Dcc Plc · LSE:DCC
Dcc — Investor Day (June 2015)
120 slides from Dcc's investor day presentation, June 2015
Slide 1: DCC Capital Markets Day
DCC Capital Markets Day June 2015
Slide 2: Disclaimer
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 is being provided to you on a confidential basis solely for your information. This presentation may not
Slide 3: DCC
DCC DCC is an international sales, marketing, distribution and business support services group operating across four divisions Profit* by division (YE 31 March 15) Profit* by geography (YE 31 March 15) 6% 15% 18% 8% 54% 22% DCC Energy DCC Technology 77% UK DCC Healthcare ROI DCC Environmental Contin
Slide 4: Track record since flotation
Track record since flotation Operating profit (£m) 208 228 EPS (pence) 209.2 196 191.2 187 21 year CAGR 171 21 year CAGR 173.1 171.2 13.2% 149 161 12.2% 139.7 157.9 142.0 117 115.9 95 97.5 82 84.5 71 75 73.6 78.4 62 64.9 56 58.3 51 50.4 43 41.9 36 32.3 37.7 24 29 25.9 29.9 17 19 22 18.8 22.1 1994 20
Slide 5: DCC TSR
DCC TSR Versus the FTSE 100 and FTSE 250 Since flotation (21 years) Over last 14 years Over last 7 years 5000% 4844% 1200% 450% 426% 1064% 400% 1000% 4000% 350% 800% 300% 3000% 250% 600% 200% 2000% 400% 150% 120% 307% 1000% 815% 100% 200% 50% 366% 96% 50% 0% 0% 0% DCC FTSE 100 FTSE 250 DCC FTSE 100
Slide 6: Recent activity
Recent activity • Very pleasing FY15 results across all key metrics • Record level of development activity • Commitment to acquire Butagaz, DCC’s largest ever acquisition • Further acquisitions across Energy, Technology and Healthcare • Disposal of Food & Beverage division – sharpened strategic focu
Slide 7: DCC's Strategy
DCC’s Strategy Our Objective: Our strategic priorities: • Creating and sustaining leading positions in each of the To continue to build markets in which we operate a growing, sustainable • Continuously benchmarking and improving the efficiency and cash generative of our operating model in each of ou
Slide 8: Agenda
Agenda Time Topic Speakers 9.00 Introduction Tommy Breen, CEO 9.15 DCC Energy Donal Murphy, MD Henry Cubbon, MD LPG Eddie O’Brien, MD Retail & Fuelcard 10.15 DCC Technology Niall Ennis, MD Gerry O’Keeffe, MD Exertis UK&I Patrice Arzillier, MD Exertis Continental Europe 10.50 Coffee 11.15 DCC Healthc
Slide 9: DCC Energy
DCC Energy June 2015
Slide 10: Agenda
Agenda Introduction & Oil Donal Murphy Managing Director LPG Henry Cubbon Managing Director, LPG Retail & Fuelcard Eddie O’Brien Managing Director, Retail & Fuelcard Market Opportunity Donal Murphy & Summary 1
Slide 11: Safety First
WOSAFETY’ FIRST THE RIGHT CHOICE THE RIGHT CALL
Slide 12: The European Leader
DCC Energy The European Leader The leading oil and liquefied Volume Revenue Operating profit ROCE petroleum gas (“LPG”) sales, 10.8bn £7,624.1m £119.4m 19.8% Litres marketing and distribution business in Europe 10% • Oil distribution for transport, heating and Transport Fuels industrial / agricultur
Slide 13: Our Business
DCC Energy Our Business Volumes by geography Volumes by sector 9% 15% Britain Oil 25% 13% Europe LPG 66% Ireland Retail & Fuelcard 72% Customer Volumes Operating profit by sector 4% 3% Commercial & Industrial 4% 24% 11% Retail Oil Domestic 41% LPG Agricultural 18% 60% Retail & Fuelcard Marine Other
Slide 14: Track Record
DCC Energy Track Record Volumes – Reported (Billion litres) Operating profit (£'m) 10 year CAGR 10.2 10.8 13.2% 119.4 9.6 117.0 110.5 106.2 100.4 7.9 83.2 7.1 72.5 6.2 5.3 52.2 40.4 4.2 37.4 3.2 2.9 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Underlying operating profit Estimated weather impac
Slide 15: A Business of Scale
DCC Energy A Business of Scale Pro-Forma Business Statistics FY 2015 (inc. acquisitions announced) Volumes Customers Trucks Employees Facilities 13.5bn 1.3m 2,150 5,300 430 Litres Retail petrol sites operated/supplied Britain France Sweden 1,600 400 400 Austria Ireland 300 100 6
Slide 16: Key Competitive Advantages
Key Competitive Advantages Large diversified Platform for customer further base growth Sales & operational expertise Strength of the Group Balance Sheet Extensive acquisition and integration Broad experience portfolio of suppliers 7
Slide 17: Vision & strategy
DCC Energy Vision & strategy DCC Energy’s vision is to be a global leader in the sales, marketing and distribution of fuels and related products and the provision of services to energy consumers Oil Distribution LPG Distribution Retail & Fuelcard 8
Slide 18: Oil Distribution
Oil Distribution “for business & the home” “for the road” “for the air” “for the sea” 9
Slide 19: Oil Distribution – The Consolidation Play
Oil Distribution – The Consolidation Play • # 1 oil distributor in Britain Volume Split % • First entered the market in 7% 21% Sept. 2001 Retail • Acquired and integrated 39 11% Domestic oil distributors including the Commerial BP, Shell, Texaco and Total 61% Other operations • Significant synergies
Slide 20: Oil Distribution – opportunity for growth
Oil Distribution – opportunity for growth • Further consolidation in existing markets – most Volumes Customers Trucks markets remain highly fragmented 8.0bn 0.7m 1,500 • Expand into new geographies in Western Europe Litres • Growth opportunities in differentiated fuels, aviation, marine, lubricants,
Slide 21: We are still a small part of a very large market
We are still a small part of a very large market #14 Norway Road: 3.3MT Non Road: 3.0MT #03 #08 UK Sweden Road: 35.0MT Road: 7.7MT Non Road: 21.6MT Non Road: 3.7MT #13 #12 Ireland Finland Road: 3.6MT Road: 4.0MT Non Road: 3.1MT Non Road: 2.8MT #06 #15 Netherlands Denmark Road : 10.2MT Non Road: 5.3M
Slide 22: LPG Distribution
LPG Distribution 13
Slide 23: LPG – the story so far
LPG – the story so far Acquired BP LPG Greenfield start up Acquired of Flogas in Altagas Entered the Acquired Acquired Ireland, followed Acquired Benelux market Neste’s cavern Drievorm by acquisition of British Gas through facilities Ergas (Shell) LPG acquisition of Benegas (BP) 1977 1984 2001 2002
Slide 24: The Flogas Group today
The Flogas Group today Domestic Commercial Market* Cylinders bulk bulk Autogas Aerosol Share / psn Flogas Britain 30% #2 Flogas Ireland 40% #2 Benegas 26% #1jt Flogas Scandinavia 49% #1 * Flogas estimates, Scandinavia = NO +SW • Operating in six countries with full national coverage Delivering in FY
Slide 25: Global LPG Trends
Global LPG Trends • World LPG supply is increasing vs demand • Gap is increasing with new natural gas & shale gas developments • This is resulting in lower prices • Industrial users moving from oil to LPG • New sourcing/trading opportunities emerging • Demand for LPG worldwide to grow by c. 1.7% CAG
Slide 26: LPG in Europe
#1 Market Position Sweden LPG in Europe Market Share: 55% Market Size: 424kT #1 Market Position Norway Market Share: 38% Market Size: 193kT #1 Market Position 241kT Netherlands Market Share: 26% Market Size: 391kT #2 Market Position 20kT Britain (ex NI) Market Share: 30% 85kT Market Size: 1,013kT 48
Slide 27: DCC LPG – the growth story: next steps
DCC LPG – the growth story: next steps Organic growth Near-term Development Medium-term • Switching more • Infill acquisitions to build Development commercial users of oil to scale in existing • LPG market has similar LPG (cost and carbon territories characteristics across the savings) globe • Add o
Slide 28: 27
27
Slide 29: Transaction Highlights
Transaction Highlights • Acquisition of the second largest LPG business in France, with market share of 25% and the leading brand in the market • Market leader in the cylinder and small bulk market segments • Sells directly or indirectly to over four million customers • Significantly increases the s
Slide 30: Business Mix
Business Mix No.1 No.1 Packed / Cylinder Small bulk Large bulk Autogas Overview • LPG in cylinders mainly used • Customers with low annual • Customers who purchase 80 • Used as a fuel for for cooking and forklift trucks usage (<80T), mainly tonnes or more of LPG per transportation by commercial cust
Slide 31: An excellent infrastructure
An excellent infrastructure Secondary Primary Storage / LPG supply and tertiary Points of sale Customers transport filling transport 26,000 packed points Norgal 3 Mandataires(2) of sale (principally > 4,000,000 and Grand Nord supermarkets and Packed end users hypermarkets) Donges 168,000 domestic &
Slide 32: Butagaz - Potential within DCC
Butagaz - Potential within DCC • Leverage the strong Butagaz brand in related energy sectors • Greater B2B focus e.g. Oil2LPG and LNG • Integration of Antargaz & Totalgaz may create opportunities to grow market share • Expand the domestic bulk market • Continued cost reduction • Development of a nat
Slide 33: Retail & Fuelcard
Retail & Fuelcard DCC 24
Slide 34: Retail & Fuelcard
Retail & Fuelcard FUEL CARDS KEY INGREDIENT Unmanned Retail COCO Retail DODO • Key pillar for DCC Energy’s • Selective Investments in • Continue to build our Dealer retail growth Company Owned, Company Owned Dealer Operated sites • Develop a Pan-European Operated sites • Highly complementary to netw
Slide 35: The journey over the last two years
The journey over the last two years Site network Network volumes (litres m) 800 2500 700 2000 600 500 1500 400 300 1000 200 500 100 0 0 2013 2014 2015 2016 2013 2014 2015 2016 Ireland UK Sweden France* Ireland UK Sweden France* * Includes Esso Retail France , not yet completed 26
Slide 36: Retail Operating Model
Retail Operating Model • Central functions based “Hub & Spoke” in Ireland • Esso France replacement Pricing systems and processes • Professional management team recruited Back office Customer functionality service • Allows a lean organisation approach to country operations • Local marketing Product
Slide 37: The "Hub"
The “Hub” • All fuel pricing execution and Centralised strategy centralised operations Pricing • Product procurement support centralised to leverage scale, security and supplier relationships • Professional team with Key contract Customer specific industry experience management service • Exception m
Slide 38: Leveraging technology to drive low cost operations
Leveraging technology to drive low cost operations • World class technical systems • Automated and integrated processes • Centralised and scalable solutions • Optimisation engines in supply chain and pricing 29
Slide 39: Significant bolt-on opportunities
Significant bolt-on opportunities • Oil majors continue the trend of divestment • Unmanned penetration continues to grow faster than traditional formats • Certas Energy’s execution track record is strong • Professional management team in place 30
Slide 40: Fuel Cards – Pumping up the Volume
Fuel Cards – Pumping up the Volume • Largest independent reseller of branded fuel cards in Britain • Key Partners: BP, Diesel Direct, Shell, Esso, Texaco, UK Fuels • Value adding products and services a major profit contributor – MileageCount & CO2Count • Excellent nationwide coverage • 12% share of
Slide 41: Retail & Cards – 685 sites & 3.3bn litres
Retail & Cards – 685 sites & 3.3bn litres 1.0bn litres 1.9bn litres 80m litres 322 sites 31 sites 13m litres 310m litres 8 sites 324 sites Further opportunities? 32
Slide 42: Market opportunity & summary
Market opportunity & summary
Slide 43: Significant Market Opportunity in Europe
Significant Market Opportunity in Europe • DCC Energy only has a presence in 10* countries in Europe with c. 3.5% share of the European market 13 9 10 1 • Significant opportunity to 2 7 expand activities in existing 7 2 markets and into new 68 43 24 geographies 28 114 3 9 80 4 • Market characteristi
Slide 44: An Excellent Fit for DCC
An Excellent Fit for DCC Strong competitive position in the French LPG market Potential value creation Established and trusted opportunities through Butagaz brand brand monetisation Experienced and Strong profitability and ambitious management cash generation team with a clear delivering high ROCE s
Slide 45: What the Oil Majors are saying
What the Oil Majors are saying “ “ A substantial contribution to cash flow will The Butagaz transaction is consistent with Shell’s come from planned disposals, which will strategy to concentrate its Downstream footprint on amount to 8 billion euros… 25% will come a smaller number of assets and marke
Slide 46: Summary
Summary Scale • DCC Energy is a business of scale • c. 13.5bn litres of sales • c. 1.3m customers across 10 countries Financial Characteristics • Asset light • Recurring revenues • Strong Cash Conversion and High ROCE Organic Growth • Platform to drive organic profit growth • Oil • LPG • Retail & Ca
Slide 47: DCC Technology
DCC Technology June 2015
Slide 48: Agenda
Agenda Introduction & strategy Niall Ennis Managing Director Product & service Gerry O’Keeffe development MD Exertis UK & Ireland Channel development & Patrice Arzillier geographic expansion MD Exertis Continental Europe Positioned for growth Niall Ennis 1
Slide 49: DCC Technology
DCC Technology FY2015 Leading route-to-market Revenue £2,350.3m partner for global Operating profit £49.3m consumer and SME ROCE 25.5% technology brands Employees 1,953 DCC Technology operates under the brand 350 In the home 15,000+ Consumer industry customers leading In the office Retail, etail, &
Slide 50: Exertis at a glance
at a glance Exertis delivers an industry-leading and innovative range of services and value add solutions that enable our partners to access existing and new sales channels in the most effective manner possible. The obvious partner for a new supplier to access European Retail and SME markets Key Fac
Slide 51: Strong market positions
DCC Technology Strong market positions DCC Current presence Geography Market Position Technology Expansion plans UK No. 1 Ireland No. 1 France No. 7 In the home In the office Sweden No. 3 On the move Netherlands Belgium Others UAE Spain Norway Total Europe No. 4 Global supply chain capability with o
Slide 52: Track record
DCC Technology Track record • Long history of significant organic Operating Profit (£M) volume growth 60.0 10 year CAGR • Strong organic growth in UK 11.6% 49.3 50.0 48.1 • Mobile 41.6 41.5 • Retail 40.0 36.2 • Reseller (Network, Security, Server) 32.1 32.1 32.7 30.0 27.1 • Acquisitions in Continent
Slide 53: Innovation driving market growth
Innovation driving market growth • Strong growth forecast in Internet of Things and Connected Home 6
Slide 54: Strategy and focus
DCC Technology Strategy and focus Superior service Deepest Channel • Supply chain • New and emerging channels • Retail • Broadest B2B reach • Digital • Obvious choice for new vendors • Enabled by IT Strategic Vendor Partners Multi-Country • Constant product development • Expand geographic reach • Fu
Slide 55: Gerry O'Keeffe
Gerry O’Keeffe MD Exertis UK & Ireland
Slide 56: Product development
Drive for growth Product development New technologies Expand portfolio Full coverage in each country 9
Slide 57: 350+ Vendors
Drive for growth New technology stories 350+ Vendors Consumer 25 Product Teams B2B Channel Channel Latest focussed product stories: 1. Wearable Tech 2. Smart Home 10
Slide 58: Expand portfolio
Drive for growth Expand portfolio Prospect Align Respond 11
Slide 59: Leveraging geographies
Drive for growth Leveraging geographies IT Home Mobile Supplies 12
Slide 60: Service development
Drive for growth Service development Supply Chain Services Retail Services Digital Services 13
Slide 61: Supply chain services
Drive for growth Supply chain services Challenge: Issues: • Deliver 200,000 Windows 8 Tablets • Intel chipset not available into Golden Quarter until September • No route to market established Procure First Spec select Create Build QA Execute Ongoing components meeting Design demand & Shipment with
Slide 62: Retail services
Drive for growth Retail services Challenge: Building a Year 1 Launch plan for a $3bn US Consumer Electronics entrant to the UK Market Our Approach: Research and deliver a detailed 1 overview of the UK Market Recommend optimum 2 go to market strategy Strategy Introduce / host and manage Management 3
Slide 63: Investing in infrastructure
Drive for growth Investing in infrastructure Vendors Customers Exertis New National Distribution Centre New ERP • 450,000 sq.ft facility due for completion • Best in class e-commerce capability in Q4 2016 • Provides opportunity for ‘front to back’ • Delivers significant additional capacity, customer
Slide 64: Patrice Arzillier
Patrice Arzillier MD Exertis Continental Europe
Slide 65: Channel development
Drive for growth Channel development Broaden Existing New Channels Multi Channel 18
Slide 66: Broadening existing channels
Drive for growth Broadening existing channels B2C: Expand our product breadth category with large customers (IT, Mobile, Accessories, Gaming) B2B: Bring additional value to the reseller channel through a specialist approach New technologies: to new and existing customers 19
Slide 67: New channels
Drive for growth New channels Our current channels in France: Superstores Online Telco Office Supplies Resellers Dixons, Fnac, Amazon, Ebuyer, Vodafone, O2, Staples, Top Hifi, IT, Design Leclerc, Darty Cdiscount, LDLC SFR, Orange Office, InMac ≈ 4,000 points of sale Our potential channels in France:
Slide 68: Multi channel model
Drive for growth Multi channel model Vendor Customer Store End user Distribution Hub Managed by Vendor Virtual End user Retailer 21
Slide 69: Geographic expansion
Drive for growth Geographic expansion Acquisition Bolt-on Organic 22
Slide 70: Geographic expansion
Drive for growth Geographic expansion #14 Existing Markets Norway €0.9 bn Modest presence – target for expansion Target for expansion #02 #08 UK Sweden €13.2 bn €2.6bn #15 #13 Ireland Finland €0.9 bn €0.9 bn #11 #06 Denmark Netherlands €1.7 bn €3.8 bn #07 #09 Poland Belgium €3.7 bn €2.5 bn #01 Germa
Slide 71: Geographic expansion
Drive for growth Geographic expansion Acquisition of CapTech (Sweden) in September 2014 • Focus on vendor development • Asus • Acer • D-Link • New division launch • Mobile • Supplies • Become a pan-Nordics distributor • Branch office in Norway • Target potential acquisitions 24
Slide 72: Channel expansion
Drive for growth Channel expansion Acquisition of Computers Unlimited in May 2015 • Complementary customer set and product portfolio • Connected home • Design professional CU sales per country • UK, France and a growing 18% 2% presence in Spain UK France • Development focus: Spain • New product incu
Slide 73: Positioned for growth
Positioned for growth
Slide 74: Evolving technology supply chains
Evolving technology supply chains Brand owners ODM 3PL, Far East 3PL Europe Product design Far East Hub and Freight Netherlands and innovation Finalisation HUB, UK, FR, SW Reseller / Retailer Store Either 3PL or Brand Central Distribution 3PL for Web End User Repair Partner End User Store or Fulfill
Slide 75: Evolving technology supply chains
Evolving technology supply chains Brand owners ODM 4PL Product design Far East Hub, finalise and innovation and distribution Store / End User rreverse & repair Insurance Scrap End to end data Accelerate stock through Reduce cost to serve from manufacturer the supply chain and obsolescence to consume
Slide 76: DCC Technology - positioned for growth
DCC Technology - positioned for growth Deepest Industry and broadest leading channel service coverage offering Expanding Multi- addressable country market capability Strategic vendor relationships 29
Slide 77: DCC Healthcare
DCC Healthcare June 2015
Slide 78: Agenda
Agenda Introduction Conor Costigan Managing Director DCC Vital Harry Keenan Managing Director DCC Vital DCC Health & Stephen O’Connor Managing Director Beauty Solutions DCC Health & Beauty Solutions Acquisition focus Conor Costigan and conclusion 1
Slide 79: A growth business
DCC Healthcare A growth business FY2015 Sales, marketing Revenue £488.1m and distribution of Operating profit £39.7m pharmaceuticals and ROCE 16.6% medical devices and Employees 1,992 provision of services to health & beauty Share of Group Operating Profit brand owners Energy 18% Technology Healthca
Slide 80: Strong market positions
DCC Healthcare Strong market positions DCC Vital FY15 sales by business • Most comprehensive sales channel coverage in Britain and Ireland, including 29% • #1 in hospital supplies in Ireland DCC Vital • #1 in GP supplies in Britain DCC H&BS • A leading generics player in Britain 71% DCC H&BS • A lea
Slide 81: Track record
DCC Healthcare Track record • Period of significant Operating Profit* (£M) growth across the business 10 year CAGR • Excellent organic profit growth 16.1% 39.7 in DCC H&BS • Ramp up in acquisition activity 28.3 especially in DCC Vital 21.0 • Strong development momentum 15.9 17.4 18.4 • 8 acquisition
Slide 82: Strategically well placed for continued growth
DCC Healthcare Strategically well placed for continued growth Market dynamics Changing Lifestyle Trend to Increasing Fragmented Demographics government Innovation factors outsourcing regulation markets policies Growth opportunities DCC Vital DCC Health & Beauty Solutions Patient care products Consum
Slide 83: Vision
DCC Healthcare Vision Build a substantial European healthcare products and services business focused on: • Sales, marketing and distribution of pharmaceuticals and medical devices; and • Provision of services to health & beauty brand owners 6
Slide 84: DCC Vital
DCC Vital DCC
Slide 85: Overview
DCC Vital Overview • Sales, marketing and distribution of Gross Profit Split pharmaceuticals and medical devices • Sales >£350m 13% • Broad product portfolio • Own and third party brands / licences Medical devices 37% 16% Pharma • Market leading sales channel coverage GP supplies in Britain and Irel
Slide 86: What we do
DCC Vital What we do FY15 GP by product: 3rd party Own brand/licence brand owners products 38% Own Brand 62% Third Party Sales, marketing Portfolio Procurement Vendor Supply chain & distribution development management management & and product logistics services licensing FY15 GP by channel: 23% Hosp
Slide 87: Product focus
DCC Vital Product focus Medical devices – single use products Medical devices Pharma • Woundcare • Antibiotics • Diagnostics • Pain management • Electrodes • Respiratory Pharma – • Diathermy consumables • Hospital injectables niche generics • Critical care products • IVIG • Gloves GP Supplies
Slide 88: Own brands and exclusive partners
DCC Vital Own brands and exclusive partners Own brand Exclusive Partners • Pharma companies • Medical device companies • Clinical diagnostics / life sciences companies 11
Slide 89: Market dynamics
DCC Vital Market dynamics Estimated market values Population increasing, aging and less healthy • Driving market growth Medical products • Increasing demands on healthcare services UK & Ireland £5.5bn Need for greater efficiencies in the system • Combined with more treatments in primary care Pharmac
Slide 90: Organic development strategy
DCC Vital Organic development strategy • Expand product portfolio • Own brand/licence • Product categories which can deliver sustainable returns • Quality IP ideally with international sales potential • Exploit expanded market coverage in Britain • Leverage increased business scale in Britain • Oper
Slide 91: DCC Health & Beauty Solutions
DCC Health & Beauty Solutions
Slide 92: Overview
DCC Health & Beauty Solutions Overview • Provision of outsourced services to Sales c.£150m the health & beauty sector in Europe • Focused on nutrition and beauty 6% products • High quality, licensed facilities (GMP) Nutritional 43% • Excellent technical, regulatory and Beauty NPD capability Healthca
Slide 93: What we do
DCC Health & Beauty Solutions What we do Product format capability Product development, Tablets, effervescents, Creams, liquids contract manufacturing hard and soft gel capsules and sprays and packing of health & beauty products 4.2billion 100million in FY2015 pots, jars and tubes in FY2015 Our Cust
Slide 94: Leading brands we support
DCC Health & Beauty Solutions Leading brands we support • Nutrition and Beauty brands • Specialist retailers • Direct sales companies • Consumer healthcare companies 17
Slide 95: Product categories
DCC Health & Beauty Solutions Product categories Facial and Bodycare Suncare and Sport, Diet Self tanning and Active lifestyles Nutritional Stay well / Haircare enhance Beauty health Healthcare cream & liquids Men’s health Women’s & grooming Health OTC and Baby and Medical Devices Children’s health
Slide 96: Market background
DCC Health & Beauty Solutions Market background Estimated market values (at RSP) Dynamics Vitamins & Health Supplements • Long term growth markets • Pre-emptive healthcare UK Europe • Active lifestyles £0.5bn €3.0bn • Fast moving, innovative brands • Trend to outsourcing Beauty products • Innovation
Slide 97: Organic development strategy
DCC Health & Beauty Solutions Organic development strategy • Drive continued growth with existing customers • Leverage strength and depth of new product development (NPD) and technical resources • Cross-selling of service capability across all facilities • Attract new customers in European markets •
Slide 98: Acquisition focus & summary
Acquisition focus & summary
Slide 99: Acquisition focus
DCC Healthcare Acquisition focus • Expand DCC Vital product portfolio • Product and business acquisitions • Integration synergies • Enhance DCC Health & Beauty Solutions service capability, in particular • Sports nutrition products • Healthcare creams and liquids • Geographic expansion • Primary foc
Slide 100: Substantial growth opportunity for DCC
DCC Healthcare Substantial growth opportunity for DCC Favourable market dynamics Flow of Leading acquisition market opportunities position Track record Excellent of organic and operational acquisitive infrastructure growth 23
Slide 101: Positioned for continued growth
DCC Healthcare Positioned for continued growth Operating Profit* (£m) 10 year CAGR 16.1% 39.7 28.3 21.0 17.4 18.4 15.9 13.1 13.2 11.6 11.1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * Excludes Virtus Inc. and Mobility & Rehab – disposed during the 10 year period 24
Slide 102: Financial Strategy
Financial Strategy June 2015
Slide 103: Agenda
Agenda Cash flow since flotation in 1994 Cash inflow drivers Cash outflow drivers Balance sheet strength ROCE vs. cost of capital Acquisition preferences 1
Slide 104: Cash flow since flotation in 1994
Cash flow since flotation in 1994 21 Year 1 April 1994 – 31 March 2015 £m CAGR Operating profit 2,195 13.2% • Revenue increased from £0.2bn to £10.6bn Decrease in working capital 214 Depreciation 614 • Operating profit increased from £17m to Other (50) £228m. CAGR of 13.2% Operating cash flow 2,973
Slide 105: Cash conversion since flotation
Cash conversion since flotation Free Cash Flow conversion (%) 104% • 21 year free cash flow 21 year FCF conversion of 104% since conversion flotation • Conversion step up since 2008 • Strong cash flow generation supports development opportunities 3
Slide 106: Cash generated and uses of cash since flotation
Cash generated and uses of cash since flotation (pro forma) • Includes c.£465m of committed development expenditure and net placing proceeds of c.£193m • Net debt increase of £240m • Disposals have brought enhanced strategic focus: • Altimate (DCC Technology) • Mobility and rehabilitation (DCC Healt
Slide 107: Cash inflow drivers (1)
Cash inflow drivers (1) Operating profit Operating Profit (£m) EPS (pence) 21 year CAGR 21 year CAGR 13.2% 12.2% 5
Slide 108: Cash inflow drivers (2)
Cash inflow drivers (2) Net Working Capital (NWC) Days • Since 1994 working capital has decreased by £214m, notwithstanding revenue growth of over £10 billion • From 2011 to 2015: • Group NWC days reduced from 4.9 days to (4.9) days • Non-Energy NWC days reduced from 19.2 days to 5.7 days • Group de
Slide 109: Cash outflow drivers (1)
Cash outflow drivers (1) Depreciation vs. capex Depreciation vs. capex* By Division – Since 2000* 15 Year Total: £0.6bn • Since 1994 capex has exceeded depreciation • Ongoing spend to fund the organic growth by £86m of the Group • Driven by organic growth and catch up for acquired businesses in DCC
Slide 110: Cash outflow drivers (2)
Cash outflow drivers (2) Dividends Dividend Growth (pence sterling) 21 year CAGR 14.6% * Since flotation in 1994 8
Slide 111: Cash outflow drivers (3)
Cash outflow drivers (3) 7 years to 7 years to 7 years to Total £ millions 31 March 2001 31 March 2008 31 March 2015 21 years Operating Profit 260 669 1,266 2,195 EBITDA 348 861 1,600 2,809 Free cash flow 228 493 1,552 2,273 Free cash flow conversion 88% 74% 123% 104% Dividends / share buy backs (77
Slide 112: Cash outflow drivers (4)
Cash outflow drivers (4) Acquisitions Acquisitions* By Division – Since 2000* 15 Year Total £1.6bn • £1.8bn spent / committed on acquisitions • Excluding the Irish subsidiaries of DCC Food & since flotation in 1994 Beverage which were disposed of in Q4 FY15 • Disposals net of exceptionals yielded £0
Slide 113: Balance Sheet
Balance Sheet Strong, Well Funded and Highly Liquid 2015 2014 • Strong balance sheet allows for acquisition flexibility £’m £’m and facilitates the leveraging of good commercial and Fixed assets 465 469 credit terms with suppliers Working capital (144) (32) • An enabler for acquisitions Other net op
Slide 114: Return on Total Capital Employed
Return on Total Capital Employed The Key Metric 31 March 2015* ROCE (%) Total Capital Employed by Division Total Capital Employed at 31 March 2015 £1.2bn • Creation of shareholder value through a combination of operational efficiency, organic and acquisitive growth • Core strategic aim to deliver re
Slide 115: Acquisition Preferences
Acquisition Preferences Acquisiti Eventually some global cquisitions aspirations complementary to P DCC’s existing businesses Continental European acquisitions particularly a relevant for DCC Energy, Consolidation and compounding opportunities Acquisition Preferences DCC Technology and Robust growth
Slide 116: Why sell to DCC?
Why sell to DCC? • We say what we will do, then we do what we say Track record of buying • £1.2 billion spent / committed in the last seven years businesses • Provides assurance to both the owners (sellers) of the business and the Balance sheet strength, suppliers to the business funding and liquidi
Slide 117: Key Messages
Key Messages • Focus on ROCE and cash generation • Prudent management of balance sheet • Significant capacity for further bolt on acquisitions • Long term value creation and delivery of returns well above cost of capital • High cash conversion used to finance further acquisitions and pay dividends 1
Slide 118: Wrap Up / Q&A
Wrap Up / Q&A
Slide 119: How we create value
How we create value • Relentless focus on detail and KPI’s • Driven to be the best, ambition to be better • Alignment of Group and business strategies • Capital allocation • Expertise in creating and executing on acquisition opportunities • Decentralised management structure • Management continuity
Slide 120: DCC TSR
DCC TSR Versus the FTSE 100 and FTSE 250 Since flotation (21 years) Over last 14 years Over last 7 years 5000% 4844% 1200% 450% 426% 1064% 400% 1000% 4000% 350% 800% 300% 3000% 250% 600% 200% 2000% 400% 150% 120% 307% 1000% 815% 100% 200% 50% 366% 96% 50% 0% 0% 0% DCC FTSE 100 FTSE 250 DCC FTSE 100