After 17 consecutive years of growth, it is disappointing to report to you a fall of 18.4% in adjusted earnings per share on a constant currency basis in the financial year ended 31 March 2012. Having had a very strong performance from DCC Energy over a ten year period , with an exceptional uplift in our oil and LPG businesses from colder than normal weather in the preceding two years, temperatures were exceptionally warm throughout the financial year just ended. High oil prices exacerbated the weak trading conditions throughout the year . As a result, DCC Energy's operating profit fell by 38.3%. As against that, we had a robust overall performance from the other divisions, notably DCC SerCom, where operating profit was up by 17.0%.

Our overall return on capital employed, at 14.2%, while lower than recent years, remained exceptional and well above the cost of capital. Our free cash flow, at €146.0 million, was higher than in the previous year and our balance sheet remained very robust, with net year end borrowings of only €128.2 million, compared with shareholder equity of over €1 billion.


The Board is recommending a final dividend of 50.47 cent per share, making a total annual dividend of 77.89 cent per share, a 5% increase over the prior year. The total dividend for the year is covered 2.1 times by adjusted earnings per share. The Board's policy is to grow dividends over time in line with what we believe to be the long term sustainable trend in underlying earnings per share. It also seeks to balance the income needs of shareholders with the needs of the Group to invest both in the business we have and in future growth opportunities through acquisition, where we believe that we can continue to make high returns on capital employed, as we have consistently done. graph


2011/12 was a good year for development activity. In all, we deployed €169.1 million on acquisitions during the year, the most substantial of which was for part of the Total business in the UK. We sold our enterprise IT distribution business, which we had concluded was not core to our future strategy, for a good price.

We saw strong organic growth and consolidated leadership positions in the UK and in Ireland in a number of our businesses across the divisions. Approaching one-fifth of our operating profit now comes from Continental Europe.

A number of acquisition opportunities are under review at present across our divisions, to which we will apply our normal disciplined approach.

We made a number of key new senior management appointments during the year so that we will be well equipped to deal with future growth and to continue to build sustainable, scale businesses.

On behalf of the Board, I want to thank DCC's Chief Executive, Tommy Breen, his management team and all 8,800 or so DCC employees for their very hard work, discipline, persistence and effectiveness in meeting all of the challenges and pursuing all of the opportunities that presented themselves during the year.

In addition to Board focus on strategy and operational performance, a detailed review of risk management and compliance policies, practices and structures was completed, with external assistance, in the light of the substantial growth we have experienced in recent years and the diversified nature of the Group. The Board is happy that what we have in place is appropriate from a commercial point of view and in the context of best practice.

I am happy with our progress on our sustainability agenda. We have more to do. But I believe that at all levels there is an appropriate focus on ensuring the resilience of DCC's business over time, by maintaining an appropriate balance between economic, social and environmental dimensions in the way we look at cost management, revenue enhancement, customers, our people management and our reputation.

Board and Governance

The Board believes that DCC meets all of the current requirements of the latest corporate governance standards as set out in the UK Corporate Governance Code and in the Irish Corporate Governance Annex.

There were no changes in the composition of the Board during the year under review. The average service of the non-executive Director cadre at 31 March 2012 was 4 years and 8 months. The significant diversification of experience and expertise brought to the table as a result of new appointments over the past three years has paid substantial dividends in terms of the quality of Board discussion and contribution to decision-making. The effectiveness of the Board was underlined by the positive results of an external evaluation of Board performance which was undertaken by Towers Watson in the final quarter of the financial year. The Board has incorporated learnings from the evaluation into an action plan which will be implemented in the current year. I continue to spend a significant amount of time on ensuring that we will continue to have available top class candidates for future non-executive appointments, as vacancies arise.

Further detail on governance is set out in the Corporate Governance statement on pages 64 to 73.


Economic conditions in the UK, Ireland and Europe generally, on which our business is focused, are unlikely to improve materially in the year ahead. But a return to something like more average winter temperatures should lead to a material resumption in DCC Energy's profit growth path. On that key assumption and with the benefit of our continuing development activities across all divisions, I would anticipate strong overall growth in Group operating profit and another year of excellent returns on capital employed in the year ahead.

Michael Buckley
14 May 2012