SerCom Distribution markets and sells IT and entertainment products to the Retail market, the Reseller market and the Enterprise market. SerCom Solutions provides outsourced procurement and supply chain management services in Ireland, Poland, China and the USA.

 

DCC SerCom currently employs 1,340 people.

			Change on prior year
	2009	2008	Reported	Constant Currency
Revenue	€1,551.3m	€1,423.4m	+9.0%	+18.7%
Operating profit	€40.1m	€40.1m	+0.2%	+9.2%
Operating margin	2.6%	2.8%

Business and Markets
Retail
DCC SerCom’s Retail business distributes a broad range of consumer products, including games consoles and software, consumer electronics and home entertainment products, to retailers, e-tailers and catalogue resellers in Britain, Ireland and France. DCC SerCom represents many of the leading brands in the computer games, entertainment and consumer electronics markets such as Electronic Arts, Entertainment in Video, Garmin, Logitech, Microsoft, Nintendo, Paramount, Seagate, Symantec, Take Two and Warner Brothers. The business is the leading specialist distributor of home entertainment products in Ireland, the leading specialist distributor of games hardware, software and accessories, consumer electronics and software in Britain and the leading specialist distributor of IT peripherals and consumer electronics in France. The Retail business provides a range of value added services to its customers and suppliers including end-user fulfillment, third party logistics, category management and merchandising, security tagging and cross vendor bundling.

 

Reseller
DCC SerCom’s Reseller business distributes a broad range of IT products focused on the SME and home markets to a very wide customer base of IT resellers, dealers and retailers in Britain and Ireland. The products distributed include PCs, peripherals, printers, and network products. The Reseller business is a distribution partner of many of the leading brands in the IT market such as Acer, Canon Cisco, IBM, Lenovo, Microsoft, Netgear, Samsung, Sony and Toshiba. The business provides its partners with an exceptionally broad customer reach and proactively markets IT products to the channel through product focused sales teams with strong technical expertise. DCC SerCom’s Reseller business has strong market positions in its core markets in Britain and Ireland and is typically the No. 1 distributor for the brands it represents.

Enterprise
DCC SerCom’s Enterprise business distributes a range of data management, security and virtualisation software, servers and storage products which are typically utilised in medium-sized and large organisations. The business’s customers are value added resellers, large account resellers and independent software vendors in France, Iberia, Benelux and Britain. The Enterprise business has developed a supplier portfolio of the leading hardware and software vendors in the industry including Adobe, Appliance EMC, Fortinet, HP, IBM, Network, Oracle, Red Hat, SonicWall, Sun, Symantec and VMware. This allows its highly trained sales teams to offer integrated IT solutions and related services to its customers. The business is the leading specialist distributor of enterprise and mid-market products in its core markets of France, Spain, Portugal, Belgium and Luxembourg and has a developing presence in Britain and the Netherlands.

 

Supply Chain Management
DCC SerCom’s supply chain management business, SerCom Solutions, provides a range of specialist procurement and sourcing services from its operations in Ireland, Poland, China and the United States, employing state of the art IT systems and procurement processes. The business is a strategic supply chain partner for some of the world’s leading technology and telecommunications companies. The business delivers global supply chain solutions encompassing vendor hubbing, consignment stock programmes, supplier identification and qualification, quality assurance and compliance and supplier and customer fulfillment to effectively reduce its partners’ cost of production and reduce obsolescence and wastage. SerCom Solutions has developed partnerships with leading logistics firms to enable the business to deliver its services in a flexible, cost effective manner in its core markets in Europe, North America and the Far East.

Performance Management - key performance indicators	2009	2008
Revenue growth (constant currency)	+18.7%	+18.8%
Organic revenue growth (constant currency)	+8.7%	+9.6%
Operating cash flow	€46.0m	€64.5m
Working capital	32.9 days	34.9 days
ROCE including intangible assets	15.5%	15.3%
ROCE excluding intangible assets	26.2%	24.2%
10 year CAGR	7.0%	9.2%

 

Performance for the year ended 31 March 2009
DCC SerCom achieved strong constant currency operating profit growth of 9.2%, despite challenging trading conditions in some of its markets. This strong growth was driven primarily by excellent growth from the Retail business in Britain, a full year contribution from Banque Magnetique (the French Retail business) and the successful integration of a number of small bolt-on acquisitions in the Enterprise business.

 

The Retail business had a strong year, achieving good operating profit growth. The business performed particularly well in Britain, increasing its share of the games market and benefiting from the continuing strong demand for games consoles, software and associated products. The business also saw very good growth in its own brand product range, which continues to develop well. The French business performed in line with expectations, despite weakening consumer demand. In Ireland, the business suffered from a significant decline in consumer demand, which resulted in a reduction in profits.

 

The Reseller business had a good year driven by strong sales growth in Britain, achieved through market share gains, particularly in PCs. Operating profit declined in the Irish business, with market conditions deteriorating throughout the year; significant restructuring has been implemented in this business to appropriately align its cost base with current revenue levels.

 

The Enterprise business achieved excellent operating profit growth. The business grew its market share and strengthened its product portfolio particularly in software. The business also benefited from the successful integration of a number of modest bolt-on acquisitions completed in the current year.

 

Although operating profit declined in DCC SerCom’s Supply Chain Management business, trading was ahead of expectations, due to the slower than anticipated change in the procurement strategy of a major customer.

 

Strategy and Development
DCC SerCom’s strategy is to deliver consistent long-term profit growth and industry leading returns on capital employed by building strong commercial and market positions in each of its focused business units.

 

SerCom Distribution’s principal medium term objectives are:

•	to extend its product and market coverage in the Retail market, providing an integrated multi-country service, including the further development of own brand products;
•	to extend its pan-European presence in the Enterprise market with an increased focus on software and security products;
•	to expand the Reseller business in Britain and Ireland in complementary product markets, such as mobile telephony and communications.

 

SerCom Solution’s primary strategic objectives are to expand its customer base in East Asia, Europe and North America through strategic partnership arrangements and the extension of its procurement and sourcing services and capability.

 

Outlook
For the year to 31 March 2010, DCC SerCom anticipates that operating profit will be broadly in line with the prior year on a constant currency basis. While it is expected that SerCom Distribution will achieve good constant currency operating profit growth, operating profit in the Supply Chain Management business is likely to decline.