Annual Report and Accounts 2006 - DCC plc

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30financial reviewgenerated from operations of €142.9million, an increase of 22.8% on theprevious year. This cashflowsubstantially relates to cashgenerated by DCC’s subsidiaries andjoint ventures. While cash generationin DCC’s associates increasedsubstantially in the year, dividendsreceived by DCC from theseassociates amounted to just €1.0million.Despite a 29.9% (€791.6 million)increase in revenue, working capitalincreased by just €11.2 million whichequates to 9.5 days’ revenue at 31March 2006, and compares favourablyto 10.2 days’ at 31 March 2005, asdetailed in Table 3. A summary ofDCC’s cashflow is set out in Table 4.Table 3: Working capital dayswas deferred. The cash impact ofacquisitions in the year was €54.7million when payments of deferredacquisition consideration of €5.6million are taken into account. Capitalexpenditure was €57.9 million(inclusive of expenditure of €13.4million on land and buildings). Netof disposals and capital grantsreceived, net capital expenditurewas €45.2 million.Balance sheet and groupfinancingDCC has a very strong balance sheetwith total equity of €585.4 million at31 March 2006. The composition ofnet debt at 31 March 2006 of €32.7International FinancialReporting StandardsThe results for 2006 have beenprepared in accordance with theGroup’s policies under InternationalFinancial Reporting Standards (IFRS).Financial statements for the yearended 31 March 2005, which wereprepared in accordance with IrishGAAP, have been restated underIFRS, with the exception of IAS 32Financial Instruments: Disclosure andPresentation and IAS 39 FinancialInstruments: Recognition andMeasurement, with effect from thetransition date of 1 April 2004. TheGroup adopted IAS 32 and IAS 39with effect from 1 April 2005.2006 2005DaysDaysStocks 11.6 13.9Debtors 42.9 45.7Creditors (45.0) (49.4)9.5 10.2Table 4: Summary of cash flows2006 2005€’m€’mInflowsCash generated from operations 142.9 116.4Share issues (net) 3.3 6.9Grants received 1.2 -147.4 123.3OutflowsCapital expenditure (net) (46.4) (35.8)Acquisitions (54.7) (81.1)Share buyback - (26.7)Interest and tax paid (19.1) (12.1)Dividends paid (31.8) (27.4)Net exceptional costs (15.4) (6.6)167.4 189.7Net cash outflow (20.0) (66.4)Translation adjustment and other (3.8) (4.9)Opening net (debt)/cash (8.9) 62.4Closing net debt (32.7) (8.9)Acquisition and developmentexpenditure amounted to €120.8million. DCC’s ongoing acquisitionprogramme resulted in a number ofacquisitions being completed duringthe year at a total committed cost of€62.9 million, of which €13.8 millionmillion is analysed in Table 5. Ananalysis of DCC’s cash, debt andfinancial derivative instrument balancesat 31 March 2006, including maturityperiods and currency and interest rateprofiles, is shown in Notes 27 to 30 tothe financial statements.The adoption of IFRS had a limitedimpact on the 2006 full year resultsand net assets of the Group. Thechange to IFRS represents anaccounting change only and does notaffect the underlying operations orcashflow generation of the Group.
financial review31Table 5: Analysis of net debt2006 2005€’m€’mNon-current assets:Derivative financial instruments 9.0 -Current assets:Derivative financial instruments 0.1 -Cash and short term bank deposits 345.3 353.3345.4 353.3Non-current liabilities:Interest-bearing loans and borrowings (6.3) (11.6)Derivative financial instruments (27.1) -Unsecured Notes due 2008 to 2016 (286.5) (305.1)(319.9) (316.7)Current liabilities:Interest-bearing loans and borrowings (67.1) (45.5)Derivative financial instruments (0.1) -(67.2) (45.5)Net debt (32.7) (8.9)The principal changes for the Grouparising from the introduction of IFRSwere as follows:• IFRS 2 Share-based Paymentrequires expensing the cost ofemployee and executive rewardsunder the Group’s share schemesthrough the Group IncomeStatement using option valuationmodels. The share basedpayments charge in the 2006Group Income Statement is €1.8million (€1.0 million: 2005).• Under IFRS 3 BusinessCombinations, goodwill is nolonger amortised but must betested annually for impairment.Under IAS 38, Intangible Assetsthere is a requirement toseparately identify and amortiseother intangibles acquired. TheGroup Income Statement for 2006includes a charge of €5.0 million(€1.3 million: 2005) in respect ofthe amortisation of intangibleassets (mainly comprisingcustomer relationships) associatedwith acquisitions completed since1 April 2004.• Under IAS 12 Income Taxes,deferred tax is recognised inrespect of all temporary timingdifferences at the balance sheetdate between the tax bases ofassets and liabilities and theircarrying value for financialreporting purposes. The GroupBalance Sheet at 31 March 2006includes an additional net deferredtax liability of €0.7 million (€1.4million: 2005). This resultsprimarily from the creation ofdeferred tax in respect of definedbenefit pension liabilities,intangible assets acquired onbusiness combinations, fair valuerevaluations of assets andliabilities in the balance sheets ofbusinesses acquired and gains onproperty disposals which wererolled over.• IAS 19 Employee Benefitsrequires the assets and liabilitiesof defined benefit pension schemesto be shown on the face of theGroup Balance Sheet. Actuarialgains and losses are charged toequity and, as a result, the netdeficit of the Group’s definedbenefit pension schemes iscarried in full on the GroupBalance Sheet. The GroupBalance Sheet at 31 March 2006includes a net pension schemeliability of €20.7 million (€25.4million: 2005) after recordingactuarial gains of €1.8 million thatarose in the year and werecredited in the Group’s Statementof Recognised Income andExpense.• Under IAS 21 The Effects ofChanges in Foreign ExchangeRates, certain intercompany loans,which had been treated underIrish GAAP as part of netinvestment in foreign operations,do not qualify for such treatment.Accordingly, foreign exchangegains or losses arising on theseloans which had been recogniseddirectly in reserves must, ontransition from Irish GAAP toIFRS, be recognised in the GroupIncome Statement. The financialimpact of the above is a charge tothe Group Income Statement of€1.145 million for the year ended31 March 2006 (charge of €4.809million: 2005) in respect of foreignexchange losses and theseamounts are included inexceptional items.Financial risk managementFinancial risk management within theGroup is governed by policies andguidelines reviewed and approvedannually by the Board of Directors.These policies and guidelinesprimarily cover foreign exchange risk,commodity price risk, credit risk,liquidity risk and interest rate risk.The principal objective of thesepolicies and guidelines is theminimisation of financial risk atreasonable cost. The Group does nottrade in financial instruments nor doesit enter into any leveraged derivativetransactions. DCC’s Group Treasuryfunction centrally manages theGroup’s funding and liquidityrequirements. Divisional and
Page 1 and 2: Annual Reportand Accounts2006
Page 3 and 4: Group at a Glance 2Board of Directo
Page 5: 3Market positionGrowth focusGrowth
Page 8 and 9: 6board of directors
Page 10 and 11: 8senior managementgroup and divisio
Page 12 and 13: 10chairman’s statement“ Over th
Page 14 and 15: 12chief executive’s review“ The
Page 16: peopleWe recognise that our employe
Page 19 and 20: 17Performance for the year to 31 Ma
Page 27: 25Performance for the year to 31 Ma
Page 30 and 31: 28financial reviewOverview of resul
Page 34: 32financial reviewsubsidiary manage
Page 38: qualityDCC Food & Beveragemarkets q
Page 41 and 42: corporate governance39written terms
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Page 46 and 47: 44report of the remuneration commit
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Page 50 and 51: 48statement of directors’responsi
Page 52 and 53: 50 report of the independent audito
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DCC plcDCC House, Brewery Road,Stil
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Annual Report and Accounts 2006 - DCC plc

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