14 May 2019

DCC Reports Excellent Performance and New Acquisitions

DCC, the leading international sales, marketing and support services group, is today announcing its results for the year ended 31 March 2019.

·   Excellent performance for the year, notwithstanding the mild weather conditions, with Group adjusted operating profit on continuing operations increasing by 20.1% to £460.5 million. All divisions of DCC recorded very strong profit growth. 

·    Adjusted earnings per share on continuing activities up 12.8% to 358.2 pence, reflecting the equity placing completed during the year.

·   With approval of this year's final dividend, DCC will have recorded 25 years of unbroken dividend growth since listing in 1994. A proposed 13.7% increase in the final dividend will see the total dividend for the year increase by 12.5%.

·   Excellent cash flow performance, with free cash flow conversion of approximately 94% and a return on capital employed of 17.0%.

·   Another active period of development for DCC with approximately £370 million of capital committed to acquisitions. Approximately £90 million of new acquisition commitments announced today, including Pacific Coast Energy, DCC LPG's first material follow-on acquisition in the US and DCC Technology's acquisitions of Comm-Tec in Germany and Amacom in the Netherlands, strengthening its European presence.

·  The Group expects that the year ending 31 March 2020 will be another year of profit growth and development.

Commenting on the results, Donal Murphy, Chief Executive, said:

"I am very pleased to report that the year ended 31 March 2019 has been another year of significant progress for DCC. An excellent trading performance, very strong cash generation and continued acquisition activity across the Group exemplifies the DCC business model. I am particularly pleased that each division recorded very strong growth in operating profit and traded in line with expectations, given the mild weather conditions experienced during the year.  

It has been another active year from a development perspective and we have committed approximately £370 million to acquisitions during the period. Each of the new acquisitions announced today are good examples of our divisional strategies in action. DCC LPG's acquisition of Pacific Coast Energy, our first material bolt-on in the US LPG market, will strengthen our position in the north-west of the US, helping to build further scale in that region. Similarly, DCC Technology's acquisition of both Comm-Tec and Amacom significantly enhances our business in Continental Europe and will strengthen our relationships with suppliers and customers in the region.

Following the equity placing completed during the year, DCC has a very strong and liquid balance sheet, leaving the Group well placed to continue its targeted acquisition strategy. The Group continues to have the platforms, opportunities and capability for further development across each of our four divisions.

We expect that the year to 31 March 2020 will be another year of profit growth and development for the Group."

Presentation of results and dial-in / webcast facility

There will be a presentation of these results to analysts and fund managers at 9.00 am today in the London Stock Exchange. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie.

There will also be audio conference access to, and a live webcast of, the presentation. The access details for the presentation are:

Ireland: +353 (0) 1 431 9615                        

UK / International: +44 (0) 2071 92 8000

Passcode: 5263849                         

Webcast Link: https://edge.media-server.com/m6/p/iurzueqv                           

This report, a webcast of the presentation and further information on DCC is available at www.dcc.ie.

For reference, please contact:

Group Results

A summary of the Group's results for the year ended 31 March 2019 is as follows:

Reporting currency

The Group's financial statements are presented in sterling. Results and cash flows of operations based in non-sterling jurisdictions have been translated into sterling at average rates for the year. The principal exchange rates used for the translation of results into sterling were as follows:

The impact of currency translation versus the prior period was very modest, with average sterling exchange rates marginally weakening against the euro and US Dollar and marginally strengthening against other relevant currencies.

Revenue - continuing operations

Revenue from continuing operations increased by 16.0% to £15.2 billion. Prior year revenue has been restated to reflect the adoption of IFRS 15 Revenue from Contracts with Customers as set out in note 4 to the financial statements.

Volumes in DCC LPG increased by 10.8% to 2.1 million tonnes, driven by DCC LPG's prior year acquisitions of the businesses in the US, Germany and Hong Kong & Macau. On a like-for-like basis, volumes were 2.8% behind the prior year, principally reflecting the warmer than average temperatures across Europe which impacted heating segments. DCC LPG's revenue increased by 30.5%.

DCC Retail & Oil volumes were 12.2 billion litres, modestly behind the prior year, reflecting the disposal of the oil distribution business in Northern Ireland. On a like-for-like basis, volumes declined by 3.8%, reflecting the mild weather conditions and also the impact of reduced volumes in France as a result of the regular nationwide protests. DCC Retail & Oil's revenue increased by 12.2%.

Revenue excluding DCC LPG and DCC Retail & Oil was £4.2 billion, an increase of 19.5%, approximately one third of which was organic.

Group adjusted operating profit - continuing operations

Group adjusted operating profit from continuing operations increased by 20.1% to £460.5 million, reflecting the contribution from acquisitions and organic growth, notwithstanding the mild weather conditions experienced during the year.

DCC LPG delivered very strong operating profit growth of 20.5%, primarily driven by acquisitions completed in the final quarter of the prior year. As anticipated, organic operating profit was modestly behind the prior year, reflecting the investment in the natural gas and electricity offering in France and the impact of mild weather conditions. Each of the newly acquired businesses in the US, Germany and Hong Kong & Macau was integrated into the Group during the year and performed in line with, or modestly ahead of, expectations.

Operating profit in DCC Retail & Oil was significantly ahead of the prior year, increasing by 17.6%, approximately one third of which was organic. This excellent performance reflects strong organic profit growth in the businesses in Britain, France and Denmark and the contribution from acquisitions completed during the prior year.

DCC Technology achieved very strong operating profit growth of 35.1%, principally driven by the first-time contribution from acquisitions completed in the current year and also good organic growth. The UK and Ireland, DCC Technology's largest business, benefited from market share gains and the continued development of its value-added service proposition.

In DCC Healthcare, operating profit increased by 11.1% and approximately half of the growth was organic. DCC Vital delivered good organic profit growth in GP supplies and medical devices, while DCC Health & Beauty Solutions generated very strong organic growth in both the nutrition and beauty sector. DCC Healthcare also benefited from the contribution from acquisitions completed in the prior year.

Finance costs (net) and other

Net finance costs and other increased to £45.9 million (2018: £35.4 million) and reflects the full year impact of an increase in the Group's gross debt following a private placement debt issuance in the prior year. It also reflects an increase in the Group's average net debt during the year to approximately £670 million, from £467 million in the prior year and the impact of the increased level of acquisition activity in jurisdictions with relatively higher base interest rates. 

Interest was covered 12.2 times by Group adjusted operating profit before depreciation and amortisation of intangible assets (2018: 13.4 times).

Profit before net exceptional items, amortisation of intangible assets and tax

Profit before net exceptional items, amortisation of intangible assets and tax increased by 19.1% to £414.6 million. 

Net exceptional charge and amortisation of intangible assets

The Group incurred a net exceptional charge after tax and non-controlling interests of £24.6 million (2018: net exceptional credit of £11.4m) as follows:

Acquisition costs include the professional fees and tax costs relating to the evaluation and completion of acquisition opportunities and amounted to £9.6 million.

Restructuring and integration costs and other amounted to £18.6 million. The largest component of the charge relates to the ongoing dual running costs relating to the optimisation of DCC Technology's logistics and related infrastructure. The upgraded warehousing and logistics in the UK, Nordics and France are all now operational. The related UK SAP implementation is now live in an element of the UK business, with the remaining components of the business scheduled to go-live during the next financial year. Given the level of acquisitions undertaken in the previous 12 months across the Group, a number of integration-related restructurings took place during the year.

Most of the Group's debt has been raised in the US Private Placement market and swapped, using long term interest and cross currency interest rate derivatives, to both fixed and floating rate sterling and euro. The level of ineffectiveness calculated under IAS 39 on the fair value and cash flow hedge relationships relating to fixed rate debt is charged or credited as an exceptional item. In the year ended 31 March 2019, this amounted to an exceptional non-cash gain of £4.3 million. Following this credit, the cumulative net exceptional charge taken in respect of the Group's outstanding US Private Placement debt and related hedging instruments is £1.2 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 £63.3 million from £43.0 million in the prior year, with the increase principally reflecting acquisitions completed in the current and prior year.

Profit before tax

Profit before tax increased to £326.7 million.

Taxation

The effective tax rate for the Group remained consistent at 17.0%. The Group's tax rate is influenced by the geographical mix of profits arising in any year and the tax rates attributable to the individual territories.

Adjusted earnings per share

Adjusted earnings per share on a continuing basis increased by 12.8% to 358.16 pence. This reflects an 18.7% increase in adjusted earnings offset by a 5.2% increase in the average number of shares in issue during the year, primarily as a result of the equity placing which was successfully completed on 2 October 2018.

Total adjusted earnings per share increased by 12.5% to 358.16 pence.

Dividend

The Board is recommending an increase of 13.7% in the final dividend to 93.37 pence per share, which, when added to the interim dividend of 44.98 pence per share, gives a total dividend for the year of 138.35 pence per share. This represents a 12.5% increase over the total prior year dividend of 122.98 pence per share. The dividend is covered 2.6 times by adjusted earnings per share on a continuing basis (2018: 2.6 times). It is proposed to pay the final dividend on 18 July 2019 to shareholders on the register at the close of business on 24 May 2019. 

Over its 25 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 14.4%.

Return on capital employed

The creation of shareholder value through the delivery of consistent, 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:

In 2019, the Group continued to generate very strong returns on capital employed with the modest decrease in the return on capital employed versus the prior year principally reflecting the impact of the substantial acquisition spend in both the current and prior year, as the Group entered new geographies and the recent organic investments made in the warehousing and operating infrastructure of the UK, Nordics and France.

As set out in note 2, IFRS 16 Leases will replace IAS 17 Leases in the next financial year. The Group currently expects to recognise a lease liability and corresponding increase in property, plant and equipment of approximately £320 million on transition. The increase in capital employed resulting from the new accounting standard would reduce the Group's 2019 return on capital employed to approximately 15.4%.  

Cash flow

The Group generated very strong operating and free cash flow during the year as set out below:

Operating cash flow in 2019 was £607.5 million compared to £473.4 million in the prior year. Working capital decreased by £37.5 million, primarily as a result of a reduction in working capital at businesses acquired during the last 18 months. Overall working capital days were negative 0.4 days sales, compared to negative 2.0 days sales in the prior year, reflecting the acquisition during the year of businesses with positive working capital characteristics. On a like-for-like basis, working capital days were modestly improved on the previous year. 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. The level of supply chain financing at 31 March 2019 increased modestly on the prior year and had a positive impact on Group working capital days of 4.9 days (31 March 2018: 4.4 days) or £211.4 million (2018: £202.2 million).

Net capital expenditure amounted to £173.5 million for the year (2018: £145.3 million) and was net of disposal proceeds of £8.8 million (2018: £7.6 million). The increase in net capital expenditure over the prior year reflects the increasing scale of the Group and a number of investments being undertaken to support its continued organic growth and development. Capital expenditure in DCC LPG principally comprised development expenditure to support the ongoing conversion of oil customers to LPG and the initial investment in relation to the Avonmouth LPG storage facility in the UK. The ongoing investment in new retail sites and site upgrades in France and Norway were the principal items in the Retail & Oil division. As previously reported, DCC Technology has made significant investments in improving its logistics and warehousing infrastructure in the UK, Nordics and France. Within DCC Healthcare, DCC Health & Beauty Solutions is expanding its manufacturing footprint in the soft gel facility in South Wales which will significantly increase the scale and capability of the facility. Net capital expenditure for the Group exceeded the depreciation charge in the year by £63.9 million.  

The Group's free cash flow amounted to £434.0 million, representing a 94% conversion of operating profit into free cash flow.

Committed acquisitions, disposals and net capital expenditure

Committed acquisition spend in the period and net capital expenditure amounted to £541.8 million. An analysis by division is shown below:

DCC LPG

Pacific Coast Energy

In April 2019, DCC LPG acquired Pacific Coast Energy, an LPG distribution business operating in the north-west of the US for an enterprise value of approximately £30 million. The business trades under a number of brand names, supplying both residential and commercial customers in Washington and Oregon from five well-located facilities. DCC LPG has an existing modest presence in the north west region and the acquisition of Pacific Coast Energy, DCC's first material bolt-on acquisition in the US market, will provide an enlarged presence in this attractive regional market.

DCC Retail & Oil

DCC Retail & Oil completed a number of small complementary bolt-on acquisitions during the period, primarily in the UK and France. These acquisitions have been successfully integrated into the existing businesses.

DCC Technology

DCC Technology has today announced the agreement to acquire Comm-Tec GmbH ("Comm-Tec") in Germany and Amacom Holding BV ("Amacom") in the Netherlands.

Comm-Tec

Comm-Tec is a leading value-added distributor of Pro AV and IT products to system integrators and resellers across Germany, Austria, Switzerland, Italy and Spain. The business recorded revenue of approximately €90 million in its latest financial year and employs approximately 150 people. The acquisition of Comm-Tec represents a material extension of DCC Technology's Pro AV offering in Europe. 

Amacom

Amacom is a leading distributor of consumer electronics, AV and IT products, primarily to the retail and e-tail sectors in the Netherlands. The business recorded revenue of approximately €160 million in its latest financial year and employs approximately 80 people. Amacom will provide DCC Technology with an efficient distribution footprint in the Netherlands and an attractive portfolio of product categories and suppliers.

The combined initial enterprise value of Amacom and Comm-Tec is approximately £55 million and both acquisitions are subject to customary regulatory approvals.

Jam

In September 2018, DCC Technology announced the acquisition of Jam, a market-leading North American specialist sales, marketing and services business serving the professional audio, musical instruments and consumer electronics product sectors.

Headquartered in Montreal, Canada, Jam is a world-leader in the professional audio and musical instruments sectors, providing a range of industry-leading, value-adding services and solutions to both its vendor and customer partners. This product sector and channel specialisation includes marketing and sales support, in-house technicians providing technical support, after-sales, repair and warranty repair services, in-house graphics and print services and the provision of white-label e-commerce platforms for smaller retailers and resellers. The business recorded revenue of US$323 million in the year ended 30 April 2018 and employs approximately 570 people.

The acquisition of Jam significantly strengthened DCC Technology's position in the North American market building on the acquisition of Stampede in July 2018. Importantly, the very strong service capability of Jam is consistent with DCC Technology's increasing focus on positioning itself as a specialist service partner for customers and suppliers, providing extensive brand reach, market access and simplifying the complex supply chain of its chosen sectors.

Stampede

In July 2018, DCC Technology announced the acquisition of Stampede, a specialist distributor of Pro AV products and solutions in North America. 

Headquartered in Buffalo, New York, Stampede, one of the leading specialist Pro AV distributors in the US, supplies Pro AV products including large format display, projectors, lamps, drones and accessories to system integrators, value-added resellers, retailers and etailers in the US, Canada and the UK. Stampede also provides Pro AV solutions to the hospitality, government, corporate and education sectors. Stampede partners with, and supplies products from, leading Pro AV brands such as Christie, Epson, LG, NEC, Samsung and Sharp. Stampede recorded revenue of US$280 million in the year ended 31 December 2017 and employs approximately 210 people.

The acquisition of Stampede represented DCC Technology's first acquisition in North America and is consistent with DCC Technology's strategy to extend the geographic footprint and product range of its successful and growing Pro AV business, strengthening its partnership with existing suppliers, while also broadening its base of customers and suppliers.

Kondor

In July 2018, DCC announced the acquisition of Kondor, based in the South of England. Kondor distributes audio and mobile accessory products to etailers, retailers and mobile operators in the UK and Continental Europe. It partners with mobile and accessory brand owners and has an extensive portfolio of own-brand products, complementing its third-party brands. Kondor also provides outsourced category management services, including category/brand management, marketing support, promotional display, brand support and advanced stock solutions, to the retail channel.

DCC Retail & Oil

Denmark Aviation

In March 2019, DCC Retail & Oil's Danish business agreed to create a new branded marketing and distribution aviation business with Shell Aviation. The business will supply national and international airlines with aviation fuel from seven Danish airports. The business is the largest supplier of aviation fuel in the country, serving Denmark's busiest airports. The relationship, which involved Shell Aviation taking a stake in DCC's existing Danish aviation operations, combines DCC's local presence and supply infrastructure with Shell's global expertise in aviation and capabilities in jet fuel production and supply.

Oil Distribution Northern Ireland

In April 2018, DCC Retail & Oil completed the disposal of its fuel storage terminal in Belfast and its distribution business in Northern Ireland. The distribution business sold approximately 250 million litres of product in the year ended 31 March 2018. 

Total cash spend on acquisitions for the year ended 31 March 2019

The total cash spend on acquisitions completed in the year was £296.8 million and included the payment of deferred and contingent acquisition consideration previously provided of £30.3 million.

Financial strength

An integral part of the Group's strategy is the maintenance of a strong and liquid balance sheet, which amongst other benefits, enables it to take advantage of development opportunities as they arise. On 2 October 2018, the Group completed an equity placing raising approximately £600 million, significantly strengthening the Group's balance sheet following a period of record development expenditure.

At 31 March 2019, the Group had net debt of £18.4 million, total equity of £2.4 billion, cash resources, net of overdrafts, of £1.5 billion and a further £400 million of undrawn, committed debt facilities. The Group's outstanding term debt had an average maturity of 5.3 years (6.4 years including commitments). Substantially all of the Group's debt has been raised in the US Private Placement market with an average credit margin of 1.61% over floating Euribor/Libor. In April 2019, DCC successfully drew down a private placement issuance equivalent to £353 million, which will refinance private placement debt maturing within the next 12 months.

At 31 March 2019, the Group's net debt:EBITDA was less than 0.1 times and on a pro-forma basis, adjusting solely for the acquisition commitments announced today, net debt:EBITDA at 31 March 2019 would be approximately 0.2 times.

Outlook

The Group expects that the year ending 31 March 2020 will be another year of profit growth and development.

Annual Report and Annual General Meeting

DCC's 2019 Annual Report will be published in June 2019. The Company's Annual General Meeting will be held at 11.00 am on Friday 12 July 2019 in The InterContinental Hotel, Simmonscourt Road, Ballsbridge, Dublin 4, Ireland.

Performance Review - Divisional Analysis

DCC LPG delivered very strong growth, notwithstanding the mild weather conditions experienced in Europe, with operating profit increasing by 20.5% to £201.8 million, driven by acquisitions. The integration of each of the US, German and Hong Kong & Macau businesses was completed during the year and each business performed in line with, or modestly ahead of, expectations during the year.

Overall volumes increased by 10.8%, driven by the contribution from the aforementioned acquisitions. On a like-for-like basis volumes declined by 2.8%, reflecting the mild weather conditions across Europe which impacted heating segments. The operating profit per tonne increased versus the prior year, principally due to the positive effect on mix of the newly acquired businesses.

The business in France performed in line with expectations, with good procurement and cost control offsetting the impact of lower volumes due to the warmer than normal weather conditions. The business continues to focus on diversifying its offering to complement its very strong position in the retail and domestic LPG segments. The business made good progress during the year in increasing its presence in the commercial LPG market, rolled out approximately 200 'Click & Collect' automated cylinder dispensers and has also developed a nascent business in the retailing of wood pellets. Similarly, the B2C natural gas and electricity start-up initiative launched in the prior year continues to develop, albeit in a competitive marketplace. These initiatives are aimed at leveraging the strength of the 'Butagaz' brand and developing a broader position in the French energy market.

DCC LPG delivered good growth in volumes in Britain and Ireland, despite the warmer weather conditions, with particular success in growing its sales to industrial and commercial customers, with the commercial and environmental benefits of LPG continuing to attract new customers to the segment. In Britain, the Countrywide LPG business was successfully integrated during the second half of the financial year. The British business continues to invest in its operational infrastructure and was recently granted planning permission to convert an existing LNG facility in Avonmouth into a large LPG storage terminal which, when completed, will provide enhanced security of supply to the business.

The US business has performed well since acquisition and benefited from the colder than normal weather conditions experienced in its regional markets. The business recently completed the acquisition of Pacific Coast Energy, its first material bolt-on acquisition, as it continues to target further expansion in the highly fragmented US LPG market.

DCC LPG now has substantial operations in ten countries and is very well placed to continue its development both in existing and new territories, as well as continuing to develop its position in adjacencies, which broadens the service offering of the division.

DCC Retail & Oil delivered very strong growth, with operating profit increasing to £133.7 million, 17.6% ahead of the prior year. This excellent performance reflects both the continuing focus of the business on increasing its penetration of value-added products and services, which drove very strong organic profit growth in the year, and the full year impact of acquisitions completed in the prior year.

DCC Retail & Oil sold 12.2 billion litres of product, a modest decline on the prior year. On a like-for-like basis (adjusting for acquired volumes and the disposal of the Northern Irish distribution business in April 2018), volumes declined by 3.8%. This reflected the mild weather conditions, which impacted both agricultural and heating-related volumes, and also the impact of reduced volumes in France where the business was affected by the regular nationwide protests.

In Britain and Ireland, the business delivered good organic profit growth. A strong performance in the commercial sector and the positive mix impact from the expansion into premium fuels and value-added services offset the impact of adverse weather conditions on both heating volumes in the last quarter and agricultural demand seen earlier in the year. The business continued its recent growth in the lubricants sector, delivering good organic growth and also acquiring two modest lubricants blending businesses during the period. Following the complementary acquisition of SNAP in the prior year, the business continues to invest in the expansion of its activities in unmanned retail and in its HGV truck stop network, where the business is adding well-located sites across Britain. It now offers additional services to HGVs at these truck stops, such as secure parking and truck washes, which is enabled by SNAP's technology platform. The Fuel Card business performed very well, delivering strong organic profit growth in both fuel and non-fuel income streams, and placed an increased focus on customer engagement in a competitive market.

The Scandinavian business performed very well, primarily driven by strong organic operating profit growth and the full year contribution of Esso Norway. Notwithstanding the difficult weather conditions which impacted both agricultural and heating-related volumes, the Danish business recorded very strong operating profit growth as the business continued to both develop its offering in differentiated fuels and to improve the performance of the retail and commercial business acquired in 2017. In Norway, management continues to drive improvements in what remains a difficult retail market environment. In March 2019, the Danish business agreed to create a new branded marketing and distribution business with Shell Aviation, which involved Shell taking a stake in the existing Danish aviation operations, giving the business access to Shell's global network and settlements platform, further strengthening DCC Retail & Oil's presence in the aviation fuels market. 

In France, the business delivered good organic profit growth, despite the impact of the regular nationwide protests. The growth in France has been supported by initiatives in customer engagement, loyalty programmes, fuel differentiation through Esso's 'Synergy' fuels, and the modest bolt-on acquisition of a network of Esso dealers that completed during the year. The other Continental European businesses also performed very well during the year.

DCC Retail & Oil now has substantial operations in eight countries and has developed a scalable platform to grow the business in existing and new territories. 

DCC Technology recorded very strong growth with operating profit increasing by 35.1%, driven by acquisitions completed in the current year and strong organic profit growth in the UK & Ireland. It was also a very significant period of development activity, with DCC Technology entering the North American market and today announcing the further strengthening of its European presence through the acquisitions of Comm-Tec in Germany and Amacom in the Netherlands. The improvement in operating margin reflects the increasing proportion of service-led revenue in the business, whilst the recent strategic investments made in the warehousing and operating infrastructure of the UK, Nordics and France held back the division's return on capital employed.

In the UK & Ireland, the business achieved very strong revenue and profit growth, driven by market share gains and growth in the mobile, datacentre and AV sectors. The business also benefited from the continued development of its service proposition, including device life cycle management. The upgrade of the enterprise management system in the UK business is continuing, with the system now live in an element of the UK business, with the remaining components of the business scheduled to go live during the next financial year. The upgrade is expected to significantly enhance the capability of the business to service its customers and suppliers.

The acquisitions of Comm-Tec and Amacom announced today substantially strengthen DCC Technology's position in Continental Europe, while the significant investment made in the infrastructure in France and the Nordics has enhanced the service offering in the region, will drive efficiencies in the business and support future growth. Comm-Tec is a leading value-added distributor of Pro AV and IT products to system integrators and resellers across Germany, Austria, Switzerland, Italy and Spain and Amacom is a leading distributor of consumer electronics, AV, and IT products, primarily to the retail and e-tail sectors in the Netherlands.

The business in the Middle East continued to generate very strong organic revenue and profit growth, reflecting further development of its relationships with key retailers in the region.

As previously reported, DCC Technology also acquired two businesses in North America during the year, Stampede and Jam, both of which are trading in line with expectations. Stampede and Jam provide platforms for DCC Technology to develop and expand its business in North America, in particular in the Pro AV, Pro Audio and consumer electronics market.

With its increasing scale and geographic reach and significant investments in operational infrastructure and service capability, DCC Technology is very well placed to continue its development and become a leading specialist technology and value-added services business, delivering an industry-leading services offering to technology manufacturers, resellers and retailers in both existing and new markets.  

DCC Healthcare again delivered very strong operating profit growth, driven by excellent organic growth in the health and beauty sector and also benefiting from acquisitions completed in the prior year. 

DCC Vital, which is focused on the sales and marketing of medical devices and pharmaceuticals to healthcare providers in Britain and Ireland, performed well and delivered good organic profit growth in the supply of medical products into the hospital and GP channels in Britain. The business generated strong growth in sales of its own medical and surgical products into hospitals, particularly in the areas of cardiac monitoring, anaesthesia and laparoscopic surgery. DCC Vital strengthened its position as the market leader in the GP channel in Britain, generating very strong profit growth including the benefit of synergies from the successful integration of two small complementary bolt-on acquisitions completed in the prior year. DCC Vital's pharma activities performed satisfactorily, with good profit growth in Britain driven by the strength of its supply chain, which offset a slightly weaker performance in the Irish market.

DCC Health & Beauty Solutions, which provides outsourced solutions to international nutrition and beauty brand owners, generated very strong organic profit growth and also benefited from the first-time contribution from the prior year acquisition of Elite One Source. In the nutrition sector, the business generated very strong organic growth as it continues to support the international growth of key customers, particularly this year in the Chinese and Scandinavian markets, by providing a high-quality service encompassing innovation, manufacturing flexibility and technical support. The business also benefited from the development of new nutritional liquid products on behalf of customers. In the beauty sector, DCC generated excellent organic growth across a range of existing and new customers, driven in particular by strong demand for premium brands in the travel sector.

DCC Health & Beauty Solutions continues to invest in its facilities against the positive background of continuing global market growth and strong customer demand for its services. The business made good progress on a number of on-going investment projects across its manufacturing footprint, which will add significant new capacity and capability. The most material investment is at DCC Health & Beauty Solutions' soft gel facility in south Wales. DCC has grown its European market share in soft gels on the back of its market-leading capability in complex formulation and vegetarian soft gel products. This expansion project, which is scheduled to be commissioned over the summer months, will almost double soft gel capacity, allowing the business to leverage its latest technology innovations in organic vegetarian and delayed release soft gel products.

Forward-looking statements

This announcement contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risk and uncertainty. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable, however because they involve risk and uncertainty as to future circumstances, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed in or implied by such forward-looking statements.