12 November 2024

Interim results for the six months ended 30 September 2024

DCC delivers good profit growth in first half; Announces significant strategic update

· Group adjusted operating profit increased 4.7% (6.0% constant currency) in the seasonally less significant first half of the year. Organic growth was 0.5% with M&A activity (net of divestments) contributing 5.5%.

· Adjusted earnings per share up 6.2% (7.5% constant currency).

· Interim dividend up 5.0% to 66.19 pence per share.

· Since our prior year Final Results in May 2024, DCC has committed approximately £130 million to eight bolt-on acquisitions. The largest acquisitions were in DCC Energy: Wirsol in Germany, a solar photovoltaic (PV) and battery storage business; and Acteam ENR, a French solar PV business. During the period, DCC also disposed of a majority stake in its liquid gas business in Hong Kong & Macau.

· Separately this morning, DCC has announced a strategy update which will see the Group focus on the energy sector, simplify the Group's operations and maximise shareholder value.

· Notwithstanding the headwind of currency translation, DCC expects that the year ending 31 March 2025 will be a year of good operating profit growth and significant strategic progress.

Donal Murphy, Chief Executive, commented:

"We delivered good profit growth in the first half of our financial year. Although the macro environment remains volatile, our resilient business continued to perform well. Today we are also announcing decisive actions to simplify our Group, pursue our largest growth and returns opportunity in the energy sector and unlock substantial shareholder value. In DCC Energy, we are executing our Cleaner Energy in Your Power strategy and completed a number of complementary acquisitions and a divestment. Our disciplined approach to capital allocation is aligned with our strategic priorities to give all our customers the power to choose a cleaner energy future."

Contact information

Presentation: Strategy update and interim results - audio webcast and conference call details

Group management will host a live audio webcast and conference call of the presentation at 09.00 GMT today. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie.

The access details are as follows:

Ireland:             +353 (0) 1 691 7842

UK:                    +44 (0) 203 936 2999

International:  +44 (0) 203 936 2999

Passcode:           337425

Webcast link:     https://www.investis-live.com/dcc/67068eabb2cedb000e392a82/hjdtw

This report, presentation slides and a replay of the audio will be made available at www.dcc.ie.

About DCC plc

Invest in what the world needs

DCC is a leading international sales, marketing and support services group. We provide solutions the world needs across three transformative sectors: energy, healthcare and technology; where we acquire, improve and grow diverse businesses. We bring our growth mindset to our businesses in 21 countries across four continents, empowering our 16,700 employees to create long term value - for our shareholders, customers, society and the planet.

Headquartered in Dublin, DCC plc is listed on the London Stock Exchange and is a constituent of the FTSE 100. In our financial year ended 31 March 2024, DCC generated revenues of £19.9 billion and adjusted operating profit of £682.8 million. DCC has an excellent record, delivering compound annual growth of 14% in adjusted operating profit and unbroken dividend growth of 13% while maintaining high returns on capital employed over 30 years as a public company.

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www.dcc.ie

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.

A summary of the Group's results for the six months ended 30 September 2024 is as follows:

Group revenue

Overall, Group revenue decreased by 3.0% (1.8% on a constant currency basis) to £9.3 billion, primarily due to lower revenue in DCC Energy where average commodity prices were lower.

DCC Energy sold 7.1 billion litres of product in the first half, modestly behind the prior year (-1.1%). Volumes in Energy Solutions increased by +0.4%, despite the headwind of mild weather conditions. This was offset by a decline in Energy Mobility volumes of 4.2%. Revenue in DCC Energy declined by 4.5% to £6.6 billion, reflecting lower commodity prices and the modest overall decline in volumes. DCC Healthcare recorded revenue of £415.1 million, in line with the prior year on a constant currency basis and 1.3% behind on a reported basis. Revenue in DCC Vital was in line with the prior year while in HBI Health & Beauty Innovations, the UK business delivered good revenue growth, offset by a decline in the US business. Revenue in DCC Technology was £2.3 billion, an increase of 1.2% (+2.3% on a constant currency basis). Revenue growth in Pro Tech was partly offset by a modest decline in Info Tech.

Group adjusted operating profit

Group adjusted operating profit increased by 4.7% to £259.3 million (+6.0% on a constant currency basis), in the seasonally less significant first half of the year. DCC Energy grew by 7.0%, while DCC Healthcare and DCC Technology were broadly in line with the prior year. Following very good organic growth in the prior year, especially in DCC Energy, organic growth was modest at 0.5%.  

The impact on reported Group adjusted operating profit of foreign exchange (FX) translation, M&A and organic growth was as follows:

The net impact of FX translation in the first half of the year was a headwind of 1.3%, or £3.3 million, in the reported growth in adjusted operating profit. This reflects average sterling exchange rates strengthening against most of the Group's reporting currencies during the period.

Acquisitions completed in the prior year and in the current period contributed 5.5% of the reported operating profit growth. The material contribution during the six-month period came from the prior year acquisition of Progas and the current year acquisition of Next Energy, offset somewhat by the disposal of our liquid gas business in Hong Kong & Macau.

The Group's organic operating profit growth was 0.5%, with organic growth in DCC Energy and DCC Healthcare offset by a modest decline in DCC Technology. The inflationary environment continues to be a significant feature but costs were well managed during the period. The Group's like for like overhead cost base was 2.8% ahead of prior year. Further commentary on the trading performance of each of the three divisions is detailed below.

· DCC Energy delivered operating profit growth of 7.0% (8.4% constant currency) in the seasonally less significant first half, driven by acquisitions in Energy Solutions and good organic growth in Energy Mobility. Acquisitions, net of the significant disposal in Hong Kong & Macau, contributed the majority of the strong profit growth, while organic growth was 1.0%, notwithstanding a very strong prior year performance. DCC Energy committed £106 million to acquisitions in the period.

· Volumes declined modestly (1.1%) compared with the prior year. Energy Solutions volumes were in line with prior year (+0.4%), while volumes in Energy Mobility decreased by 4.2%. Continued strong operational focus in Energy Mobility and progress in non-fuel volume profitability more than offset the lower volume impact. Within Energy Solutions, our non-volumetric Energy Management Services ("EMS") revenues were up 3.0% on prior year.

· The share of operating profit from services, renewables and other products ("SRO") reduced modestly to 43%², down from 46% in the prior year principally due to lower profitability in renewable power in Ireland which recorded a very strong performance in the prior year. DCC Energy's Scope 3 emissions declined by 5.4%, highlighting the conversion of customers to biofuel in particular. In delivering our Cleaner Energy in Your Power strategy, we reduced the carbon intensity of our profits by 11.6% in the first half of the year.   

DCC Energy Solutions grew operating profit by 8.7% (10.1% constant currency), while volumes were in line with the prior year. EMS revenue grew 3.0%, driven by acquisitions completed during the period and the second half of FY24. Our Energy Solutions business launched a 'Solar as a Service' offering, which includes a financing solution for customers with funding from partners. We believe that this offer will help us to grow customer numbers and cement long-term customer relationships, leading to the increased sales of complementary recurring revenue solutions on-site. There are four operating regions within DCC Energy Solutions: Continental Europe, UK & Ireland, Scandinavia and North America.

In Continental Europe, we delivered good operating profit growth driven by acquisitions and a strong performance in France. We acquired Acteam and Copropriétés Diagnostic to further broaden our EMS presence across France, where our existing businesses (trading under the 'Wewise' umbrella brand) performed very strongly. We recorded strong growth in Germany and Austria, as a result of the first-time contribution from Progas, Wirsol and Secundo.

Operating profit in the UK & Ireland grew very strongly, driven by organic growth and the contribution from acquisitions in the prior year. The performance in Ireland was robust, following a very strong prior year. Volumes across the UK and Ireland in liquid gas and liquid fuel were in line with the prior year. Operating profit in the UK benefited from energy management acquisitions completed in the second half of the prior financial year, primarily eEnergy (rebranded to Equity Energies), DTGen and the current year acquisition of Next Energy. We continued to grow our market share in biofuel, led by Hydrotreated Vegetable Oil (HVO). Customer numbers also grew strongly, especially in Ireland.

In Scandinavia, operating profit declined modestly following a very strong prior year performance. The modest decline reflected lower profits in our aviation business in the region which had grown very strongly in the prior year. Our liquid fuels and liquid gas businesses in the region performed well and in line with expectations.

In North America our business primarily serves domestic and small commercial heating customers, so it is significantly weighted to the second half of the year. Operating profit declined, as weather was much warmer than the five-year average throughout the period, but also during the final quarter of the prior year which impacted customers tank levels entering the current year. Gross margins have been resilient, despite the competitive market, although this was offset by higher costs. We continue to invest in our capability in the region, reflecting our ambitions for the growth and future development opportunity we see in the market.

DCC Energy Mobility operating profit increased by 4.5% (5.8% constant currency) and almost all of the growth was organic. Volumes declined, mainly driven by lower volumes in Denmark where the business exited a lower margin contract with a retail partner. Although volumes declined, we delivered a strong operational performance across our retail forecourt business, extending our track record of improving our operating performance.

In the UK, we delivered very strong operating profit growth led by our fleet service businesses, which is non-volume correlated. During the period we acquired Cubo, a fleet telematics business that we bolted on during the period. The acquisition reflects our ongoing investment in non-fuel services for fleets as well as electric vehicle charging for cars and convenience retail.

In France, operating profit was in line with prior year and expectations. The market remained competitive, but the pricing environment was much improved compared with the second half of FY24. In Scandinavia the business in Norway recorded good operating profit growth, with a robust performance in Denmark.

· DCC Healthcare delivered a robust performance in the first half of the year. Operating profit was up 0.4% on an organic constant currency basis, and very modestly behind (0.4%) on a reported basis.

· In DCC Vital, the Medical Devices and Primary Care businesses in Europe performed well, while our UK Primary Care business continued to face challenges from NHS funding restrictions. Our recently rebranded HBI Health & Beauty Innovations ("HBI") business delivered good growth, particularly in the UK.

· DCC Healthcare has implemented a range of strategic initiatives to drive revenue growth and cost optimisation across the division. These include strengthening the leadership team, driving product and process innovation, and re-branding our consumer health business as we drive increased customer engagement. We have also now completed the material capital expenditure projects to expand capacity and capability in our consumer health business, providing the platform to capture growth and share as demand recovers.

Divisional revenue

DCC Healthcare recorded revenue of £415.1 million, marginally behind the prior year by 1.3% (-0.3% organic constant currency). Revenue in DCC Vital was in line with the prior year. In HBI, the UK business delivered good revenue growth, offset by a decline in the US business.

DCC Vital: Patient Health

In Medical Devices, the business delivered good organic profit growth across our major markets of France, Germany and the UK. In Ireland the business performed in line with expectations, having grown very strongly during the last number of years. During the period the Irish business agreed to acquire Iskus Health, subject to competition approval. This complementary bolt-on acquisition is a supplier of single-use, medical and surgical devices to Irish hospitals and is expected to complete in the coming months.

In Primary Care profitability was modestly behind the prior year. In Europe, the businesses in Germany and Switzerland performed well and delivered profit growth in line with expectations. This good performance was offset by a decline in the UK business, where the market continues to be challenging, principally due to NHS funding constraints.

Following the significant expansion of the business in recent years, our European Medical Devices business has an exciting and innovative product pipeline and extensive distribution reach across multiple geographies. Meanwhile, we continued our strategic investment in technology in Primary Care (e-commerce, digital and AI investments) to enhance sales growth in the UK and Germany and to improve both customer experience and efficiency.

HBI Health & Beauty Innovations: Consumer Health

Our HBI business delivered good organic profit growth, driven by the performance of the UK business. Although demand in the US has not yet normalised, demand improved from a range of customers across the UK and Europe, where the business recorded very strong organic growth, particularly in beauty.

Following recent investments, we have enhanced our capability and capacity in the product formats which are attracting the most customer interest - gummies and stick packs. We have appointed a new CEO to the HBI business. We have also launched a new common brand across the business, showcasing the breadth of our offering and highlighting our credentials as a sustainable product development and contract manufacturer. This will boost cross-selling opportunities across formats and geographies.  

· Against the backdrop of continued weak market conditions, DCC Technology performed robustly and in line with expectations, with operating profit up 1.1% on a constant currency basis and declining 0.4% on a reported basis. Organically profits were back 1.4% in the first half of the year. Market conditions reflect robust demand for Pro Tech products in North America but relatively weaker demand for Info Tech consumer technology products in Europe and Life Tech products in North America.

· We continued to improve profitability in our Info Tech business in the UK, where the operational improvement programme has delivered cost reductions and enhanced the quality of the business. We expect further improvement in returns, as our programme continues. Despite inflationary pressures, we reduced operating costs for the division compared with the prior year.

· DCC Technology commenced a commercial excellence programme in our North American Pro Tech and Life Tech businesses. This will optimise operations to drive significant improvement in profitability and returns over the next 24 months. We have already delivered results by reducing freight and transport costs while improving product flow and warehouse efficiency.

Divisional revenue

Divisional revenue increased by 1.2% (+2.3% constant currency), mainly driven by revenue growth in Pro Tech offsetting revenue decline in Info Tech where demand for consumer technology products was weak in continental Europe. Revenue was 0.2% higher organically. 

Pro Tech

In Pro Tech, DCC Technology is the leading specialist distributor of AV products globally, centred on our business in North America. We grew operating profit and gained market share in the specialist AV segment in North America where demand remained robust. During the period we acquired MDM Commercial Inc, a small bolt on acquisition which broadens our professional AV capabilities in North America. Operating profit declined in our smaller European Pro Tech business, as market conditions remained softer in France and Germany in particular.

Info Tech

Our Info Tech business distributes high-volume consumer and business IT products to the retail and reseller channels in Europe, with our largest markets being in the UK and Ireland. Consumer demand remained soft and little different to the last two years across Europe. We continued to lower costs and improved our gross margin in the UK business. The business in Ireland performed well in the first half of the year. Operating profit declined in our other Info Tech businesses in continental Europe, reflecting the weak consumer demand environment.

Life Tech

In Life Tech we distribute consumer appliances and lifestyle technology products to the retail and etail channels in North America. In the first half, operating profit declined modestly because of lower demand for consumer electronics and musical products. The business was also affected by overstocking in certain market segments. 

Finance costs (net) and other

Net finance costs and other, which includes the Group's net financing costs, lease interest and the share of profit/loss of associated businesses, increased modestly to £53.1 million (2023: £52.2 million) and reflects a sustained higher interest rate environment throughout the period relative to the prior year. This continued to impact the cost of the floating rate element of the Group's gross debt, offset somewhat by an increased return on the Group's gross cash. Approximately 70% of the Group's gross debt is fixed (30 September 2023: c. 60%). Average net debt, excluding lease creditors, in the period was £1.3 billion, compared to an average net debt of £1.2 billion in the prior year.

Net exceptional items and amortisation of intangible assets 

The Group recorded a net exceptional charge after tax of £19.1 million in the first six months of the year as follows:

Restructuring and integration costs and other of £15.9 million mainly relates to the restructuring of operations across a number of businesses and recent acquisitions. The majority of the cost relates to optimisation and integration of operations in the Technology division. Acquisition and related costs include the professional fees and tax costs relating to the evaluation and completion of acquisition opportunities and amounted to £11.1 million.

During the period DCC Energy completed the sale of a majority stake in its liquid gas business in Hong Kong & Macau. The transaction valued DCC's business at an initial enterprise value of c.US$150 million (c.£117 million), on a debt-free, cash-free basis and DCC retained a minority stake in the combined business. The transaction resulted in a modest profit on disposal of £4.3 million.

The level of ineffectiveness calculated under IAS 39 on the hedging instruments related to the Group's US private placement debt is charged or credited as an exceptional item. In the six months ended 30 September 2024 this amounted to an exceptional non-cash charge of £0.3 million. The cumulative net exceptional credit taken in respect of IAS 39 ineffectiveness was £0.3 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 decreased slightly to £52.2 million from £53.5 million in the prior period.

Taxation

The effective tax rate for the Group in the first half of the year of 20.3% is based on the anticipated mix of profits for the full year. It compares to a full year effective tax rate in the prior year of 19.7%. The Group's effective tax rate is influenced by the geographical mix of profits arising in any year and the tax rates attributable to the individual jurisdictions. The higher tax rate reflects corporation tax increases in a number of jurisdictions.

Adjusted earnings per share

Adjusted earnings per share increased by 6.2% to 158.5 pence (7.5% on a constant currency basis), reflecting the increase in profit before exceptional items and goodwill amortisation.

Dividend

The Board has decided to pay an interim dividend of 66.19 pence per share, which represents a 5.0% increase on the prior year interim dividend of 63.04 pence per share. This dividend will be paid on 13 December 2024 to shareholders on the register at the close of business on 22 November 2024. Over our 30 years as a listed company, DCC has an unbroken record of dividend growth at a compound annual rate of 13.2%.

Cash flow

As with its operating profit, the Group's operating cash flow is significantly weighted towards the second half of the financial year. The cash flow of the Group for the six months ended 30 September 2024 can be summarised as follows:

Free cash flow generation

Free cash flow in the six months ended 30 September 2024 of £15.8 million (deficit) compares to £54.5 million in the prior year. On a rolling 12-month basis (i.e., H1 FY25 and H2 FY24 cumulatively), free cash flow conversion remained very strong at 88%.

Working capital

As expected, working capital increased by £265.8 million in the first half of the financial year, reflecting the Group's typical seasonal outflow and the very strong cash generation in the second half of the prior year. The seasonal working capital requirements are driven particularly by DCC Technology and DCC Energy Solutions and, as usual, are expected to largely reverse in the second half of the year.

The absolute value of working capital at 30 September 2024 increased to £508.3 million (£440.2 million at 30 September 2023), reflecting acquisition activity in DCC Energy. Excluding acquisitions, the absolute level of working capital was in line with prior year. Overall working capital days at 30 September 2024 was 9.5 days sales (30 September 2023: 7.4 days sales) reflecting recently completed acquisitions.

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 30 September 2024 was £160.0 million (2023: £122.8 million) reflecting growth in our UK Info Tech business with retail customers. Supply chain financing had a positive impact on Group working capital days of 3.0 days (30 September 2023: 2.1 days).

Net capital expenditure

Net capital expenditure for the six months of £86.1 million (2023: 111.4 million) was net of disposal proceeds (£9.7 million) and reflects continued investment in development initiatives across the Group.

Capital expenditure in DCC Energy primarily comprised expenditure on tanks, cylinders and installations, with a focus on supporting new and existing liquid gas customers in Energy Solutions. In Mobility, there was investment to maintain our retail sites and upgrades across the business, including adding further lower emission product capability, electric vehicle fast charging and related forecourt services in the Nordics and France in particular. In DCC Healthcare, the spending primarily related to increased manufacturing capability and capacity across HBI Health & Beauty Innovations. In DCC Technology, capital expenditure included continued enterprise resource planning investment in Europe. Net capital expenditure for the Group exceeded the depreciation charge of £82.7 million (excluding right-of-use leased assets) in the period by £3.4 million.

Total cash spend on acquisitions in the six months to 30 September 2024

The total cash spend on acquisitions in the six months ended 30 September 2024 was £164.1 million. This included the completion of the acquisition of Next Energy, Secundo Photovoltaik and Copropriétés Diagnostic in DCC Energy which were announced in the prior year Results Announcement in May 2024. Payment of deferred and contingent acquisition consideration previously provided amounted to £15.7 million.

Committed acquisitions

Committed acquisitions in the period amounted to £129.3 million as follows:

DCC continues to be very active from a development perspective. The Group's recent acquisitions include:  

DCC Energy

DCC Energy has committed approximately £105.6 million to new acquisitions to support its Cleaner Energy in Your Power strategy. In addition to a number of small bolt-on acquisitions, DCC Energy has acquired:    

· In July 2024, DCC Energy completed the acquisition of WIRSOL Roof Solutions ("Wirsol") in Germany. Wirsol has been providing high quality solar photovoltaic (PV) and battery storage solutions for more than 20 years. Based in Waghäusel, Germany, the business employs 120 people and has planned and installed over 16,000 solar systems for commercial and private customers throughout Germany. Following the recent acquisition of Progas in the liquid gas market, Wirsol provides a platform to now develop our Energy Management Services ("EMS") offering in the German energy market-the largest in Europe.

· In July 2024, DCC Energy completed the acquisition of Cubo, a fleet telematics business providing integrated telematics & communication solutions in the UK & Ireland. The complementary acquisition provides additional digital solutions to our fleet service customers.  

· DCC Energy acquired Acteam ENR ("Acteam") in September 2024, a French solar PV business based in Toulouse. Acteam provides project development, engineering, project management along with construction support and supervision services for commercial solar PV projects. The acquisition is geographically complementary to our Wewise French business and will enable us to develop our energy management services capability in the south of France.   

· In November 2024, DCC Energy completed the acquisition of MG Habitat, a French energy services business providing design, installation and maintenance services for solar PV, heat-pumps and other energy installations.

DCC Healthcare

DCC Healthcare has agreed to acquire Iskus Health, subject to clearance from the Competition and Consumer Protection Commission in Ireland.  Iskus, established in 2000, is an independent supplier of single-use, medical and surgical devices to the Irish healthcare market. The proposed bolt on acquisition is complementary to DCC Healthcare's existing Irish business.

DCC Technology

DCC Technology completed the acquisition of MDM Commercial Inc, a distributor of hospitality and healthcare professional AV equipment in the USA. The business is headquartered in Jacksonville, Florida with 40 employees. The modest acquisition continues DCC Technology's strategy of building a leading Pro AV distribution business in North America.

Divestment of liquid gas business in Hong Kong & Macau

In July 2024, DCC Energy completed the sale of a majority stake in its liquid gas business in Hong Kong & Macau to CITADEL Pacific Ltd, an Asian industrial group with an existing and complementary business in the region. The transaction valued DCC's business at an initial enterprise value of c.US$150 million (c.£117 million), on a debt-free, cash-free basis and DCC retained a minority stake in the combined business. Further details on the transaction can be found in DCC's stock exchange announcement of 11 July 2024.

Financial strength

DCC has always maintained a strong balance sheet and it remains an important enabler of the Group's strategy. A strong balance sheet provides many strategic and commercial benefits, including enabling DCC to take advantage of acquisitive or organic development opportunities as they arise. At 30 September 2024, the Group had net debt (including lease creditors) of £1.4 billion, net debt (excluding lease creditors) of £1.1 billion, cash resources (net of overdrafts) of £800 million and total equity of £3.1 billion.

Historically, the Group has raised its term debt in the US private placement market. Recently, (see below) the Group also has become an issuer in the public debt markets. The Group's term debt has an average maturity of 5.3 years. The Group repaid £263 million of private placement debt in May 2024.

DCC has taken a pro-active approach to the credit markets since going public. The Group has been active in the US private placement debt market since 1996 and has built up a robust and well-diversified funding portfolio, with a balanced maturity profile. DCC's long term banking partners, investors and suppliers have always appreciated the strong credit quality of the Company. In November 2023 S&P Global Ratings issued a BBB rating and Fitch issued a BBB rating for DCC in the first public credit rating opinions of the Company. In June 2024 DCC established a Euro Medium Term Note (EMTN) programme and issued its inaugural public market debt instrument, a benchmark €500 million seven-year senior unsecured bond. The bond raise refinanced recently redeemed and shortly maturing private placement debt.

Principal risks and uncertainties

The Board of DCC is responsible for the Group's risk management and internal control systems, which are designed to identify, manage and mitigate material risks to the achievement of the Group's strategic and business objectives. The Board has approved a Risk Management Policy which sets out delegated responsibilities and procedures for the management of risk across the Group.

The principal risks and uncertainties facing the Group in the short to medium term, as set out on pages 87 to 91 of the 2024 Annual Report (together with the principal mitigation measures), continue to be the principal risks and uncertainties facing the Group for the remaining six months of the financial year.

This is not an exhaustive statement of all relevant risks and uncertainties. Matters which are not currently known to the Board or events which the Board considers to be of low likelihood could emerge and give rise to material consequences. The mitigation measures that are in place in relation to identified risks are designed to provide a reasonable and proportionate, and not an absolute, level of protection against the impact of the events in question.