DCC : Final Results - 31 March 2022 Announcement

Press Release

17 May 2022

DCC, the leading international sales, marketing and support services group, is today announcing its results for the year ended 31 March 2022.

Excellent Organic Performance and Continued Acquisitive Growth

Financial highlights:	2022	2021	% change	% change CC1
Revenue	£17.732bn	£13.412bn	+32.2%	+35.9%
Adjusted operating profit2	£589.2m	£530.2m	+11.1%	+15.1%
DCC LPG	£237.7m	£231.3m	+2.8%	+6.7%
DCC Retail & Oil	£169.4m	£144.8m	+17.0%	+20.1%
DCC Healthcare	£100.4m	£81.7m	+22.9%	+25.5%
DCC Technology	£81.7m	£72.4m	+12.8%	+19.9%
Adjusted earnings per share2	430.1p	386.6p	+11.2%	+15.2%
Dividend per share	175.78p	159.80p	+10.0%
Free cash flow3	£382.6m	£687.8m
Return on capital employed4	16.5%	17.1%

• Very strong growth in Group adjusted operating profit, up 11.1% (15.1% on a constant currency basis) to £589.2 million, ahead of market expectations:
• 
  o Excellent organic profit growth of 6.1% o Acquisition growth of 9.0%
  o Growth in operating profit across each division
  o Adjusted earnings per share up 11.2% (15.2% on a constant currency basis)
• Proposed 11.2% increase in the final dividend will see the total dividend for the year increase by 10.0%, DCC's 28th consecutive year of dividend growth.
• Free cash flow of £382.6 million reflects anticipated reversal of prior year working capital timing benefits
• • cumulative free cash flow conversion across both years of 96%.
• Continued momentum in acquisition activity with c.£600 million committed in the period, including Almo, DCC's largest acquisition to date.
• Separately this morning, DCC has announced an updated strategy for its energy business, including:
• • Creation of DCC Energy. New divisional and management structure is aligned with DCC's goal of leading customers in their transition to lower carbon and renewable energies
  • Capital allocation priorities to accelerate the transition capability of DCC Energy
  • A 2050 or sooner net zero target for Scope 3 carbon emissions
• DCC expects that the year ending 31 March 2023 will be another year of profit growth and development, notwithstanding the challenging macro environment at present.

1. Constant currency ('CC') represents the retranslation of foreign denominated current year results at prior year exchange rates
2. Excluding net exceptionals and amortisation of intangible assets
3. After net working capital and net capital expenditure and before net exceptionals, interest and tax payments
4. Excluding the impact of IFRS 16 Leases. Current year ROCE including the impact of IFRS 16 Leases is 15.3%

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

"I am very pleased that DCC has delivered an excellent performance in a challenging macro environment, with profit growth across each of our divisions, again demonstrating the resilience of our business. Our colleagues around the Group continued to deliver for our healthcare, technology and energy customers and other stakeholders, ensuring the supply of DCC's essential products and services. It was a very good period for acquisition activity, with approximately £600 million committed to the continued growth and evolution of the Group. Separately, this morning we are announcing an updated strategy for our activities in the energy sector. We are committed to leading our customers in their energy transition by providing innovative and cleaner energy solutions that will help them to achieve their net zero goals.

We are ambitious to build DCC into a global leader in our chosen sectors. We have the platforms, opportunities and capability to do so. Although the world is experiencing a particularly volatile period and supply chain disruption is elevated, DCC is well positioned to grow and develop with momentum."

Contact information
Investor enquiries:
Kevin Lucey, Chief Financial Officer	Tel: [phone]
Rossa White, Head of Group Investor Relations	Email: [e-mail]
Media enquiries:
Powerscourt (Eavan Gannon/Genevieve Ryan)	Tel: [phone]
	Email:[e-mail]

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Presentation of results - audio webcast and conference call details

DCC will host a live audio webcast and conference call of the presentation at 09.00 BST today. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie. The access details for the live presentation are as follows:

Ireland:	[phone]
UK:	[phone]
International:	[phone]
Passcode:	893512
Webcast link:	https://www.investis-live.com/dcc/6254073ea330680c006e6714/wgjw

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

About DCC plc

DCC is a leading international sales, marketing and support services group with a clear focus on sustainable growth. DCC is an ambitious and entrepreneurial business operating in 21 countries, supplying products and services used by millions of people every day. Building strong routes to market, driving for results, focusing on cash conversion and generating superior sustainable returns on capital employed enable the Group to reinvest in its business, creating value for its stakeholders.

Headquartered in Dublin, the Group operates across three sectors: energy, healthcare and technology, employing over 15,400 people. DCC plc is listed on the London Stock Exchange and is a constituent of the FTSE 100. In its financial year ended 31 March 2022, DCC generated revenue of £17.7 billion and adjusted operating profit of £589.2 million.

DCC has an excellent record, delivering compound annual growth of 14% in adjusted operating profit and generating an average return on capital employed of approximately 19% over 28 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.

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Divisional Performance Reviews
DCC LPG
2022	2021	% change	% change CC
Volumes (thousand tonnes)	2,615.2kT	2,259.3kT	+15.8%
Operating profit	£237.7m	£231.3m	+2.8%	+6.7%
Operating profit per tonne	£90.89	£102.36
Return on capital employed excl. IFRS 16	15.8%	17.4%
Return on capital employed incl. IFRS 16	15.1%	16.6%

DCC LPG performed strongly during the year with operating profit increasing by 2.8% (6.7% on a constant currency basis) to £237.7 million. The profit growth was achieved despite the backdrop of both very substantial increases and volatility in the wholesale cost of product, with average product cost almost doubling during the year. Notwithstanding this backdrop, DCC LPG delivered modest organic profit growth and also benefited from bolt-on acquisitions completed in the current and prior year.

Volumes increased by 15.8% driven by the reopening of economies and acquisition activity in the US and Ireland. Organic volumes increased by 6.8% due to the strong recovery in commercial and industrial demand. As expected, operating profit per tonne was lower due to the mix impact of the significant increase in lower margin commercial and industrial customer demand and the impact of the lower margin UPG and Naturgy acquisitions.

The French business performed well, benefiting from continued good domestic demand and growth in the cylinder sector, where it has increased its market share over the last two years. The recent acquisitions and expansion of the business into the solar sector has been successful and performed ahead of expectations, driven by strong demand for the design, build and maintenance solution offering. In B2B gas and power, the business continued to expand its customer base and range of energy solutions, although the higher wholesale cost of energy and associated volatility was a headwind throughout the year. The business continues to broaden the energy transition solutions it offers to customers in France and, amongst other initiatives, has launched an innovative service that provides energy efficiency and management, renewable power and EV charging capability to large offices and shopping centres. The business also delivered strong growth in its other European markets of Scandinavia, Germany and Benelux, benefiting from good organic growth and the acquisition of Primagaz in the Netherlands earlier in the year.

In Britain and Ireland, the business experienced a strong recovery in commercial volumes. It also grew its market share through oil to LPG conversions that lower customer carbon emissions by approximately 20%. In Ireland, the off-grid LPG business performed well, although similar to the experience in France, the on- grid gas and power business faced significant volatility and increased wholesale cost of product for natural gas and electricity. In December 2021, DCC acquired Naturgy's power and gas marketing operations in Ireland. The acquisition adds innovative energy transition expertise in biomethane, direct renewable electricity power purchase agreements and solar solutions, and has performed in line with expectations since acquisition.

The US business delivered strong volume and operating profit growth during the year, driven by the full year contribution from the prior year acquisitions of NES (September 2020) and UPG (January 2021) as well as three smaller bolt-on acquisitions completed in recent months in Kentucky and Colorado. The US business now operates across 22 states serving 310,000 customers. In Hong Kong & Macau, the business performed well during a difficult year for the region and continued to grow its customer base, adding several new large residential estates.

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DCC Retail & Oil	2022	2021	% change	% change CC
Volumes (billion litres)	11.628bn	10.199bn	+14.0%
Operating profit	£169.4m	£144.8m	+17.0%	+20.1%
Operating profit per litre	1.46ppl	1.42ppl
Return on capital employed excl. IFRS 16	24.8%	19.2%
Return on capital employed incl. IFRS 16	21.0%	16.9%

DCC Retail & Oil delivered excellent growth, with operating profit increasing to £169.4 million, 17.0% ahead of prior year (20.1% on a constant currency basis). The vast majority of the growth was organic, reflecting strong volume growth and an excellent operational and cost performance. In addition, the business continues to deliver significant growth in non-fuel profits, particularly in lubricants and HGV and fleet services.

DCC Retail & Oil sold 11.6 billion litres of product, an increase of 14.0% on the prior year. The significant volume increase was driven by a strong recovery in commercial, retail and fuel card volumes, which had been adversely impacted by Covid-19 restrictions in the prior year. The business experienced particularly strong demand in Scandinavia, France and Britain.

The business in Britain and Ireland recorded very strong organic operating profit growth, in part due to the recovery in commercial activity, which drove fuel and fuel card usage. In Britain, the business also delivered good growth in its company owned retail network, with non-fuel sales performing strongly. The business delivered good growth across lubricants, truck stop, roadside services and heating services, with the growth in the increased range of customer solutions continuing to broaden the activities of the British business. Recently, the business acquired a new HGV bunker site in the Port of Felixstowe, further strengthening its network of HGV service coverage to 26 strategically located facilities across Britain. The business in Ireland delivered very strong organic growth, benefiting from the integration of the two recent bolt-on acquisitions and from strong demand from the power generation sector.

The Scandinavian business performed robustly following an excellent performance in the prior year. The business in Denmark performed particularly well and generated strong growth across the retail, agricultural and commercial sectors. In Scandinavia, the business continued to deploy capital into lower emissions fuels and EV charging infrastructure, including winning a significant tender for a transport mobility hub in Norway. In Denmark, the business has partnered with Shell Re-Charge to provide customers with EV charging solutions in the home, office, forecourts and public spaces.

In France, the business recorded very strong growth, as restrictions were eased and retail mobility consumers were increasingly active. The business made good progress during the year in further developing its products and solution offerings to mobility customers. The business has partnered with ENGIE to deploy EV chargers on 16 motorway sites. It also rolled out the infrastructure to enable the sale of E85 biofuel (85% ethanol content) across 59 sites on its network. E85 offers a significantly lower carbon alternative product for customers. In September 2021, the business also acquired a synergistic network of 19 convenience-led retail sites in Luxembourg, which are performing in line with expectations. Although modest, the acquisition has added a strong company-operated convenience retailing capability. DCC Retail & Oil has also recently entered into a major lubricants distribution agreement to the auto franchise and independent workshop segments in France, establishing a platform to develop further organic revenue opportunities in the lubricants sector in Europe.

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