Results Presentation

For the year ended 31 March 2020

19 May 2020

Disclaimer

This presentation does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any shares or other securities of DCC plc ("DCC").

This presentation 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 circumstance, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements. DCC undertakes no duty to and will not necessarily update any such statements in light of new information or future events, except to the extent required by any applicable law or regulation. Recipients of this presentation are therefore cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in or implied by any forward-looking statements.

Any statement in this presentation which infers that transactions may be earnings accretive does not constitute a profit forecast and should not be interpreted to mean that DCC's earnings or net assets in the first full financial year following the transactions, nor in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial year.

Your attention is drawn to the risk factors referred to in the Principal Risks and Uncertainties section of DCC's Annual Report. These risks and uncertainties do not necessarily comprise all the risk factors associated with DCC and/or any recently acquired businesses. There may be other risks which may have an adverse effect on the business, financial condition, results or future prospects of DCC. In particular, it should be borne in mind that past performance is no guide to future performance. Persons needing advice should contact an independent financial advisor.

1

DCC Results Presentation - 19 May 2020

Agenda

  • Introduction and highlights
  • Business and financial review
  • Current trading and Covid-19
  • Summary and Q&A

2

DCC Results Presentation - 19 May 2020

Introduction and highlights

  • Strong performance for the year
    • Operating profit growth across each division
    • Excellent cash flow performance
    • Strong return on capital employed
    • Balance sheet in excellent shape, particularly strong and liquid
  • Another good period of development activity
    • c.£170 million of capital committed to new acquisitions
    • Substantial expansion of US nutritional business in DCC Healthcare with acquisitions of Ion Labs and Amerilab
    • Continued bolt-on activity across each division, including recent of bolt-on in gas & power in Ireland
  • Group responding well to challenges of Covid-19
    • Health and safety our key priority - operations, products and services deemed
      'essential'
    • DCC businesses and people quickly adapted to new ways of working
    • Group trading robustly since beginning of new financial year

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DCC Results Presentation - 19 May 2020

Business and financial review

Fergal O'Dwyer

Chief Financial Officer

Financial summary

For the year ended 31 March 2020

£'m

2020

2019

% change

Revenue

14,755

15,277

-3.1%

Group adjusted operating profit1,2

494.3

460.5

+7.3%

Finance costs net and other1

(54.3)

(45.9)

Profit before net exceptionals,

440.0

414.6

+6.1%

amortisation of intangible assets and tax

Adjusted EPS1,2

362.6 pence

358.2 pence

+1.3%

Dividend per share

145.27 pence

138.35 pence

+5.0%

Free cash flow

£492.3m

£434.0m

Net debt - excluding lease creditors

60.2

18.3

Lease creditors

306.9

0.1

Net debt - including lease creditors

367.1

18.4

ROCE

16.5%

17.0%

  1. The current financial year includes the impact of the adoption of IFRS 16 Leases; the comparatives have not been restated in accordance with transitional guidelines. As anticipated, the Group adjusted operating profit reflects a benefit of £5.0 million, while finance costs reflect an incremental charge of £8.6 million from the adoption of IFRS 16, resulting in a net negative impact on earnings of approximately £3.6 million, or 3.7 pence per share
  2. Excluding net exceptionals and amortisation of intangible assets

5

DCC Results Presentation - 19 May 2020

Divisional results

For the year ended 31 March 2020

£'m

2020

2019

% change

Adjusted operating profit1,2

DCC LPG

228.2

201.8

+13.1%

DCC Retail & Oil

140.3

133.7

+4.9%

DCC Technology

65.3

64.7

+1.0%

DCC Healthcare3

60.5

60.3

+0.3%

Group adjusted operating profit

494.3

460.5

+7.3%

By Division

12%

LPG

13%

Retail & Oil

46%

Technology

29%

Healthcare

By Geography

14%

UK

36%

Ireland

44%

6%

Continental Europe

RoW

  1. The current financial year includes the impact of the adoption of IFRS 16 Leases; the comparatives have not been restated in accordance with transitional guidelines
  2. Excluding net exceptionals and amortisation of intangible assets
  3. The reported growth in operating profit in DCC Healthcare is impacted by the disposal of its UK generic pharmaceutical activities and related manufacturing facility in Ireland (Kent Pharma and Athlone Laboratories) in September 2019. Operating profit growth on a continuing basis is 8.6%

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DCC Results Presentation - 19 May 2020

Divisional highlights

For the year ended 31 March 2020

DCC LPG

DCC Retail & Oil

DCC Technology

DCC Healthcare

  • Very strong profit growth +13.1% - c. 75% organic
  • Good organic volume growth, continuing oil to LPG conversions, customer wins in B2B natural gas and strong procurement and cost control
  • Very strong performances in Britain, Ireland and the US
  • Good profit growth +4.9% (+6.0% ccy) - c. 50% ccy growth organic
  • Increased penetration of value-added products and services and strong cost control
  • Good performances in Britain, Ireland, Denmark and France
  • Continued expansion of retail and HGV networks
  • Modest profit growth +1.0% - contribution from acquisitions in current and prior year
  • Very difficult market in the UK due to Brexit uncertainty and impact of Covid-19 - organic revenue and profit decline
  • Good growth in North America and Continental Europe
  • Strong profit growth on continuing activities +8.6% - c.30% organic
  • Strong organic growth in DCC Vital and contribution of small bolt-on acquisitions. DCC H&BS had good growth in nutrition, investments in beauty to on-board new business
  • US acquisitions of Ion Labs in November 2019 and Amerilab in March 2020 performing well

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DCC Results Presentation - 19 May 2020

Strong cash flow generation continues

2020

26 Years

Cash Flow

£m

£m

Operating profit

494.3

4,198.6

Decrease in working capital

49.2

408.7

Depreciation and other

122.3

1,070.5

Operating cash flow

665.8

5,677.8

Net capex

(167.8)

(1,438.6)

Lease payments net ROU depreciation

(5.7)

(5.7)

Free cash flow

492.3

4,233.5

Interest and tax

(116.2)

(918.0)

Free cash flow after interest and tax

376.1

3,315.5

Acquisitions

(227.5)

(3,253.5)

Disposals / exceptional items

5.8

319.8

Dividends

(139.2)

(1,120.7)

Share issues / buybacks

0.3

767.6

Net cash inflow

15.5

28.7

Opening net debt

(18.4)

(1.6)

Translation and other

(70.1)

(100.1)

IFRS 16 opening transition adjustment

(294.1)

(294.1)

Closing net debt

(367.1)

(367.1)

Closing net debt excl. lease creditors

(60.2)

(60.2)

Total cash

1,685

1,685

Excellent

FCF conversion

Free cash

conversion of 100%

in 2020, 26 year average of 101%

Strong & liquid balance sheet

Closing net debt

(excl. lease

creditors) of £60.2m

Net Debt/EBITDA

of 0.1x

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DCC Results Presentation - 19 May 2020

Current trading and Covid-19

Donal Murphy

Chief Executive

Covid-19 - Impact and actions

Swift and decisive action taken to ensure the safety of our people and that customers continue to receive DCC's essential products and services

Impact

Actions

Lockdown and related restrictions

All businesses operational, with

triggering business continuity plans

appropriate changes to operations -

Changed demand patterns experienced

safety of our people our first priority

Active management of cost base and

in each division and geography

Increased demand for essential heating

resources

All discretionary and non-essential

and healthcare products

Demand negatively impacted for retail

expenditure curtailed. Essential

maintenance and health and safety

transport fuels and certain consumer and

expenditure continues

B2B technology products

Group continues to be active from a

development perspective

10 DCC Results Presentation - 19 May 2020

Current trading

DCC operating effectively and trading robustly, albeit behind the prior year, in seasonally less significant period

DCC LPG

DCC Retail & Oil

DCC Technology

DCC Healthcare

  • Good domestic/cylinder demand across France, Britain and US despite warmer weather conditions
  • Strong cost control somewhat mitigating impact of lower industrial/commercial demand with operating profit behind prior year, reflecting lower commercial volumes
  • Strong demand from domestic and agri customers
  • Transport fuel demand declined significantly during second half of March and into April - volumes increasing in May as restrictions ease
  • Operating profit modestly behind prior year due to strong domestic and agri demand
  • Strong consumer and etail demand, particularly in working-from-home products
  • Pro AV and some other B2B categories impacted as installations difficult through lockdown
  • Relative performance to prior year improved in second half of April and into May, although operating profit behind prior year
  • Strong performance in first six weeks of new year, well ahead of prior year
  • Good demand for nutritional products and recent acquisitions, Ion Labs and Amerilab, performing well
  • Strong demand in DCC Vital for Covid-19-related products more than offsetting reduced demand for elective surgery and primary care products

11 DCC Results Presentation - 19 May 2020

Covid-19 - Playing our part

DCC LPG

DCC Retail & Oil

DCC Technology

DCC Healthcare

12 DCC Results Presentation - 19 May 2020

Summary and Q&A

Donal Murphy

Chief Executive

Summary

  • Strong growth in FY20 operating profit, excellent cash flow generation and continued development activity
  • DCC people and operations have responded very well to Covid-19 challenges and Group is trading robustly
  • Continue to have the platforms, opportunities and capability for further development across each of our divisions

DCC has a diverse and resilient business model, leading market positions and an extremely strong balance sheet and is well positioned to continue its growth and development into the future

14 DCC Results Presentation - 19 May 2020

Strategy continues to deliver

26 year CAGR

Operating profit (£m)

1

26 year CAGR1

EPS (pence)

12.1%

14.5%

358 363

494

317

461

287

383

243

345

285

202

183

208

151 164

165

170 189

129

133

176

155

104

139

131

73

86

46

49

54

61

62

68

78

97

34

37

46

52

59

67

69

15

16

19

20

26

32

37

17

27

28

19

22

1994

2020

1994

2020

Dividend (pence)

26 year CAGR

14.0%

145

138

123

112

97

85

77

63

68

70

60

52

40

9

10

11

13

15

18

23

25

29

34

5

6

7

8

1994

2020

1 On a continuing basis

15

DCC Results Presentation - 19 May 2020

Free cash flow conversion (%) 26 year conversion

101.0%

160.0%

140.0%

120.0%

100.0%

80.0%

60.0%

40.0%

20.0%

0.0%

2020

1994

Appendix

DCC LPG

2020

2019

% change

Volumes

15%

Britain

Volume ('000 tonnes)

2,176.3

2,078.3

+4.7%

11%

Operating profit (£'m)

228.2

201.8

+13.1%

10%

Ireland

Continental Europe

Operating profit / tonne

£104.87

£97.11

RoW

ROCE

18.4%

17.1%

64%

  • Very strong performance with operating profits up 13.1%
    • Organic operating profit growth was driven by good volume growth and strong procurement and cost control
    • Volume growth of 4.7%, driven by continued success in oil to gas conversions in Britain and market share gains
    • France delivered good operating profit growth with new business development driving growth in B2B natural gas & power, with good procurement and cost control contributing to strong performance in LPG
    • In Britain & Ireland, the businesses continued to grow sales to industrial and commercial customers and also delivered operational improvements, including in supply chain and procurement
    • The US business performed strongly, with good organic profit growth and also benefited from the successful integration of Pacific Coast Energy, acquired in April 2019

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DCC Results Presentation - 19 May 2020

DCC Retail & Oil

2020

2019

% change

Volumes

Volume (bn litres)

11.632

12.151

-4.3%

Britain

Operating profit (£'m)

140.3

133.7

+4.9%

46%

49%

Ireland

Operating profit / litre

1.21ppl

1.10ppl

Continental

ROCE

18.5%

18.6%

5%

Europe

  • Strong growth with operating profits up 4.9%
    • Volumes behind prior year due to decision to exit some lower margin marine, aviation and commercial relationships in Britain
    • In Britain and Ireland, very strong organic profit growth driven by increased penetration of premium fuels and good cost performance
    • Good performance in Scandinavia driven by strong organic profit growth in Denmark where business continued to increase product offering and further improved performance in its retail and commercial segments. The businesses in Norway and Sweden performed in line with expectations
    • Strong organic profit growth in France reflecting a continued focus on business development and customer engagement
    • Development continued with further expansion of the retail network, including a partnership with Tesco to operate their forecourts in Ireland and further expansion of lubricants business

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DCC Results Presentation - 19 May 2020

DCC Technology

2020

2019

% change Revenue by geography

Revenue (£'m)

3,913

3,631

+7.8%

15%

Operating profit (£'m)

65.3

64.7

+1.0%

UK&I

17%

Cont. Europe

Operating margin

1.7%

1.8%

68%

RoW

ROCE

11.0%

14.3%

  • Operating profit growth of 1.0%
    • Difficult year with challenges of Brexit-related uncertainty in the UK and emergence of Covid 19, offsetting benefit of acquisitions completed in current and prior year and good growth in North America and Continental Europe
    • UK market difficult across all channels, throughout the year in B2B and enterprise, and increasingly in the consumer channel into Christmas. Business market shares remain robust with growth in key product categories including smarthome, computing, security and wireless. The Irish business performed in line with expectations
    • In Continental Europe, operating profit growth was primarily driven by the previously announced acquisitions of Amacom and Comm-Tec. Amacom in particular performing very strongly, leveraging integration capability with key customers and suppliers
    • The North American business performed very well across all key categories, benefiting from good market conditions and new vendor additions

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DCC Results Presentation - 19 May 2020

DCC Healthcare

2020

2019

% change Revenue by business

Revenue (£'m)*

549.5

519.0

+5.9%

Healthcare

Operating profit (£'m)*

56.0

51.6

+8.6%

45%

providers

Operating margin

10.2%

9.9%

55%

H&B Brand

Owners

ROCE

14.7%

16.6%

*On a continuing basis (adjusted to reflect disposal of Kent Pharma)

  • Excellent strategic progress and very strong operating profit:
  • DCC Vital:
    • Strong organic operating profit growth and benefit of bolt-on acquisitions completed in first half of the year, business responded very well to increased demand related to Covid-19 at end of year
    • Strong growth in pharma in Ireland, particularly in sales of blood plasma products and exempt medicinal products, and a robust performance in Britain - market impacted by Brexit for much of year
  • DCC Health & Beauty Solutions:
    • Significant expansion in the US, through acquisitions of Ion Labs and Amerilab, adding important new customer relationships and enhanced product format capability
    • Good growth in nutritional products, although growth in Europe was held back due to destocking by small number of customers. In Beauty, benefit of enhanced customer mix with increased weighting
      of premium products apparent through second half of year

20 DCC Results Presentation - 19 May 2020

Financial summary

Volumes /

Gross margin

Operating

Operating

pt/ppl/% of

revenue

costs

profit

sales change

DCC LPG (tonnes)

2,176kT

£307pt

£440m

£228m

£105pt

+4.7%

vs £297pt; +3.3%

£202pt; +1.0%

+13.1%

vs £97pt; +8.1%

DCC Retail & Oil (litres)

11.632bn

4.87ppl

£426m

£140m

1.21ppl

-4.3%

vs 4.61pt; +5.6%

3.66ppl; +4.3%

+4.9%

vs 1.10; +10%

DCC Technology & DCC

£4,491m

11.3%

£380m

£126m

2.8%1

Healthcare

+6.7%

vs 10.9%

8.5% vs 7.9%

+0.6%

vs 3.0%

Group

£14,755m

£1,740m

£1,246m

£494m

-3.1%

+10.6%

+5.9%

+7.3%

  • Revenue ex-DCC LPG and DCC Retail & Oil up 6.7%, primarily due to acquisitions in DCC Technology
  • DCC LPG gross margin increased modestly by £10 (+3.3%) to £307 per tonne, driven by product mix
  • DCC Retail & Oil gross margin increased to 4.87ppl, a 0.26ppl (+5.6%) - increase again reflecting mix
  • Gross margin excluding DCC LPG and DCC Retail & Oil of 11.3% (2019: 10.9 %) - higher service element and product mix
  • Operating costs +£69m (+5.9%) (acqs +£52m, organic +£27m, currency -£10m); organic +2.2%

1 Ex the disposal of DCC Healthcare's pharma business operating profit growth on a continuing basis is 4.4%.

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DCC Results Presentation - 19 May 2020

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DCC plc published this content on 19 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2020 08:52:04 UTC