group has power
over its relevant activities, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity.
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.
Equity accounted investments
The Group’s interests in equity accounted investments comprise interests in associates. Associates are those entities in which the Group has
significant influence, but not control or joint control, over the financial and operating policies. They are initially recognised at cost, which includes
transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Group’s share of the profit or loss and other
comprehensive income of the equity accounted investments, until the date on which significant influence ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised
gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
1.4 Critical Accounting Estimates and Judgements
This section sets out the key areas of judgement and estimation that management has identified as having a potentially
material impact on the Group’s consolidated financial statements.
The preparation of financial statements in conformity with IFRS requires the use of accounting estimates and assumptions. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The Group’s main accounting policies affecting
its results of operations and financial condition are set out in note 5.9. The Group has considered the impact of climate change on the financial
statements including impairment of non-financial and financial assets, the useful lives of assets, and provisions. Further details are included in note
3.1 Property, Plant and Equipment and note 3.3 Intangible Assets and Goodwill. The Group also considers the impact of climate change as part of the
annual budget and strategic plans to ensure consistency with achieving the Group’s carbon reduction targets.
We continually evaluate our estimates, assumptions and judgements based on available information and experience. As the use of estimates
is inherent in financial reporting, actual results could differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis and management has discussed its critical accounting estimates and associated disclosures with the Audit Committee. Management
considers the accounting estimates and assumptions discussed below to be its critical accounting estimates (‘E’) and judgements (‘J’):
Goodwill (E, J)
The Group has capitalised goodwill of £1,766.0 million at 31 March 2022. 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 and estimation 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 3.3.
170
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
1.4 Critical Accounting Estimates and Judgements continued
Business combinations (E)
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. The Group engages a specialist valuation expert to assist with this process where appropriate.
Taxation (E, J)
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 or probability of settlement. Where the final tax outcome is different from the amounts that were initially recorded, such differences will
impact the current tax and/or 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.
Useful lives for property, plant and equipment and intangible assets (E, J)
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 depend 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 residual values and change them if necessary to reflect current
conditions. In determining these useful lives management consider technological change, patterns of consumption, the impact of climate change,
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.
DCC plc Annual Report and Accounts 2022
171
Financial Statements
Notes to the Financial Statements continued
Notes to the Financial Statements continued
1
2
n
o
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S
3
4
5
6
Section 2 Results for the Year
2.1 Segment Information
The Group is organised into four operating segments. This section provides information on the financial performance
for the year on both a segmental and geographic basis.
Segmental analysis
DCC is a leading international sales, marketing and 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. Donal Murphy, Chief Executive and his executive management team.
The Group is organised into four operating segments (as identified under IFRS 8 Operating Segments) and generates revenue through the
(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:124)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:29)(cid:3)
DCC LPG is a leading liquefied petroleum gas (’LPG’) sales and marketing business, supplying LPG in cylinder and bulk format to residential,
commercial and industrial customers. In addition, DCC LPG continues to develop a broader customer offering through the supply of natural gas,
power and renewables products, plus a range of specialty gases such as refrigerants and medical gases.
DCC Retail & Oil is a leading provider of transport and heating energy, lower emission fuels and biofuels, and related services to consumers and
businesses across Europe and has a key focus on being a market leader in providing sustainable energy solutions to consumers.
DCC Healthcare is a leading healthcare business, providing products and services to health and beauty brand owners and healthcare providers.
DCC Technology is a leading route-to-market and supply chain partner for global technology brands and customers. DCC Technology provides a
broad range of consumer, business and enterprise technology products and services to retailers, resellers and integrators and domestic appliances
and lifestyle products to retailers and consumers.
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 (‘adjusted operating profit’). 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.
Intersegment revenue is not material and thus not subject to separate disclosure.
172
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
2.1 Segment Information continued
The segment results for the year ended 31 March 2022 are as follows:
Income Statement items
Segment revenue
2,608,303
9,714,286
765,213
4,644,218
17,732,020
Year ended 31 March 2022
DCC
LPG
£’000
DCC
Retail & Oil
£’000
DCC
Healthcare
£’000
DCC
Technology
£’000
Total
£’000
Adjusted operating profit
Amortisation of intangible assets
Net operating exceptionals (note 2.6)
Operating profit
Finance costs
Finance income
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:790)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)
Profit before income tax
Income tax expense
Profit for the year
237,700
(45,903)
(10,487)
181,310
169,432
(9,764)
(6,200)
153,468
100,415
(6,092)
(6,540)
87,783
81,687
(22,581)
(23,307)
35,799
589,234
(84,340)
(46,534)
458,360
(77,205)
24,267
314
405,736
(79,734)
326,002
Segment revenue
1,685,570
6,588,186
655,364
4,483,330
13,412,450
Year ended 31 March 2021
DCC
LPG
£’000
DCC
Retail & Oil
£’000
DCC
Healthcare
£’000
DCC
Technology
£’000
Total
£’000
Adjusted operating profit
Amortisation of intangible assets
Net operating exceptionals (note 2.6)
Operating profit
Finance costs
Finance income
(cid:54)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:89)(cid:72)(cid:86)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:790)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:87)(cid:68)(cid:91)
Profit before income tax
Income tax expense
Profit for the year
231,253
(37,829)
(17,732)
175,692
144,824
(4,926)
(5,261)
134,637
81,721
(5,504)
(4,229)
71,988
72,445
(18,639)
(13,273)
40,533
530,243
(66,898)
(40,495)
422,850
(85,639)
27,637
233
365,081
(62,278)
302,803
DCC plc Annual Report and Accounts 2022
173
Financial Statements
Notes to the Financial Statements continued
1
2
n
o
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S
3
4
5
6
2.1 Segment Information continued
Balance Sheet items
Segment assets
2,503,997
2,308,080
706,152
2,339,399
7,857,628
As at 31 March 2022
DCC
LPG
£’000
DCC
Retail & Oil
£’000
DCC
Healthcare
£’000
DCC
Technology
£’000
Total
£’000
Reconciliation to total assets as reported in the Group Balance Sheet:
Equity accounted investments
Derivative financial instruments (current and non-current)
Deferred income tax assets
Cash and cash equivalents
Total assets as reported in the Group Balance Sheet
26,843
225,939
54,494
1,394,272
9,559,176
Segment liabilities
947,198
1,607,664
143,695
1,096,857
3,795,414
Reconciliation to total liabilities as reported in the Group Balance Sheet:
Borrowings (current and non-current)
Lease creditors (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Acquisition related liabilities (current and non-current)
Government grants (current and non-current)
Total liabilities as reported in the Group Balance Sheet
2,001,150
336,702
38,964
319,759
96,252
372
6,588,613
Segment assets
2,036,261
1,822,541
577,012
1,592,740
6,028,554
As at 31 March 2021
DCC
LPG
£’000
DCC
Retail & Oil
£’000
DCC
Healthcare
£’000
DCC
Technology
£’000
Total
£’000
Reconciliation to total assets as reported in the Group Balance Sheet:
Equity accounted investments
Derivative financial instruments (current and non-current)
Deferred income tax assets
Cash and cash equivalents
Total assets as reported in the Group Balance Sheet
27,134
161,852
30,706
1,786,556
8,034,802
Segment liabilities
720,773
1,072,416
131,950
993,345
2,918,484
Reconciliation to total liabilities as reported in the Group Balance Sheet:
Borrowings (current and non-current)
Lease creditors (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Acquisition related liabilities (current and non-current)
Government grants (current and non-current)
Total liabilities as reported in the Group Balance Sheet
1,772,859
315,224
10,495
227,301
84,402
393
5,329,158
174
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
2.1 Segment Information continued
Other segment information
Capital expenditure – additions (note 3.1)
Capital expenditure – business combinations (note 3.1)
Depreciation (excluding right-of-use assets) (note 3.1)
Total consideration on business combinations (note 5.2)
Goodwill and intangible assets acquired (note 3.3)
Capital expenditure – additions (note 3.1)
Capital expenditure – business combinations (note 3.1)
Depreciation (excluding right-of-use assets) (note 3.1)
Total consideration on business combinations (note 5.2)
Goodwill and intangible assets acquired (note 3.3)
DCC
LPG
£’000
101,478
15,251
64,357
81,168
89,208
DCC
LPG
£’000
85,890
31,042
65,216
189,413
164,056
Year ended 31 March 2022
DCC
Retail & Oil
£’000
DCC
Healthcare
£’000
58,179
17,070
45,613
43,078
44,194
27,793
1,704
12,564
79,692
87,733
DCC
Technology
£’000
11,781
29,148
15,442
511,566
260,175
Year ended 31 March 2021
DCC
Retail & Oil
£’000
43,102
9,969
42,544
24,572
24,706
DCC
Healthcare
£’000
DCC
Technology
£’000
17,719
–
10,926
2,347
5,284
23,399
857
12,513
29,221
22,642
Total
£’000
199,231
63,173
137,976
715,504
481,310
Total
£’000
170,110
41,868
131,199
245,553
216,688
Geographical analysis
The Group has a presence in 21 countries worldwide. The following represents a geographical analysis of revenue and non-current assets 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. Revenue from operations is derived almost entirely from the sale of goods and is disclosed based on the location of the entity selling
the goods. The analysis of non-current assets is based on the location of the assets. There are no material dependencies or concentrations on individual
customers which would warrant disclosure under IFRS 8.
Republic of Ireland (country of domicile)
United Kingdom
France
United States
Rest of World
Revenue
2022
£’000
1,609,797
6,632,084
3,251,238
1,301,893
4,937,008
Non-current assets*
2021
£’000
901,802
5,932,234
2,442,082
801,368
3,334,964
2022
£’000
254,453
1,264,586
950,929
871,143
901,081
2021
£’000
180,635
1,253,059
918,853
548,708
779,111
17,732,020
13,412,450
4,242,192
3,680,366
* Non-current assets comprise property, plant and equipment, right-of-use leased assets, intangible assets, goodwill and equity accounted investments.
DCC plc Annual Report and Accounts 2022
175
Financial Statements
Notes to the Financial Statements continued
1
2
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3
4
5
6
2.1 Segment Information continued
Disaggregation of revenue
The following table disaggregates revenue by primary geographical market, major revenue lines and timing of revenue recognition. The use of
revenue as a metric of performance in the Group’s LPG and Retail & Oil segments is of limited relevance due to the influence of changes in underlying
energy product costs on absolute revenues. Whilst changes in underlying energy product costs will change percentage operating margins, this
has little relevance in the downstream energy distribution market in which these two segments operate where profitability is driven by absolute
contribution per tonne/litre of product sold, and not a percentage margin. Accordingly, management review geographic volume performance
rather than geographic revenue performance for these two segments as country-specific GDP and weather patterns can influence volumes. The
disaggregated revenue information presented below for DCC Healthcare and DCC Technology, which can also be influenced by country-specific
GDP movements, is consistent with how revenue is reported and reviewed internally.
Republic of Ireland (country of domicile)
United Kingdom
France
North America
Rest of World
Year ended 31 March 2022
DCC
LPG
£’000
313,206
425,871
1,148,089
261,559
459,578
DCC
Retail & Oil
£’000
781,194
3,804,115
1,752,698
–
3,376,279
2,608,303
9,714,286
DCC
Healthcare
£’000
117,405
419,088
–
148,318
80,402
765,213
DCC
Technology
£’000
397,992
1,983,010
350,451
1,035,055
877,710
Total
£’000
1,609,797
6,632,084
3,251,238
1,444,932
4,793,969
4,644,218
17,732,020
Products transferred at point in time
2,608,303
9,714,286
765,213
4,644,218
17,732,020
LPG and related products
Oil and related products
Medical and pharmaceutical products
Nutrition and health & beauty products
Technology products and services
Republic of Ireland (country of domicile)
United Kingdom
France
North America
Rest of World
2,608,303
–
–
–
–
–
9,714,286
–
–
–
2,608,303
9,714,286
–
–
407,672
357,541
–
765,213
–
–
–
–
4,644,218
2,608,303
9,714,286
407,672
357,541
4,644,218
4,644,218
17,732,020
Year ended 31 March 2021
DCC
LPG
£’000
130,842
330,907
767,199
173,122
283,500
DCC
Retail & Oil
£’000
340,285
2,699,344
1,348,429
–
2,200,128
1,685,570
6,588,186
DCC
Healthcare
£’000
103,364
373,413
–
178,587
–
655,364
DCC
Technology
£’000
327,311
2,528,570
326,454
571,886
729,109
Total
£’000
901,802
5,932,234
2,442,082
923,595
3,212,737
4,483,330
13,412,450
Products transferred at point in time
1,685,570
6,588,186
655,364
4,483,330
13,412,450
LPG and related products
Oil and related products
Medical and pharmaceutical products
Nutrition and health & beauty products
Technology products and services
1,685,570
–
–
–
–
–
6,588,186
–
–
–
1,685,570
6,588,186
–
–
281,540
373,824
–
655,364
–
–
–
–
4,483,330
1,685,570
6,588,186
281,540
373,824
4,483,330
4,483,330
13,412,450
176
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
2.2 Other Operating Income/Expenses
This note provides an analysis of the amounts included in other operating income and expenses presented in the Group
Income Statement.
Other operating income/(expenses) comprise the following credits/(charges):
Other operating income/(expenses)
Fair value gains on non-hedge accounted derivative financial instruments – commodities
Fair value gains on non-hedge accounted derivative financial instruments – forward exchange contracts
Property and tank rental income
Net profit on disposal of property, plant and equipment
Throughput
Haulage
Fair value losses on non-hedge accounted derivative financial instruments – commodities
Fair value losses on non-hedge accounted derivative financial instruments – forward exchange contracts
Expensing of employee share options and awards (note 2.5)
Other net operating expenses
Net other operating income before exceptional items
Other operating income included in net exceptional items
Other operating expenses included in net exceptional items
Total net other operating expenses
2.3 Group Profit for the Year
The Group profit for the year includes some key amounts which are presented separately below.
Group profit for the year has been arrived at after charging/(crediting) the following amounts:
Depreciation on property, plant and equipment (note 3.1)
Depreciation on right-of-use assets (note 3.2)
Amortisation of intangible assets (note 3.3)
Amortisation of government grants (note 3.18)
Foreign exchange loss
During the year the Group obtained the following services from the Group’s auditors (KPMG):
KPMG Ireland (statutory auditor):
Audit fees
Other including non-audit, audit related and assurance services
Other KPMG network firms:
Audit fees
Other including non-audit, audit related and assurance services
2022
£’000
2021
£’000
30,762
905
21,496
7,281
6,092
4,222
(30,762)
(779)
(6,467)
1,428
34,178
1,219
(47,753)
(12,356)
11,745
1,702
20,114
5,263
5,785
3,423
(11,745)
(2,441)
(6,055)
(2,458)
25,333
1,097
(41,592)
(15,162)
2022
£’000
137,976
67,804
84,340
(20)
566
2021
£’000
131,199
61,373
66,898
(36)
469
2022
£’000
1,831
31
1,862
1,763
109
1,872
2021
£’000
1,699
14
1,713
1,568
97
1,665
DCC plc Annual Report and Accounts 2022
177
Financial Statements
Notes to the Financial Statements continued
1
2
n
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3
4
5
6
2.4 Employment
This section provides an analysis of the average number of employees in the Group by segment together with their
related payroll expense for the year. Further information on the compensation of key management personnel is included
in note 5.6, Related Party Transactions.
The average number of persons (including executive Directors) employed by the Group during the year, analysed by class of business, was:
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
The employee benefit expense (excluding termination payments – note 2.6) for the above were:
Wages and salaries
Social welfare costs
Share based payment expense (note 2.5)
Pension costs – defined contribution plans
Pension costs – defined benefit plans (note 3.15)
2022
Number
3,736
3,580
2,816
4,374
2021
Number
3,415
3,373
2,458
3,953
14,506
13,199
2022
£’000
650,473
85,006
6,467
18,992
318
761,256
2021
£’000
566,725
70,878
6,055
17,286
386
661,330
Directors’ emoluments (which are included in operating costs) and interests are presented in the Remuneration Report on pages 128 to 153. Details
of the compensation of key management personnel for the purposes of the disclosure requirements under IAS 24 are provided in note 5.6. The prior
year figure for wages and salaries has been adjusted to correct a misstatement which did not affect any other items in the financial statements apart
from this disclosure note.
2.5 Employee Share Options and Awards
Share options and awards are used to incentivise Directors and employees of the Group. A charge is recognised over the
vesting period in the Consolidated Income Statement to record the cost of these share options and awards, based on
the fair value of the share option/award at the grant date.
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 £6.467 million (2021: £6.055 million) has been arrived at by applying a Monte Carlo simulation technique for share awards
issued under the DCC plc Long Term Incentive Plans.
Impact on Income Statement
The total share option expense is analysed as follows:
Date of grant
17 November 2015
10 February 2017
16 November 2017
15 November 2018
14 November 2019
12 November 2020
11 November 2021
Total expense
Share price
at date
of grant
Minimum
duration of
vesting period
Number of share
awards/options
granted
Weighted
average fair
value
£57.35
£67.75
£70.95
£60.65
£68.80
£57.08
£61.42
5 years
5 years
5 years
5 years
5 years
5 years
3 years
131,455
137,269
128,451
167,567
147,939
170,152
171,974
£49.56
£54.17
£56.52
£46.13
£53.32
£44.63
£46.39
Expense in Income Statement
2022
£’000
–
1,159
1,073
405
1,499
1,446
885
6,467
2021
£’000
835
1,317
374
1,462
1,561
506
–
6,055
178
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
2.5 Employee Share Options and Awards continued
Share options and awards
DCC plc Long Term Incentive Plans
At 31 March 2022, Group employees hold awards to subscribe for 730,042 ordinary shares under the DCC plc Long Term Incentive Plans.
The general terms of the DCC plc Long Term Incentive Plans are set out in the Remuneration Report on page 134.
The DCC plc Long Term Incentive Plans contain 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 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 Plans during the year is as follows:
At 1 April
Granted
Exercised
Expired and forfeited
At 31 March
2022
Number of
share awards
702,329
171,974
(76,274)
(67,987)
730,042
2021
Number of
share awards
757,460
170,152
(162,044)
(63,239)
702,329
The weighted average share price at the dates of exercise for share awards exercised during the year under the DCC plc Long Term Incentive Plans was
(cid:127)(cid:25)(cid:19)(cid:17)(cid:26)(cid:24)(cid:3)(cid:11)(cid:21)(cid:19)(cid:21)(cid:20)(cid:29)(cid:3)(cid:127)(cid:25)(cid:22)(cid:17)(cid:24)(cid:28)(cid:12)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:86)(cid:75)(cid:68)(cid:85)(cid:72)(cid:3)(cid:68)(cid:90)(cid:68)(cid:85)(cid:71)(cid:86)(cid:3)(cid:82)(cid:88)(cid:87)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:3)(cid:72)(cid:81)(cid:71)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:68)(cid:3)(cid:90)(cid:72)(cid:76)(cid:74)(cid:75)(cid:87)(cid:72)(cid:71)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:85)(cid:72)(cid:80)(cid:68)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:68)(cid:70)(cid:87)(cid:88)(cid:68)(cid:79)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:23)(cid:17)(cid:25)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:3)(cid:11)(cid:21)(cid:19)(cid:21)(cid:20)(cid:29)(cid:3)(cid:23)(cid:17)(cid:25)(cid:124)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:12)(cid:17)
The weighted average fair values assigned to share awards granted under the DCC plc Long Term Incentive Plan, which were computed in
accordance with the Monte Carlo valuation methodology, were as follows:
Granted during the year ended 31 March 2022
Granted during the year ended 31 March 2021
£46.39
£44.63
The fair values of share awards granted under the DCC plc Long Term Incentive Plan were determined taking account of peer group total share return
volatilities and correlations together with the following assumptions:
Risk-free interest rate (%)
Dividend yield (%)
Expected volatility (%)
Expected life in years
Share price at date of grant
2022
0.65
2.7
29.0
5.0
£61.42
2021
0.04
2.4
29.0
6.0
£57.08
The risk free rate of return is the yield on government bonds of a term consistent with the assumed option life. The dividend yield is based on historic
(cid:71)(cid:76)(cid:89)(cid:76)(cid:71)(cid:72)(cid:81)(cid:71)(cid:3)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:89)(cid:82)(cid:79)(cid:68)(cid:87)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:71)(cid:3)(cid:82)(cid:81)(cid:3)(cid:75)(cid:76)(cid:86)(cid:87)(cid:82)(cid:85)(cid:76)(cid:70)(cid:3)(cid:89)(cid:82)(cid:79)(cid:68)(cid:87)(cid:76)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:83)(cid:68)(cid:86)(cid:87)(cid:3)(cid:87)(cid:75)(cid:85)(cid:72)(cid:72)(cid:3)(cid:92)(cid:72)(cid:68)(cid:85)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:89)(cid:72)(cid:85)(cid:68)(cid:74)(cid:72)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:83)(cid:72)(cid:85)(cid:76)(cid:82)(cid:71)(cid:3)(cid:87)(cid:82)(cid:124)(cid:72)(cid:91)(cid:72)(cid:85)(cid:70)(cid:76)(cid:86)(cid:72)(cid:17)(cid:3)
Analysis of closing balance:
Date of grant
12 November 2014
17 November 2015
10 February 2017
16 November 2017
15 November 2018
14 November 2019
12 November 2020
11 November 2021
Total outstanding at 31 March
Total exercisable at 31 March
Date of expiry
12 November 2021
17 November 2022
10 February 2024
16 November 2024
15 November 2025
14 November 2026
12 November 2027
11 November 2028
2022
Number of
share awards
2021
Number of
share awards
–
38,028
57,226
62,541
86,051
144,070
170,152
171,974
730,042
95,254
23,689
61,734
75,551
64,871
162,262
144,070
170,152
–
702,329
85,423
DCC plc Annual Report and Accounts 2022
179
Financial Statements
Notes to the Financial Statements continued
1
2
n
o
i
t
c
e
S
3
4
5
6
2.6 Exceptionals
Exceptional items are those items which, in the judgement of the Directors, need to be disclosed separately by virtue
of their scale and nature. These exceptional items, detailed below, could distort the understanding of our underlying
performance for the year and comparability between periods and are therefore presented separately.
Adjustments to contingent acquisition consideration (note 3.16)
Restructuring and integration costs and other
Acquisition and related costs
Net operating exceptional items
Mark-to-market of swaps and related debt (note 2.7)
Net exceptional items before taxation
Income tax and deferred tax attaching to exceptional items
Net exceptional items attributable to owners of the Parent Company
2022
£’000
(19,864)
(16,736)
(9,934)
(46,534)
1,192
(45,342)
1,501
(43,841)
2021
£’000
27
(26,918)
(13,604)
(40,495)
1,384
(39,111)
4,104
(35,007)
Adjustments to contingent and deferred consideration of £19.864 million reflects movements in provisions associated with the expected earn-out
or other deferred arrangements that arise through the Group’s corporate development activity. The charge in the year primarily reflects increases in
contingent consideration payable in respect of acquisitions in DCC Technology where the trading performance of acquisitions in North America has
been very strong and ahead of expectations and also in respect of an acquisition in DCC Retail & Oil where performance has also been ahead of
expectations. In accordance with IFRS 3, this increase in the fair value of contingent consideration is recognised as a charge in the Income Statement.
Restructuring and integration costs and other of £16.736 million relates to the restructuring and integration of operations across a number of
businesses and acquisitions. The significant items during the year include costs related to the integration of acquisitions in DCC LPG and DCC
Technology. These include the integration of Primagaz in the Netherlands, acquired during the financial year and where integration with DCC’s
existing operations is continuing in line with expectations. It also includes the integration of Almo and combination with DCC Technology’s existing
Pro-Av business in North America. It also includes the final stage of the consolidation of the UK infrastructure in DCC Technology and a project
underway in France to enhance the efficiency of the LPG operating infrastructure.
Acquisition and related costs include the professional fees and tax costs relating to the evaluation and completion of acquisition opportunities and
amounted to £9.934 million (2021: £13.604 million).
Most of the Group’s debt has been raised in the US private placement market, denominated in US dollars, euro and sterling. Long-term interest and
cross currency interest rate derivatives have been utilised to achieve an appropriate mix of fixed and floating rate debt across the three currencies.
The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to this debt is charged or credited
as an exceptional item. In the year ended 31 March 2022, this amounted to an exceptional non-cash gain of £1.192 million (2021: non-cash gain
of £1.384 million). Following this gain, the cumulative net exceptional charge taken in respect of the Group’s outstanding US Private Placement debt
and related hedging instruments is £0.546 million. This, or any subsequent similar non-cash charges or gains, will net to zero over the remaining term
of this debt and the related hedging instruments.
There was a related income tax credit of £1.501 million in relation to certain exceptional charges.
The net cash flow impact in the current year for exceptional items and the disposal of equity accounted investments was an outflow of
(cid:127)(cid:21)(cid:28)(cid:17)(cid:23)(cid:28)(cid:27)(cid:124)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:11)(cid:21)(cid:19)(cid:21)(cid:20)(cid:29)(cid:3)(cid:68)(cid:81)(cid:3)(cid:82)(cid:88)(cid:87)(cid:73)(cid:79)(cid:82)(cid:90)(cid:3)(cid:82)(cid:73)(cid:3)(cid:127)(cid:21)(cid:28)(cid:17)(cid:22)(cid:24)(cid:27)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:12)(cid:17)
Restructuring and integration costs and other of £26.918 million in the prior year primarily related to restructuring of operations as part of the
integration of completed acquisitions across a small number of businesses. It included the costs related to the restructuring of DCC LPG’s consumer
gas and power business in France where a new partnership with a third party was created to better leverage the strong brand presence while reducing
risk associated with this market in France. It also included the dual running costs relating to DCC Technology’s UK SAP implementation which went
live during the prior year in the majority of the UK business. DCC Technology also incurred restructuring costs across a number of businesses where
some right-sizing was required given the change in mix in the business as a result of Covid-19.
180
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Strategic Report
Governance
Financial Statements
Supplementary Info
2.7 Finance Costs and Finance Income
This note details the interest income generated by our financial assets and the interest expense incurred on our financial
liabilities. Finance income principally comprises interest on cash and term deposits and net income on interest rate and
currency swaps whilst finance costs mainly comprise interest on Unsecured Notes, bank borrowings and lease creditors.
Finance costs
On bank loans, overdrafts and Unsecured Notes
Unwinding of discount applicable to lease creditors (note 3.12)
Unwinding of discount applicable to acquisition related liabilities (note 3.16)
Unwinding of discount applicable to provisions for liabilities (note 3.17)
Facility fees
Other interest
Finance income
Interest on cash and term deposits
Net income on interest rate and currency swaps
Net interest income on defined benefit pension schemes (note 3.15)
Mark-to-market of swaps and related debt*
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 swaps designated as fair value hedges and related debt
Movement on cross currency interest rate swaps designated as cash flow hedges
Transferred to cash flow hedge reserve
Total mark-to-market of swaps and related debt
2022
£’000
2021
£’000
(58,302)
(9,473)
(969)
(1,676)
(1,244)
(5,541)
(77,205)
1,024
21,890
161
23,075
1,192
24,267
(65,941)
(9,707)
(1,011)
(1,630)
(1,810)
(5,540)
(85,639)
1,279
24,811
163
26,253
1,384
27,637
(52,938)
(58,002)
(28,201)
(240)
29,633
1,192
9,401
(9,401)
–
1,192
(6,990)
(59,062)
67,436
1,384
(28,193)
28,193
–
1,384
DCC plc Annual Report and Accounts 2022
181
Financial Statements
Notes to the Financial Statements continued
1
2
n
o
i
t
c
e
S
3
4
5
6
2.8 Share of Equity Accounted Investments’ Profit after Tax
Share of equity accounted investments’ profit after tax represents the results of businesses we do not control, but
instead exercise significant influence and generally have an equity holding of up to 50%.
The Group’s share of equity accounted investments’ (i.e. associates) profit after tax is equity accounted and presented as a single line item in the
Group Income Statement. The profit after tax generated by the Group’s equity accounted investments is analysed as follows under the principal
Group Income Statement captions:
Group share of:
Revenue
Operating profit and profit before tax
Income tax expense
Profit after tax
2022
£’000
13,267
370
(56)
314
2021
£’000
7,550
266
(33)
233
Income Tax Expense
2.9
Tax is payable in the territories in which we operate. This note details the current tax charge which is the tax payable
on this year’s taxable profits and the deferred tax charge which represents the tax expected to arise in the future due
(cid:87)(cid:82)(cid:3)(cid:71)(cid:76)(cid:73)(cid:73)(cid:72)(cid:85)(cid:72)(cid:81)(cid:70)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:68)(cid:91)(cid:3)(cid:69)(cid:68)(cid:86)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:124)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)
(i) Income tax expense recognised in the Income Statement
2022
£’000
2021
£’000
9,365
15,470
75,351
(1,726)
(4,884)
93,576
(2,992)
5,933
(13,536)
225
(3,472)
(13,842)
79,734
2022
£’000
(210)
16,138
15,928
7,038
15,086
56,041
(2,971)
(4,598)
70,596
288
1,153
(8,372)
(1,133)
(254)
(8,318)
62,278
2021
£’000
(159)
11,554
11,395
Current taxation
Irish corporation tax at 12.5%
United Kingdom corporation tax at 19%
Other overseas tax
Income tax credit attaching to exceptional items
Over provision in respect of prior years
Total current taxation
Deferred tax
Irish at 12.5%
United Kingdom at 25%
Other overseas deferred tax
Deferred tax credit attaching to exceptional items
Over provision in respect of prior years
Total deferred tax
Total income tax expense
(ii) Deferred tax recognised in Other Comprehensive Income
Deferred tax relating to defined benefit pension obligations
Deferred tax relating to cash flow hedges
Total deferred tax charge recognised in Other Comprehensive Income
182
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
2.9
(iii) Reconciliation of effective tax rate
Income Tax Expense continued
Profit before taxation
Less: share of equity accounted investments’ profit after tax
Add back: amortisation of intangible assets
Profit before share of equity accounted investments’ profit after tax and amortisation of intangible assets
Add back: net exceptional items before tax
Profit before share of equity accounted investments’ profit after tax, amortisation of intangible assets and
(cid:81)(cid:72)(cid:87)(cid:124)(cid:72)(cid:91)(cid:70)(cid:72)(cid:83)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:86)
Profit before taxation
At the standard rate of corporation tax in Ireland of 12.5%
Amortisation and share of equity accounted investments 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
Other differences
Income tax expense
Income tax and deferred tax attaching to exceptional items
Deferred tax attaching to amortisation of intangible assets
Total income tax expense
Income tax expense as a percentage of profit before share of equity accounted investments’ profit after tax,
amortisation of intangible assets and net exceptionals
Impact of share of equity accounted investments’ profit after tax, amortisation of intangible assets and net
exceptionals
Total income tax expense as a percentage of profit before tax
2022
£’000
405,736
(314)
84,340
489,762
45,342
2021
£’000
365,081
(233)
66,898
431,746
39,111
535,104
470,857
405,736
365,081
50,717
10,503
(8,356)
42,176
2,616
97,656
(1,501)
(16,421)
79,734
2022
%
18.3%
1.4%
19.7%
45,635
8,333
(4,852)
29,976
954
80,046
(4,104)
(13,664)
62,278
2021
%
17.0%
0.1%
17.1%
(iv) Factors that may affect future tax rates and other disclosures
No change has been enacted 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 is 19% and will increase to 25% with effect from 1 April 2023. This rate change has been taken into account in these financial statements.
A French corporate income tax rate of 28.4% applied for the year ended 31 March 2022. The French corporate income tax rate is legislated to reduce
to 25.8% for the year ending 31 March 2023. As the legislation to give statutory effect to the reduction in the French corporate income tax rate had been
(cid:72)(cid:81)(cid:68)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:68)(cid:87)(cid:72)(cid:15)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:75)(cid:68)(cid:86)(cid:3)(cid:69)(cid:72)(cid:72)(cid:81)(cid:3)(cid:87)(cid:68)(cid:78)(cid:72)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:76)(cid:86)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:124)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:17)
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 or
intention to remit earnings.
2.10 Dividends
Dividends represent one type of shareholder return and are paid as an amount per ordinary share held. The Group
retains part of the profits generated in the year to meet future growth plans.
Dividends paid per ordinary share are as follows:
Final: paid 107.85 pence per share on 22 July 2021 (2021: paid 95.79 pence per share on 23 July 2020)
Interim: paid 55.85 pence per share on 10 December 2021 (2021: paid 51.95 pence per share on 9 December 2020)
2022
£’000
105,417
55,182
160,599
2021
£’000
92,478
51,045
143,523
The Directors are proposing a final dividend in respect of the year ended 31 March 2022 of 119.93 pence per ordinary share (£118.303 million).
This proposed dividend is subject to approval by the shareholders at the Annual General Meeting.
DCC plc Annual Report and Accounts 2022
183
Financial Statements
Notes to the Financial Statements continued
2.11 Earnings per Ordinary Share
Earnings per ordinary share (‘EPS’) is the amount of post-tax profit attributable to each ordinary share. Basic EPS is the
amount of profit for the year divided by the weighted average number of shares in issue during the year. Diluted EPS
shows what the impact would be if all outstanding and exercisable options were exercised and treated as ordinary shares
at year end.
Profit attributable to owners of the Parent Company
Amortisation of intangible assets after tax
Exceptionals after tax (note 2.6)
Adjusted profit after taxation and non-controlling interests
Basic earnings per ordinary share
Basic earnings per ordinary share
Amortisation of intangible assets after tax
Exceptionals after tax
Adjusted basic earnings per ordinary share
Weighted average number of ordinary shares in issue (thousands)
2022
£’000
312,373
67,919
43,841
424,133
2022
pence
316.78p
68.88p
44.45p
430.11p
98,610
2021
£’000
292,619
53,234
35,007
380,860
2021
pence
297.04p
54.04p
35.54p
386.62p
98,510
1
2
n
o
i
t
c
e
S
3
4
5
6
Basic earnings per ordinary share is calculated by dividing the profit attributable to owners of the Parent Company by the weighted average number
of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares. The adjusted figures for
basic earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating the impact
of amortisation of intangible assets and net exceptionals.
Diluted earnings per ordinary share
Diluted earnings per ordinary share
Amortisation of intangible assets after tax
Exceptionals after tax
Adjusted diluted earnings per ordinary share
Weighted average number of ordinary shares in issue (thousands)
2022
pence
316.36p
68.79p
44.40p
429.55p
98,739
2021
pence
296.62p
53.96p
35.49p
386.07p
98,650
The earnings used for the purposes of the diluted earnings per ordinary share calculations were £312.373 million (2021: £292.619 million) and
£424.133 million (2021: £380.860 million) for the purposes of the adjusted diluted earnings per ordinary share calculations.
The weighted average number of ordinary shares used in calculating the diluted earnings per ordinary share for the year ended 31 March 2022 was
98.739 million (2021: 98.650 million). A reconciliation of the weighted average number of ordinary shares used for the purposes of calculating the
diluted earnings per ordinary 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
2022
(cid:346)(cid:19)(cid:19)(cid:19)
98,610
129
98,739
2021
(cid:346)(cid:19)(cid:19)(cid:19)
98,510
140
98,650
Diluted earnings per ordinary 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. The adjusted
figures for diluted earnings per ordinary share (a non-GAAP financial measure) are intended to demonstrate the results of the Group after eliminating
the impact of amortisation of intangible assets and net exceptionals.
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 would not have been satisfied as at the end of the
reporting period if that were the end of the vesting period.
184
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Strategic Report
Governance
Financial Statements
Supplementary Info
Section 3 Assets and Liabilities
3.1 Property, Plant and Equipment
This note details the tangible assets utilised by the Group to generate revenues and profits. The cost of these assets
primarily represents the amounts originally paid for them. All assets are depreciated over their useful economic lives.
Year ended 31 March 2022
Opening net book amount
Exchange differences
Arising on acquisition (note 5.2)
Additions
Disposals
Depreciation charge
Impairment charge
Reclassification
Closing net book amount
At 31 March 2022
Cost
Accumulated depreciation and impairment losses
Net book amount
Year ended 31 March 2021
Opening net book amount
Exchange differences
Arising on acquisition (note 5.2)
Additions
Disposals
Depreciation charge
Reclassification
Closing net book amount
Land &
buildings
£’000
342,040
2,107
36,557
16,655
(6,341)
(16,353)
(105)
5,295
379,855
463,239
(83,384)
379,855
323,928
(5,460)
8,605
16,048
(5,146)
(14,876)
18,941
342,040
Plant &
machinery &
cylinders
£’000
Fixtures,
fittings & office
equipment
£’000
Motor
vehicles
£’000
Capital work
in progress
£’000
534,990
2,633
19,376
104,171
(6,227)
(80,719)
(75)
1,313
575,462
135,397
345
4,354
24,135
(1,361)
(27,111)
(142)
17,004
152,621
65,971
764
2,740
9,342
(679)
(13,793)
–
(11)
64,334
Total
£’000
1,137,634
6,217
63,173
199,231
(14,608)
(137,976)
(322)
–
59,236
368
146
44,928
–
–
–
(23,601)
81,077
1,253,349
1,261,065
(685,603)
310,716
(158,095)
165,104
(100,770)
575,462
152,621
64,334
81,077
–
81,077
2,281,201
(1,027,852)
1,253,349
517,273
(11,896)
21,746
88,059
(2,965)
(79,695)
2,468
534,990
91,277
(1,714)
4,070
32,892
(1,509)
(23,614)
33,995
135,397
64,095
(1,885)
7,432
8,621
(992)
(13,014)
1,714
65,971
92,454
(582)
15
24,490
(23)
–
(57,118)
1,089,027
(21,537)
41,868
170,110
(10,635)
(131,199)
–
59,236
1,137,634
At 31 March 2021
Cost
Accumulated depreciation and impairment losses
Net book amount
411,795
(69,755)
342,040
1,156,985
(621,995)
534,990
279,371
(143,974)
135,397
160,687
(94,716)
65,971
59,236
–
59,236
2,068,074
(930,440)
1,137,634
Useful economic lives of assets
The Group updated its energy strategy over the course of the year to ensure the Group remains well placed to support customers as they transition
to lower carbon forms of energy. This process took account of the Group’s assessment of the risks and opportunities created by climate-change to
(cid:76)(cid:87)(cid:86)(cid:3)(cid:72)(cid:91)(cid:76)(cid:86)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:88)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:90)(cid:75)(cid:76)(cid:70)(cid:75)(cid:3)(cid:76)(cid:86)(cid:3)(cid:82)(cid:88)(cid:87)(cid:79)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:80)(cid:82)(cid:85)(cid:72)(cid:3)(cid:71)(cid:72)(cid:87)(cid:68)(cid:76)(cid:79)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:53)(cid:76)(cid:86)(cid:78)(cid:3)(cid:53)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:83)(cid:68)(cid:74)(cid:72)(cid:86)(cid:3)(cid:28)(cid:21)(cid:3)(cid:87)(cid:82)(cid:3)(cid:20)(cid:19)(cid:20)(cid:17)(cid:124)(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:112)(cid:86)(cid:3)(cid:88)(cid:83)(cid:71)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:72)(cid:81)(cid:72)(cid:85)(cid:74)(cid:92)(cid:3)(cid:86)(cid:87)(cid:85)(cid:68)(cid:87)(cid:72)(cid:74)(cid:92)(cid:3)(cid:75)(cid:68)(cid:86)(cid:15)(cid:3)(cid:76)(cid:81)(cid:3)
turn, allowed the Group to commit to reducing its carbon emissions from its own activities (Scope 1 and 2) and from the energy it sells (Scope 3) to
(cid:81)(cid:72)(cid:87)(cid:3)(cid:93)(cid:72)(cid:85)(cid:82)(cid:3)(cid:69)(cid:92)(cid:3)(cid:21)(cid:19)(cid:24)(cid:19)(cid:3)(cid:82)(cid:85)(cid:3)(cid:86)(cid:82)(cid:82)(cid:81)(cid:72)(cid:85)(cid:17)(cid:124)(cid:39)(cid:88)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:74)(cid:76)(cid:89)(cid:72)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:73)(cid:68)(cid:70)(cid:87)(cid:82)(cid:85)(cid:86)(cid:3)(cid:90)(cid:75)(cid:72)(cid:81)(cid:3)(cid:71)(cid:72)(cid:87)(cid:72)(cid:85)(cid:80)(cid:76)(cid:81)(cid:76)(cid:81)(cid:74)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:88)(cid:86)(cid:72)(cid:73)(cid:88)(cid:79)(cid:3)(cid:79)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:112)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)(cid:124)(cid:3)(cid:44)(cid:80)(cid:83)(cid:82)(cid:85)(cid:87)(cid:68)(cid:81)(cid:87)(cid:79)(cid:92)(cid:15)(cid:3)(cid:80)(cid:68)(cid:81)(cid:92)(cid:3)
of the Group’s existing assets, such as depots, storage equipment and trucks will continue to be used for the distribution of lower carbon forms of
(cid:73)(cid:88)(cid:72)(cid:79)(cid:15)(cid:3)(cid:86)(cid:88)(cid:70)(cid:75)(cid:3)(cid:68)(cid:86)(cid:3)(cid:69)(cid:76)(cid:82)(cid:73)(cid:88)(cid:72)(cid:79)(cid:86)(cid:17)(cid:3)(cid:38)(cid:68)(cid:83)(cid:76)(cid:87)(cid:68)(cid:79)(cid:3)(cid:72)(cid:91)(cid:83)(cid:72)(cid:81)(cid:71)(cid:76)(cid:87)(cid:88)(cid:85)(cid:72)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:75)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:72)(cid:71)(cid:76)(cid:88)(cid:80)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:17)(cid:124)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)
(cid:70)(cid:82)(cid:81)(cid:86)(cid:76)(cid:71)(cid:72)(cid:85)(cid:86)(cid:3)(cid:87)(cid:75)(cid:68)(cid:87)(cid:3)(cid:87)(cid:75)(cid:72)(cid:86)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:69)(cid:72)(cid:3)(cid:68)(cid:81)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:79)(cid:3)(cid:83)(cid:68)(cid:85)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:82)(cid:87)(cid:68)(cid:79)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:83)(cid:82)(cid:85)(cid:87)(cid:73)(cid:82)(cid:79)(cid:76)(cid:82)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:75)(cid:82)(cid:85)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:72)(cid:71)(cid:76)(cid:88)(cid:80)(cid:3)(cid:87)(cid:72)(cid:85)(cid:80)(cid:17)(cid:124)(cid:41)(cid:88)(cid:85)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3)
information is included in note 3.3 Intangible Assets and Goodwill on page 188.
There remains a risk that the useful lives of the assets created by future capital expenditure may differ from current assumptions. For instance,
governments in some of the Group’s operating locations could take measures to restrict the use of certain fossil-based assets which could affect
(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:88)(cid:86)(cid:72)(cid:73)(cid:88)(cid:79)(cid:3)(cid:79)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:87)(cid:75)(cid:82)(cid:86)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:17)(cid:124)(cid:3)(cid:43)(cid:82)(cid:90)(cid:72)(cid:89)(cid:72)(cid:85)(cid:15)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:85)(cid:72)(cid:68)(cid:86)(cid:82)(cid:81)(cid:86)(cid:3)(cid:86)(cid:87)(cid:68)(cid:87)(cid:72)(cid:71)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:90)(cid:72)(cid:85)(cid:72)(cid:3)(cid:81)(cid:82)(cid:3)(cid:86)(cid:76)(cid:74)(cid:81)(cid:76)(cid:73)(cid:76)(cid:70)(cid:68)(cid:81)(cid:87)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:86)(cid:87)(cid:76)(cid:80)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:82)(cid:73)(cid:3)(cid:88)(cid:86)(cid:72)(cid:73)(cid:88)(cid:79)(cid:3)(cid:79)(cid:76)(cid:89)(cid:72)(cid:86)(cid:3)(cid:71)(cid:88)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)
the current financial year.
DCC plc Annual Report and Accounts 2022
185
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2
3
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Financial Statements
Notes to the Financial Statements continued
3.2 Right-Of-Use Leased Assets
This note details the right-of-use leased assets utilised by the Group to generate revenues and profits. All assets are
depreciated over their useful economic lives.
Year ended 31 March 2022
Opening net book amount
Exchange differences
Arising on acquisition (note 5.2)
Additions (note 3.12)
Terminations
Depreciation charge
Impairment charge
Closing net book amount
Year ended 31 March 2021
Opening net book amount
Exchange differences
Arising on acquisition (note 5.2)
Additions (note 3.12)
Terminations
Depreciation charge
Impairment charge
Closing net book amount
Land &
buildings
£’000
256,576
476
30,684
42,938
(1,407)
(46,923)
–
282,344
273,053
(4,784)
6,066
27,912
(1,988)
(41,844)
(1,839)
256,576
Plant &
machinery &
cylinders
£’000
Fixtures,
fittings & office
equipment
£’000
3,677
(199)
543
1,371
(3)
(1,306)
–
4,083
3,473
(277)
291
1,457
(83)
(1,184)
–
3,677
456
2
–
244
3
(161)
–
544
465
68
–
145
–
(222)
–
456
Motor
vehicles
£’000
48,154
(128)
833
11,380
(245)
(19,414)
–
40,580
27,106
(856)
2,787
38,377
(1,137)
(18,123)
–
48,154
Total
£’000
308,863
151
32,060
55,933
(1,652)
(67,804)
–
327,551
304,097
(5,849)
9,144
67,891
(3,208)
(61,373)
(1,839)
308,863
186
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Intangible Assets and Goodwill
3.3
The Group Balance Sheet contains significant intangible assets and goodwill. Goodwill, customer and supplier
relationships and brands can arise on the acquisition of a business. Goodwill arises when we pay an amount which is
higher than the fair value of the net assets acquired (primarily due to expected synergies). This goodwill is not amortised
but is subject to annual impairment reviews whereas customer and supplier relationships and brands are amortised over
their useful economic lives.
Year ended 31 March 2022
Opening net book amount
Exchange differences
Arising on acquisition (note 5.2)
Adjustments to contingent consideration (note 3.16)
Amortisation charge
Closing net book amount
At 31 March 2022
Cost
Accumulated amortisation and impairment losses
Net book amount
Year ended 31 March 2021
Opening net book amount
Exchange differences
Arising on acquisition (note 5.2)
Adjustments to contingent consideration (note 3.16)
Amortisation charge
Closing net book amount
At 31 March 2021
Cost
Accumulated amortisation and impairment losses
Net book amount
Customer &
supplier related
intangibles
£’000
Goodwill
£’000
Brand related
intangibles
£’000
Total
£’000
1,527,598
14,705
224,020
(362)
–
1,765,961
497,230
15,848
248,787
–
(75,963)
685,902
181,907
553
8,503
–
(8,377)
2,206,735
31,106
481,310
(362)
(84,340)
182,586
2,634,449
1,804,232
(38,271)
1,099,417
(413,515)
222,416
(39,830)
3,126,065
(491,616)
1,765,961
685,902
182,586
2,634,449
Goodwill
£’000
1,467,150
(34,874)
92,674
2,648
–
1,527,598
Customer &
supplier related
intangibles
£’000
Brand related
intangibles
£’000
484,283
(28,878)
100,986
–
(59,161)
497,230
175,459
(8,843)
23,028
–
(7,737)
Total
£’000
2,126,892
(72,595)
216,688
2,648
(66,898)
181,907
2,206,735
1,566,051
(38,453)
1,527,598
832,171
(334,941)
497,230
213,370
(31,463)
2,611,592
(404,857)
181,907
2,206,735
Customer and supplier related intangible assets principally comprise contractual and non-contractual customer and supplier relationships arising
from business combinations and are amortised over their estimated useful lives. The weighted average remaining amortisation period for customer
related intangibles is 11.8 years (2021: 11.3 years). Brand related intangible assets comprise registered trade names and logos which are well
established and recognised within the industries in which the Group operates. The weighted average remaining amortisation period for brand related
intangibles is 26.5 years (2021: 27.7 years). There are no internally generated brand related intangibles recognised on the Group Balance Sheet.
DCC plc Annual Report and Accounts 2022
187
Financial Statements
Notes to the Financial Statements continued
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Intangible Assets and Goodwill continued
3.3
In accordance with IAS 38 Intangible Assets, details of individually significant intangible assets and their remaining amortisation periods as at
31 March 2022 are as follows:
Butagaz
Almo
DCC Propane
DSG Hong Kong & Macau
Mobility Continental Europe
DCC Vital
Others
Closing net book amount
Segment
DCC LPG
DCC Technology
DCC LPG
DCC LPG
DCC Retail & Oil
DCC Healthcare
Remaining
amortisation
period in
years
8.1 years
9.7 years
10.3 years
20.8 years
14.3 years
19.0 years
Customer &
supplier related
intangibles
£’000
104,894
151,019
100,419
60,913
52,319
45,811
170,527
685,902
Brand
related
intangibles
£’000
119,088
–
33,282
–
–
–
30,216
182,586
Remaining
amortisation
period in
years
32.5 years
–
16.2 years
–
–
–
In accordance with IAS 38 Intangible Assets, details of individually significant intangible assets and their remaining amortisation periods as at
31 March 2021 are as follows:
Butagaz
DCC Propane
DSG Hong Kong & Macau
Mobility Continental Europe
TEGA
Gaz Européen
Others
Closing net book amount
Segment
DCC LPG
DCC LPG
DCC LPG
DCC Retail & Oil
DCC LPG
DCC LPG
Customer &
supplier related
intangibles
£’000
120,609
95,951
61,321
42,623
27,020
24,029
125,677
497,230
Remaining
amortisation
period in
years
8.9 years
10.9 years
21.8 years
16.6 years
11.0 years
7.8 years
Brand
related intangibles
£’000
115,162
33,739
–
–
15,355
10,051
7,600
181,907
Remaining
amortisation
period in
years
34.5 years
17.1 years
–
–
17.0 years
15.8 years
Cash-generating units
Goodwill acquired in business combinations is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are expected to benefit from that
business combination. 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 32 CGUs (2021: 33 CGUs) have been identified and these are analysed between the Group’s operating segments below together with a
summary of the allocation of the carrying value of goodwill by segment.
Cash-generating units
Goodwill
DCC LPG
DCC Retail & Oil
DCC Healthcare
DCC Technology
9
7
7
9
32
2022
number
2021
number
2022
£’000
578,634
588,036
267,922
331,369
2021
£’000
518,503
563,931
227,221
217,943
9
8
7
9
33
1,765,961
1,527,598
As part of the revised Energy strategy discussed on pages 22 to 27, management considered the impact of the planned restructuring of the Group’s
LPG and Retail & Oil divisions on the identification of CGUs in these divisions and the level at which goodwill will be assessed for internal management
purposes. In particular, consideration was given to the Group’s retail fuel businesses in France, Denmark and Norway, which previously represented
separate CGUs, together with the recently acquired Luxembourg retail fuels business. Management considered the new management structures,
how performance will be monitored, product supply agreements, shared IT platforms and ongoing synergies. Arising from this review, management
have identified a new CGU, “Mobility Continental Europe”, which includes the Group’s retail fuels activities in France, Denmark, Norway and
Luxembourg. The comparative data in the tables below has been adjusted accordingly.
The Group’s North American Stampede business will be integrated into that of the recently acquired Almo business. Accordingly, the combined
entity now represents one single CGU (‘Almo’) for goodwill impairment testing purposes. The comparative data in the table overleaf has been
(cid:68)(cid:71)(cid:77)(cid:88)(cid:86)(cid:87)(cid:72)(cid:71)(cid:124)(cid:68)(cid:70)(cid:70)(cid:82)(cid:85)(cid:71)(cid:76)(cid:81)(cid:74)(cid:79)(cid:92)(cid:17)
188
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
3.3
In accordance with IAS 36 Impairment of Assets, the CGUs to which significant amounts of goodwill have been allocated are as follows:
Intangible Assets and Goodwill continued
CGU
Certas Energy UK Group
Butagaz
DCC Vital Group
Mobility Continental Europe
DCC Propane
Almo
Exertis UK Group
Others
Closing net book amount
Segment
DCC Retail & Oil
DCC LPG
DCC Healthcare
DCC Retail & Oil
DCC LPG
DCC Technology
DCC Technology
2022
£’000
290,255
208,151
174,264
166,595
117,317
136,390
101,598
571,391
2021
£’000
282,495
191,733
136,491
154,078
103,618
26,916
101,629
530,638
1,765,961
1,527,598
For the purpose of impairment testing, the before-tax discount rates applied to these CGUs to which significant amounts of goodwill have been
allocated were 9.8% (2021: 9.4%) for the Certas Energy UK Group, Butagaz, Mobility Continental Europe and DCC Propane, 11.0% (2021: 10.7%) for
the DCC Vital Group and 11.2% (2021: 10.8%) for the Exertis UK Group and Almo. The long-term growth rates assumed for the Certas Energy UK,
DCC Vital and Exertis UK Groups was 1.5%, a long-term growth rate of 1.7% was assumed for Almo and DCC Propane and a long-term growth rate
of 1.0% was assumed for Mobility Continental Europe. No growth was assumed for Butagaz. The remaining goodwill balance of £571.391 million is
allocated across 25 CGUs (2021: £530.638 million across 26 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. Impairment of goodwill
occurs when the carrying value of a CGU is greater than the present value of the cash that it is expected to generate (i.e. the recoverable amount).
The Group reviews the carrying value of each CGU at least annually or more frequently if there is an indication that the CGU may be impaired.
The recoverable amount of each CGU is based on a value in use computation. The cash flow forecasts employed for this computation are based on
the Three Year Plan that has been formally approved by the Board of Directors and specifically excludes future acquisition activity. These cash flow
forecasts are consistent with those used for the Group’s going concern and viability assessments. Cash flows for a further two years are based on
the assumptions underlying the Three Year Plan. Cash flow forecasts include consideration of past performance along with reflecting management’s
best estimates of future developments in each of the Group’s markets. Net cash flows include consideration of the estimated capital expenditure
required to achieve the Group’s 2030 and 2050 emissions commitments. A long-term growth rate reflecting the lower of the extrapolated cash flow
projections and the long-term GDP rate for the country of operation is applied to the year five cash flows. The weighted average long-term growth
rate used in the impairment testing was 1.5% (2021: 1.4%).
Management have given consideration to its assessment of impairment risk given that the preparation and Board approval of the Group’s Three Year
Plans was completed whilst the Covid-19 pandemic was still ongoing. Lockdown restrictions have generally been lifted in the jurisdictions in which the
Group operates and the Three Year Plans assume that the Group’s businesses return to normal activity levels in the short-term. Whilst the pace of
recovery from the pandemic in the next year could differ from that modelled, the vast majority of the value in use is in the terminal value, which is
derived by applying the growth rate to the terminal year cash flow projection. Beyond the uncertainty over the short to medium-term recovery, the
Directors continue to assume there will not be any long-term net adverse impact from the pandemic based on the strength of our customer
relationships and the recovery in demand for the Group’s products as restrictions have been lifted.
The assumptions behind the cash flow projections also take account of the climate change risk assessment exercise carried out during the year as
described in the Risk Report on page 95. The climate scenarios tested and the principal conclusions relevant for the impairment assessment are
discussed below.
The Group’s climate change risk assessment considered the transitional impacts of climate change on our energy activities in a scenario consistent
with 1.5ºC warming by 2050. Whilst there is a challenge arising from the evolution of the legal environment, technological change and the introduction
of new forms of energy that will likely see a reduction in demand for fossil fuels over the medium to long-term, the Group concluded that there is
a significant opportunity available to our energy businesses to support existing and new customers as they reduce their use of fossil fuels over the
coming decades. In particular, our energy businesses can add to the range of products and services that we offer while continuing to use the assets
that we currently own.
The Group’s climate change risk assessment also considered the physical impacts of climate change on certain of the Group’s assets in a scenario
consistent with 4.0ºC warming by 2050. This risk assessment considered both the risk of physical damage to assets and the potential disruption to
our wider operations that would be caused if these sites were inoperable for a certain period because of more frequent adverse weather conditions.
The Group concluded that whilst there is a risk in the medium term to these assets, these risks can be fully mitigated through increased physical
mitigation measures and business continuity planning. In addition, the Group maintains insurance cover against physical damage and/or business
interruption. And finally, the geographical diversity of the Group and potential alternative sources of supply means that the risk to the Group as a
whole is unlikely to be material.
DCC plc Annual Report and Accounts 2022
189
Financial Statements
Notes to the Financial Statements continued
Intangible Assets and Goodwill continued
3.3
Having assessed these scenarios the Group has concluded that, while climate change is an existing and evolving risk, it does not warrant any
amendments to the assumptions used in the Group’s impairment testing.
A present value of the future cash flows is calculated using a before-tax discount rate representing the Group’s estimated before-tax weighted
average cost of capital, adjusted to reflect risks associated with each CGU. The range of discount rates applied ranged from 9.8% to 11.2%
(cid:11)(cid:21)(cid:19)(cid:21)(cid:20)(cid:29)(cid:124)(cid:28)(cid:17)(cid:23)(cid:8)(cid:3)(cid:87)(cid:82)(cid:3)(cid:20)(cid:19)(cid:17)(cid:27)(cid:8)(cid:12)(cid:17)
Key assumptions include management’s estimates of future profitability, working capital movements and capital expenditure and disposal proceeds
on property, plant and equipment. 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.
Applying these techniques, no impairment charge arose in 2022 (2021: nil).
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Sensitivity analysis
Sensitivity analysis was performed by increasing the discount rate by 1%, reducing the long-term growth rate by 0.3% and decreasing cash flows by
10% which resulted in an excess in the recoverable amount of 31 CGUs over their carrying amount under each approach. 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 except in the
case of one CGU detailed below.
In relation to a CGU which forms part of the DCC Technology segment, the value in use of £53.5 million represented an excess of £1.1 million over
its carrying value of £52.4 million. The table below identifies the amounts by which each of the key assumptions must change in order for the
recoverable amount of each CGU to be equal to its carrying amount:
Increase in discount rate
Reduction in long-term growth rate
Reduction in cash flow
CGU in
DCC Technology
0.2 percentage points
0.3 percentage points
3%
3.4 Equity Accounted Investments
Equity accounted investments represent the Group’s interests in certain entities where we exercise significant influence
and generally have an equity holding of up to 50%.
At 1 April
Share of profit after tax
Disposals
Exchange and other
At 31 March
2022
£’000
27,134
314
(935)
330
26,843
2021
£’000
27,729
233
–
(828)
27,134
Investments in associates at 31 March 2022 include goodwill of £19.107 million (2021: £19,131 million).
Summarised financial information for the Group’s share of its investment in associates which are accounted for using the equity method is as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Details of the Group’s principal associates are included in the Group Directory on page 241.
2022
£’000
34,999
8,174
(1,468)
(14,862)
26,843
2021
£’000
36,177
6,335
(1,847)
(13,531)
27,134
190
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Inventories
3.5
Inventories represent assets that we intend to convert or sell in order to generate revenue in the short term. The Group’s
inventory consists primarily of finished goods, net of an allowance for obsolescence.
Raw materials
Work in progress
Finished goods
2022
£’000
66,258
5,844
1,061,564
1,133,666
2021
£’000
59,409
6,539
620,002
685,950
Write-downs of inventories recognised as an expense within cost of sales amounted to £21.5 million (2021: £7.7 million) and arose in the normal
course of activities.
3.6 Trade and Other Receivables
Trade and other receivables mainly consist of amounts owed to the Group by customers, net of an allowance for bad and
doubtful debts, together with prepayments and accrued income.
Trade receivables
Allowance for impairment of trade receivables
Prepayments and accrued income
Value-added tax recoverable
Other debtors
2022
£’000
2,086,578
(54,929)
313,648
43,711
119,605
2021
£’000
1,477,573
(40,360)
142,532
32,159
77,468
2,508,613
1,689,372
Information about the Group’s exposure to credit and market risks, and impairment losses for trade receivables is included in note 5.7. The aged
analysis of these balances is as follows:
Not overdue
Less than 1 month overdue
1 – 3 months overdue
3 – 6 months overdue
Over 6 months overdue
Gross trade receivables
Trade receivables net of
allowance for impairment
2022
£’000
1,760,825
194,240
71,294
26,625
33,594
2021
£’000
1,255,609
132,543
42,207
14,660
32,554
2022
£’000
1,755,430
188,461
66,269
19,893
1,596
2021
£’000
1,243,643
127,443
40,081
10,472
15,574
2,086,578
1,477,573
2,031,649
1,437,213
The movement in the allowance for impairment of trade receivables during the year is as follows:
At 1 April
Allowance for impairment recognised in the year
Subsequent recovery of amounts previously provided for
Amounts written off during the year
Arising on acquisition
Exchange
At 31 March
2022
£’000
40,360
17,556
(832)
(5,884)
3,619
110
54,929
2021
£’000
36,744
15,536
(697)
(10,612)
572
(1,183)
40,360
The vast majority of the allowance for impairment relates to trade and other receivables balances which are over six months overdue.
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Financial Statements
Notes to the Financial Statements continued
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3.7 Trade and Other Payables
The Group’s trade and other payables mainly consist of amounts we owe to our suppliers that have been either invoiced
or accrued and are due to be settled within 12 months.
Trade payables
Other creditors and accruals
PAYE and National Insurance or equivalent
Value-added tax
Government grants (note 3.18)
Interest payable
Amounts due in respect of property, plant and equipment
2022
£’000
2021
£’000
2,402,935
895,758
23,425
113,740
16
13,981
18,850
1,850,102
623,800
13,951
91,082
20
11,668
13,554
3,468,705
2,604,177
3.8 Movement in Working Capital
Working capital represents the net of inventories, trade and other receivables and trade and other payables. This note
details the overall movement in the year under each of these headings.
Year ended 31 March 2022
At 1 April 2021
Translation adjustment
Arising on acquisition (note 5.2)
Exceptional items, interest accruals, capital accruals and other
Increase/(decrease) in working capital (note 5.3)
Inventories
£’000
685,950
15,299
254,522
–
177,895
Trade
and other
receivables
£’000
Trade
and other
payables
£’000
1,689,372
4,383
200,443
155
614,260
(2,604,177)
(2,471)
(229,336)
(9,292)
(623,429)
Total
£’000
(228,855)
17,211
225,629
(9,137)
168,726
At 31 March 2022
1,133,666
2,508,613
(3,468,705)
173,574
Year ended 31 March 2021
At 1 April 2020
Translation adjustment
Arising on acquisition (note 5.2)
Exceptional items, interest accruals, capital accruals and other
Increase/(decrease) in working capital (note 5.3)
At 31 March 2021
630,996
(21,068)
18,209
–
57,813
1,647,117
(37,573)
30,640
(415)
49,603
(2,318,758)
46,940
(48,955)
1,682
(285,086)
685,950
1,689,372
(2,604,177)
(40,645)
(11,701)
(106)
1,267
(177,670)
(228,855)
3.9 Cash and Cash Equivalents
The majority of the Group’s cash and cash equivalents are held in current accounts and deposit accounts with maturities
of up to three months.
Cash at bank and in hand
Short-term deposits
2022
£’000
2021
£’000
904,036
490,236
594,119
1,192,437
1,394,272
1,786,556
Cash at bank earns interest at floating rates based on daily bank deposit rates. The short-term deposits, which include bank and money market
deposits, are for periods up to three months and earn interest at the respective short-term deposit rates. Cash and cash equivalents include the
following for the purposes of the Group Cash Flow Statement:
Cash and short-term deposits
Bank overdrafts
Bank overdrafts are included within current borrowings (note 3.11) in the Group Balance Sheet.
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2022
£’000
2021
£’000
1,394,272
(67,668)
1,786,556
(69,660)
1,326,604
1,716,896
Strategic Report
Governance
Financial Statements
Supplementary Info
3.10 Derivative Financial Instruments
Derivatives are financial instruments that derive their value from the price of underlying items such as interest rates,
foreign exchange rates, commodities or other indices. This note details the derivative financial instruments used by the
Group to hedge certain risk exposures arising from operational, financing and investment activities. These derivatives are
held at fair value.
Non-current assets
Cross currency interest rate swaps – fair value hedges
Cross currency interest rate swaps – cash flow hedges
Interest rate swaps – fair value hedges
Commodity forward contracts – cash flow hedges
Current assets
Cross currency interest rate swaps – fair value hedges
Interest rate swaps – fair value hedges
Currency swaps – not designated as hedges
Foreign exchange forward contracts – cash flow hedges
Foreign exchange forward contracts – not designated as hedges
Commodity forward contracts – cash flow hedges
Commodity forward contracts – not designated as hedges
Total assets
Non-current liabilities
Interest rate swaps – fair value hedges
Commodity forward contracts – cash flow hedges
Current liabilities
Currency swaps – not designated as hedges
Foreign exchange forward contracts – cash flow hedges
Foreign exchange forward contracts – not designated as hedges
Commodity forward contracts – cash flow hedges
Commodity forward contracts – not designated as hedges
Total liabilities
Net asset arising on derivative financial instruments
2022
£’000
2021
£’000
72,122
38,606
1,737
6,113
70,147
29,386
21,433
705
118,578
121,671
–
–
554
765
19
94,152
11,871
107,361
225,939
(8,398)
(1,932)
(10,330)
(558)
(1,094)
(49)
(6,101)
(20,832)
(28,634)
(38,964)
186,975
16,812
107
190
1,072
98
15,358
6,544
40,181
161,852
–
(652)
(652)
(100)
(847)
(55)
(375)
(8,466)
(9,843)
(10,495)
151,357
The full fair value of a hedging derivative is classified as a non-current asset or non-current liability if the remaining maturity of the hedged item is more
than 12 months and as a current asset or current liability if the maturity of the hedged item is less than 12 months.
DCC plc Annual Report and Accounts 2022
193
Financial Statements
Notes to the Financial Statements continued
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3.10 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 2022 total
£192.5 million and €260.0 million. At 31 March 2022, the fixed interest rates vary from 1.96% to 4.49% and the floating rates are based on sterling
SONIA and EURIBOR.
Cross currency interest rate swaps
The Group utilises cross currency interest rate swaps to swap fixed rate US dollar denominated debt of $554.0 million into floating rate sterling debt
of £128.662 million and floating rate euro debt of €263.839 million, which are based on sterling SONIA and EURIBOR respectively. At 31 March 2022
the fixed interest rates vary from 4.04% to 4.53%. These swaps are designated as fair value hedges under IAS 39.
The Group utilises cross currency interest rate swaps to swap fixed rate US dollar denominated debt of $317.0 million into fixed rate sterling debt of
£61.189 million and fixed rate euro debt of €163.045 million. At 31 March 2022 the fixed US dollar interest rates vary from 4.04% to 4.98% and the
average swapped fixed rates for sterling and euro were 4.47% and 3.74% respectively. These swaps are designated as cash flow hedges under IAS 39.
Currency swaps
During the year ended 31 March 2022, the Group entered into currency swaps to manage currency risk related to the funding of certain acquisitions.
The principal amounts of outstanding currency swaps at 31 March 2022 total £180.570 million (2021: £40.509 million).
Forward foreign exchange contracts
The notional principal amounts of outstanding forward foreign exchange contracts at 31 March 2022 total £142.703 million (2021: £113.600 million).
Gains and losses recognised in the cash flow hedge reserve in equity (note 4.2) at 31 March 2022 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 12 months after the reporting date.
Commodity price forward contracts
The notional principal amounts of outstanding forward commodity contracts at 31 March 2022 total £267.184 million (2021: £162.146 million). Gains
and losses recognised in the cash flow hedge reserve in equity (note 4.2) at 31 March 2022 on forward commodity contracts designated as cash flow
hedges under IAS 39 will be released to the Income Statement at various dates up to 60 months after the reporting date.
3.11 Borrowings and Lease Creditors
The Group utilises long-term debt funding together with committed credit lines with our relationship banks. We use
derivatives to manage risks associated with interest rates and foreign exchange.
Non-current
Unsecured Notes
Bank borrowings
Total borrowings
Lease creditors (note 3.12)
Total non-current borrowings and lease creditors
Current
Unsecured Notes
Bank borrowings
Total borrowings
Lease creditors (note 3.12)
Total current borrowings and lease creditors
Total borrowings and lease creditors
The maturity of non-current borrowings is as follows:
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
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DCC plc Annual Report and Accounts 2022
2022
£’000
2021
£’000
1,544,822
388,660
1,933,482
273,164
1,553,200
–
1,553,200
261,617
2,206,646
1,814,817
–
67,668
67,668
63,538
131,206
149,999
69,660
219,659
53,607
273,266
2,337,852
2,088,083
2022
£’000
2021
£’000
310,955
1,111,059
784,632
46,664
767,177
1,000,976
2,206,646
1,814,817
Strategic Report
Governance
Financial Statements
Supplementary Info
3.11 Borrowings and Lease Creditors continued
Bank borrowings
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 SONIA and US$ SOFR) and consequently fair value approximates carrying amounts.
The Group has a £800 million five-year committed revolving credit facility with ten relationship banks: Barclays, BNP Paribas, Danske Bank, HSBC,
ING, J.P. Morgan, National Westminster Bank, Bank of Ireland, Citibank and Toronto Dominion. The facility matures in March 2027 and £411 million
remained undrawn at 31 March 2022. The drawing at that date was at a floating rate of 1.45%. The Group had various other uncommitted bank
facilities available at 31 March 2022.
Unsecured Notes
The Group’s Unsecured Notes which fall due between 2023 and 2034 are comprised of fixed rate debt of US$446.0 million issued in 2013 and
maturing in 2023 and 2025 (the ‘2023/25 Notes’), fixed rate debt of US$425.0 million, €45.0 million and £65.0 million issued in 2014 and maturing
in 2024, 2026 and 2029 (the ‘2024/26/29 Notes’), fixed rate debt of £127.5 million and €215.0 million issued in September 2017 and maturing
in 2027 and 2029 (the ‘2027/29 Notes’), floating rate debt of €145.0 million issued in September 2017 and maturing in 2024, 2027 and 2029 (the
‘2024/27/29 Notes’) and fixed rate debt of US$350.0 million and €100.0 million issued in April 2019 and maturing in 2026, 2029, 2031 and 2034
(the ‘2026/29/31/34 Notes’).
Of the 2023/25 Notes denominated in US dollars, $176.0 million has been swapped (using cross currency interest rate swaps designated as fair value
hedges under IAS 39) from fixed US$ 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 SONIA, $85.0 million has been swapped (using cross currency interest rate swaps designated as cash flow hedges under IAS 39) from fixed
US$ 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.
Of the 2024/26/29 Notes denominated in US dollars, $178.0 million has been swapped (using cross currency interest rate swaps designated as fair
value hedges under IAS 39) from fixed US$ to floating euro rates, repricing quarterly based on EURIBOR, $60.0 million has been swapped (using cross
currency interest rate swaps designated as fair value hedges under IAS 39) from fixed US$ to floating sterling rates, repricing quarterly based on
sterling SONIA, $135.0 million has been swapped (using cross currency interest rate swaps designated as cash flow hedges under IAS 39) from fixed
US$ to fixed euro rates, $52.0 million has been swapped (using cross currency interest rate swaps designated as cash flow hedges under IAS 39)
from fixed US$ to fixed sterling rates. The 2024/26/29 Notes denominated in euro have been swapped (using interest rate swaps designated as fair
value hedges under IAS 39) from fixed euro to floating euro rates, repricing quarterly based on EURIBOR. The 2024/26/29 Notes denominated in
sterling have been swapped (using interest rate swaps designated as fair value hedges under IAS 39) from fixed sterling to floating sterling rates,
repricing quarterly based on sterling SONIA.
The 2027/29 Notes denominated in sterling have been swapped (using interest rate swaps designated as fair value hedges under IAS 39) to floating
sterling rates, repricing half yearly based on sterling SONIA. The 2027/29 Notes denominated in euro have been swapped (using interest rate swaps
designated as fair value hedges under IAS 39) to floating euro rates, repricing half yearly based on EURIBOR.
The 2024/27/29 Notes are at floating euro rates, repricing half yearly based on EURIBOR.
The 2026/29/31/34 Notes have not been swapped.
The maturity and interest profile of the Unsecured Notes is as follows:
Average maturity
Average fixed interest rates*:
– US$ denominated
– sterling denominated
– euro denominated
Average floating rate including swaps:
– sterling denominated
– euro denominated
*
Issued and repayable at par.
2022
2021
4.7 years
5.2 years
4.45%
3.34%
2.26%
2.34%
1.04%
4.48%
3.36%
2.33%
1.91%
1.01%
DCC plc Annual Report and Accounts 2022
195
Financial Statements
Notes to the Financial Statements continued
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3.12 Lease Creditors
Lease creditors represent the present value of the Group’s lease commitments. Lease creditors are initially measured
at the present value of the future minimum lease payments, discounted using the incremental borrowing rate over the
remaining lease term.
The movement in the Group’s lease creditors during the year ended 31 March 2022 is as follows:
At 1 April
Exchange differences
Additions of right-of-use assets (note 3.2)
Terminations
Arising on acquisition (note 5.2)
Lease repayments
Unwinding of discount applicable to lease creditors (note 2.7)
At 31 March
2022
£’000
315,224
934
55,933
(1,627)
31,818
(75,053)
9,473
336,702
2021
£’000
306,867
(6,145)
67,891
(3,254)
9,144
(68,986)
9,707
315,224
An analysis of the maturity profile of the discounted lease creditor arising from the Group’s leasing activities as at 31 March 2022 is as follows:
Within one year
Between one and two years
Between two and five years
Over five years
At 31 March
Analysed as:
Non-current liabilities
Current liabilities
2022
£’000
63,538
55,478
98,564
119,122
336,702
273,164
63,538
336,702
2021
£’000
53,607
46,664
97,973
116,980
315,224
261,617
53,607
315,224
The Group has availed of the exemption from capitalising lease costs for short-term leases and low-value assets where the relevant criteria are met.
Wholly variable lease payments directly linked to sales or usage are also expensed as incurred. The following lease costs have been charged to the
Income Statement as incurred:
Short-term leases
Leases of low-value assets
Wholly variable lease payments
Total
The total cash outflow for lease payments during the period was as follows:
Cash outflow for short-term leases, leases of low value assets and wholly variable lease payments
Lease payments relating to capitalised right-of-use leased assets
2022
£’000
6,365
562
59,033
65,960
2022
£’000
65,960
75,053
2021
£’000
6,520
462
54,226
61,208
2021
£’000
61,208
68,986
Total cash outflow for lease payments
141,013
130,194
Lease commitments for short-term leases at the Balance Sheet date are not materially different to the short-term lease costs expensed during
(cid:87)(cid:75)(cid:72)(cid:124)(cid:92)(cid:72)(cid:68)(cid:85)(cid:17)
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Governance
Financial Statements
Supplementary Info
3.12 Lease Creditors continued
The Group’s business model is that of a distributor and, therefore, maintaining flexibility in the Group’s cost base is of significant importance.
Substantially all of the Group’s variable lease payments arise from two types of contracts:
(i) transport costs (primarily for the transport of LPG) which vary depending on kilometres and hours of truck travel (i.e. deliveries outside of normal
working hours can incur a premium). Given that the variable costs arising on LPG transport contracts are linked to hours and distance travelled
by the trucks, these costs will vary in line with demand patterns.
(ii) third party petrol forecourts costs which vary based primarily on volume of fuel sold and margin achieved. These costs will vary in line with
demand patterns.
There are no other significant factors that can influence the variability of the Group’s variable lease payments other than those mentioned above.
The effect of excluding future cash outflows arising from termination options and leases not yet commenced from lease creditors was not material
for the Group. Income from subleasing and gains/losses on sales and leaseback transactions were not material for the Group.
3.13 Analysis of Net Debt
Net debt is a key metric of the Group and represents cash and cash equivalents less borrowings, derivative financial
instruments and lease creditors.
Reconciliation of opening to closing net debt
The reconciliation of opening to closing net debt for the year ended 31 March 2022 is as follows:
Cash and short-term deposits
Overdrafts
Bank loans and loan notes
Unsecured Notes
Derivative financial instruments (net)
Group net cash/(debt) (excl. lease creditors)
Lease creditors
At 1 April
2021
£’000
1,786,556
(69,660)
1,716,896
–
(1,703,199)
151,357
165,054
(315,224)
Cash/debt
movements
£’000
(396,266)
2,096
(394,170)
(372,426)
149,182
(36,999)
(654,413)
(20,544)
Group net debt (incl. lease creditors)
(150,170)
(674,957)
Fair value adjustment
Income
Statement
£’000
–
–
–
–
29,633
(28,441)
1,192
–
1,192
Cash Flow
Hedge
Reserve
£’000
–
–
–
–
–
101,198
101,198
–
101,198
Translation
adjustment
£’000
3,982
(104)
3,878
(16,234)
(20,438)
(140)
(32,934)
(934)
(33,868)
At 31 March
2022
£’000
1,394,272
(67,668)
1,326,604
(388,660)
(1,544,822)
186,975
(419,903)
(336,702)
(756,605)
The reconciliation of opening to closing net debt for the year ended 31 March 2021 is as follows:
Cash and short-term deposits
Overdrafts
Bank loans and loan notes
Unsecured Notes
Derivative financial instruments (net)
Group net cash/(debt) (excl. lease creditors)
Lease creditors
Group net debt (incl. lease creditors)
Fair value adjustment
At 1 April
2020
£’000
Cash/debt
movements
£’000
Income
Statement
£’000
1,794,467
(109,694)
1,684,773
(56,634)
(1,919,940)
231,549
(60,252)
(306,867)
(367,119)
41,298
38,321
79,619
53,697
63,915
(59,121)
138,110
(14,502)
123,608
–
–
–
–
67,436
(66,052)
1,384
–
1,384
Cash Flow
Hedge
Reserve
£’000
–
–
–
–
–
45,703
45,703
–
45,703
Translation
adjustment
£’000
(49,209)
1,713
(47,496)
2,937
85,390
(722)
40,109
6,145
46,254
At 31 March
2021
£’000
1,786,556
(69,660)
1,716,896
–
(1,703,199)
151,357
165,054
(315,224)
(150,170)
DCC plc Annual Report and Accounts 2022
197
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2
3
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Financial Statements
Notes to the Financial Statements continued
3.13 Analysis of Net Debt continued
Currency profile
The currency profile of net debt at 31 March 2022 and 31 March 2021 is as follows:
As at 31 March 2022
Euro
Sterling
US dollar
Danish krone
Swedish krona
Norwegian krone
Hong Kong dollar
Other
At 31 March 2022
As at 31 March 2021
Euro
Sterling
US dollar
Danish krone
Swedish krona
Norwegian krone
Hong Kong dollar
Other
At 31 March 2021
Cash and cash
equivalents
£’000
Borrowings and
lease creditors*
£’000
Derivatives
£’000
Total
£’000
364,412
594,877
131,206
162,805
71,293
38,004
15,574
16,101
(1,012,373)
(592,309)
(681,565)
(10,033)
(16,753)
(16,766)
(2,694)
(5,359)
1,394,272
(2,337,852)
556,366
855,356
126,285
111,220
62,665
43,447
18,669
12,548
(1,122,426)
(628,803)
(288,028)
(9,010)
(20,217)
(11,366)
(3,022)
(5,211)
114,766
77,238
5,339
(10,353)
–
(15)
–
–
186,975
97,643
53,618
2,428
(2,331)
–
(1)
–
–
1,786,556
(2,088,083)
151,357
(533,195)
79,806
(545,020)
142,419
54,540
21,223
12,880
10,742
(756,605)
(468,417)
280,171
(159,315)
99,879
42,448
32,080
15,647
7,337
(150,170)
* Euro, sterling and US dollar borrowings reflect the cross currency interest rate swaps referred to in note 3.10.
Interest rate profile
Cash and cash equivalents at 31 March 2022 and 31 March 2021 have maturity periods up to three months (note 3.9).
Bank borrowings are at floating interest rates for periods up to six months while the Group’s Unsecured Notes due 2023 to 2034 comprises debt
swapped to a combination of fixed rates and floating rates which reset on a quarterly and semi-annual basis, and debt which has not been swapped.
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Financial Statements
Supplementary Info
3.14 Deferred Income Tax
Deferred tax is an accounting adjustment to provide for tax that is expected to arise in the future as a result of differences
in the accounting and tax bases of assets and liabilities.
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 2022:
At 1 April 2021
Consolidated Income Statement
Recognised in Other Comprehensive Income
Arising on acquisition (note 5.2)
Exchange differences and other
At 31 March 2022
Analysed as:
Deferred tax asset
Deferred tax liability
Property,
plant and
equipment
£’000
Intangible
assets
£’000
Tax losses
and credits
£’000
Retirement
benefit
obligations
£’000
Derivative
financial
instruments
£’000
28,452
4,333
–
1,603
(16)
132,420
(15,185)
–
64,648
2,010
(902)
707
–
(10,740)
(452)
554
469
(207)
(285)
7
2,561
225
16,138
–
–
Short-term
temporary
differences
and other
£’000
(10,571)
(4,389)
(3)
(6,176)
101
Total
£’000
152,514
(13,840)
15,928
49,050
1,650
34,372
183,893
(11,387)
538
18,924
(21,038)
205,302
(5,630)
40,002
(71)
183,964
(11,387)
–
(2,238)
2,776
–
18,924
(35,168)
14,130
(54,494)
259,796
34,372
183,893
(11,387)
538
18,924
(21,038)
205,302
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 2021:
At 1 April 2020
Consolidated Income Statement
Recognised in Other Comprehensive Income
Arising on acquisition (note 5.2)
Exchange differences and other
At 31 March 2021
Analysed as:
Deferred tax asset
Deferred tax liability
Property,
plant and
equipment
£’000
26,358
2,650
–
4
(560)
140,375
(13,365)
–
10,981
(5,571)
28,452
132,420
(5,325)
33,777
(143)
132,563
28,452
132,420
Intangible
assets
£’000
Tax losses
and credits
£’000
Retirement
benefit
obligations
£’000
Derivative
financial
instruments
£’000
Short-term
temporary
differences
and other
£’000
(13,157)
2,830
–
(19)
(225)
Total
£’000
144,597
(8,318)
11,395
10,966
(6,126)
1,154
(588)
(159)
–
147
(9,214)
221
11,554
–
–
554
2,561
(10,571)
152,514
(1,904)
2,458
554
–
2,561
2,561
(22,432)
11,861
(30,706)
183,220
(10,571)
152,514
(919)
(66)
–
–
83
(902)
(902)
–
(902)
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 deferred tax asset at 31 March 2022 of £54.494 million is expected to be settled/
recovered more than 12 months after the reporting 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.
DCC plc Annual Report and Accounts 2022
199
Financial Statements
Notes to the Financial Statements continued
1
2
3
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5
6
3.15 Post-Employment Benefit Obligations
The Group operates a number of defined benefit and defined contribution pension schemes for our employees. All of
the Group’s defined benefit pension schemes are closed to new members.
(cid:55)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:73)(cid:76)(cid:81)(cid:72)(cid:71)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:70)(cid:75)(cid:72)(cid:80)(cid:72)(cid:86)(cid:17)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:83)(cid:72)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:86)(cid:70)(cid:75)(cid:72)(cid:80)(cid:72)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:86)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:75)(cid:72)(cid:79)(cid:71)(cid:3)(cid:76)(cid:81)(cid:3)(cid:86)(cid:72)(cid:83)(cid:68)(cid:85)(cid:68)(cid:87)(cid:72)(cid:3)(cid:87)(cid:85)(cid:88)(cid:86)(cid:87)(cid:72)(cid:72)(cid:3)(cid:68)(cid:71)(cid:80)(cid:76)(cid:81)(cid:76)(cid:86)(cid:87)(cid:72)(cid:85)(cid:72)(cid:71)(cid:124)(cid:73)(cid:88)(cid:81)(cid:71)(cid:86)(cid:17)
The Group operates five defined benefit pension schemes in the Republic of Ireland (‘ROI’), four in the UK and four in Germany. The projected unit
credit method has been employed in determining the present value of the defined benefit obligation arising, the related current service cost and,
where applicable, past service cost.
Full actuarial valuations were carried out between 31 August 2018 and 1 April 2021. 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 2022 for IAS 19 by a qualified actuary.
The schemes expose the Group to a number of risks, the most significant of which are as follows:
Discount rates
The calculation of the present value of the defined benefit obligation is sensitive to changes in the discount rate. The discount rate is based on
the interest yield at the reporting date on high-quality corporate bonds of a currency and term consistent with the currency and term of the
post-employment benefit obligation. Changes in the discount rate can lead to volatility in the Group’s Balance Sheet, Income Statement and
Statement of Comprehensive Income.
Asset volatility
The scheme assets are reported at fair value using bid prices where relevant. The majority of the Group’s scheme assets comprise of bonds. A decrease
in corporate bond yields will increase the value of the Group’s bond holdings although this will be partially offset by an increase in the value of the
scheme’s liabilities. The Group also holds a significant proportion of equities which are expected to outperform corporate bonds in the long term
while providing some volatility and risk in the short term. External consultants periodically conduct investment reviews to determine the most
appropriate asset allocation, taking account of asset valuations, funding requirements, liability duration and the achievement of appropriate returns.
Inflation risk
The majority of the Group’s defined benefit obligations are linked to inflation and higher inflation will lead to higher scheme liabilities although caps
are in place to protect the schemes against extreme inflation.
Mortality risk
The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of plan participants. An increase in
the life expectancy of the plan participants will increase the defined benefit obligation.
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
German schemes
Rate of increase in salaries
Rate of increase in pensions in payment
Discount rate
Inflation assumption
* There is no future service accrual for the Irish schemes.
200
DCC plc Annual Report and Accounts 2022
2022
2021
n/a*
1.25% – 2.60%
2.10%
2.60%
n/a*
1.25% – 2.50%
1.50%
1.50%
0.00% – 3.60%
1.80% – 4.00%
2.75%
3.60%
0.00% – 3.25%
1.63% – 4.00%
2.20%
3.25%
3.60%
2.60%
2.10%
2.60%
2.50%
1.50%
1.50%
1.50%
Strategic Report
Governance
Financial Statements
Supplementary Info
3.15 Post-Employment Benefit Obligations continued
The post-retirement mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 are set based on
advice from published statistics and experience in the relevant geographic regions and are in accordance with the underlying funding valuations.
The mortality assumptions disclosed for ‘current retirees’ relate to assumptions based on longevity, in years, following retirement at the balance
sheet date, with ‘future retirees’ being that relating to an employee retiring in 25 years’ time. The mortality assumptions are as follows:
Current retirees
Male
Female
Future retirees
Male
Female
The Group does not operate any post-employment medical benefit schemes.
The net pension asset recognised in the Balance Sheet is analysed as follows:
Equities
Bonds
Property
Investment funds
Cash
Total fair value at 31 March 2022
Present value of scheme liabilities
Net pension asset/(liability) at 31 March 2022
Equities
Bonds
Property
Investment funds
Cash
Total fair value at 31 March 2021
Present value of scheme liabilities
Net pension asset/(liability) at 31 March 2021
ROI
£’000
11,494
37,835
31
2,734
4,771
56,865
(44,147)
12,718
ROI
£’000
13,046
38,325
32
3,168
4,967
59,538
(45,383)
14,155
2022
Years
23.3
25.3
25.6
27.6
2022
UK
£’000
Germany
£’000
1,546
15,233
–
12,323
720
29,822
(24,406)
5,416
2021
UK
£’000
3,001
13,849
–
12,323
626
29,799
(25,516)
4,283
–
–
–
–
876
876
(11,265)
(10,389)
Germany
£’000
–
–
–
–
863
863
(11,277)
(10,414)
2022
£’000
(263)
(55)
(318)
(1,391)
1,552
161
2021
Years
23.3
25.4
25.7
27.7
Total
£’000
13,040
53,068
31
15,057
6,367
87,563
(79,818)
7,745
Total
£’000
16,047
52,174
32
15,491
6,456
90,200
(82,176)
8,024
2021
£’000
(272)
(114)
(386)
(1,562)
1,725
163
The amounts recognised in the Group Income Statement in respect of defined benefit pension schemes are as follows:
Current service cost
Administration expenses
Total, included in employee benefit expense (note 2.4)
Interest cost on scheme liabilities
Interest income on scheme assets
Net interest income, included in net finance costs (note 2.7)
Based on the assumptions employed for the valuation of assets and liabilities at 31 March 2022, the net charge in the Group Income Statement in the
year ending 31 March 2023 is expected to be broadly in line with the current year figures.
DCC plc Annual Report and Accounts 2022
201
Financial Statements
Notes to the Financial Statements continued
1
2
3
n
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5
6
3.15 Post-Employment Benefit Obligations continued
Remeasurements recognised in Other Comprehensive Income are as follows:
Return on scheme assets excluding interest income
Experience variations
Actuarial gain from changes in demographic assumptions
Actuarial gain/(loss) from changes in financial assumptions
Total, included in Other Comprehensive Income
2022
£’000
(1,753)
(900)
441
1,464
(748)
Cumulatively since transition to IFRS on 1 April 2004, £48.861 million has been recognised as a charge in the Group Statement of
(cid:38)(cid:82)(cid:80)(cid:83)(cid:85)(cid:72)(cid:75)(cid:72)(cid:81)(cid:86)(cid:76)(cid:89)(cid:72)(cid:124)(cid:44)(cid:81)(cid:70)(cid:82)(cid:80)(cid:72)(cid:17)
The movement in the fair value of plan assets is as follows:
At 1 April
Interest income on scheme assets
Remeasurements:
– return on scheme assets excluding interest income
Contributions by employers
Contributions by members
Administration expenses
Benefit and settlement payments
Exchange
At 31 March
The actual return on plan assets was a loss of £0.201 million (2021: gain of £10.728 million).
The movement in the present value of defined benefit obligations is as follows:
At 1 April
Current service cost
Interest cost
Remeasurements:
– experience variations
– actuarial gain from changes in demographic assumptions
– actuarial (gain)/loss from changes in financial assumptions
Contributions by members
Benefit and settlement payments
Exchange
At 31 March
2021
£’000
9,003
(680)
126
(8,195)
254
2021
£’000
88,351
1,725
9,003
836
41
(114)
(7,183)
(2,459)
2022
£’000
90,200
1,552
(1,753)
643
40
(55)
(2,649)
(415)
87,563
90,200
2022
£’000
82,176
263
1,391
900
(441)
(1,464)
40
(2,649)
(398)
2021
£’000
81,036
272
1,562
680
(126)
8,195
41
(7,183)
(2,301)
79,818
82,176
The weighted average duration of the defined benefit obligation at 31 March 2022 was 17.7 years (2021: 18.7 years).
Employer contributions for the forthcoming financial year are estimated at £0.5 million. The level of actual employer contributions paid in the current
year of £0.6 million was in line with the expectation of £0.6 million included in the 2021 Annual Report.
202
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
3.15 Post-Employment Benefit Obligations continued
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, UK and German 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
Impact on German 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 4.3%
Increase/decrease by 2.1%
Increase/decrease by 3.7%
Decrease/increase by 4.8%
Increase/decrease by 4.2%
Increase/decrease by 3.8%
Decrease/increase by 4.5%
Increase/decrease by 3.0%
Increase/decrease by 3.9%
Split of scheme assets
Investments quoted in active markets:
Equity instruments:
– developed markets
– emerging markets
Debt instruments:
– non government debt instruments
– government debt instruments
Investment funds
Cash and cash equivalents
Unquoted investments:
Property
Republic of Ireland
2022
£’000
2021
£’000
UK
2022
£’000
Germany
2021
£’000
2022
£’000
2021
£’000
Total
2022
£’000
2021
£’000
11,266
228
3,646
34,189
2,734
4,771
12,234
812
2,477
35,848
3,168
4,967
1,546
–
4,387
10,846
12,323
720
3,001
–
12,643
1,206
12,323
626
31
32
–
–
56,865
59,538
29,822
29,799
–
–
–
–
–
876
–
876
–
–
–
–
–
863
12,812
228
8,033
45,035
15,057
6,367
15,235
812
15,120
37,054
15,491
6,456
–
31
32
863
87,563
90,200
DCC plc Annual Report and Accounts 2022
203
1
2
3
n
o
i
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4
5
6
Financial Statements
Notes to the Financial Statements continued
3.16 Acquisition Related Liabilities
Acquisition related liabilities arising on business combinations comprise debt like items and contingent consideration.
Contingent consideration arises when a portion of the purchase price is deferred into the future and represents the fair
value of the estimate of amounts payable to acquire the remaining shareholding.
The Group’s acquisition related liabilities of £96.252 million (2021: £84.402 million) as stated on the Balance Sheet are payable as follows:
Within one year
Between one and two years
Between two and five years
Analysed as:
Non-current liabilities
Current liabilities
The currency profile of the Group’s acquisition related liabilities, which are stated at fair value, is as follows:
Euro
US dollar
Hong Kong dollar
Sterling
Other
The movement in the Group’s acquisition related liabilities is as follows:
At 1 April
Arising on acquisition (note 5.2)
Unwinding of discount applicable to acquisition related liabilities (note 2.7)
Adjustments to contingent consideration (adjustment to goodwill) (note 3.3)
Adjustments to contingent consideration (recognised in the Income Statement) (note 2.6)
Paid during the year
Exchange and other
At 31 March
2022
£’000
23,602
25,368
47,282
96,252
72,650
23,602
96,252
2022
£’000
49,037
33,351
6,345
7,048
471
96,252
2022
£’000
84,402
47,381
969
(362)
19,864
(52,006)
(3,996)
96,252
2021
£’000
21,853
27,496
35,053
84,402
62,549
21,853
84,402
2021
£’000
38,098
35,236
6,391
4,626
51
84,402
2021
£’000
113,634
9,321
1,011
2,648
(27)
(36,330)
(5,855)
84,402
204
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
3.17 Provisions for Liabilities
A provision is recorded when an obligation exists, resulting from a past event and it is probable that cash will be paid
to settle it but there is uncertainty over either the amount or timing of the outflow. The main provisions held by the
(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:124)(cid:68)(cid:85)(cid:72)(cid:3)(cid:76)(cid:81)(cid:3)(cid:85)(cid:72)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:82)(cid:85)(cid:74)(cid:68)(cid:81)(cid:76)(cid:86)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:80)(cid:72)(cid:86)(cid:15)(cid:3)(cid:72)(cid:81)(cid:89)(cid:76)(cid:85)(cid:82)(cid:81)(cid:80)(cid:72)(cid:81)(cid:87)(cid:68)(cid:79)(cid:3)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:15)(cid:3)(cid:70)(cid:92)(cid:79)(cid:76)(cid:81)(cid:71)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:87)(cid:68)(cid:81)(cid:78)(cid:3)(cid:71)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)
(cid:76)(cid:81)(cid:86)(cid:88)(cid:85)(cid:68)(cid:81)(cid:70)(cid:72)(cid:124)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:17)
The reconciliation of the movement in provisions for liabilities for the year ended 31 March 2022 is as follows:
Rationalisation,
restructuring
and redundancy
£’000
Environmental
and remediation
£’000
Cylinder and
tank deposits
£’000
At 1 April 2021
Provided during the year
(cid:56)(cid:81)(cid:90)(cid:76)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:11)(cid:81)(cid:82)(cid:87)(cid:72)(cid:124)(cid:21)(cid:17)(cid:26)(cid:12)
Utilised during the year
Unutilised/reversed during the year
Arising on acquisition (note 5.2)
Exchange and other
At 31 March 2022
Analysed as:
Non-current liabilities
Current liabilities
31,328
11,433
–
(15,593)
(1,087)
1,053
(427)
26,707
14,265
12,442
26,707
The reconciliation of the movement in provisions for liabilities for the year ended 31 March 2021 is as follows:
Rationalisation,
restructuring and
redundancy
£’000
Environmental
and remediation
£’000
Cylinder and
tank deposits
£’000
At 1 April 2020
Provided during the year
(cid:56)(cid:81)(cid:90)(cid:76)(cid:81)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:73)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:70)(cid:68)(cid:69)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:83)(cid:85)(cid:82)(cid:89)(cid:76)(cid:86)(cid:76)(cid:82)(cid:81)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:76)(cid:68)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:11)(cid:81)(cid:82)(cid:87)(cid:72)(cid:124)(cid:21)(cid:17)(cid:26)(cid:12)
Utilised during the year
Unutilised/reversed during the year
Arising on acquisition (note 5.2)
Exchange and other
At 31 March 2021
Analysed as:
Non-current liabilities
Current liabilities
33,830
19,257
–
(20,980)
(504)
467
(742)
31,328
15,195
16,133
31,328
88,676
8,148
367
(3,912)
(66)
–
(544)
158,947
10,767
1,306
(1,774)
(5,260)
5,336
(880)
Insurance
and other
£’000
43,400
12,590
3
(8,870)
(1,351)
1,038
(158)
Total
£’000
322,351
42,938
1,676
(30,149)
(7,764)
7,427
(2,009)
92,669
168,442
46,652
334,470
84,584
8,085
92,669
158,697
9,745
168,442
26,645
20,007
46,652
284,191
50,279
334,470
84,119
8,617
291
(862)
(1,141)
–
(2,348)
167,155
11,631
1,339
(7,526)
(6,858)
–
(6,794)
Insurance
and other
£’000
25,685
8,928
–
(1,976)
(830)
261
11,332
Total
£’000
310,789
48,433
1,630
(31,344)
(9,333)
728
1,448
88,676
158,947
43,400
322,351
79,319
9,357
88,676
149,819
9,128
158,947
35,159
8,241
43,400
279,492
42,859
322,351
DCC plc Annual Report and Accounts 2022
205
Financial Statements
Notes to the Financial Statements continued
1
2
3
n
o
i
t
c
e
S
4
5
6
3.17 Provisions for Liabilities continued
Rationalisation, restructuring and redundancy
This provision relates to various rationalisation and restructuring programmes across the Group. The Group expects that the majority of this
provision will be utilised within three years.
Environmental and remediation
This provision relates to obligations governing site remediation and improvement costs to be incurred in compliance with environmental regulations
together with the costs associated with removing LPG tanks from customer sites. 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. 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 but the exact timing of settlement of these provisions is not certain.
Cylinder and tank deposits
This provision relates to DCC LPG’s operations where an obligation arises from the receipt of deposit fees paid by customers for LPG cylinders and
tanks. On receipt of a deposit the Group recognises a liability equal to the deposit received. This deposit will subsequently be refunded at an amount
equal to the original deposit on return of the cylinder or tank together with the original deposit receipt. Cylinder and tank deposits acquired through
business combinations are measured initially at their fair value at the acquisition date (i.e. net present value) and the unwinding of the discount
element is reflected in the Income Statement. The majority of this obligation will unwind over a 25-year timeframe but the exact timing of settlement
of this provision is not certain.
Insurance and other
The Group operates a level of self-insurance for motor liability and public and products liability. Under these arrangements the Group retains certain
insurance exposure up to pre-determined self-insurance thresholds. This provision reflects an estimation of claims that are classified as incurred but
not reported and also the outstanding loss reserve. A significant element of the provision is subject to external assessments. The utilisation of the
provision is dependent on the timing of settlement of the outstanding claims. Historically, the average time for settlement of outstanding claims
ranges from one to three years from the date of the claim.
3.18 Government Grants
Government grants relate to capital grants received by the Group and are amortised to the Income Statement over the
estimated useful lives of the related capital assets.
2022
£’000
393
–
(20)
(1)
372
356
16
372
2021
£’000
342
89
(36)
(2)
393
373
20
393
At 1 April
Government grants received in year
Amortisation in year
Exchange
At 31 March
Analysed as:
Non-current liabilities
Current liabilities (note 3.7)
206
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Section 4 Equity
4.1 Share Capital and Share Premium
The ordinary shareholders of DCC plc own the Company. This note details how the total number of ordinary shares
in issue has changed during the year and how many of these ordinary shares are held as treasury shares.
Authorised
152,368,568 ordinary shares of €0.25 each
Issued
Year ended 31 March 2022
Number of
shares
At 31 March 2021 (including 2,768,690 ordinary shares held as treasury shares)
Premium arising on re-issue of treasury shares
101,333,904
–
At 31 March 2022 (including 2,688,004 ordinary shares held as treasury shares)
101,333,904
Year ended 31 March 2021
Number of
shares
At 31 March 2020 (including 2,932,474 ordinary shares held as treasury shares)
Premium arising on re-issue of treasury shares
101,333,904
–
At 31 March 2021 (including 2,768,690 ordinary shares held as treasury shares)
101,333,904
2022
£’000
2021
£’000
25,365
25,365
Share
capital
£’000
17,422
–
17,422
Share
capital
£’000
17,422
–
17,422
Share
premium
£’000
882,924
397
883,321
Share
premium
£’000
882,887
37
882,924
Total
£’000
900,346
397
900,743
Total
£’000
900,309
37
900,346
As at 31 March 2022, the total authorised number of ordinary shares is 152,368,568 shares (2021: 152,368,568 shares) with a par value of €0.25 per
share (2021: €0.25 per share). Share premium relates to the share premium arising on the issue of shares.
During the year the Company re-issued 80,686 treasury shares for a consideration of £0.397 million.
All shares, with the exception of ordinary shares held as treasury 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 2.5 to the financial statements and in the Remuneration Report on pages 134 to 148.
Restriction on transfer of shares
The Directors may, at their absolute discretion and without giving any reason, refuse to register the transfer of a share, or any renunciation of any
allotment made in respect of a share, which is not fully paid, or any transfer of a share to a minor or a person of unsound mind.
The Directors may also refuse to register any transfer (whether or not it is in respect of a fully paid share) unless (i) it is lodged at the Company’s
Registered Office or at such other place as the Directors may appoint and is accompanied by the certificate (if any) for the shares to which it relates
and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer (ii) it is in respect of only
one class of shares and (iii) it is in favour of not more than four transferees.
Restriction of voting rights
If at any time the Directors determine that a ‘Specified Event’ as defined in the Articles of Association of DCC plc has occurred in relation to any share
or shares, the Directors may serve a notice to such effect on the holder or holders thereof. Upon the expiry of 14 days from the service of any such
notice, for so long as such notice shall remain in force, no holder or holders of the share or shares specified in such notice shall be entitled to attend,
speak or vote either personally, by representative or by proxy at any general meeting of the Company or at any separate general meeting of the
holders of the class of shares concerned or to exercise any other right conferred by membership in relation to any such meeting. The Directors shall,
where the specified shares represent not less than 0.25% of the class of shares concerned, be entitled to withhold payment of any dividend or
other amount payable (including shares issuable in lieu of dividends) in respect of the shares specified in such notice and/or, in certain circumstances,
to refuse to register any transfer of the specified shares or any renunciation of any allotment of new shares or debentures made in respect thereof
unless such transfer or renunciation is shown to the satisfaction of the Directors to be an arm’s length transfer or a renunciation to another beneficial
owner unconnected with the holder or any person appearing to have an interest in the specified shares.
DCC plc Annual Report and Accounts 2022
207
Financial Statements
Notes to the Financial Statements continued
1
2
3
4
n
o
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e
S
5
6
4.2 Other Reserves
This note details the movement in the Group’s other reserves which are treated as different categories of equity
(cid:68)(cid:86)(cid:3)(cid:85)(cid:72)(cid:84)(cid:88)(cid:76)(cid:85)(cid:72)(cid:71)(cid:3)(cid:69)(cid:92)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:76)(cid:81)(cid:74)(cid:124)(cid:86)(cid:87)(cid:68)(cid:81)(cid:71)(cid:68)(cid:85)(cid:71)(cid:86)(cid:17)(cid:3)
At 31 March 2020
Currency translation
Cash flow hedges:
– fair value loss in year – private placement debt
– fair value gain in year – other
– tax on fair value net gains
– transfers to sales
– transfers to cost of sales
– transfers to operating expenses
– tax on transfers
Share based payment
At 31 March 2021
Currency translation
Cash flow hedges:
– fair value gain in year – private placement debt
– fair value gain in year – other
– tax on fair value net gains
– transfers to sales
– transfers to cost of sales
– transfers to operating expenses
– tax on transfers
Share based payment
Share based
payment
reserve1
£’000
34,914
–
–
–
–
–
–
–
–
6,055
40,969
–
–
–
–
–
–
–
–
6,467
Cash flow
hedge
reserve2
£’000
(43,277)
–
(28,193)
75,128
(7,980)
32
1,185
19,809
(3,574)
–
13,130
–
9,402
247,305
(46,365)
374
(155,913)
(12,392)
30,227
–
Foreign
currency
translation
reserve3
£’000
111,527
(51,267)
Other
reserves4
£’000
932
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
60,260
27,012
932
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total
£’000
104,096
(51,267)
(28,193)
75,128
(7,980)
32
1,185
19,809
(3,574)
6,055
115,291
27,012
9,402
247,305
(46,365)
374
(155,913)
(12,392)
30,227
6,467
At 31 March 2022
47,436
85,768
87,272
932
221,408
1. The share based payment 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
(cid:92)(cid:72)(cid:87)(cid:124)(cid:82)(cid:70)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:17)
3. The Group’s 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-sterling
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 reporting date.
4. The Group’s other reserves principally comprises a capital conversion reserve fund.
208
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Strategic Report
Governance
Financial Statements
Supplementary Info
4.3 Retained Earnings
Retained Earnings represents the accumulated earnings of the Group not distributed to shareholders and is shown net
of the cost to the Group of acquiring shares held as treasury shares.
At 1 April
Net income recognised in Income Statement
Net income recognised in Other Comprehensive Income:
– remeasurements of defined benefit pension obligations
– deferred tax on remeasurements
Dividends
At 31 March
2022
£’000
2021
£’000
1,631,797
312,373
1,482,288
292,619
(748)
210
(160,599)
254
159
(143,523)
1,783,033
1,631,797
The cost to the Group and the Company of €39.702 million to acquire the 2,688,004 shares held in Treasury has been deducted from the Group and
Company Retained Earnings. These shares were acquired at prices ranging from €12.80 to €17.90 each (average: €14.77) between 17 May 2004 and
19 June 2006 and are primarily held to satisfy exercises under the Group’s share options and awards schemes.
4.4 Non-Controlling Interests
Non-controlling interests principally comprises the 40% equity interest in our Danish subsidiary DCC Holding A/S which
is not owned by the Group.
At 1 April
Share of profit for the financial year
Dividends to non-controlling interests
Non-controlling interest arising on acquisition (note 5.2)
Exchange
At 31 March
2022
£’000
58,210
13,629
(6,909)
912
(463)
65,379
2021
£’000
54,765
10,184
(4,802)
323
(2,260)
58,210
DCC plc Annual Report and Accounts 2022
209
Financial Statements
Notes to the Financial Statements continued
1
2
3
4
5
n
o
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6
Section 5 Additional Disclosures
5.1 Foreign Currency
This note details the exchange rates used to translate non-sterling Income Statement and Balance Sheet amounts into
sterling, which is the Group’s presentation currency.
The Group’s financial statements are presented in sterling, denoted by the symbol ‘£’. Results and cash flows of operations based in non-sterling
countries have been translated into sterling at average rates for the year, and the related balance sheets have been translated at the rates of
exchange ruling at the balance sheet date. The principal exchange rates used for translation of results and balance sheets into sterling were
(cid:68)(cid:86)(cid:124)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:86)(cid:29)
Euro
Danish krone
Swedish krona
Norwegian krone
US dollar
Hong Kong dollar
2022
Stg£1=
1.1750
8.7400
12.0190
11.8654
1.3694
10.6580
Average rate
2021
Stg£1=
1.1182
8.3295
11.6205
12.0742
1.3036
10.1056
2022
Stg£1=
1.1820
8.7918
12.2187
11.4787
1.3122
10.2740
Closing rate
2021
Stg£1=
1.1736
8.7282
12.0154
11.7304
1.3760
10.6975
5.2 Business Combinations
The Group acquired a number of businesses during the year. This note provides details on the consideration paid and/or
payable as well as the provisional fair values of the net assets acquired.
A key strategy of the Group is to create and sustain market leadership positions through 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 by DCC Healthcare in June 2021 of 100% of Wörner Medizinprodukte Holding GmbH (‘Wörner’), a leading supplier of medical
and laboratory products to the primary care sector in Germany and Switzerland. Wörner sells a broad product range to approximately 20,000
customers annually, including general practitioners, primary care centres, specialist medical centres and laboratories;
• The acquisition by DCC LPG of 100% of Primagaz from SHV Energy in July 2021. The business focuses on the bulk and cylinder LPG markets,
and serves approximately 10,000 customers annually;
• The acquisition by DCC Retail & Oil in September 2021 of a network of 19 retail forecourt sites in Luxembourg. Most of the sites are Gulf branded
with established convenience retail operations under the Cactus Shoppi brand which DCC will operate. The network contains well-located, urban
sites, suitable for investment in EV fast charging infrastructure in the future;
• The acquisition of 100% of Naturgy’s Irish power and gas marketing operations by DCC LPG in December 2021. The business is a service-led
supplier of electricity and gas to large B2B energy customers and also provides a range of services including demand side management, lighting
as a service, solar PV and PPA management. The acquisition enhances DCC’s presence in the Irish electricity and gas markets and represents
an important step in its strategy to expand its energy solutions offering across the island of Ireland; and
• The acquisition by DCC Technology of 100% of Almo Corporation (‘Almo’) in December 2021. Almo is one of the largest specialist Pro AV
(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:124)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:81)(cid:76)(cid:87)(cid:72)(cid:71)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:86)(cid:124)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:86)(cid:3)(cid:68)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:81)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:68)(cid:79)(cid:3)(cid:71)(cid:76)(cid:86)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:82)(cid:85)(cid:3)(cid:82)(cid:73)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:68)(cid:83)(cid:83)(cid:79)(cid:76)(cid:68)(cid:81)(cid:70)(cid:72)(cid:86)(cid:15)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:88)(cid:80)(cid:72)(cid:85)(cid:3)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:85)(cid:82)(cid:81)(cid:76)(cid:70)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:79)(cid:76)(cid:73)(cid:72)(cid:86)(cid:87)(cid:92)(cid:79)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:86)(cid:72)(cid:79)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)
to integrators, resellers, dealers, retailers and e-tailers nationwide. The transaction represents DCC’s largest acquisition to date and is a major
(cid:86)(cid:87)(cid:72)(cid:83)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:76)(cid:81)(cid:88)(cid:76)(cid:81)(cid:74)(cid:3)(cid:72)(cid:91)(cid:83)(cid:68)(cid:81)(cid:86)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:82)(cid:87)(cid:75)(cid:3)(cid:39)(cid:38)(cid:38)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:39)(cid:38)(cid:38)(cid:3)(cid:55)(cid:72)(cid:70)(cid:75)(cid:81)(cid:82)(cid:79)(cid:82)(cid:74)(cid:92)(cid:3)(cid:76)(cid:81)(cid:124)(cid:49)(cid:82)(cid:85)(cid:87)(cid:75)(cid:3)(cid:36)(cid:80)(cid:72)(cid:85)(cid:76)(cid:70)(cid:68)(cid:17)
210
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.2 Business Combinations continued
The acquisition data presented below reflects the fair value of the identifiable net assets acquired (excluding net cash/debt acquired) in respect of
acquisitions completed during the year.
Assets
Non-current assets
Property, plant and equipment (note 3.1)
Right-of-use leased assets (note 3.2)
Intangible assets (note 3.3)
Deferred income tax assets
Total non-current assets
Current assets
Inventories (note 3.8)
Trade and other receivables (note 3.8)
Total current assets
Liabilities
Non-current liabilities
Deferred income tax liabilities
Provisions for liabilities
Lease creditors
Total non-current liabilities
Current liabilities
Trade and other payables (note 3.8)
Provisions for liabilities
Current income tax assets/(liabilities)
Lease creditors
Total current liabilities
Identifiable net assets acquired
Non-controlling interest arising on acquisition (note 4.4)
Goodwill (note 3.3)
Total consideration
Satisfied by:
Cash
Net debt/(cash and cash equivalents) acquired
Net cash outflow
Acquisition related liabilities (note 3.16)
Total consideration
Almo
2022
£’000
Others
2022
£’000
Total
2022
£’000
Total
2021
£’000
28,052
7,113
149,701
15,254
200,120
229,556
113,009
342,565
35,121
24,947
107,589
390
168,047
24,966
87,434
112,400
63,173
32,060
257,290
15,644
368,167
254,522
200,443
454,965
(40,419)
–
(3,670)
(44,089)
(24,275)
(7,336)
(20,585)
(52,196)
(64,694)
(7,336)
(24,255)
(96,285)
(104,677)
–
5,138
(3,443)
(124,659)
(91)
(2,599)
(4,120)
(229,336)
(91)
2,539
(7,563)
(102,982)
(131,469)
(234,451)
395,614
–
103,648
499,262
465,657
16,519
482,176
17,086
499,262
96,782
(912)
120,372
216,242
215,799
(29,852)
185,947
30,295
216,242
492,396
(912)
224,020
715,504
681,456
(13,333)
668,123
47,381
715,504
41,868
9,144
124,014
15
175,041
18,209
30,640
48,849
(10,981)
(659)
(7,350)
(18,990)
(48,955)
(69)
(880)
(1,794)
(51,698)
153,202
(323)
92,674
245,553
248,694
(12,462)
236,232
9,321
245,553
DCC plc Annual Report and Accounts 2022
211
1
2
3
4
5
n
o
i
t
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e
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6
Financial Statements
Notes to the Financial Statements continued
5.2 Business Combinations continued
The acquisition of Almo has been deemed to be a substantial transaction and separate disclosure of the fair values of the identifiable assets and
liabilities has therefore been made. None of the remaining business combinations completed during the period were considered sufficiently material
to warrant separate disclosure of the fair values attributable to those combinations. The carrying amounts of the assets and liabilities acquired,
determined in accordance with IFRS, before completion of the combination together with the adjustments made to those carrying values disclosed
above were as follows:
Almo
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Goodwill arising on acquisition
Total consideration
Others
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Non-controlling interest arising on acquisition
Goodwill arising on acquisition
Total consideration
Total
Non-current assets (excluding goodwill)
Current assets
Non-current liabilities
Current liabilities
Identifiable net assets acquired
Non-controlling interest arising on acquisition
Goodwill arising on acquisition
Total consideration
Book
value
£’000
Fair value
adjustments
£’000
50,419
348,696
(3,670)
(101,595)
293,850
205,412
499,262
149,701
(6,131)
(40,419)
(1,387)
101,764
(101,764)
–
Book
value
£’000
Fair value
adjustments
£’000
64,355
117,686
(27,967)
(128,294)
25,780
(912)
191,374
216,242
103,692
(5,286)
(24,229)
(3,175)
71,002
–
(71,002)
–
Book
value
£’000
Fair value
adjustments
£’000
114,774
466,382
(31,637)
(229,889)
319,630
(912)
396,786
715,504
253,393
(11,417)
(64,648)
(4,562)
172,766
–
(172,766)
–
Fair
value
£’000
200,120
342,565
(44,089)
(102,982)
395,614
103,648
499,262
Fair
value
£’000
168,047
112,400
(52,196)
(131,469)
96,782
(912)
120,372
216,242
Fair
value
£’000
368,167
454,965
(96,285)
(234,451)
492,396
(912)
224,020
715,504
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 fair values within the 12 month timeframe from
the date of acquisition will be disclosable in the 2023 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.
£8.3 million of the goodwill recognised in respect of acquisitions completed during the financial year is expected to be deductible for tax purposes.
Acquisition and related costs included in other operating expenses in the Group Income Statement amounted to £9.934 million (note 2.6).
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 £206.523 million. The fair value
of these receivables is £200.443 million (all of which is expected to be recoverable) and is inclusive of an aggregate allowance for impairment
(cid:82)(cid:73)(cid:3)(cid:127)(cid:25)(cid:17)(cid:19)(cid:27)(cid:19)(cid:124)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:17)(cid:3)
212
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.2 Business Combinations continued
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 £71.0 million.
The post-acquisition impact of business combinations completed during the year on the Group’s revenue and profit for the financial year was
(cid:68)(cid:86)(cid:124)(cid:73)(cid:82)(cid:79)(cid:79)(cid:82)(cid:90)(cid:86)(cid:29)
Revenue
Profit for the financial year attributable to Owners of the Parent Company
2022
£’000
851,115
29,596
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
Profit for the financial year attributable to Owners of the Parent Company
2022
£’000
18,779,745
345,547
5.3 Cash Generated from Operations
This note reconciles how the Group’s profit for the year translates into cash flows generated from operating activities.
Profit for the financial year
Add back non-operating expenses/(income):
– tax
– share of equity accounted investments’ profit
– net operating exceptionals
– net finance costs
Operating profit before exceptionals
– share-based payments expense (note 2.5)
– depreciation (including right-of-use leased assets)
– amortisation of intangible assets (note 3.3)
– profit on disposal of property, plant and equipment
– amortisation of government grants (note 3.18)
– other
Changes in working capital (excluding the effects of acquisition and exchange differences on consolidation):
– inventories (note 3.8)
– trade and other receivables (note 3.8)
– trade and other payables (note 3.8)
Cash generated from operations before exceptionals
2022
£’000
2021
£’000
326,002
302,803
79,734
(314)
46,534
52,938
504,894
6,467
205,780
84,340
(8,916)
(20)
4,614
(177,895)
(614,260)
623,429
628,433
62,278
(233)
40,495
58,002
463,345
6,055
192,572
66,898
(5,263)
(36)
2,418
(57,813)
(49,603)
285,086
903,659
5.4 Commitments
A commitment represents an obligation to make a payment in the future as long as the counterparty meets its
obligations, and mainly relates to agreements to buy capital assets. These amounts are not included in the Group’s
Balance Sheet as we have not yet received the goods or services from the supplier.
Capital expenditure commitments
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
2022
£’000
2021
£’000
58,102
19,281
146,263
204,365
161,368
180,649
DCC plc Annual Report and Accounts 2022
213
Financial Statements
Notes to the Financial Statements continued
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5.5 Contingencies
Contingent liabilities include guarantees given in respect of borrowings and other obligations arising in the ordinary
course of business.
Guarantees
The Company has given guarantees of £2,411.237 million (2021: £2,018.990 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 357 of the Companies Act, 2014, the Company has guaranteed the commitments of the following Irish
subsidiaries and, as a result, these companies will be exempted from the filing provisions of Sections 347 and 348 of the Companies Act, 2014:
Alvabay Limited, Budget Energy Limited, Budget Energy Holdings Limited, Campus Oil Limited, CC Lubricants Limited, Certas Energy Ireland Limited,
DCC Corporate Funding Unlimited Company, DCC Corporate Partners Unlimited Company, DCC Corporate 2007 dac, DCC Corporate Services dac,
DCC Energy Limited, DCC Finance Limited, DCC Finance Holdings Limited (formerly DCC Technology Limited), DCC Finance & Treasury dac, DCC
Financial Services Unlimited Company, DCC Financial Services Holdings Unlimited Company, DCC Financial Services International dac, DCC Financial
Services International Holdings Limited, DCC Financial Services Investments CLG, DCC Financial Services Ireland Unlimited Company, DCC Financial
Services Management dac (formerly DCC Financial Services US dac), DCC Funding 2007 dac, DCC Fund Services Unlimited Company, DCC
Healthcare Limited, DCC Management Services Limited, DCC Nominees Unlimited Company, DCC Technology Limited (formerly DCC Technology
(Holdings) Limited), DCC Treasury 2010 dac, DCC Treasury Ireland 2013 dac, DCC Treasury Management Unlimited Company, DCC Treasury
Services Unlimited Company, DCC Treasury Solutions Limited, Emo Oil Limited, Energy Procurement Limited, Energy Procurement Ireland 2013
Limited, Exertis Arc Telecom Limited, Exertis Ireland Limited, Fannin Limited, Flogas Enterprise Solutions Limited (formerly Naturgy Limited), Flogas
Ireland Limited, Flogas Natural Gas Limited,, Jones Oil Limited, Medisource Ireland Limited, Source LS Global Limited and Starata Limited.
Three of the Group’s German subsidiaries, Bronberger & Kessler Handelsgesellschaft und Gilg & Schweiger GmbH & Co.KG, TEGA-Technische Gase
und Gasetechnik GmbH and DCC Germany Holding GmbH availed of disclosure exemptions pursuant to Section 264 of the German Commercial
Code (HGB) and are therefore exempted from the obligations to prepare and disclose audited financial statements.
5.6 Related Party Transactions
The Group’s principal related parties are the Group’s subsidiaries, associates and key management personnel of
(cid:87)(cid:75)(cid:72)(cid:124)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:17)
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 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.
Subsidiaries and associates
The consolidated financial statements include the financial statements of the Parent Company and its subsidiaries and associates as documented
in the accounting policies in note 5.9 and the basis of consolidation in note 1.3. A listing of the principal subsidiaries and associates is provided in the
Group Directory on pages 238 to 241 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 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 2.5)
2022
£’000
4,197
169
1,060
5,426
2021
£’000
4,407
175
1,653
6,235
214
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.7 Financial Risk and Capital Management
This note details the Group’s treasury management and financial risk management objectives and policies. Information
is also provided regarding the Group’s exposure and sensitivity to capital risk, credit risk, liquidity risk, foreign exchange
risk, interest rate risk and commodity price risk, and the policies in place to monitor and manage these risks.
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.
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/cash 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 Company, net debt, lease creditors
and acquisition related liabilities, may be summarised as follows:
Capital and reserves attributable to the owners of the Parent Company
Net debt/(cash) (excl. lease creditors) (note 3.13)
Lease creditors (note 3.12)
Acquisition related liabilities (note 3.16)
At 31 March
2022
£’000
2,905,184
419,903
336,702
96,252
2021
£’000
2,647,436
(165,054)
315,224
84,402
3,758,041
2,882,008
Financial risk management
Group financial risk management is governed by policies and guidelines which are reviewed and approved annually by the Board of Directors, most
recently in February 2022. 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, in
conjunction with Group Commodity Risk Management, manage commodity price exposures, within approved policies and guidelines. Monitoring
of compliance with the policies and guidelines is managed by the Group Risk Management function.
The Group’s has a consistent focus on maintaining financial strength through a disciplined approach to balance sheet management and maintaining
relatively low levels of financial risk. At 31 March 2022, the Group had cash and cash equivalents of £1,394.272 million (note 3.9) and £411.3 million
undrawn under its committed revolving credit facility (note 3.11). At 31 March 2022, the capital structure, as summarised above had net debt
excluding lease creditors of £419.903 million.
(i) Credit risk management
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
It arises principally from credit exposure to trade receivables, cash and cash equivalents including deposits with banks and financial institutions and
derivative financial instruments.
The Group’s trade receivables are generally unsecured and non-interest bearing and 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 allocates each exposure to a credit risk grade, based
on data that is determined to be predictive of risk of loss. 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.
The Group applies the simplified approach to providing for expected credit losses (‘ECL’) permitted by IFRS 9 Financial Instruments, which requires
expected lifetime losses to be recognised from initial recognition of the trade receivables. The Group uses an allowance matrix to measure the ECL’s
of trade receivables, which comprises a very large number of small balances. Loss rates are based on actual credit loss experience.
As detailed in note 3.6, the Group’s trade receivables at 31 March 2022 amount to £2,086.578 million (2021: £1,477.573 million). Customer credit risk
arising in the context of the Group’s operations is not significant and the total allowance for impairment of trade receivables amounts to 2.6% of the
Group’s gross trade receivables (2021: 2.7%). The vast majority of the allowance for impairment relates to trade and other receivables balances which
are over six months overdue.
DCC plc Annual Report and Accounts 2022
215
Financial Statements
Notes to the Financial Statements continued
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5.7 Financial Risk and Capital Management continued
Where appropriate, certain of the Group’s operations selectively utilise supply chain financing solutions to sell, on a non-recourse basis, a portion
of their receivables relating to certain larger supply chain/sales and marketing activities. The level of supply chain financing at 31 March 2022 was
£168.037 million (2021: £232.595 million) and has been derecognised from ‘Trade and other receivables’ in accordance with the Group’s accounting
policy. Revenues relating to the non-recourse sale of receivables included in overall Group revenues in the year ended 31 March 2022 amounted to
£1,305.432 million (2021: £1,738.657 million).
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. Deposits are also placed with AAA
money market funds. The Group actively monitors its credit exposure to each counterparty to ensure compliance with the counterparty risk limits
of the Board approved treasury policy. Of the total cash and cash equivalents at 31 March 2022 of £1,394.272 million, 13.8% (£192.230 million) was
with money market funds, 97.9% (£1,364.810 million) was with money market funds or financial institutions with minimum short-term ratings of
A-1 (Standard and Poor’s) or P-1 (Moody’s) and 98.1% (£1,368.152 million) was with money market funds or financial institutions with minimum
short-term ratings of A-2 (Standard and Poor’s) or P-2 (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 2022, derivative transactions were with counterparties with ratings ranging from A+
to A- (long-term) with Standard and Poor’s or Aa1 to A2 (long-term) with Moody’s. The Group accordingly does not expect any loss in relation to its
cash and cash equivalents or its derivative balances at 31 March 2022.
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.
Liquidity risk management
(ii)
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, 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 management accounts. Sensitivity analysis using various scenarios are applied to forecasts to assess their impact
on covenants and net debt/cash. During the year to 31 March 2022, 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.
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.
As at 31 March 2022
Financial liabilities – cash outflows
Trade and other payables
Interest bearing loans and borrowings
Interest payments on interest bearing loans and borrowings
Lease creditors
Interest payments on lease creditors
Acquisition related liabilities
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
Other derivative financial instruments
Less than
1 year
£’000
Between
1 and 2 years
£’000
Between
2 and 5 years
£’000
Over
5 years
£’000
Total
£’000
(3,468,705)
(67,668)
(62,252)
(63,538)
(8,376)
(23,602)
(13,423)
(28,634)
–
(255,296)
(52,533)
(55,478)
(7,075)
(25,368)
(228,135)
(252)
–
(1,009,186)
(102,859)
(98,564)
(15,155)
(47,282)
(327,540)
(1,680)
–
(674,406)
(56,701)
(119,122)
(40,825)
–
(18,717)
–
(3,468,705)
(2,006,556)
(274,345)
(336,702)
(71,431)
(96,252)
(587,815)
(30,566)
(3,736,198)
(624,137)
(1,602,266)
(909,771)
(6,872,372)
4,357
28,826
107,361
140,544
4,322
274,514
5,461
284,297
5,367
406,747
652
412,766
1,704
23,979
–
25,683
15,750
734,066
113,474
863,290
216
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.7 Financial Risk and Capital Management continued
As at 31 March 2021
Financial liabilities – cash outflows
Trade and other payables
Interest bearing loans and borrowings
Interest payments on interest bearing loans and borrowings
Lease creditors
Interest payments on lease creditors
Acquisition related liabilities
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
Other derivative financial instruments
Less than
1 year
£’000
Between
1 and 2 years
£’000
Between
2 and 5 years
£’000
Over
5 years
£’000
(2,604,177)
(217,756)
(56,843)
(53,607)
(8,686)
(21,853)
(107,462)
(9,843)
–
–
(53,794)
(46,664)
(7,391)
(27,496)
(12,798)
(148)
–
(640,535)
(105,549)
(97,973)
(15,928)
(35,053)
(471,641)
(504)
–
(869,630)
(74,981)
(116,980)
(42,631)
–
(106,126)
–
Total
£’000
(2,604,177)
(1,727,921)
(291,167)
(315,224)
(74,636)
(84,402)
(698,027)
(10,495)
(3,080,227)
(148,291)
(1,367,183)
(1,210,348)
(5,806,049)
6,633
139,313
23,262
169,208
6,550
27,489
645
34,684
14,223
546,358
60
560,641
6,692
126,182
–
132,874
34,098
839,342
23,967
897,407
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.
(iii) Market risk management
Foreign exchange risk management
DCC’s presentation currency is sterling. 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 the euro 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 Group does not hedge translation exposure on the translation of the profits of foreign currency subsidiaries on the basis that there is no
commitment or intention to remit earnings.
The Group has investments in non-sterling, primarily euro and US dollar denominated, operations which are cash generative and a significant
proportion of cash generated from these operations is reinvested in development activities rather than being repatriated into sterling. The Group
seeks to manage the resultant foreign currency translation risk through borrowings denominated in (or swapped utilising cross currency interest
rate swaps into) the relevant currency or through currency swaps related to intercompany funding, although these hedges are offset by the strong
ongoing cash flow generated from the Group’s non-sterling operations, leaving DCC with a net investment in non-sterling assets. The gain of
(cid:127)(cid:21)(cid:25)(cid:17)(cid:24)(cid:124)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:85)(cid:76)(cid:86)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:87)(cid:85)(cid:68)(cid:81)(cid:86)(cid:79)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:82)(cid:73)(cid:3)(cid:39)(cid:38)(cid:38)(cid:112)(cid:86)(cid:3)(cid:81)(cid:82)(cid:81)(cid:16)(cid:86)(cid:87)(cid:72)(cid:85)(cid:79)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:72)(cid:81)(cid:82)(cid:80)(cid:76)(cid:81)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:81)(cid:72)(cid:87)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:87)(cid:3)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:87)(cid:3)(cid:22)(cid:20)(cid:3)(cid:48)(cid:68)(cid:85)(cid:70)(cid:75)(cid:3)(cid:21)(cid:19)(cid:21)(cid:21)(cid:3)(cid:68)(cid:86)(cid:3)(cid:86)(cid:72)(cid:87)(cid:3)(cid:82)(cid:88)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:42)(cid:85)(cid:82)(cid:88)(cid:83)(cid:3)(cid:54)(cid:87)(cid:68)(cid:87)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)
of Comprehensive Income mainly reflects the weakening in the value of sterling against the US dollar, with the impact of movements against other
currencies largely offsetting each other.
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 currencies 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. The Group also
hedges a proportion of anticipated transactions in certain subsidiaries for periods ranging up to 18 months with such transactions qualifying as
‘highly probable’ forecast transactions for IAS 39 hedge accounting purposes.
Sensitivity to currency movements
A change in the value of other currencies by 10% against sterling would have a £28.6 million (2021: £23.7 million) impact on the Group’s profit before
tax and exceptional items, would change the Group’s equity by £188.4 million and change the Group’s net debt by £84.5 million (2021: £143.9 million
and £43.5 million respectively). These amounts include an insignificant amount of transactional currency exposure.
Interest rate risk management
On a net debt/cash basis, the Group is exposed to changes in interest rates, primarily changes in EURIBOR and sterling SONIA. 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.
DCC plc Annual Report and Accounts 2022
217
Financial Statements
Notes to the Financial Statements continued
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5.7 Financial Risk and Capital Management continued
Sensitivity of interest charges to interest rate movements
Based on the composition of net debt at 31 March 2022 a one percentage point (100 basis points) change in average floating interest rates would
have a £3.8 million (2021: £2.6 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 3.10 and 3.11.
Commodity price risk management
DCC, through its activities in the energy sector, procures, markets and sells LPG, natural gas, electricity and oil products and, as such, is exposed
to changes in commodity cost prices. In general, market dynamics are such that commodity cost price movements are promptly reflected in sales
prices. In certain markets, short-term or seasonal price stability is preferred by certain customer segments which requires hedging a proportion
of forecasted transactions, with such transactions qualifying as ‘highly probable’ for IAS 39 hedge accounting purposes. DCC uses both forward
purchase contracts and derivative commodity instruments to support its pricing strategy for a portion of expected future sales, typically for periods
of less than 12 months.
Fixed price supply contracts may be provided to certain customers for periods typically less than 12 months in duration. DCC fixes its cost of sales
on contracted future volumes where the customer contract contains a take-or-pay arrangement that permits the customer to purchase a fixed
amount of product for a fixed price during a specified period and requires payment even if the customer does not take delivery of the product.
Where a take-or-pay clause is not included in the customer contract, DCC hedges a portion of forecasted sales volume recognising that certain
sales, such as natural gas and electricity in particular, are exposed to volumetric risk in the form of an uncertain consumption profile arising from
a range of factors, including supply dynamics and the weather.
DCC does not hold significant amounts of commodity inventory relative to purchases and sales; however, for certain inventory, such as fuel oil and
natural gas, DCC may enter hedge contracts to manage price exposures.
Across its energy activities, DCC enters into commodity hedges to fix a portion of own fuel costs.
Certain activities of individual businesses are centralised under the supervision of the DCC Group Commodity Risk Management function. Divisional
and subsidiary management, in conjunction with the Group’s Commodity Risk Management function, manage commodity price exposures within
approved policies and guidelines.
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
Due to pricing dynamics in the oil distribution market, an increase or decrease of 10% in the commodity cost price of oil would have an immaterial
impact on the Group’s profit before tax (2021: immaterial) and an immaterial impact on the Group’s equity (2021: immaterial).
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, natural
gas or electricity 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.
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 fair values of expected future payments under contingent consideration arrangements are determined by applying
a risk-adjusted discount rate to the future payments which are based on forecasted operating profits of the acquired entity over the relevant period.
The carrying value of non-interest bearing financial assets, financial liabilities and cash and cash equivalents approximates their fair values, largely
due to their short-term maturities. The nominal value less impairment allowance of trade receivables and payables approximate to 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 financial assets
and financial liabilities:
Financial assets
Derivative financial instruments
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Borrowings (excluding lease creditors)
Lease creditors
Derivative financial instruments
Acquisition related liabilities
Trade and other payables
218
DCC plc Annual Report and Accounts 2022
2022
2021
Book value
£’000
Fair value
£’000
Book value
£’000
Fair value
£’000
225,939
2,508,613
1,394,272
225,939
2,508,613
1,394,272
161,852
1,689,372
1,786,556
161,852
1,689,372
1,786,556
4,128,824
4,128,824
3,637,780
3,637,780
2,001,150
336,702
38,964
96,252
3,468,705
2,052,844
336,702
38,964
96,252
3,468,705
1,772,859
315,224
10,495
84,402
2,604,177
1,860,499
315,224
10,495
84,402
2,604,177
5,941,773
5,993,467
4,787,157
4,874,797
Strategic Report
Governance
Financial Statements
Supplementary Info
5.7 Financial Risk and Capital Management continued
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).
Fair value measurement as at 31 March 2022
Financial assets
Derivative financial instruments (note 3.10)
Financial liabilities
Acquisition related liabilities (note 3.16)
Derivative financial instruments (note 3.10)
Fair value measurement as at 31 March 2021
Financial assets
Derivative financial instruments (note 3.10)
Financial liabilities
Acquisition related liabilities (note 3.16)
Derivative financial instruments (note 3.10)
Level 1
£’000
Level 2
£’000
Level 3
£’000
Total
£’000
–
–
–
–
–
Level 1
£’000
–
–
–
–
–
225,939
225,939
–
38,964
38,964
Level 2
£’000
161,852
161,852
–
–
225,939
225,939
96,252
–
96,252
Level 3
£’000
96,252
38,964
135,216
Total
£’000
–
–
161,852
161,852
–
10,495
10,495
84,402
–
84,402
84,402
10,495
94,897
Level 2 fair value measurement:
The specific valuation techniques used to value financial instruments that are carried at fair value using level 2 valuation techniques are:
•
the fair value of interest rate, currency and cross currency interest rate swaps is calculated as the present value of the estimated future cash flows
based on observable yield curves;
the fair value of forward foreign exchange contracts is determined using quoted forward exchange rates at the reporting date with the resulting
value discounted back to present value; and
the fair value of forward commodity contracts is determined using quoted forward commodity prices at the reporting date with the resulting value
discounted back to present value.
•
•
Level 3 fair value measurement:
Acquisition related liabilities are included in level 3 of the fair value hierarchy. Details of the movement in the year are included in note 3.16. The specific
valuation techniques used to value contingent consideration that is carried at fair value using level 3 valuation techniques are:
•
the expected future payments are determined by forecasting the acquiree’s relevant basis for the contingent consideration (i.e. valuations based
on EBITDA or EBIT multiples) as appropriate to the specific contractual earn out arrangement; and
the present value of the estimated future expected payments are discounted using a risk-adjusted discount rate where the time value of money
is material.
•
The significant unobservable inputs are as follows:
•
•
•
forecasted average adjusted operating profit growth rate 5.0% to 18.0%;
forecasted average outflow on Butagaz acquisition related liabilities £4.3 million per annum; and
risk adjusted discount rate 1.0% to 2.0%.
DCC plc Annual Report and Accounts 2022
219
Financial Statements
Notes to the Financial Statements continued
1
2
3
4
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5.7 Financial Risk and Capital Management continued
The estimated fair value of contingent consideration would increase/(decrease) if EBITDA/EBIT growth was higher/(lower) if the forecasted outflow
on Butagaz acquisition related liabilities was higher/(lower) or if the risk-adjusted discount rate was lower/(higher). For the fair value of contingent
consideration, a reasonably possible change to one of the significant unobservable inputs at 31 March 2022, holding the other inputs constant,
would have the following effects:
Impact on the carrying value of contingent consideration
Forecasted average adjusted operating profit growth rate (1% movement)
Forecasted outflow on Butagaz acquisition related liabilities (5% movement)
Risk adjusted discount rate (0.5% movement)
2022
£’000
2,289
698
793
2021
£’000
449
1,279
811
Offsetting financial assets and financial liabilities
(i) Financial assets
The following financial assets are subject to offsetting, enforceable master netting arrangements or similar agreements:
As at 31 March 2022
Derivative financial instruments
Cash and cash equivalents
As at 31 March 2021
Derivative financial instruments
Cash and cash equivalents
Gross amounts of
recognised
financial assets
£’000
Gross amounts of
recognised
financial liabilities
set off in the
Balance Sheet
£’000
Net amounts
of financial assets
presented in the
Balance Sheet
£’000
112,465
467,047
579,512
–
–
–
112,465
467,047
579,512
Gross amounts of
recognised
financial assets
£’000
137,885
370,131
508,016
Gross amounts of
recognised
financial liabilities
set off in the
Balance Sheet
£’000
Net amounts
of financial assets
presented in the
Balance Sheet
£’000
–
–
–
137,885
370,131
508,016
Related amounts not set off in the
Balance Sheet
Financial
liabilities
£’000
(8,084)
(65,287)
(73,371)
Cash collateral
received
£’000
–
–
–
Net amount
£’000
104,381
401,760
506,141
Related amounts not set off in the
Balance Sheet
Financial
liabilities
£’000
–
(66,413)
(66,413)
Cash collateral
received
£’000
–
–
–
Net amount
£’000
137,885
303,718
441,603
(ii) Financial liabilities
The following financial liabilities are subject to offsetting, enforceable master netting arrangements or similar agreements:
As at 31 March 2022
Derivative financial instruments
Bank borrowings
As at 31 March 2021
Derivative financial instruments
Bank borrowings
Gross amounts of
recognised
financial liabilities
£’000
Gross amounts of
recognised
financial
assets set
off in the Balance
Sheet £’000
Net amounts
of financial
liabilities
presented in the
Balance Sheet
£’000
Related amounts not set off
in the Balance Sheet
Financial assets
£’000
Cash collateral
provided
£’000
Net amount
£’000
8,398
65,287
73,685
–
–
–
8,398
65,287
73,685
(8,084)
(65,287)
(73,371)
–
–
–
314
–
314
Gross amounts of
recognised
financial liabilities
£’000
Gross amounts of
recognised
financial
assets set
off in the Balance
Sheet £’000
Net amounts
of financial
liabilities presented
in the Balance
Sheet
£’000
Related amounts not set off
in the Balance Sheet
Financial assets
£’000
Cash collateral
provided
£’000
Net amount
£’000
–
66,413
66,413
–
–
–
–
66,413
66,413
–
(66,413)
(66,413)
–
–
–
–
–
–
For the financial assets and liabilities subject to enforceable master netting arrangements or similar arrangements above, each agreement between
the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the
absence of such an election, financial assets and liabilities will be settled on a gross basis however each party to the master netting agreement or
similar agreement will have the option to settle all such amounts on a net basis in the event of default of the other party. Per the terms of each
agreement, an event of default includes failure by a party to make payment when due, failure by a party to perform any obligation required by the
agreement (other than payment) if such a failure is not remedied within periods of 15 to 30 days after notice of such failure is given to the party,
(cid:82)(cid:85)(cid:124)(cid:69)(cid:68)(cid:81)(cid:78)(cid:85)(cid:88)(cid:83)(cid:87)(cid:70)(cid:92)(cid:17)
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DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.8 Events after the Balance Sheet Date
This note provides details on material events which have occurred between the year end date of 31 March and the date
of approval of the financial statements.
As detailed on pages 22 to 27, the Group will organise and report all of its energy activities (previously DCC LPG and DCC Retail & Oil) as one
reportable segment, DCC Energy, with effect from 1 April 2022. Further information on the establishment of DCC Energy and its strategy is available
on www.dcc.ie.
There have been no other material events subsequent to 31 March 2022 which would require disclosure in this Report.
5.9 Summary of Significant Accounting Policies
This section sets out the Group’s accounting policies which are applied in recognising and measuring transactions and
balances arising in the year.
Revenue recognition
Revenue comprises the fair value of the sale of goods and services to external customers net of applicable sales taxes, volume and promotional
rebates, allowances and discounts. Revenue is generally recognised on a duty inclusive basis where applicable. The Group is deemed to be a principal
in an arrangement when it controls a promised good or service before transferring them to a customer, and accordingly recognises revenue on
a gross basis. Where the Group is determined to be an agent in a transaction, based on the principle of control, the net amount retained after the
deduction of any costs to the principal is recognised as revenue.
The Group operates across a wide range of business segments and jurisdictions with varying customer credit terms which are in line with normal
credit terms offered in that business segment and/or country of operation. Given the short-term nature of these credit terms, no element of
financing is deemed present. Group revenues do not include any significant level of variable consideration.
Revenue is recorded when the collection of the amount is reasonably assured and when specific criteria have been met for each of the Group’s
activities as detailed below.
Sales of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods are transferred to the customer
and when the amount of revenue and costs incurred can be measured reliably. This generally arises on delivery or in accordance with specific terms
and conditions agreed with individual customers. In the case of consignment stock arrangements, revenue is recognised on the date that legal title
passes. Rebates, allowances and discounts are recorded in the same period as the original revenue.
DCC LPG derives the majority of its revenue from the sale of LPG, refrigerants, electricity and natural gas. Revenue is recognised when the products
are delivered to the customer. Products can be sold under short or long-term agreements at prevailing market prices or at fixed prices for which
(cid:39)(cid:38)(cid:38)(cid:124)(cid:47)(cid:51)(cid:42)(cid:3)(cid:90)(cid:76)(cid:79)(cid:79)(cid:3)(cid:75)(cid:68)(cid:89)(cid:72)(cid:3)(cid:73)(cid:76)(cid:91)(cid:72)(cid:71)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:92)(cid:3)(cid:83)(cid:85)(cid:76)(cid:70)(cid:72)(cid:86)(cid:17)
DCC Retail & Oil derives most of its revenue from the sale of transport and commercial fuels, heating oils and related products. Revenue is
recognised when the products are delivered to the customer.
DCC Healthcare derives its revenue from the sale of a broad range of third-party and own-branded medical devices and pharmaceuticals. Revenue is
also generated from the manufacture of products for health and beauty brand owners. Revenue is recognised on delivery of the product to the customer
in the majority of cases.
DCC Technology derives the majority of its revenue from the sale of consumer and SME focused technology products. Revenue is generally recognised
on despatch. Should volume and promotional rebates be granted to customers they are recognised as a reduction in sales revenue at the time of the
sale based on managements’ estimate of the likely rebate to be awarded to customers. Estimates are based on historical results, taking into consideration
the type of customer, the type of transaction and the specific facts of each arrangement.
Sales of services
Revenue from the rendering of services is recognised in the period in which the services are rendered. Contracts do not contain multiple
performance obligations as defined by IFRS 15.
Service revenue in DCC LPG and DCC Retail & Oil is generated from a variety of value-added services provided to customers. Revenue is recognised
as the service is provided.
DCC Healthcare generates service revenue from a variety of sources such as logistics services including stock management, distribution services
to hospitals and healthcare manufacturers as well as engineering and preventative maintenance services. Revenue is recognised as the service
is rendered and completed.
DCC Technology generates service revenue from providing a range of value-added services to both its customers and suppliers including third party
logistics, web site development and management, outsourced managed services, training and certain supply chain management services such as
quality assurance and compliance. Revenue relating to these services is recognised as the service is provided.
DCC plc Annual Report and Accounts 2022
221
Financial Statements
Notes to the Financial Statements continued
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5.9 Summary of Significant Accounting Policies continued
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable.
Dividend income
Dividend income from investments is recognised when the shareholders’ right to receive payment have been established.
Rental income
Rental income principally comprises property and LPG tank rental income and rental income from operating leases is recognised on a straight line
basis over the term of the lease. The related assets are recorded within property, plant and equipment and are depreciated on a straight-line basis
over the useful lives of the assets.
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 four reportable
operating segments: DCC LPG, DCC Retail & Oil, DCC Healthcare and DCC Technology.
Foreign currency translation
Functional and presentation currency
The functional currency of the Company is euro. The consolidated financial statements are presented in sterling which is the Company’s and the
Group’s presentation currency and a significant portion of the Group’s revenue and operating profit is generated in sterling. 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
(cid:72)(cid:81)(cid:87)(cid:76)(cid:87)(cid:92)(cid:124)(cid:82)(cid:83)(cid:72)(cid:85)(cid:68)(cid:87)(cid:72)(cid:86)(cid:17)(cid:3)
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 reporting 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 and associates which do not have sterling as their functional currency are translated into sterling 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 reporting date. Adjustments arising on translation of the results of
such subsidiaries and associates at average rates, and on the restatement of the opening net assets at closing rates, are dealt with in a separate
translation reserve within equity, net of differences on related currency instruments designated as hedges of such investments.
On disposal of a foreign operation, such cumulative currency translation differences are recognised in the Income Statement as part of the overall
gain or loss on disposal. In accordance with IFRS 1, cumulative currency translation differences arising prior to the transition date to IFRS (1 April
2004) have been set to zero for the purposes of ascertaining the gain or loss on disposal of a foreign operation.
Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the foreign operation, are
expressed in the functional currency of the foreign operation and are recorded at the exchange rate at the date of the transaction and subsequently
retranslated at the applicable closing rates.
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 and acquisition related liabilities. The interest
expense component of lease creditor payments is recognised in the Income Statement using the effective interest rate method. The net finance
cost/income on defined benefit pension scheme assets or obligations are 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 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 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.
222
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.9 Summary of Significant Accounting Policies continued
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 contingent acquisition consideration, the impact on deferred tax balances as a result of changes to enacted
corporation tax rates 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.
Income tax
Current tax
The Group’s income tax charge is based on reported profit and enacted statutory tax rates, which reflect various allowances and reliefs available to
the Group in the multiple tax jurisdictions in which it operates. The determination of the Group’s provision for income tax requires certain judgements
and estimates in relation to matters where the ultimate tax outcome may not be certain. The recognition or non-recognition of deferred tax assets
as appropriate also requires judgement as it involves an assessment of the future recoverability of those assets. In addition, the Group is subject to
tax audits which can involve complex issues that could require extended periods to conclude, the resolution of which is often not within the control
of the Group. Although management believes that the estimates included in the Consolidated Financial Statements and its tax return positions are
correct, there is no certainty that the final outcome of these matters will not be different to that which is reflected in the Group’s historical income tax
provisions and accruals. Whilst it is possible, the Group does not currently anticipate that any such differences could have a material impact on the
income tax provision and profit for the period in which such a determination is made nor does it expect any significant impact on its financial position
in the near term. This is based on the Group’s knowledge and experience, as well as the profile of the individual components which have been
reflected in the current tax liability, the status of the tax audits, enquiries and negotiations in progress at each year end.
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 reporting date and taking into account any adjustments stemming from prior years. Any interest or penalties arising are included within current
tax. Where items are accounted for outside of profit or loss, the related income tax is recognised either in other comprehensive income or directly in
equity as appropriate.
Deferred tax
Deferred tax is provided using the liability method on all temporary differences at the reporting 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:
• 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
• where, in respect of taxable temporary differences associated with investments in subsidiaries 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:
• 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
• where, in respect of deductible temporary differences associated with investment in subsidiaries 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 reporting 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.
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 buildings
Plant and machinery
Cylinders
Motor vehicles
Fixtures, fittings & office equipment
Annual Rate
2%
(cid:24)(cid:8)(cid:3)(cid:116)(cid:3)(cid:22)(cid:22)(cid:386)(cid:8)
(cid:25)(cid:387)(cid:8)(cid:3)(cid:116)(cid:3)(cid:20)(cid:19)(cid:8)
(cid:20)(cid:19)(cid:8)(cid:3)(cid:116)(cid:3)(cid:22)(cid:22)(cid:386)(cid:8)
(cid:20)(cid:19)(cid:8)(cid:3)(cid:116)(cid:3)(cid:22)(cid:22)(cid:386)(cid:8)
DCC plc Annual Report and Accounts 2022
223
Financial Statements
Notes to the Financial Statements continued
1
2
3
4
5
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5.9 Summary of Significant Accounting Policies continued
Land is not depreciated. The residual values and useful lives of property, plant and equipment are reviewed, and adjusted if appropriate, at each
reporting date.
In accordance with IAS 36 Impairment of Assets, the carrying amounts of items of property, plant and equipment are reviewed at each reporting
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.
Investments in subsidiary undertakings
Investments in subsidiaries are stated at cost less any accumulated impairments and are reviewed for impairment if there are indications that the
carrying value may not be recoverable.
Business combinations
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
(cid:68)(cid:86)(cid:124)(cid:76)(cid:81)(cid:70)(cid:88)(cid:85)(cid:85)(cid:72)(cid:71)(cid:17)
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
remeasured 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. The fair value of contingent
consideration is arrived at through discounting the expected payment to present value. Subsequent changes to the fair value of the contingent
consideration which is deemed to be an asset or liability will be recognised in the Income Statement.
Goodwill is initially measured at cost being the excess of the fair value 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 non-controlling shareholder’s option to put its shareholding back to the Group, being the fair value
of the estimate of amounts payable to acquire the non-controlling interest. The financial liability is included in 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.
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 as the excess of the fair value of consideration paid for the business combination plus any non-controlling
interest, over 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.
224
DCC plc Annual Report and Accounts 2022
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Governance
Financial Statements
Supplementary Info
5.9 Summary of Significant Accounting Policies continued
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
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 40 years, depending on the
nature of the intangible asset.
The carrying amount of finite-lived intangible assets are reviewed for indicators of impairment at each reporting date and are subject to impairment
testing when events or changes in circumstances indicate that the carrying values may not be recoverable. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
The Group does not have any indefinite-lived intangible assets.
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.
Financial instruments
A financial instrument is recognised when the Group becomes a party to its contractual provisions. Financial assets are derecognised when the
Group’s contractual rights to the cash flows from the financial assets expire, are extinguished or transferred to a third party. Financial liabilities are
derecognised when the Group’s obligations specified in the contracts expire, are discharged or cancelled.
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 allowance for impairment.
An allowance for impairment of trade receivables is established based on both expected credit losses and information available that the Group will
not be able to collect all amounts due according to the original terms of the 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 allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows. The amount
of the allowance is recognised in the Income Statement.
The Group derecognises a receivable only when the contractual rights to the cash flows from the receivable expire, or when it transfers the receivable
and substantially all of the risks and rewards of ownership of the asset to another entity. The Group applies a number of tests to receivable purchase
agreements to determine whether derecognition is appropriate or not. These tests are applied to the entire portfolio of receivables rather than to each
individual receivable as the receivables comprise ‘a group of similar assets’ in accordance with IFRS 9. The testing procedure includes consideration of
the following; whether the arrangement represents a qualifying transfer of assets, whether substantially all of the risks and rewards of the receivable
transferred from the Group and whether the Group has lost control of the receivable.
On derecognition of a receivable the difference between the asset’s carrying amount and the sum of the consideration received and receivable
and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in the Income
Statement. Following derecognition, receivables arising from non-recourse sales are excluded from ‘Trade and other receivables’ in the Group
Balance Sheet. The Group presents cash flows arising from non-recourse sales as part of operating activities in the Group Cash Flow Statement.
DCC plc Annual Report and Accounts 2022
225
Financial Statements
Notes to the Financial Statements continued
1
2
3
4
5
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5.9 Summary of Significant Accounting Policies continued
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.
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.
Leases
The Group enters into leases for a range of assets, principally relating to property. These property leases have varying terms and renewal rights,
including periodic rent reviews linked with indices. The Group also leases motor vehicles, plant, machinery and other equipment. The terms and
conditions of these leases do not impose significant financial restrictions on the Group.
A contract contains a lease if it is enforceable and conveys the right to control the use of a specified asset for a period of time in exchange for
consideration, which is assessed at inception. A right-of-use asset and lease creditor are recognised at the commencement date for contracts
containing a lease, with the exception of leases with a term of 12 months or less, leases where the underlying asset is of low value and leases with
associated payments that vary directly in line with usage or sales (such lease costs continue to be expensed in the Income Statement as incurred).
The commencement date is the date at which the asset is made available for use by the Group.
Lease creditors are initially measured at the present value of the future lease payments, discounted using the incremental borrowing rate over the
remaining lease term. Lease payments include fixed payments, variable payments that are dependent on an index known at the commencement
date, payments for an optional renewal period and termination option payments, if the Group is reasonably certain to exercise those options. The
lease term is the non-cancellable period of the lease adjusted for any renewal or termination options which are reasonably certain to be exercised.
Management applies judgement in determining whether it is reasonably certain that a renewal or termination option will be exercised.
Incremental borrowing rates are calculated using a portfolio approach, based on the risk profile of the entity holding the lease and the term and
currency of the lease.
After initial recognition, lease creditors are measured at amortised cost using the effective interest method. They are remeasured when there
is a change in future lease payments or when the Group changes its assessment of whether it is reasonably certain to exercise an option within
the contract. A corresponding adjustment is made to the carrying amount of the right-of-use asset.
The right-of-use asset is initially measured at cost, which comprises the lease creditor adjusted for any payments made at or before the commencement
date, initial direct costs incurred, lease incentives received and an estimate of the cost to dismantle or restore the underlying asset or the site on
which it is located at the end of the lease term. The right-of-use asset is depreciated over the lease term and is tested periodically for impairment
if an impairment indicator is considered to exist.
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
(cid:69)(cid:72)(cid:76)(cid:81)(cid:74)(cid:124)(cid:75)(cid:72)(cid:71)(cid:74)(cid:72)(cid:71)(cid:17)(cid:3)
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’.
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/Expenses’.
226
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Strategic Report
Governance
Financial Statements
Supplementary Info
5.9 Summary of Significant Accounting Policies continued
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 3.10 and the movements on the cash flow hedge reserve in equity are shown
in note 4.2. 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 12 months and as a current asset or current liability if the remaining maturity of the derivative is less than 12 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 remeasurement 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.
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/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 Cost 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.
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 reporting 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 has certain site remediation obligations to be incurred in compliance with local or national environmental regulations together with
constructive obligations stemming from established best practice. The measurement of these provisions is based on the evaluation of currently
available facts with respect to each individual site and is adjusted periodically as remediation efforts progress or as additional information becomes
available. Inherent uncertainties exist in such measurements primarily due to unknown timing, site conditions and changing regulations. Full provision
is made for the net present value of the estimated costs in relation to the Group’s environmental liabilities. The net present value of the estimated
costs is capitalised as property, plant and equipment and the unwinding of the discount element on the environmental provision is reflected in the
Income Statement.
DCC plc Annual Report and Accounts 2022
227
Financial Statements
Notes to the Financial Statements continued
1
2
3
4
5
n
o
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e
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6
5.9 Summary of Significant Accounting Policies continued
Cylinder and tank deposits provisions
In certain DCC LPG operations, an obligation arises from the receipt of deposit fees paid by customers for LPG cylinders and tanks. On receipt
of a deposit the Group recognises a liability equal to the deposit received. This deposit will subsequently be refunded at an amount equal to the
original deposit on return of the cylinder or tank together with the original deposit receipt. Cylinder and tank deposits acquired through business
combinations are measured initially at their fair value at the acquisition date (i.e. net present value) and the unwinding of the discount element is
reflected in the Income Statement.
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
qualified actuaries and are arrived at using actuarial assumptions based on market expectations at the reporting 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 fair values.
The discount rate employed in determining the present value of the schemes’ liabilities is determined by reference to market yields at the reporting
date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-employment
(cid:69)(cid:72)(cid:81)(cid:72)(cid:73)(cid:76)(cid:87)(cid:124)(cid:82)(cid:69)(cid:79)(cid:76)(cid:74)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)
The deferred tax impact of pension scheme surpluses and deficits is disclosed separately within deferred tax liabilities or assets as appropriate.
Remeasurements, comprising actuarial gains and losses and the return on plan assets (excluding net interest) are recognised immediately in the
Group Balance Sheet with a corresponding entry to retained earnings through Other Comprehensive Income in the period in which they occur.
Remeasurements are not reclassified to profit or loss in subsequent periods.
The defined benefit pension asset or liability in the Group Balance Sheet comprises the total for each plan of the present value of the defined benefit
obligation less the fair value of plan assets out of which the obligations are to be settled directly. Plan assets are assets that are held by a long-term
employee benefit fund or qualifying insurance policies. Fair value is based on market price information and, in the case of published securities, it is the
published bid price. The value of any defined benefit asset is limited to the present value of any economic benefits available in the form of refunds
from the plan and reductions in the future contributions to the plan.
A curtailment arises when the Group is demonstrably committed to make a significant reduction in the number of employees covered by a plan.
A past service cost, negative or positive, arises following a change in the present value of the defined benefit obligation for employee service in prior
periods, resulting in the current period from the introduction of, or changes to, post-employment benefits. A settlement arises where the Group is
relieved of responsibility for a pension obligation and eliminates significant risk relating to the obligation and the assets used to effect the settlement.
Past-service costs, negative or positive, are recognised immediately in the Income Statement. Losses arising on settlement or curtailment not
allowed for in the actuarial assumptions are measured at the date on which the Group becomes demonstrably committed to the transaction.
Gains arising on a settlement are measured at the date on which all parties whose consent is required are irrevocably committed to the transaction.
Settlement gains and losses are dealt with in the Income Statement.
Share-based payment transactions
Certain 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.
At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market
vesting conditions and service conditions. It recognises the impact of the revision to original estimates, if any, in the Income Statement, with a
corresponding adjustment to equity. The fair value at the grant date is determined using a Monte Carlo simulation technique for the DCC plc Long
Term Incentive Plan.
The DCC plc Long Term Incentive Plan 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 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.
228
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
5.9 Summary of Significant Accounting Policies continued
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. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related costs, are recognised in profit or loss in the period in which they become receivable.
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 share premium.
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 reporting date are not recognised as a liability at that reporting 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 Company. 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.
5.10 Approval of Financial Statements
The financial statements were approved by the Board of Directors on 16 May 2022.
DCC plc Annual Report and Accounts 2022
229
Note
2022
£’000
2021
£’000
6.4
1,130,455
1,141,692
6.5
6.7
4.1
4.1
6.8
6.9
204,611
31,867
236,478
200,563
19,237
219,800
1,366,933
1,361,492
17,422
883,321
105,414
318,532
17,422
882,924
108,486
309,022
1,324,689
1,317,854
6.6
42,244
43,638
1,366,933
1,361,492
Financial Statements
Company Balance Sheet
As at 31 March 2022
ASSETS
Non-current assets
Investments in subsidiary undertakings
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
EQUITY
Capital and reserves
Share capital
Share premium
Other reserves
Retained earnings
Total equity
LIABILITIES
Current liabilities
Trade and other payables
Total equity and liabilities
Mark Breuer, Donal Murphy
Directors
230
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Company Statement of Changes in Equity
For the year ended 31 March 2022
For the year ended 31 March 2022
At 1 April 2021
Profit for the financial year
Other comprehensive income:
Currency translation
Total comprehensive income
Re-issue of treasury shares
Share based payment
Dividends
At 31 March 2022
For the year ended 31 March 2021
At 1 April 2020
Profit for the financial year
Other comprehensive income:
Currency translation
Total comprehensive income
Re-issue of treasury shares
Share based payment
Dividends
At 31 March 2021
Share
capital
(note 4.1)
£’000
17,422
Share
premium
(note 4.1)
£’000
Retained
earnings
(note 6.9)
£’000
Other
reserves
(note 6.8)
£’000
Total
equity
£’000
882,924
309,022
108,486
1,317,854
–
–
–
–
–
–
–
–
–
397
–
–
170,109
–
170,109
–
170,109
–
–
(160,599)
(9,539)
(9,539)
(9,539)
160,570
–
6,467
–
397
6,467
(160,599)
17,422
883,321
318,532
105,414
1,324,689
Share
capital
(note 4.1)
£’000
17,422
Share
premium
(note 4.1)
£’000
Retained
earnings
(note 6.9)
£’000
Other
reserves
(note 6.8)
£’000
Total
equity
£’000
882,887
245,168
156,099
1,301,576
–
–
–
–
–
–
–
–
–
37
–
–
17,422
882,924
207,377
–
207,377
–
207,377
–
–
(143,523)
309,022
(53,668)
(53,668)
(53,668)
153,709
–
6,055
–
37
6,055
(143,523)
108,486
1,317,854
DCC plc Annual Report and Accounts 2022
231
Financial Statements
Company Cash Flow Statement
For the year ended 31 March 2022
Operating activities
Cash generated from operations
Interest paid
Income tax received
Net cash flow from operating activities
Investing activities
Inflows:
Interest received
Proceeds on disposal
Dividends received from subsidiaries
Net cash flow from investing activities
Financing activities
Inflows:
Proceeds from issue of shares
Outflows:
Dividends paid
Net cash flow 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
Note
6.10
2022
£’000
(88)
–
–
(88)
2021
£’000
(73,415)
(1)
1
(73,415)
8,268
4,347
160,526
173,141
8,406
24,671
199,070
232,147
397
37
2.10
(160,599)
(160,202)
(143,523)
(143,486)
12,851
(221)
19,237
31,867
15,246
(908)
4,899
19,237
6.7
232
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Notes to the Company Financial Statements
Section 6 Notes to the Company Financial Statements
In accordance with the Companies Act 2014, information regarding the ultimate Parent Company, DCC plc,
(cid:76)(cid:86)(cid:3)(cid:83)(cid:85)(cid:72)(cid:86)(cid:72)(cid:81)(cid:87)(cid:72)(cid:71)(cid:124)(cid:69)(cid:72)(cid:79)(cid:82)(cid:90)(cid:17)
6.1 Basis of Preparation
The financial statements which are presented in sterling, rounded to the nearest thousand, have been prepared in accordance with International
Financial Reporting Standards (‘IFRS’) as adopted by the European Union.
The Company applies consistent accounting policies to those applied by the Group. To the extent that an accounting policy is relevant to both
Group and Parent Company financial statements, please refer to the Group financial statements for disclosure of the relevant accounting policy.
6.2 Auditor Statutory Disclosure
The audit fee for the Parent Company is £15,450 and is payable to KPMG, Ireland, the statutory auditor (2021: £15,000).
6.3 Profit Attributable to DCC plc
Profit after taxation for the year attributable to owners of the Parent Company amounting to £170.109 million (2021: £207.377 million) has been
accounted for in the financial statements of the Company. In accordance with Section 304(2) of the Companies Act, 2014, 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 304(2) of the Companies Act, 2014.
6.4
Investments in Subsidiary Undertakings
At 1 April
Proceeds received in respect of share based payments previously capitalised
Disposals
Impairment
Exchange and other
At 31 March
2022
£’000
1,141,692
–
(9)
(3,073)
(8,155)
2021
£’000
1,218,408
(6,362)
(24,671)
–
(45,683)
1,130,455
1,141,692
Details of the Group’s principal operating subsidiaries are included in the Supplementary Information section on pages 238 to 241. Non-wholly owned
subsidiaries principally comprises DCC Holding Denmark A/S (60%) (which owns 100% of DCC Energi Danmark A/S and DCC Energi Retail A/S).
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 Zuiderzeestraatweg 1, 3882 NC, Putten, The Netherlands.
6.5 Trade and Other Receivables
Amounts owed by subsidiary undertakings
2022
£’000
2021
£’000
204,611
200,563
All amounts owed by subsidiary undertakings are interest-free and repayable on demand. There were no past due or impaired trade receivables in the
Company at 31 March 2022 (31 March 2021: nil). The Company does not expect any loss in relation to trade and other receivables at 31 March 2022.
DCC plc Annual Report and Accounts 2022
233
Financial Statements
Notes to the Company Financial Statements continued
1
2
3
4
5
6
n
o
i
t
c
e
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6.6 Trade and Other Payables
Amounts due to subsidiary undertakings
Other creditors and accruals
6.7 Cash and Cash Equivalents
Cash at bank and in hand
6.8 Other Reserves
At 1 April 2020
Share based payment
Currency translation
At 31 March 2021
Share based payment
Currency translation
At 31 March 2022
2022
£’000
41,716
528
42,244
2021
£’000
43,118
520
43,638
2022
£’000
2021
£’000
31,867
19,237
Share based
payment
reserve1
£’000
Foreign currency
translation
reserve2
£’000
Other
reserves3
£’000
34,914
6,055
–
40,969
6,467
–
47,436
120,956
–
(53,668)
67,288
–
(9,539)
57,749
229
–
–
229
–
–
229
Total
£’000
156,099
6,055
(53,668)
108,486
6,467
(9,539)
105,414
1. The share based payment reserve comprises capital contributions to subsidiaries in connection with share based payments.
2. The Company’s foreign currency translation reserve represents all foreign exchange differences from 1 April 2004 arising from the translation of the net assets of the Company’s euro
denominated operations into sterling (the presentation currency), including the translation of the profits and losses of the Company from the average rate for the year to the closing rate at
the balance sheet date.
3. The Company’s other reserves is a capital conversion reserve fund.
6.9 Retained Earnings
At 1 April
Total comprehensive income for the financial year
Dividends
At 31 March
6.10 Cash Generated from Operations
Profit for the financial year
Add back non-operating income:
– tax
– net operating exceptionals
– net finance income
– dividend income
Operating profit before exceptionals
Changes in working capital:
– trade and other receivables
– trade and other payables
Other
Cash generated from operations
234
DCC plc Annual Report and Accounts 2022
2022
£’000
309,022
170,109
(160,599)
318,532
2021
£’000
245,168
207,377
(143,523)
309,022
2022
£’000
2021
£’000
170,109
207,377
–
(1,265)
(8,268)
(160,526)
50
951
(1,089)
–
(88)
(1)
–
(8,406)
(199,070)
(100)
178,225
(257,902)
6,362
(73,415)
Strategic Report
Governance
Financial Statements
Supplementary Info
6.11 Related Party Transactions
Subsidiaries and associates
The Company’s Income Statement includes dividends from its subsidiary companies DCC Financial Services Holdings Unlimited Company of
£160.526 million. Details of loan balances to/from subsidiaries are provided in the Company Balance Sheet on page 230, in note 6.5 ‘Trade and
Other Receivables’ and in note 6.6 ‘Trade and Other Payables’.
6.12 Financial Risk Management
A description of the Group’s financial risk management objectives and policies is provided in note 5.7 to the Group financial statements. These financial
risk management objectives and policies also apply to the Parent Company.
(i) Credit risk management
(cid:38)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:68)(cid:85)(cid:76)(cid:86)(cid:72)(cid:86)(cid:3)(cid:73)(cid:85)(cid:82)(cid:80)(cid:3)(cid:70)(cid:85)(cid:72)(cid:71)(cid:76)(cid:87)(cid:3)(cid:72)(cid:91)(cid:83)(cid:82)(cid:86)(cid:88)(cid:85)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:85)(cid:70)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:3)(cid:85)(cid:72)(cid:70)(cid:72)(cid:76)(cid:89)(cid:68)(cid:69)(cid:79)(cid:72)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:68)(cid:86)(cid:75)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:89)(cid:68)(cid:79)(cid:72)(cid:81)(cid:87)(cid:86)(cid:3)(cid:76)(cid:81)(cid:70)(cid:79)(cid:88)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:71)(cid:72)(cid:83)(cid:82)(cid:86)(cid:76)(cid:87)(cid:86)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:69)(cid:68)(cid:81)(cid:78)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:124)(cid:76)(cid:81)(cid:86)(cid:87)(cid:76)(cid:87)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:86)(cid:17)
As detailed in note 6.5, the Group’s intercompany receivables at 31 March 2022 amount to £204.611 million (2021: £200.563 million). None of these
balances include a provision for impairment and all amounts are expected to be recoverable in full.
Risk of counterparty default arising on cash and cash equivalents 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 plc transacts with a variety of high credit quality financial institutions for the
purpose of placing deposits. The Group actively monitors its credit exposure to each counterparty to ensure compliance with the counterparty risk
limits of the Board approved treasury policy. The cash and cash equivalents balance at 31 March 2022 of £31.867 million was held with financial
institutions with minimum short-term ratings of A-2 (Standard and Poor’s) or P-1 (Moody’s).
(ii) Liquidity risk management
The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Company’s trade and
other payables. These projections are based on the interest and foreign exchange rates applying at the end of the relevant financial year.
As at 31 March 2022
Financial liabilities – cash outflows
Trade and other payables
As at 31 March 2021
Financial liabilities – cash outflows
Trade and other payables
Less than
1 year
£’000
Between
1 and 2 years
£’000
Between
2 and 5 years
£’000
42,244
42,244
Less than
1 year
£’000
43,638
43,638
–
–
–
–
Between
1 and 2 years
£’000
Between
2 and 5 years
£’000
–
–
–
–
Over
5 years
£’000
–
–
Over
5 years
£’000
–
–
Total
£’000
42,244
42,244
Total
£’000
43,638
43,638
The Company has sufficient cash resources and liquid assets to enable it to meet its trade and other payables.
DCC plc Annual Report and Accounts 2022
235
Financial Statements
Notes to the Company Financial Statements continued
1
2
3
4
5
6
n
o
i
t
c
e
S
(iii) Market risk management
Foreign exchange risk management
The Company does not have any material assets or liabilities denominated in any currency other than euro at 31 March 2022 or at 31 March 2021
which would give rise to a significant transactional currency exposure. However, as the presentation currency for the Company is sterling, it is
exposed to fluctuations in the sterling/euro exchange rate. A change in the value of euro by 10% against sterling would have a £1.2 million
(cid:11)(cid:21)(cid:19)(cid:21)(cid:20)(cid:29)(cid:124)(cid:127)(cid:19)(cid:17)(cid:27)(cid:124)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:12)(cid:3)(cid:76)(cid:80)(cid:83)(cid:68)(cid:70)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:112)(cid:86)(cid:3)(cid:83)(cid:85)(cid:82)(cid:73)(cid:76)(cid:87)(cid:3)(cid:69)(cid:72)(cid:73)(cid:82)(cid:85)(cid:72)(cid:3)(cid:87)(cid:68)(cid:91)(cid:15)(cid:3)(cid:90)(cid:82)(cid:88)(cid:79)(cid:71)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:112)(cid:86)(cid:3)(cid:72)(cid:84)(cid:88)(cid:76)(cid:87)(cid:92)(cid:3)(cid:69)(cid:92)(cid:3)(cid:127)(cid:20)(cid:21)(cid:19)(cid:17)(cid:26)(cid:3)(cid:80)(cid:76)(cid:79)(cid:79)(cid:76)(cid:82)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:38)(cid:82)(cid:80)(cid:83)(cid:68)(cid:81)(cid:92)(cid:112)(cid:86)(cid:3)
net cash by £3.2 million (2021: £119.8 million and £1.9 million respectively).
Interest rate risk management
Based on the composition of net cash at 31 March 2022 a one percentage point (100 basis points) change in average floating interest rates would
have a £0.3 million (2021: £0.2 million) impact on the Company’s profit before tax. 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 Company has no exposure to commodity price risk.
Fair values of financial assets and financial liabilities
The following is a comparison by category of book values and fair values of the Company’s financial assets and financial liabilities:
Financial assets
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Trade and other payables
2022
2021
Book value
£’000
Fair value
£’000
Book value
£’000
Fair value
£’000
204,611
31,867
236,478
42,244
42,244
204,611
31,867
236,478
42,244
42,244
200,563
19,237
219,800
43,638
43,638
200,563
19,237
219,800
43,638
43,638
As at 31 March 2022 and 31 March 2021 the Company had no financial assets or financial liabilities which were carried at fair value.
6.13 Contingencies
Guarantees given in respect of borrowings and other obligations are detailed in note 5.5 to the Group financial statements.
236
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Supplementary
Information
Principal Subsidiaries and Associates
Shareholder Information
Corporate Information
Independent Assurance Statement
Additional Sustainability Information
Alternative Performance Measures
5 Year Review
Index
238
242
244
245
247
249
255
256
DCC plc Annual Report and Accounts 2022
237
Supplementary Information
Principal Subsidiaries and Associates1
DCC LPG
Company name
DCC LPG Limited
Butagaz SAS
Company address
Principal activity
DCC House,
Leopardstown Road, Foxrock,
Dublin 18, D18 PK00, Ireland
Holding and divisional management
company
47-53 Rue Raspail, 92300
Levallois – Perret, Paris, France
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Gaz de Paris SAS
(trading as Gaz Européen)
47-53 Rue Raspail, 92300
Levallois – Perret, Paris, France
Procurement, sales, marketing and
distribution of natural gas
Flogas Britain Limited
DCC Propane LLC
Flogas Ireland Limited
DSG Energy Limited
DCC Germany Holding GmbH
81 Rayns Way, Syston,
Leicester LE7 1PF, England
204 North State Route 54,
Roberts, IL 60962, USA
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Procurement, sales, marketing and
distribution of liquefied petroleum gas
USA
Knockbrack House, Matthew’s
Lane, Donore Road, Drogheda,
Co. Louth, A92 T803, Ireland
Procurement, sales, marketing and
distribution of liquefied petroleum gas
and natural gas
Ireland
Suites 2201-2, 22nd Floor,
AIA Kowloon Tower, Landmark
East, 100 How Ming Street,
Kwun Tong, Kowloon, Hong Kong
Werner-von Siemens-Str. 18,
97076 Würzburg, Germany
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Hong Kong
100
Holding company
Germany
100
TEGA – Technische Gase und
Gasetechnik GmbH
Werner-von-Siemens-Str. 18,
97076 Würzburg, Germany
Procurement, sales, marketing and
distribution of liquefied petroleum gas
and refrigerant gases
Germany
100
Brännkyrkagatan 63, 11822
Stockholm, Sweden
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Sandakerveien 116, 0484 Oslo,
Norway
Procurement, sales, marketing and
distribution of liquefied petroleum gas
Sweden
Norway
Zuiderzeestraatweg 1, 3882NC,
Putten, The Netherlands
Procurement, sales, marketing and
distribution of liquefied petroleum gas
The
Netherlands
100
100
100
Incorporated
and operating in
Group
shareholding %
Ireland
100
France
France
Britain
100
100
100
100
100
Flogas Sverige AB
Flogas Norge AS
Benegas BV
DCC Retail & Oil
Company name
DCC Retail & Oil Limited
Certas Energy UK Limited
Fuel Card Services Limited
Certas Energy Norway AS
Certas Energy France SAS
Energy Procurement
Ireland 2013 Limited
DCC Energi Danmark A/S
Company address
Principal activity
Holding and divisional management
company
Incorporated
and operating in
Group
shareholding %
Ireland
100
DCC House,
Leopardstown Road, Foxrock,
Dublin 18, D18 PK00, Ireland
302 Bridgewater Place,
Birchwood Park, Warrington
WA3 6XG, England
Alexandra House,
Lawnswood Business Park,
Redvers Close, Leeds LS16 6QY,
England
Procurement, sales, marketing and
distribution of petroleum and lubricant
products
Sale and administration of petroleum
products through the use of fuel cards
Britain
100
Britain
100
Elias Smiths vei 24,
1337 Sandvika, Norway
Procurement, sales and marketing of
petroleum products
9 Avenue Edouard Belin, 92500
Rueil Malmaison, Paris, France
Procurement, sales and marketing of
petroleum products
Procurement, sales and marketing of
petroleum products
Norway
France
Ireland
100
100
100
DCC House,
Leopardstown Road, Foxrock,
Dublin 18, D18 PK00, Ireland
Naerum Hovedgade 8,
2850 Naerum, Denmark
Procurement, sales, marketing and
distribution of petroleum and lubricant
products and natural gas
Denmark
60
1. The information in this section relates only to the Group’s principal subsidiaries and associates. A full list of subsidiaries and associates will be annexed to the Annual Return of the Company to
be filed with the Irish Registrar of Companies.
238
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
DCC Retail & Oil continued
Company name
Qstar Försäljning AB
Company address
Principal activity
Spårgatan 5, Box 633,601 14
Norrköping, Sweden
Procurement, sales and marketing
of petroleum products
Energie Direct
MineralölhandelsgesmbH
Alte Poststraße 400, A-8055 Graz,
Austria
Procurement, sales, marketing and
distribution of petroleum and lubricant
products and natural gas
Incorporated
and operating in
Group
shareholding %
Sweden
Austria
100
100
Emo Oil Limited
Clonminam Industrial Estate,
Portlaoise, Co. Laois, R32 YY26,
Ireland
Procurement, sales, marketing
and distribution of petroleum and
lubricant products
Ireland
100
Company address
Principal activity
DCC House,
Leopardstown Road, Foxrock,
Dublin 18, D18 PK00, Ireland
Holding and divisional management
company
Incorporated
and operating in
Group
shareholding %
Ireland
100
DCC Healthcare
Company name
DCC Healthcare Limited
DCC Vital
DCC Vital Limited
Fannin Limited
Fannin House,
South County Business Park,
Leopardstown, Dublin 18,
D18 Y0C9, Ireland
Fannin House,
South County Business Park,
Leopardstown, Dublin 18,
D18 Y0C9, Ireland
Williams Medical Supplies
Limited
Craiglas House,
The Maerdy Industrial Estate,
Rhymney, Gwent NP22 5PY, Wales
Fannin (UK) Limited
Westminster Industrial Estate,
Repton Road, Measham,
Swadlincote, Derbyshire
DE12 7DT, England
Wörner Medizinprodukte und
Logistik GmbH
Ferdinand-Lassalle-Str. 37, 72770
Reutlingen, Germany
Medilab Medical Equipments
AG
Hauptstrasse 160a, 8274
Tägerwilen, Switzerland
Health & Beauty Solutions
DCC Health & Beauty
Solutions Limited
Amerilab Technologies, Inc.
9-12 Hardwick Road,
Astmoor Industrial Estate,
Runcorn, Cheshire WA7 1PH,
England
2765 Niagara Lane,
North Plymouth, MN 55447, USA
Elite One Source
Nutritional Services, Inc.
1001 South 3rd Street West,
Missoula, MT 59801, USA
Ion Labs, Inc.
8031 114th Ave, Suite 4000,
Largo, FL 33773, USA
Holding company for the operations
of the DCC Vital group of companies
Ireland
100
Sales, marketing and distribution of
medical and pharmaceutical products
to healthcare providers
Ireland
100
Sales, marketing and distribution of
medical supplies and services to UK
healthcare market, primarily GPs and
primary care organisations
Sales, marketing and distribution
of medical devices to healthcare
providers
Sales, marketing and distribution of
medical and laboratory supplies and
services to the German primary care
healthcare market
Sales, marketing and distribution of
medical and laboratory supplies and
services to the Swiss primary care
healthcare market
Britain
100
Britain
100
Germany
100
Switzerland
100
Outsourced solutions for the health
and beauty industry
Britain
100
Development, contract manufacture
and packing of effervescent nutritional
products in powder and tablet formats
Development, contract manufacture
and packing of nutritional products in
tablet and hard shell capsule format
Development, contract manufacture
and packing of nutritional products
across a range of formats including
tablets, capsules, powders and liquids
USA
100
USA
100
USA
100
DCC plc Annual Report and Accounts 2022
239
Supplementary Information
Principal Subsidiaries and Associates continued
DCC Healthcare continued
Company name
Company address
Principal activity
Incorporated
and operating in
Group
shareholding %
Health & Beauty Solutions
continued
EuroCaps Limited
Thompson & Capper Limited
Laleham Health and
Beauty Limited
Crown Business Park, Dukestown,
Tredegar, Gwent NP22 4EF, Wales
9-12 Hardwick Road, Astmoor
Industrial Estate, Runcorn,
Cheshire WA7 1PH, England
Sycamore Park, Mill Lane, Alton,
Hampshire GU34 2PR, England
Design Plus Holdings Limited
Rowan House, 3 Stevant Way,
White Lund, Morecambe,
Lancashire LA3 3PU, England
Development and contract
manufacture of nutritional products
in softgel capsule format
Development, contract manufacture
and packing of nutritional products in
tablet and hard shell capsule format
Development, contract manufacture
and packing of liquids and creams
for the beauty and consumer
healthcare sectors
Development, contract manufacture
and packing of liquids and creams
for the beauty and consumer
healthcare sectors
Britain
100
Britain
100
Britain
100
Britain
100
DCC Technology
Company name
DCC Technology Limited
Exertis (UK) Ltd
Exertis Ireland Limited
DCC House,
Leopardstown Road, Foxrock,
Dublin 18, D18 PK00, Ireland
Technology House, Magnesium
Way, Hapton, Burnley BB12 7BF,
England
Unit 21, Fonthill Business Park,
Fonthill Road, Dublin 22,
D22 FR82, Ireland
Company address
Principal activity
Holding and divisional management
company
Incorporated
and operating in
Group
shareholding %
Ireland
100
Sales, marketing and distribution
of technology products
Britain
100
Sales, marketing and distribution
of technology products
Ireland
100
Almo Corporation
2709 Commerce Way, Philadelphia,
PA19154, USA
Jam Industries Ltd.
21000 Trans-Canada Highway,
Baie-D’Urfe, QC H9X 4B7, Canada
Stampede Presentation
Products, Inc.
55 Woodridge Drive, Amherst, NY
14228, USA
Sales, marketing and distribution of
technology, appliances and lifestyle
products
Sales, marketing and distribution of
professional audio products, musical
instruments and consumer
electronics
Sales, marketing and distribution of
professional audiovisual products
and solutions
Exertis Arc Telecom Limited
Unit No. 702, X3 Building, Jumeirah
Lake Towers, Dubai, UAE
Sales, marketing and distribution
of technology products
Exertis CapTech AB
CUC SAS
(trading as Exertis Connect)
Aminogatan 17, SE- 43153
Mölndal, Gotëborg, Sweden
Sales, marketing and distribution
of technology products
Zone Industrielle Buchelay 3000,
BP 1126, 78204 Mantes en
Yvelines Cedex, France
Sales, marketing and distribution of
technology products and connecting
solutions
Exertis France SAS
5 Rue Pleyel, 93200 Saint Denis,
France
Go Telecom BV (trading as
Exertis Go Connect)
Amacom Holding BV
Laan Van Kopenhagen 100,
3317 DM Dordrecht,
The Netherlands
De Tweeling 24-A,
5215 MC ‘s-Hertogenbosch,
The Netherlands
240
DCC plc Annual Report and Accounts 2022
Sales, marketing and distribution of
technology peripherals and
accessories
Sales, marketing and distribution of
unified communications and audio
visual products
Sales, marketing and distribution of
technology products and consumer
electronics
United
States
100
Canada
100
USA
100
Ireland and
operating in
Dubai
Sweden
France
100
100
100
France
100
The
Netherlands
The
Netherlands
100
100
Strategic Report
Governance
Financial Statements
Supplementary Info
DCC Technology continued
Company name
Company address
Principal activity
Azenn SAS
23 Rue du Champ Morin, 35360,
Montauban-de-Bretagne, France
Sales, marketing and distribution of
technology products and services
Comm-Tec GmbH
(trading as Exertis Pro AV)
Siemensstraße 14, 73066
Uhingen, Germany
Sales, marketing and distribution of
professional audiovisual and IT
products
Incorporated
and operating in
Group
shareholding %
France
100
Germany
100
Exertis Supply Chain
Services Limited
Unit 21, Fonthill Business Park,
Fonthill Road, Dublin 22,
D22 FR82, Ireland
Provision of supply chain management
and outsourced procurement services
Ireland
100
Associates
Company name
KSG Dining Limited
Geogaz Lavera SA
Company address
Principal activity
McKee Avenue, Finglas, Dublin 11,
D11 NY90, Ireland
Restaurant and hospitality service
provider
Incorporated
and operating in
Group
shareholding %
Ireland
47.5
2 Rue des Martinets,
92500 Rueil Malmaison,
Paris, France
Owns and operates an LPG storage
facility
France
25
18
Norgal (GIE)
Route de la Chimie, 76700
Gonfreville L’Orcher, France
Receiving, storage and distribution site
for LPG products
France
DCC plc Annual Report and Accounts 2022
241
Supplementary Information
Shareholder Information
Share Listing
DCC’s shares have a Premium Listing on the Official List of the United Kingdom Listing Authority (‘UKLA Official List’) and are traded solely on the
London Stock Exchange in sterling.
Share Price Data
Share price at 16 May
Market capitalisation at 16 May
Share price at 31 March
Market capitalisation at 31 March
Share price movement during the year
– High
– Low
DCC plc’s ordinary share price information can be accessed on the Company’s website under the ‘Investors’ tab.
Shareholdings as at 31 March 2022
By location
6.77%
2.40%
12.83%
35.53%
UK
North America
Continental Europe
Ireland
Asia/Rest of World
Retail
Geographic division1
UK
North America
Continental Europe
Ireland
Asia/Rest of World
Retail3
Total
2022
£
62.68
6,183m
59.26
5,845m
2021
£
–
–
62.90
6,200m
64.86
55.00
72.04
47.62
Number of
shares2
35,047,368
23,637,661
18,257,625
12,660,603
2,369,084
6,673,559
98,645,900
18.51%
23.96%
Notes:
1. This represents the best estimate of the number of shares controlled by fund managers resident in the
relevant geographic regions.
2. Excludes 2,688,004 shares held as Treasury Shares.
3. Retail includes shareholdings of less than 5,000 shares.
Details of shareholdings in excess of 3% in the Company are set out on page 156.
Dividends
DCC normally pays dividends twice yearly, in July and in December, to shareholders on the register of members on the record date for the dividend.
An interim dividend of 55.85 pence per share was paid on 10 December 2021.
Subject to shareholders’ approval at the Annual General Meeting, a final dividend of 119.93 pence per share will be paid on 21 July 2022 to
shareholders on the register of members at the close of business on 27 May 2022.
Dividends are declared in sterling and shareholders have the option to elect to receive dividends in either sterling or 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.
From 1 January 2020, the Company is obliged to deduct Dividend Withholding Tax (‘DWT’) at the rate of 25% 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).
The Irish Revenue Commissioners have published a tax and duty manual entitled ‘Dividend Withholding Tax – Details of Scheme’, which was updated
in April 2021 and can be obtained by contacting the Company’s Registrar.
242
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Financial Calendar
17 May 2022
26 May 2022
27 May 2022
15 July 2022
15 July 2022
21 July 2022
8 November 2022
December 2022
February 2023
Final results announcement for 2022
Ex-dividend date – final dividend
Record date – final dividend
Interim Management Statement
Annual General Meeting
Proposed payment date – final dividend
Interim results announcement
Proposed payment date – interim dividend
Interim Management Statement
Annual General Meeting, Electronic Proxy Voting and Euroclear Bank Voting
The Annual General Meeting will be held at 11.00 am on 15 July 2022 at The Powerscourt Hotel, Powerscourt Estate, Enniskerry, Co. Wicklow,
A98 DR12, Ireland. The Notice of Meeting together with an explanatory letter from the Chairman and a Form of Proxy accompany this Annual Report.
Shareholders (being registered members) may lodge a Form of Proxy for the 2022 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, www.eproxyappointment.com, and following the
instructions that are set out on the Form of Proxy or in the email broadcast that you will have received if you have elected to receive communications
via electronic means.
Persons who hold their interests in ordinary shares as Belgian law rights through the Euroclear system or as CDIs through the CREST System should
consult with their stockbroker or other intermediary for information on the processes and timelines for submitting proxy votes for the Annual
General Meeting through the respective systems. Further details are contained in the notes to the Notice of Annual General Meeting.
DCC Website
Our corporate website, www.dcc.ie, provides access to share price information through downloadable reports and interactive share price tools.
The site also provides access to information on the Group’s activities, results, annual reports, stock exchange announcements and investor
presentations.
Electronic Communications
The use of electronic communications enables the faster receipt of documents, in an environmentally friendly and cost-effective manner.
Shareholders who wish to alter the method by which they receive communications should contact the Company’s Registrar.
Registrar
All administrative queries about the holding of DCC shares should be addressed to the Company’s Registrar, Computershare Investor Services
(Ireland) Limited, 3100 Lake Drive, Citywest Business Campus, Dublin 24, D24 AK82, Ireland.
Tel: + 353 1 247 5698
Fax: + 353 1 447 5571
www.investorcentre.com/ie/contactus
Investor Relations
For investor enquiries, please contact Rossa White, Head of Group Investor Relations, DCC plc, DCC House, Leopardstown Road, Foxrock, Dublin 18,
D18 PK00, Ireland.
Tel: + 353 1 2799 400
email: investorrelations@dcc.ie
DCC plc Annual Report and Accounts 2022
243
Supplementary Information
Corporate Information
Company Secretary
Darragh Byrne
Registered and Head Office
DCC House
Leopardstown Road
Foxrock
Dublin 18
D18 PK00
Ireland
Auditor
KPMG
1 Stokes Place
St. Stephen’s Green
Dublin 2
D02 DE03
Ireland
Registrar
Computershare Investor Services
(Ireland) Limited
3100 Lake Drive
Citywest Business Campus
Dublin 24
D24 AK82
Ireland
Bankers
Bank of Ireland
Barclays
BayernLB
BNP Paribas
Citibank
Citizens Bank
Danske Bank
DBS Bank
Deutsche Bank
HSBC
ING Bank
J.P. Morgan
National Westminster Bank
Nordea
Rabobank
Société Générale
Standard Chartered Bank
TD Securities
Wells Fargo
Solicitors
William Fry
2 Grand Canal Square
Dublin 2
D02 A342
Ireland
Pinsent Masons
1 Park Row
Leeds LS1 5AB
England
Stockbrokers
Davy
49 Dawson Street
Dublin 2
D02 PY05
Ireland
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
England
UBS
5 Broadgate
London EC2M 2QS
England
Website
www.dcc.ie
244
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Independent Assurance Statement
DCC plc
Scope
We have been engaged by DCC plc (‘DCC’) to perform a ‘limited assurance engagement,’ as defined by International Standards on Assurance
(cid:40)(cid:81)(cid:74)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:86)(cid:15)(cid:3)(cid:75)(cid:72)(cid:85)(cid:72)(cid:3)(cid:68)(cid:73)(cid:87)(cid:72)(cid:85)(cid:3)(cid:85)(cid:72)(cid:73)(cid:72)(cid:85)(cid:85)(cid:72)(cid:71)(cid:3)(cid:87)(cid:82)(cid:3)(cid:68)(cid:86)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:72)(cid:81)(cid:74)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:15)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:83)(cid:82)(cid:85)(cid:87)(cid:3)(cid:82)(cid:81)(cid:3)(cid:39)(cid:38)(cid:38)(cid:112)(cid:86)(cid:3)(cid:86)(cid:72)(cid:79)(cid:72)(cid:70)(cid:87)(cid:72)(cid:71)(cid:3)(cid:86)(cid:88)(cid:69)(cid:77)(cid:72)(cid:70)(cid:87)(cid:3)(cid:80)(cid:68)(cid:87)(cid:87)(cid:72)(cid:85)(cid:3)(cid:76)(cid:81)(cid:73)(cid:82)(cid:85)(cid:80)(cid:68)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:86)(cid:92)(cid:80)(cid:69)(cid:82)(cid:79)(cid:3)(cid:724)(cid:3)
(the ‘Subject Matter’) in the DCC Annual Report (‘the Report’) for the year ended 31 March 2022.
Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance procedures
on the remaining information included in the Report, and accordingly, we do not express a conclusion on this information.
Criteria applied by DCC
In preparing the Subject Matter, DCC applied their internally developed General Reporting Boundaries and Carbon Criteria (‘the Criteria’). Such
Criteria were specifically designed by DCC for the purposes of Subject Matter reporting. As a result, the Subject Matter may not be suitable for
another purpose.
DCC responsibilities
DCC management is responsible for selecting the Criteria, and for presenting the Subject Matter in accordance with that Criteria, in all material
respects. This responsibility includes establishing and maintaining internal controls, maintaining adequate records and making estimates that are
relevant to the preparation of the subject matter, such that it is free from material misstatement, whether due to fraud or error.
EY’s responsibilities
Our responsibility is to express a conclusion on the presentation of the Subject Matter based on the evidence we have obtained.
We conducted our engagement in accordance with the International Standard for Assurance Engagements Other than Audits or Reviews of
Historical Financial Information (‘ISAE 3000’), the International Standard for Assurance Engagements ISAE 3410 Assurance Engagements on
Greenhouse Gas Statements (‘ISAE 3410’), and the terms of reference for this engagement as agreed with DCC on 18 January 2022. Those
standards require that we plan and perform our engagement to obtain limited assurance about whether, in all material respects, the Subject Matter is
presented in accordance with the Criteria, and to issue a report. The nature, timing, and extent of the procedures selected depend on our judgment,
including an assessment of the risk of material misstatement, whether due to fraud or error.
The Subject Matter has been evaluated against the following criteria:
• Completeness: Whether all material data sources have been included and that boundary definitions have been appropriately interpreted and
applied.
• Consistency: Whether the DCC scope and definitions for the Subject Matter have been consistently applied to the data.
• Accuracy: Whether the data has been accurately collated by DCC management, and whether there is supporting information for the data
reported by operations to DCC management.
We believe that the evidence obtained is sufficient and appropriate to provide a basis for our limited assurance conclusions. We do not accept or
assume any responsibility for any other purpose or to any other person or organisation. Any reliance any such third party may place on the Report is
entirely at its own risk.
Our Independence and Quality Control
We have maintained our independence and confirm that we have met the requirements of the Code of Ethics for Professional Accountants issued by
the International Ethics Standards Board for Accountants, and have the required competencies and experience to conduct this assurance engagement.
EY also applies International Standard on Quality Control 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other
Assurance and Related Services Engagements, and accordingly maintains a comprehensive system of quality control including documented policies
and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Description of procedures performed
Procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than, for a reasonable assurance
engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would
have been obtained had a reasonable assurance engagement been performed. Our procedures were designed to obtain a limited level of assurance
on which to base our conclusion and do not provide all the evidence that would be required to provide a reasonable level of assurance.
Although we considered the effectiveness of management’s internal controls when determining the nature and extent of our procedures, our
assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing
procedures relating to checking aggregation or calculation of data within IT systems. The GHG quantification process is subject to scientific
uncertainty, which arises because of incomplete scientific knowledge about the measurement of GHGs. Additionally, GHG procedures are subject to
estimation (or measurement) uncertainty resulting from the measurement and calculation processes used to quantify emissions within the bounds
of existing scientific knowledge.
DCC plc Annual Report and Accounts 2022
245
Supplementary Information
Independent Assurance Statement continued
A limited assurance engagement consists of making enquiries, primarily of persons responsible for preparing the Subject Matter and related
information, and applying analytical and other appropriate procedures.
Our procedures included:
•
• Performed a review of the data management systems, tested reasonableness of conversion factors applied, reviewed alignment with the Criteria
Interviewed management to understand the key processes, systems and controls in place for the preparation of the Subject Matter.
and conducted analytical review procedures over the Subject Matter.
• Undertook a remote desktop review to two selected DCC operations to understand the process of data collection and reporting from site level
to head office.
• Agreed sample selection to supporting documentation and re-performed calculations.
• Assessed the appropriateness of the Criteria for the Subject Matter.
• Reviewed the Report for the appropriate presentation of the Subject Matter, including the discussion of limitations and assumptions relating
to the data presented.
We also performed such other procedures as we considered necessary in the circumstances.
Conclusion
Based on our procedures and the evidence obtained, we are not aware of any material modifications that should be made to the Subject Matter
for the year ended 31 March 2022, in order for it to be in accordance with the Criteria.
Restricted use
This report is intended solely for the information and use of DCC for limited assurance of the Subject Matter for the year ended 31 March 2022
and is not intended to be and should not be used by anyone other than those specified parties.
Ernst & Young
16 May 2022
Dublin, Ireland
246
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Additional Sustainability Information
1. GRI and SASB Reference Table
Sustainability Pillar
Target
Metric
Climate Change
& Energy
Transition
We will reduce our
carbon emissions
by 20% by 2025 and
to net zero by 2050.
Scope 1 and 2 carbon emissions
We help our customers
reduce their carbon
emissions
Scope 3 emissions
UNSDG
7: Affordable
and Clean
Energy
13: Climate
Action
GRI
SASB
Page Reference
305-1 & 2
EM-RM-
110a.1
Page 83
305-3
N/A
Page 84
Safety &
Environmental
Protection
We keep our
people safe
We protect the
environment in the
communities where
we operate
Lost time injury frequency rate (LTIFR)
and severity rate (LTISR)
Number of serious personal injuries
to employees and contractors.
Number of API Tier 1 process safety
events
Number of significant spills.
8: Decent Work
and Economic
Growth
403-9
EM-RM-
320a.1
N/A
306-3
EM-RM-
540a.1
EM-RM-
150a.2
12: Responsible
Consumption &
Production
People & Social We support the
development of
our people
Number and rate of senior employee
turnover by age group, gender, and
region
8: Decent Work
and Economic
Growth
401-1 (b)
Number of employees by age group,
gender and region who received a
performance and career development
review.
Average hours of training by age group,
gender, and region.
We support inclusion
and diversity.
Gender balance of senior management
teams (MD-1) and above.
(See comment on Governance below.)
5: Gender
Equality
404-3
404-1
405-1
N/A
N/A
N/A
N/A
Page 88
Page 88
Page 87
Page 89
N/A
N/A
N/A
Page 38
10: Reduced
Inequalities
406-1
N/A
Page 91
Number of incidents of discrimination,
the status of incidents reviewed and
confirmation of remediation.
Monetary loss from inclusion and
diversity related legal proceedings.
Governance
&
Compliance
We protect human
rights.
Human rights breaches in our business
and our supply chains.
We prevent corruption. Number of significant cases and
12: Responsible
Production and
Consumption
monetary losses related to bribery and
corruption.
We sell safe products.
Product safety-related compliance
failures.
N/A
408-1
409-1
205-1
CG-MR-
330a.2
Page 91
N/A
Page 90
HC-BP-
510a.2
Page 90
416-2 HC-DI-250a.1
Page 91
DCC plc Annual Report and Accounts 2022
247
Supplementary Information
Additional Sustainability Information continued
2. TCFD Reference Table
Governance
Disclose the organisation’s
governance around climate-
related risks and opportunities.
Strategy
Disclose the actual and
potential impacts of climate-
related risks and opportunities
on the organisation’s
businesses, strategy, and
financial planning where such
information is material.
Risk
Management
Disclose how the organisation
identifies, assesses, and
manages climate-related risks.
Metrics &
Targets
Disclose the metrics and
targets used to assess and
manage relevant climate-
related risks and opportunities
where such information
is material.
Recommended Disclosure
Principal Section of Annual Report
a) Describe the board’s oversight of climate-
related risks and opportunities.
Risk Report page 92
b) Describe management’s role in assessing
and managing climate-related risks and
opportunities.
Corporate Governance Statement page 108
Energy Strategy page 22
Sustainable Business Report page 80
Risk Report page 92
Corporate Governance Statement page 108
a) Describe the climate-related risks and
opportunities the organisation has identified
over the short, medium, and long term.
Energy Strategy page 22
Financial Review page 48
Sustainable Business Report page 80
b) Describe the impact of climate-related risks
and opportunities on the organisation’s
businesses, strategy, and financial planning.
Risk Report page 92
Energy Strategy page 22
Financial Review page 48
Sustainable Business Report page 80
c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios, including a 2°C or
lower scenario.
a) Describe the organisation’s processes for
identifying and assessing climate-related risks.
Risk Report page 92
Energy Strategy page 22
Risk Report page 92
Financial Review page 48
b) Describe the organisation’s processes
for managing climate-related risks.
c) Describe how processes for identifying,
assessing, and managing climate-related risks
are integrated into the organisation’s overall
risk management.
a) Disclose the metrics used by the organisation
to assess climate-related risks and opportunities
in line with its strategy and risk management
process.
b) Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and
the related risks.
c) Describe the targets used by the organisation
to manage climate-related risks and
opportunities and performance against targets.
Sustainable Business Report page 80
Risk Report page 92
Risk Report page 92
Risk Report page 92
Energy Strategy page 22
Sustainable Business Report page 80
Sustainable Business Report page 80
Energy Strategy page 22
Sustainable Business Report page 80
248
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Alternative Performance Measures
The Group reports certain alternative performance measures (‘APMs’) that are not required under International Financial Reporting Standards (‘IFRS’)
which represent the generally accepted accounting principles (‘GAAP’) under which the Group reports. The Group believes that the presentation of
these APMs provides useful supplemental information which, when viewed in conjunction with our IFRS financial information, provides investors with
a more meaningful understanding of the underlying financial and operating performance of the Group and its divisions.
These APMs are primarily used for the following purposes:
•
•
•
to evaluate the historical and planned underlying results of our operations;
to set Director and management remuneration; and
to discuss and explain the Group’s performance with the investment analyst community.
None of the APMs should be considered as an alternative to financial measures derived in accordance with GAAP. The APMs can have limitations as
analytical tools and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. These performance
measures may not be calculated uniformly by all companies and therefore may not be directly comparable with similarly titled measures and
disclosures of other companies.
The principal APMs used by the Group, together with reconciliations where the non-GAAP measures are not readily identifiable from the financial
statements, are as follows:
Adjusted operating profit (‘EBITA’)
Definition
This comprises operating profit as reported in the Group Income Statement before net operating exceptional items and amortisation of intangible
assets. Net operating exceptional items and amortisation of intangible assets are excluded in order to assess the underlying performance of our
operations. In addition, neither metric forms part of Director or management remuneration targets.
Calculation
Operating profit
Net operating exceptional items
Amortisation of intangible assets
Adjusted operating profit (EBITA)
Reference in Financial Statements
Income Statement
Income Statement
Income Statement
2022
£’000
458,360
46,534
84,340
589,234
2021
£’000
422,850
40,495
66,898
530,243
Adjusted operating profit before depreciation (‘EBITDA’)
Definition
EBITDA represents earnings before net interest, tax, depreciation on property, plant and equipment, amortisation of intangible assets, share
of equity accounted investments’ profit after tax and net exceptional items. This metric is used to compare profitability between companies by
eliminating the effects of financing, tax environments, asset bases and business combinations history. It is also utilised as a proxy for a company’s
cash flow.
Calculation
Adjusted operating profit (EBITA)
Depreciation of property, plant and equipment
Adjusted operating profit before depreciation (EBITDA)
Reference in Financial Statements
Per above
Note 3.1
2022
£’000
589,234
137,976
727,210
2021
£’000
530,243
131,199
661,442
Net interest before exceptional items
Definition
The Group defines net interest before exceptional items as the net total of finance costs and finance income before interest related exceptional
items as presented in the Group Income Statement.
Calculation
Finance costs before exceptional items
Finance income before exceptional items
Net interest before exceptional items
Reference in Financial Statements
Income Statement
Income Statement
2022
£’000
(77,205)
23,075
(54,130)
2021
£’000
(85,639)
26,253
(59,386)
DCC plc Annual Report and Accounts 2022
249
Supplementary Information
Alternative Performance Measures continued
Interest cover – EBITDA interest cover
Definition
The EBITDA interest cover ratio measures the Group’s ability to pay interest charges on debt from cash flows. In order to maintain comparability with
the definitions contained in the Group’s lending arrangements, EBITDA and net interest exclude the impact arising from the adoption of IFRS 16.
Calculation
EBITDA
Less: impact of IFRS 16
EBITDA for covenant purposes
Net interest before exceptional items
Less: impact of IFRS 16
Net interest for covenant purposes
EBITDA interest cover (times)
Reference in Financial Statements
Per above
Per above
Note 2.7
2022
£’000
727,210
(6,728)
720,482
(54,130)
9,473
(44,657)
16.1x
2021
£’000
661,442
(5,563)
655,879
(59,386)
9,707
(49,679)
13.2x
Effective tax rate
Definition
The Group’s effective tax rate expresses the income tax expense before exceptionals and deferred tax attaching to the amortisation of intangible
assets as a percentage of adjusted operating profit less net interest before exceptional items.
Calculation
Adjusted operating profit
Net interest before exceptional items
Income tax expense
Income tax attaching to exceptional items
Deferred tax attaching to amortisation of intangible assets
Total Income tax expense before exceptionals and deferred
tax attaching to amortisation of intangible assets
Effective tax rate (%)
Reference in Financial Statements
Per above
Per above
Income Statement
Note 2.9
Note 2.9
Dividend cover
Definition
The dividend cover ratio measures the Group’s ability to pay dividends from earnings.
Calculation
Adjusted earnings per share
Dividend
Dividend cover (times)
Reference in Financial Statements
Note 2.11
Note 2.10
2022
£’000
589,234
(54,130)
535,104
79,734
1,501
16,421
97,656
18.3%
2021
£’000
530,243
(59,386)
470,857
62,278
4,104
13,664
80,046
17.0%
2022
pence
430.11
175.78
2.4x
2021
pence
386.62
159.80
2.4x
250
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
Constant currency
Definition
The translation of foreign denominated earnings can be impacted by movements in foreign exchange rates versus sterling, the Group’s presentation
currency. In order to present a better reflection of underlying performance in the period, the Group retranslates foreign denominated current year
earnings at prior year exchange rates.
Revenue (constant currency)
Calculation
Revenue
Currency impact
Revenue (constant currency)
Adjusted operating profit (constant currency)
Calculation
Adjusted operating profit
Currency impact
Adjusted operating profit (constant currency)
Adjusted earnings per share (constant currency)
Calculation
Adjusted profit after taxation and non-controlling interests
Currency impact
Reference in Financial Statements
Income Statement
Reference in Financial Statements
Per above
Reference in Financial Statements
Note 2.11
Adjusted profit after taxation and non-controlling interests (constant
currency)
Weighted average number of ordinary shares in issue (‘000)
Note 2.11
Adjusted earnings per share (constant currency)
2022
£’000
2021
£’000
17,732,020
496,412
13,412,450
–
18,228,432
13,412,450
2022
£’000
589,234
20,872
610,106
2022
£’000
424,133
14,976
439,109
98,610
445.30p
2021
£’000
530,243
–
530,243
2021
£’000
380,860
–
380,860
98,510
386,62p
Net capital expenditure
Definition
Net capital expenditure comprises purchases of property, plant and equipment, proceeds from the disposal of property, plant and equipment and
government grants received in relation to property, plant and equipment.
Calculation
Reference in Financial Statements
Purchase of property, plant and equipment
Government grants received in relation to property, plant and equipment
Proceeds from disposal of property, plant and equipment
Group Cash Flow Statement
Group Cash Flow Statement
Group Cash Flow Statement
Net capital expenditure
2022
£’000
194,353
–
(23,524)
170,829
2021
£’000
162,879
(89)
(15,898)
146,892
Free cash flow
Definition
Free cash flow is defined by the Group as cash generated from operations before exceptional items as reported in the Group Cash Flow Statement
after repayment of lease creditors and net capital expenditure.
Calculation
Cash generated from operations before exceptionals
Repayment of lease creditors
Net capital expenditure
Free cash flow
Reference in Financial Statements
Group Cash Flow Statement
Note 3.12
Per above
2022
£’000
628,433
(75,053)
(170,829)
382,551
2021
£’000
903,659
(68,986)
(146,892)
687,781
DCC plc Annual Report and Accounts 2022
251
Supplementary Information
Alternative Performance Measures continued
Free cash flow (after interest and tax payments)
Definition
Free cash flow (after interest and tax payments) is defined by the Group as free cash flow after interest paid (excluding interest relating to lease
creditors), income tax paid, dividends received from equity accounted investments and interest received. As noted in the definition of free cash flow,
interest amounts relating to the repayment of lease creditors has been deducted in arriving at the Group’s free cash flow and are therefore excluded
from the interest paid figure in arriving at the Group’s free cash flow (after interest and tax payments).
Calculation
Free cash flow
Interest paid (including interest relating to lease creditors)
Interest relating to lease creditors
Income tax paid
Interest received
Free cash flow (after interest and tax payments)
Reference in Financial Statements
Per above
Group Cash Flow Statement
Note 3.12
Group Cash Flow Statement
Group Cash Flow Statement
Cash conversion ratio
Definition
The cash conversion ratio expresses free cash flow as a percentage of adjusted operating profit.
Calculation
Free cash flow
Adjusted operating profit
Cash conversion ratio (%)
Reference in Financial Statements
Per above
Per above
Return on capital employed (‘ROCE’)
Definition
ROCE represents adjusted operating profit expressed as a percentage of the average total capital employed.
2022
£’000
382,551
(70,103)
9,473
(76,292)
22,759
268,388
2021
£’000
687,781
(84,342)
9,707
(62,191)
27,930
578,885
2022
£’000
382,551
589,234
65%
2021
£’000
687,781
530,243
130%
The Group adopted IFRS 16 Leases on the transition date of 1 April 2019 using the modified retrospective approach, meaning that comparatives
were not restated. To assist comparability with prior years, the Group presents ROCE excluding the impact of IFRS 16 (‘ROCE excl. IFRS 16’) as well
as ROCE including the impact of IFRS 16 (‘ROCE incl. IFRS 16’). Total capital employed (excl. IFRS 16) represents total equity adjusted for net debt/
cash (including lease creditors), goodwill and intangibles written off, right-of-use leased assets, acquisition related liabilities and equity accounted
investments whilst total capital employed (incl. IFRS 16) includes right-of-use leased assets.
Similarly, adjusted operating profit is presented both excluding and including the impact of IFRS 16. Net operating exceptional items and amortisation
of intangible assets are excluded in order to assess the underlying performance of our operations. In addition, neither metric forms part of Director
or management remuneration targets.
ROCE (excl. IFRS 16)
Calculation
Total equity
Net debt (including lease creditors)
Goodwill and intangibles written off
Right-of-use leased assets
Equity accounted investments
Acquisition related liabilities (current and non-current)
Closing total capital employed (excl. IFRS 16)
Average total capital employed (excl. IFRS 16)
Reference in Financial Statements
Group Balance Sheet
Note 3.13
Note 3.2
Group Balance Sheet
Note 3.16
Adjusted operating profit
Less: impact of IFRS 16 on operating profit
Per above
Return on capital employed (%) excl. IFRS 16
2022
£’000
2,970,563
756,605
546,813
(327,551)
(26,843)
96,252
2021
£’000
2,705,644
150,170
462,473
(308,863)
(27,134)
84,402
4,015,839
3,066,692
3,541,266
3,076,327
589,234
(6,728)
582,506
16.5%
530,243
(5,563)
524,680
17.1%
252
DCC plc Annual Report and Accounts 2022
Strategic Report
Governance
Financial Statements
Supplementary Info
ROCE (incl. IFRS 16)
Calculation
Total capital employed
Right-of-use leased assets
Closing total capital employed (incl. IFRS 16)
Average total capital employed (incl. IFRS 16)
Adjusted operating profit
Return on capital employed (%) incl. IFRS 16
Reference in Financial Statements
Per above
Note 3.2
Per above
2022
£’000
2021
£’000
4,015,839
327,551
3,066,692
308,863
4,343,390
3,375,555
3,859,473
3,382,807
589,234
15.3%
530,243
15.7%
Committed acquisition expenditure
Definition
The Group defines committed acquisition expenditure as the total acquisition cost of subsidiaries as presented in the Group Cash Flow Statement
(excluding amounts related to acquisitions which were committed to in previous years) and future acquisition related liabilities for acquisitions
committed to during the year.
Calculation
Net cash outflow on acquisitions during the year
Cash outflow on acquisitions which were committed to in the previous year
Acquisition related liabilities arising on acquisitions during the year
Acquisition related liabilities which were committed to in the previous year
Amounts committed in the current year
Committed acquisition expenditure
Reference in Financial Statements
Group Cash Flow Statement
Note 3.16
2022
£’000
668,123
(114,658)
47,381
(21,510)
24,100
603,436
2021
£’000
236,232
(22,388)
9,321
(539)
152,000
374,626
Net working capital
Definition
Net working capital represents the net total of inventories, trade and other receivables (excluding interest receivable), and trade and other payables
(excluding interest payable, amounts due in respect of property, plant and equipment and current government grants).
Calculation
Reference in Financial Statements
Inventories
Trade and other receivables
Less: interest receivable
Trade and other payables
Less: interest payable
Less: amounts due in respect of property, plant and equipment
Less: government grants
Net working capital
Note 3.5
Note 3.6
Note 3.7
Note 3.7
Note 3.7
Note 3.7
Working capital (days)
Definition
Working capital days measures how long it takes in days for the Group to convert working capital into revenue.
Calculation
Net working capital
March revenue
Working capital (days)
Reference in Financial Statements
Per above
2022
£’000
1,133,666
2,508,613
(170)
(3,468,705)
13,981
18,850
16
2021
£’000
685,950
1,689,372
(16)
(2,604,177)
11,668
13,554
20
206,251
(203,629)
2022
£’000
2021
£’000
206,251
2,267,233
(203,629)
1,468,052
2.8 days
(4.3 days)
DCC plc Annual Report and Accounts 2022
253
Supplementary Information
Alternative Performance Measures continued
Economic contribution
Definition
The Group generates financial and non-financial value for our stakeholders through our activities. We make a direct contribution to our stakeholders
through the taxes, interest, salaries and dividends that we pay together with the payments we make to our suppliers for goods and services. The
Group also retains capital for future investment. The table below provides an analysis of some of the financial value generated and shared by the
Group during the year and should be read in conjunction with the outputs from the Group’s Business Model as presented on page 11.
Calculation
Revenue from goods and services
Finance income (pre exceptional items)
Other operating income
Total revenue
Cost of sales
Administration expenses
Selling and distribution expenses
Other operating expenses
Less: employee costs
Total goods and services supplied
Interim dividend paid
Proposed final dividend
Total dividends
Finance costs (pre exceptional items)
Employee costs
Income tax expense (pre exceptional items)
Capital retained for reinvestment before exceptional items
Reference in Financial Statements
Income Statement
Income Statement
Income Statement
Income Statement
Income Statement
Note 2.4
Note 2.10
Note 2.10
Income Statement
Note 2.4
Income Statement
2022
£’000
2021
£’000
17,732,020
23,075
88,093
13,412,450
26,253
62,694
17,843,188
13,501,397
(15,694,347)
(517,128)
(965,489)
(53,915)
761,263
(11,592,970)
(499,812)
(814,758)
(37,361)
661,330
(16,469,616)
(12,283,571)
(55,182)
(118,303)
(173,485)
(77,205)
(761,263)
(81,235)
280,384
(51,045)
(106,303)
(157,348)
(85,639)
(661,330)
(66,382)
247,127
254
DCC plc Annual Report and Accounts 2022
5 Year Review
Group Income Statement
Year ended 31 March
Revenue
Adjusted operating profit
Exceptional items
Amortisation of intangible assets
Operating profit
Finance costs (net)
Share of equity accounted investments
Profit before tax
Income tax expense
Non-controlling interests
Profit attributable to owners of the Parent Company
Earnings per share
– basic (pence)
– basic adjusted (pence)
Dividend per share (pence)
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
Right-of-use leased assets
Intangible assets
Equity accounted investments
Cash/derivatives
Other assets
Total assets
Equity
Non-current and current liabilities:
Borrowings/derivatives
Lease creditors
Retirement benefit obligations
Other liabilities
Total liabilities
Total equity and liabilities
Net (debt)/cash included above (excl. lease creditors)
Group Cash Flow
Year ended 31 March
Operating cash flow
Capital expenditure
Acquisitions
Other Information
Return on capital employed (%)
Working capital (days)
Strategic Report
Governance
Financial Statements
Supplementary Info
2018
£’m
2019
£’m
2020
£’m
2021
£’m
2022
£’m
13,121.7
15,226.9
14,755.4
13,412.5
17,732.0
384.4
(15.3)
(43.0)
326.1
(35.5)
0.4
291.0
(24.1)
(5.1)
261.8
460.5
(28.2)
(63.2)
369.1
(42.3)
0.7
327.5
(56.4)
(8.5)
262.6
494.3
(65.5)
(62.1)
366.7
(56.2)
1.0
311.5
(57.3)
(8.7)
245.5
530.2
(40.5)
(66.9)
422.8
(57.9)
0.2
365.1
(62.3)
(10.2)
292.6
589.2
(46.5)
(84.3)
458.4
(53.0)
0.3
405.7
(79.7)
(13.6)
312.4
293.83p
318.35p
122.98p
2.6x
10.8x
280.14p
358.16p
138.35p
2.6x
9.9x
249.64p
362.64p
145.27p
2.5x
10.5x
297.04p
386.62p
159.80p
2.4x
10.6x
316.78p
430.11p
175.78p
2.4x
13.0x
2018
£’m
2019
£’m
2020
£’m
2021
£’m
2022
£’m
933.0
–
1,953.8
24.5
1,150.0
1,982.8
6,044.1
996.5
–
2,069.6
24.2
1,765.6
2,221.7
7,077.6
1,089.0
304.1
2,126.9
27.7
2,059.9
2,313.5
7,921.1
1,137.6
308.9
2,206.7
27.1
1,948.5
2,406.0
8,034.8
1,253.3
327.6
2,634.4
26.8
1,620.2
3,696.9
9,559.2
1,677.9
2,433.5
2,541.5
2,705.6
2,970.6
1,692.7
–
(0.3)
2,673.8
4,366.2
6,044.1
(542.7)
2018
£’m
473.3
145.4
691.0
2018
17.5%
(2.0)
1,784.0
–
(1.4)
2,861.5
4,644.1
7,077.6
(18.4)
2019
£’m
607.5
173.5
296.8
2019
17.0%
(0.4)
2,120.0
306.8
(7.3)
2,960.1
5,379.6
7,921.1
(60.2)
2020
£’m
724.0
167.8
227.5
2020
16.5%
(0.6)
1,783.3
315.2
(8.0)
3,238.7
5,329.2
8,034.8
165.1
2021
£’m
903.7
147.0
272.6
2021
17.1%
(4.3)
2,040.1
336.7
(7.7)
4,219.5
6,588.6
9,559.2
(419.9)
2022
£’m
628.4
170.8
720.1
2022
16.5%
2.8
DCC plc Annual Report and Accounts 2022
255
Supplementary Information
Index
Accounting Policies
Acquisition Related Liabilities
Additional Sustainability Information
Alternative Performance Measures
Analysis of Net Debt
Annual General Meeting
Approval of Financial Statements
Audit Committee Report
Auditors
Basis of Consolidation
Basis of Preparation
Board Committees
Board of Directors
Board Performance Evaluation
Borrowings and Lease Creditors
Business Combinations
Business Model
Carbon Emissions
Cash and Cash Equivalents
Cash Generated from Operations
Chairman’s Statement
Chief Executive’s Remuneration
Chief Executive’s Review
Clawback Policy
Commitments
Commodity Price Risk Management
Company Balance Sheet
Company Cash Flow Statement
Company Statement of Changes in Equity
Compliance
Contingencies
Corporate Governance Statement
Corporate Information
Covid-19
Credit Risk Management
Critical Accounting Estimates and Judgements
Deferred Income Tax
Derivative Financial Instruments
Directors
Directors’ and Company Secretary’s Interests
Directors’ Compliance Statement
Diversity
Dividends
221
204
247
249
197
243
229
123
126
170
169
119, 123, 128
104
117
194
210
10
22, 46, 56, 62, 80
192, 234
213, 234
16
143
18
135
213
55
230
232
231
117
214, 236
108
244
19, 30, 40, 49, 86, 98
55
170
199
193
155
147
156
38, 91
183, 242
Finance Costs and Finance Income
Financial Calendar
Financial Review
Financial Risk and Capital Management
Five Year Review
Foreign Currency
Foreign Exchange Risk Management
General Meetings
Going Concern
Governance
Governance and Sustainability Committee Report
Government Grants
Greenhouse Gas Emissions
Group Balance Sheet
Group Cash Flow Statement
Group Income Statement
Group Management Team
Group Profit for the Year
Group Statement of Changes in Equity
Group Statement of Comprehensive Income
Health & Safety
Highlights of the Year
Inclusion and Diversity
Income Tax Expense
Intangible Assets and Goodwill
Interest Rate Risk and Debt/ Liquidity Management
Inventories
Investment Case
Investments in Subsidiary Undertakings
Investor Relations
Key Performance Indicators
Lease Creditors
Long Term Incentive Plan
Markets
Movement in Working Capital
181
243
48
55, 215, 235
255
210
55
155, 243
96
102
119
206
83, 248
166
168
164
106
177
167
165
80
2
36
182
187
55
191
4
233
243
44
196
134, 142
12
192
Net Zero
Non-Controlling Interests
Non-Executive Directors’ Remuneration
Non-Financial Reporting
Notes to the Financial Statements
12, 20, 22, 28, 56, 62, 80, 92
209
146
80, 155
169
Earnings per Ordinary Share
Electronic Communications
Employee Share Options and Awards
Emerging Risks
Employment
Energy Strategy
Energy Transition
Engagement with Stakeholders
Equity Accounted Investments
Events After the Balance Sheet Date
Exceptionals
Executive Directors’ Remuneration
Executive Risk Committee
Exit Payments Policy
184
243
178
94
178
20, 22, 92
20, 22, 28, 56, 62, 83, 185, 189
40
190
221
180
139
93, 109
136
256
DCC plc Annual Report and Accounts 2022
Operating Reviews
– DCC LPG
– DCC Retail & Oil
– DCC Healthcare
– DCC Technology
Other Operating Income/Expenses
Other Reserves
People
Post-Employment Benefit Obligations
Principal Risks and Uncertainties
Principal Subsidiaries
Profit Attributable to DCC plc
Property, Plant and Equipment
Provisions for Liabilities
Purpose
Registrar
Related Party Transactions
Remuneration Policy Report
Remuneration Report
Report of the Directors
Report of the Independent Auditors
Retained Earnings
Return on Capital Employed
Right-Of-Use Leased Assets
Risk Management and Internal Control
Risk Report
Segment Information
Share Capital and Share Premium
Share of Equity Accounted Investments’ Profit after Tax
Shareholder Information
Share Listing
Share Ownership and Dealing
Share Price and Market Capitalisation
Stakeholder Engagement
Statement of Compliance
Statement of Directors’ Responsibilities
Strategy
Strategy in Action
Substantial Holdings
Summary of Significant Accounting Policies
Sustainable Business Report
Sustainable Growth Model
Takeover Regulations
Task Force on Climate-Related Disclosures
Trade and Other Payables
Trade and Other Receivables
Transparency Rules
Values
Viability Statement
Website
56
62
68
74
177
208, 234
36
200
97
238
233
185
205
6, 16, 40, 111
243
214, 235
132
128
154
159
209, 234
44
186
118
92
172
207
182
242
242
118
242
40
169
158
8
28
156
221
80
6
156
80, 92, 248
192, 234
191, 233
155
6, 16, 18, 111
96
243
DCC plc,
DCC House,
Leopardstown Road,
Foxrock, Dublin 18,
D18 PK00,
Ireland
Tel: + 353 1 279 9400
Email: info@dcc.ie
www.dcc.ie