Notes to the Financial Statements

8. Proportionate Consolidation of Joint Ventures

6. Group Operating Profit
Group operating profit has been arrived at after charging/(crediting) the following amounts (including the Group’s share of joint ventures accounted for on the basis of proportionate consolidation):

	2009 €’000	2008 €’000

Provision for impairment of trade receivables (note 47)	18,996	5,638
Directors’ fees and salaries	1,874	2,145
Amortisation of government grants (note 35)	(830)	(288)
Operating lease rentals
- land and buildings	11,457	8,388
- plant and machinery	513	774
- motor vehicles	8,228	4,907
	20,198	14,069

During the year the Group obtained the following services from the Group’s auditors (PricewaterhouseCoopers):

Audit fees	1,351	1,476
Acquisition related due diligence and litigation support	303	338
Tax compliance and advisory services	2,186	1,902
	3,840	3,716

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7. Directors’ Emoluments and Interests
Directors’ emoluments and interests (which are included in operating costs) are presented in the Report on Directors’ Remuneration and Interests on pages 52 to 55.

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8. Proportionate Consolidation of Joint Ventures
Impact on Group Income Statement

Year ended 31 March Group share of:	2009 €’000	2008 €’000

Revenue	43,510	48,026
Cost of sales	(30,125)	(31,592)
Gross profit	13,385	16,434
Operating costs	(9,206)	(8,874)
Exceptional items	(336)	3,628
Amortisation of intangible assets	(428)	(157)
Operating profit	3,415	11,031
Finance income (net)	199	183
Profit before income tax	3,614	11,214
Income tax expense	(1,237)	(1,960)
Group profit for the financial year	2,377	9,254

Impact on Group Balance Sheet
As at 31 March Group share of:

Non-current assets	23,745	24,800
Current assets	9,574	19,094
Total assets	33,319	43,894

Total equity	20,423	26,401
Non-current liabilities	5,440	6,582
Current liabilities	7,456	10,911
Total liabilities	12,896	17,493
Total equity and liabilities	33,319	43,894

Impact on Group Cash Flow Statement

Year ended 31 March Group share of:

Net cash flow from operating activities	(2,206)	11,491
Net cash flow from investing activities	(4,511)	(7,329)
Net cash flow from financing activities	69	-
Net (decrease)/increase in cash and cash equivalents	(6,648)	4,162
(Overdraft)/cash acquired on acquisition	(15)	204
Translation adjustment	(339)	(569)
Cash and cash equivalents at beginning of year	9,040	5,243
Cash and cash equivalents at end of year	2,038	9,040

Reconciliation of cash and cash equivalents to net cash
Cash and cash equivalents as above	2,038	9,040
Interest-bearing loans and borrowings (current and non-current)	(61)	-
Net cash at 31 March	1,977	9,040

The Group’s share of the capital commitments of its joint ventures at 31 March 2009 is €2.858 million (2008: €3.798 million).

Details of the Group’s principal joint ventures are shown in the Group directory on pages 112 to 114.

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9. Employment
The average weekly number of persons (including executive Directors and the Group’s share of employees of joint ventures, applying proportionate consolidation) employed by the Group during the year analysed by class of business was:

	2009 Number	2008 Number

DCC Energy	2,833	2,392
DCC SerCom	1,403	1,513
DCC Healthcare	1,347	1,183
DCC Food & Beverage	1,055	1,044
DCC Environmental	544	506
	7,182	6,638

The employee benefit expenses (excluding termination payments - note 11) for the above were:

	2009 €’000	2008 €’000

Wages and salaries	264,585	246,114
Social welfare costs	29,905	27,385
Share based payment expense (note 10)	1,156	1,844
Pension costs - defined contribution plans	7,570	6,645
Pension costs - defined benefit plans (note 32)	3,090	3,246
	306,306	285,234

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10. Employee Share Options
The Group’s employee share options 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 €1.156 million (2008: €1.844 million) has been arrived at through applying the binomial model, which is a lattice option-pricing model, for options issued under the DCC plc 1998 Employee Share Option Scheme and the Black Scholes option valuation model for options issued under the DCC Sharesave Scheme 2001.

Impact on Income Statement
In compliance with IFRS 2 Share-based Payment, the Group has implemented the measurement requirements of the IFRS in respect of share options that were granted after 7 November 2002 and had not vested by 1 April 2004.

The total share option expense is analysed as follows:

Date of grant

Grant
price
€

Duration of
vesting period

Number of
options granted

Weighted
average
fair value
€

Expense in
Income Statement

2009
€’000

2008
€’000

DCC plc 1998 Employee Share Option Scheme

12 November 2002

10.38

3 and 5 years

609,500

2.81

(213)

22 December 2003

10.70

3 and 5 years

132,000

2.76

18 May 2004

12.75

3 and 5 years

162,500

3.42

9 November 2004

15.65

3 and 5 years

219,500

4.15

179

15 December 2005

16.70

3 and 5 years

215,000

4.52

181

261

23 June 2006

18.05

3 years

223,500

4.54

222

326

23 July 2007

23.35

3 years

323,000

6.35

419

456

20 December 2007

19.50

3 years

25,000

5.22

20 May 2008

15.68

3 years

315,500

4.32

379

1,112

1,413

DCC Sharesave Scheme 2001

10 December 2004

12.63

3 and 5 years

716,010

4.67

431

Total expense

1,156

1,844

Share options

DCC plc 1998 Employee Share Option Scheme
At 31 March 2009, under the DCC plc 1998 Employee Share Option Scheme, Group employees hold basic tier options to subscribe for 1,902,000 ordinary shares and second tier options to subscribe for 1,131,000 ordinary shares. The number of shares in respect of which basic tier and second tier options may be granted under this Scheme may not exceed 5% of the total number of shares in issue in each case.

Basic tier options may normally be exercised only if there has been growth in the adjusted earnings per share of the Company equivalent to the increase in the Consumer Price Index plus 2%, compound, per annum over a period of at least three years following the date of grant.

Second tier options may normally be exercised only if the growth in the adjusted earnings per share over a period of at least five years is such as would place the Company in the top quartile of companies on the ISEQ index in terms of comparison of growth in adjusted earnings per share and if there has been growth in the adjusted earnings per share of the Company equivalent to the increase in the Consumer Price Index plus 10%, compound, per annum in that period.

A summary of activity under the DCC plc 1998 Employee Share Option Scheme over the year is as follows:

	2009		2008
	Average exercise price in € per share	Options	Average exercise price in € per share	Options

At 1 April	11.12	4,262,128	10.00	4,172,712
Granted	15.68	315,500	23.07	348,000
Exercised	7.54	(1,267,128)	8.44	(202,584)
Lapsed	14.83	(277,500)	11.24	(56,000)
At 31 March	12.75	3,033,000	11.12	4,262,128

Total exercisable at 31 March	10.45	1,520,000	8.65	2,632,628

The weighted average share price at the dates of exercise for share options exercised during the year under the DCC plc 1998 Employee Share Option Scheme was €14.73 (2008: €19.39). The share options outstanding at the year end have a weighted average remaining contractual life of 4.4 years (2008: 3.8 years).

The weighted average fair values assigned to options granted under the DCC plc 1998 Employee Share Option Scheme, which were computed in accordance with the binomial valuation methodology, were as follows:

	3 year €

Granted during the year ended 31 March 2009	4.32
Granted during the year ended 31 March 2008	6.26

The fair values of options granted under the DCC plc 1998 Employee Share Option Scheme were determined using the following assumptions:

	2009	2008

	3 year	3 year
Weighted average exercise price (in €)	15.68	23.07
Risk-free interest rate (%)	4.60	4.70
Dividend yield (%)	2.50	2.50
Expected volatility (%)	25.0	25.0
Expected life in years	8.0	8.0

The expected volatility is based on historic volatility over the past 8 years. The expected life is the average expected period to exercise. The risk free rate of return is the yield on zero coupon government bonds of a term consistent with the assumed option life.

Analysis of closing balance - outstanding at end of year

		2009		2008
Date of grant	Date of expiry	Exercise price in € per share	Options	Exercise price in € per share	Options

26 June 1998	26 June 2008	-	-	8.19	391,160
27 July 1998	27 July 2008	-	-	8.13	53,000
4 August 1998	4 August 2008	-	-	7.43	60,000
6 August 1998	6 August 2008	-	-	7.43	11,052
10 November 1998	10 November 2008	-	-	6.22	492,916
9 November 1999	9 November 2009	7.00	557,500	7.00	707,500
16 May 2000	16 May 2010	10.65	50,000	10.65	50,000
21 November 2000	21 November 2010	11.25	166,500	11.25	166,500
13 November 2001	13 November 2011	10.25	494,500	10.25	654,500
12 November 2002	12 November 2012	10.38	374,000	10.38	451,000
22 December 2003	22 December 2013	10.70	119,500	10.70	122,500
18 May 2004	18 May 2014	12.75	142,500	12.75	149,500
9 November 2004	9 November 2014	15.65	166,500	15.65	199,500
15 December 2005	15 December 2015	16.70	183,000	16.70	189,500
23 June 2006	23 June 2016	18.05	190,500	18.05	215,500
23 July 2007	23 July 2017	23.35	248,000	23.35	323,000
20 December 2007	20 December 2017	19.50	25,000	19.50	25,000
20 May 2008	20 May 2018	15.68	315,500	-	-
Total outstanding at 31 March			3,033,000		4,262,128

Analysis of closing balance - exercisable at end of year

		2009		2008
Date of grant	Date of expiry	Exercise price in € per share	Options	Exercise price in € per share	Options

26 June 1998	26 June 2008	-	-	8.19	391,160
27 July 1998	27 July 2008	-	-	8.13	53,000
4 August 1998	4 August 2008	-	-	7.43	60,000
6 August 1998	6 August 2008	-	-	7.43	11,052
10 November 1998	10 November 2008	-	-	6.22	492,916
9 November 1999	9 November 2009	7.00	557,500	7.00	707,500
16 May 2000	16 May 2010	10.65	50,000	10.65	50,000
21 November 2000	21 November 2010	11.25	166,500	11.25	166,500
13 November 2001	13 November 2011	10.25	241,000	10.25	321,000
12 November 2002	12 November 2012	10.38	95,500	10.38	102,500
22 December 2003	22 December 2013	10.70	52,000	10.70	55,000
18 May 2004	18 May 2014	12.75	76,000	12.75	79,500
9 November 2004	9 November 2014	15.65	113,500	15.65	142,500
15 December 2005	15 December 2015	16.70	168,000	-	-
Total exercisable at 31 March			1,520,000		2,632,628

DCC Sharesave Scheme 2001
Under the DCC Sharesave Scheme 2001, Group employees hold options to subscribe for 223,398 ordinary shares. Options are granted at a discount of 20% to the market price as provided for by the rules of the Scheme. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:

	2009		2008
	Average exercise price in € per share	Options	Average exercise price in € per share	Options

At 1 April	12.63	328,679	12.63	563,635
Exercised	12.63	(57,452)	12.63	(199,433)
Lapsed	12.63	(47,829)	12.63	(35,523)
At 31 March	12.63	223,398	12.63	328,679

The weighted average share price at the dates of exercise for share options exercised during the year under the DCC Sharesave Scheme 2001 was €15.62 (2008: €16.01). The share options outstanding at the year end have a weighted average remaining contractual life of 1.9 years (2008: 2.4 years).

Analysis of closing balance - outstanding at end of year

		2009		2008
Date of grant	Date of expiry	Exercise price in € per share	Options	Exercise price in € per share	Options

10 December 2004	1 March 2009	12.63	-	12.63	86,891
10 December 2004	1 March 2011	12.63	223,398	12.63	241,788
Total outstanding at 31 March			223,398		328,679

Analysis of closing balance - exercisable at end of year
As at 31 March 2009, none (2008: 86,891) of the outstanding options under the DCC Sharesave Scheme 2001 were exercisable.

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