Slide 1: Leading with Energy
LEADING WITH ENERGY Leading with energy 1
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 contains some forward-looking statements that represent DCC’s expectations for its business, based on cu
Slide 3: Contents
01 Executive summary Slide 4 02 Policy and energy trends Slide 7 03 Leading with energy Slide 13 04 Our energy business Slide 18 05 Energy transition pathways Slide 23 06 Commercial & industrial solutions Slide 38 07 Domestic solutions Slide 44 08 Mobility solutions Slide 57 09 Growing with energy S
Slide 4: Executive summary
Executive summary This information pack provides background and analysis on: 1. Creation of DCC Energy, a new structure for our energy activities 2. Our Leading with Energy strategy 3. The pathways to Net Zero 2050 for our Commercial & Industrial, Domestic and Mobility customers 4. How DCC Energy wi
Slide 5: A new strategy & structure for our energy business
A new strategy & structure Our point of view on the How we are expanding our offers for our energy business pathways for energy transition and solutions Energy Solutions COMMERCIAL Energy Solutions DOMESTIC Mobility MOBILITY Leading with energy
Slide 6: The financial characteristics of the transition
The financial characteristics New commitments that What this means for the of the transition will drive our progress group in 2030 Traditional and lower carbon Zero emissions NET ZERO Leading with energy
Slide 7: Policy and energy trends
POLICY AND ENERGY TRENDS Leading with energy 7
Slide 8: This is not the first energy transition, but it's the most holistic and complex
This is not the first energy transition, but it’s the most holistic and complex Historic global primary energy consumption Forecast global primary energy consumption TWh thousands, 1900 - 2019 % of total, 2019 – 2030 Global Energy demand is expected to continue to increase between 2019 - 2030 180 Tr
Slide 9: Renewables supply will fall 20% short of demand by 2030
Estimates indicate renewables supply will fall 20% short of demand by 2030, requiring extra ~$1.3tn of investment Conclusion 1: At prevailing spending rates, our analysis indicates growth in global energy supply is set Conclusion 2: To balance JPMe S/D deficit, we estimate ~$1.3tn of incremental inv
Slide 10: We believe we'll achieve Net Zero in our markets
We believe we’ll achieve Net Zero in our markets Global and Europe CO2 emissions and Peak oil forecasts Indexed at 2000 = 100 Temporary reduction during COVID-19 350 China 300 Net-zero target: 2060 India 250 No net-zero target 200 Global IEA STEPS 150 BP ‘BAU’ 100 Europe IEA SDS Net-zero target: 205
Slide 11: In Europe, governments are introducing targets and policies to decarbonise
In Europe, governments are introducing a raft of targets and policies to decarbonise Stated govt. Heating Mobility Market ambition Low Moderate High Current policy and ‘gap’ to achieving ambition (high = bigger gap, less credible) 2025: Low carbon heating in all new homes 2030: Ban on sale of ICE on
Slide 12: Policy approaches to lowering emissions depend on the energy mix
Policy approaches to lowering emissions depend on the energy mix of the country Heating fuel mix in key DCC markets by reliance on gas (2019) Policy approaches to decarbonising fuel mix 5% 1% 3% 2% 2% 7% 1% 3% • Fossil fuel bans: Fossil fuel reduction targets are a key focus 6% 10% 5% 14% 11% for po
Slide 13: Leading with energy
Our strategy LEADING WITH ENERGY Leading with energy 13 01
Slide 14: Our strategy
Our strategy Our strategy is to accelerate the net zero journey of our customer by leading the sales, marketing and distribution of low carbon energy solutions Customer focus Multi-energy solutions Key partnerships Leading with energy 14
Slide 15: Our structure
Our structure DCC ENERGY ENERGY SOLUTIONS MOBILITY UK & Ireland Continental Europe Scandinavia North America Leading with energy 15
Slide 16: We will drive growth by winning in energy solutions and mobility
We will drive growth by winning in energy solutions and mobility DCC ENERGY STRATEGY A customer-centric, multi-energy model. Winning through superior transition insight, expertise and proximity to the customer ENERGY SOLUTIONS MOBILITY COMMERCIAL DOMESTIC RETAIL/URBAN EV HGV The trusted partner, red
Slide 17: This strategy builds on how we create value
This strategy builds on how we create value Up to today 2022- Play in narrow but deep Off-grid customers (homes and business) Off-grid customers (homes and business) value pools Specialist products (e.g. LPG, biofuel) Specialist products (e.g. LPG, biofuel, heat pumps, solar) Oil and gas distributor
Slide 18: Our energy business
OUR ENERGY BUSINESS Leading with energy 18
Slide 19: DCC Energy
DCC Energy Customers 9m Employees 7,600 Countries 13 Revenue Operating profit ROCE Volume (litres*) Operating profit by segment Operating profit mix £12.3bn £407.1m 18.6% 15.9bn Services, Renewables and Other (≤10 kgCO2e/ GJ) 1 Mobility Traditional (>65 kgCO2e/GJ) 1 Solutions 25% 22% Energy Solution
Slide 20: DCC Energy: Energy Solutions and Mobility
DCC Energy Energy Solutions Mobility Operating profit by segment Operating profit mix Services, Renewables and Other 15% (≤10 kgCO2e/ GJ) 1 Services, Renewables Traditional and Other (>65 kgCO2e/GJ) 1 (≤10 kgCO2e/ GJ) 1 20% Traditional 46% (>65 kgCO2e/GJ) 1 65% 54% Lower Carbon (≤65 kgCO2e/GJ) 1 Vol
Slide 21: Growing, with Energy
Growing, with Energy A multi-energy product and services provider and transition leader: with strong returns and cash generation £’M ROCE% 450 82% 19.0% 138% 407 18.5% 83% 400 376 93% 368 18.0% 336 350 17.5% 98% 17.0% 300 281 16.5% 250 16.0% 2018 2019 2020 2021 2022 % Free Cash Flow Conversion % Ope
Slide 22: DCC Energy five year track record
DCC Energy five year track record FY18 FY19 FY20 FY21 FY22 DCC Energy Historic Performance Revenues £M 9,601 11,020 10,265 8,274 12,323 Volumes BnL 15.0 15.2 15.0 13.9 15.9 Operating Profit £M 281.2 335.6 368.5 376.1 407.1 Operating Profit/Litre 1.88ppl 2.20ppl 2.45ppl 2.71ppl 2.56ppl ROCE excl IFRS
Slide 23: Energy transition pathways
ENERGY TRANSITION PATHWAYS Leading with energy 23
Slide 24: Leading with energy: Commercial, Domestic, Mobility
Leading with energy Energy Solutions Mobility 1. Commercial 2. Domestic 3. Mobility The trusted partner of commercial customers, We will lead the transition for off-grid homes, A leading multi-fuel mobility network focused on reducing the complexity of transition & delivering making decarbonisation
Slide 25: Commercial & industrial transition
Commercial & industrial transition
Slide 26: Domestic transition
Domestic transition Leading with energy
Slide 27: Mobility transition
Mobility transition Leading with energy
Slide 28: Commercial & industrial solutions
COMMERCIAL & INDUSTRIAL SOLUTIONS Leading with energy 28
Slide 29: Commercial & Industrial customers
1. Commercial & Industrial customers The trusted partner to commercial 40% customers, reducing the complexity of FY22 Gross Profit of transition & delivering energy solutions across processes, heating and fleets. Leading with energy
Slide 30: Commercial and industrial transition
Commercial and industrial transition Leading with energy 30
Slide 31: Commercial and industrial emissions
Commercial and industrial emissions DCC Energy C&I Scope 3 emissions (c. 5% lower by 2030) Emission (CO2e) Year Leading with energy 31
Slide 32: We will prioritize mid-sized and large businesses
We will prioritize mid-sized and large businesses with an addressable market followed by a further 1.4m small businesses UK CASE STUDY Total 6 million businesses; £4.4 trillion turnover Small Medium Large (Corporates) Sole traders Enterprise (500+ employees) 1-49 employees 50-249 employees 250-500 N
Slide 33: Our go-to-market approach will be specific to each target segment
Our go-to-market approach will be specific to each target segment: strong relationships, reputation and technical expertise are key Large business (Light manufacturing) Small business Summary “Transition partner with sector-specific technical expertise" “Low complexity decarbonisation solutions and
Slide 34: Identify and win with fast-to-transition customers and segments
Our strategy will look to identify and win with fast-to-transition customers and segments UK & FRANCE CASE STUDY Expected industry transition adoption See appendix for full sources and methodology Faster to transition Expect to see significant Would go to existing Have previously paid Easier sectora
Slide 35: Our customers trust us to help their transition
Our customers trust us to help their transition UK CASE STUDY UK Commercial & industrial brand perception UK Competitor x UK Competitor y 3.9 4.0 4.0 3.9 3.8 3.9 3.6 3.8 3.9 3.6 3.7 3.8 Current brand users score 1 (not at all / no) to 5 (high / yes) “I would go to this brand for advice on “I would g
Slide 36: What this looks like in practice for a large light manufacturer
What this looks like in practice for a large light manufacturer Light manufacturing TRIGGER FOR ACTION DISCOVERY CONSIDERATION INSTALL…& BEYOND Distillery is feeling mounting They ask DCC for a perspective on DCC conducts energy assessment, Choose to switch from oil to LPG pressures to decarbonise f
Slide 37: Manufacturing customers rely on advisory services for support
Manufacturing customers have already started considering Light manufacturing how to lower carbon emissions but rely on advisory services for support UK CASE STUDY Light manufacturing businesses have already started to take actions to Nearly all light manufacturing businesses are currently improve su
Slide 38: LPG and oil boilers will be a priority for light manufacturing customers
LPG and oil boilers will be a priority for light manufacturing customers Light manufacturing looking to transition but only when assets reaching the end of their useful life Decarbonisation pathway in light manufacturing In light manufacturing the Current energy use solution set is about and replace
Slide 39: We will increase our profit through solutions
We will increase our profit through solutions Light manufacturing UK CASE STUDY Sample UK Light Manufacturing Customer Hybrid business Full new energy solutions Traditional business (LPG + Heat (Bioenergy, Heat pump, Value (Oil / LPG) pump/solar solar, advisory, 1 £30k - £40k LTV solutions) Power so
Slide 40: Hospitality customers are also thinking about making an energy switch
Hospitality customers are also thinking about making Hospitality and leisure an energy switch though less likely to have acted yet UK CASE STUDY A similar proportion of Hospitality companies have started looking at new potential energy There is an opportunity for DCC to provide advice to Hospitality
Slide 41: Hospitality businesses could decarbonise heating and cooling with heat pumps
Hospitality businesses could decarbonise both heating and Hospitality and leisure cooling through installation of a heat pump UK & FRANCE CASE STUDY Decarbonisation pathway in hospitality and leisure Current energy use Smaller hospitality businesses will behave similarly to a large domestic customer
Slide 42: We will increase our profit through solutions
We will increase our profit through solutions Hospitality and leisure UK CASE STUDY Sample UK Hospitality Customer Hybrid business Full new energy solutions Traditional business (LPG + Heat (Bioenergy, Heat pump, Value (Oil / LPG) 1 pump/solar solar, advisory, £10k - £14k LTV solutions) Power soluti
Slide 43: French commercial sectors feel similar pressures to UK businesses
French commercial sectors feel similar pressures and motivations to decarbonise as UK businesses UK & FRANCE CASE STUDY Testing insights from UK survey Application to France Supporting data UK France Have already seen There is significant pressure to decarbonise within the biggest change 17% 27% key
Slide 44: Domestic solutions
DOMESTIC SOLUTIONS Leading with energy 44
Slide 45: Domestic customers
2. Domestic customers We will lead the transition for off-grid-homes, making decarbonisation simple and 35% of FY22 gross profit affordable. Leading with energy
Slide 46: Domestic transition
Domestic transition Leading with energy
Slide 47: Domestic emissions
Domestic emissions DCC Energy Domestic Scope 3 emissions (c. 5% lower by 2030) Emission (CO2e) Year Leading with energy 47
Slide 48: Faster to transition consumers are looking to make climate positive decisions
’Faster to transition’ consumers are looking to make climate positive decisions – this is currently focused on day-to-day behaviours, rather than energy usage UK CASE STUDY Engagement with climate change “How would you define your engagement with climate changes?” Very engaged; Actively reducing my
Slide 49: Our customers trust us to help their transition
Our customers trust us to help their transition UK CASE STUDY UK Domestic brand perception UK Competitor x UK Competitor y 3.3 3.4 3.4 3.3 3.3 3.3 2.8 2.7 2.9 3.0 3.0 3.1 Current brand users score 1 (not at all / no) to 5 (high / yes) “I associate this brand with renewable “I would go to this brand
Slide 50: Breakdown of UK and France domestic heating markets
Breakdown of UK and France domestic heating markets UK Domestic Heating Market: 28.3M France Domestic Heating Market: 28.7M Oil & LPG off gas grid 5% Off-gas grid other Off gas grid other 10% 43% Off gas grid oil 21% 3% Off gas grid LPG 85% On-gas grid 33% (Natural gas) On gas grid Leading with ener
Slide 51: Forecasts of heat pump installation differ
Forecasts of heat pump installation differ, with most ambitious targeting over 1m annual installations by 2030 – driven by government support UK CASE STUDY UK heat pumps installation Total number for domestic and commercial The UK Government sees Heat Pump Association forecasts ~20% retrofit off-gri
Slide 52: Our go-to-market approach will be tailored to target customer segments
Our go-to-market approach will be tailored to our target customer segments UK CASE STUDY 1 Oliver and Freya 2 Jan and Julia 3 Jamie and Tom Faster to transition 30-60 Faster to transition 60-75 Slower to transition 30-60 “Climate conscious changes are a lower "Making climate conscious home upgrades,
Slide 53: We know who to target with heat-as-a-service
We know who to target with heat-as-a-service UK CASE STUDY Example breakdown of the UK Domestic Heating Market Freya & Oliver • 30-60 • Average to above average property value • Highly environmentally engaged Freya & Oliver • Early adopters on domestic energy solutions 13% Jan & Julia • 60-75 11% Ja
Slide 54: We will increase our profit through solutions
We will increase our profit through solutions UK CASE STUDY Sample UK Domestic Customer New energy solutions Traditional business Heat pump install only (Bioenergy, Heat Pump, (Oil / LPG) (Heat pump) solar, service, power £1.8K - 2.5K LTV1 1.0x - 1.4x LTV solutions) 2.0x - 4.0x LTV Time 1Gross Profi
Slide 55: We are innovating with a customer-first digital model
We are innovating with a customer–first digital model DIGITAL DISCOVERY ASSESMENT & PURCHASE TRIGGER FOR ACTION INSTALL…& BEYOND Use digital touchpoint, both social Purchase bundle with financing after Multiple points to start transition Smooth installation and and owner (e.g. website, app, web home
Slide 56: French consumers are engaged with sustainability
A comparison of survey responses shows French consumers are engaged with sustainability and open to new energy transition solutions Key insights from surveys UK comparison to France Supporting data Engaged with climate Consumers are engaging with sustainability Both UK and French consumers equally b
Slide 57: Mobility solutions
MOBILITY SOLUTIONS Leading with energy 57
Slide 58: Mobility has two distinct business models
Mobility (25% of DCC Energy gross profit) has two distinct business models: retail and forecourt services, and HGV and fleet services HGV & Fleet Services Mobility has two distinct business 25% of Mobility models: retail and forecourt services, Gross Profit and HGV and fleet services Retail & 75% Fo
Slide 59: Mobility transition
Mobility transition Leading with energy 59
Slide 60: Mobility emissions
Mobility emissions DCC Energy Mobility Scope 3 emissions (c. 30% lower by 2030) Emission (CO2e) Year Leading with energy 60
Slide 61: HGVs require new technology to reach Net Zero
HGVs require new technology to reach Net Zero LONG DISTANCE MEDIUM DISTANCE SHORT DISTANCE/LAST MILE >500km/day 250-500km/day <250km/day 2050 Battery Electric Hydrogen Fuel-Cell Hydrogen Fuel-Cell Battery Electric Vehicle Technology Vehicle Leading with energy 61
Slide 62: We see growth opportunity in HGV services
We see growth opportunity in HGV services Long Distance Fleets Short / Medium Distance Fleets DCC Mobility Solutions Multi-fuel bunker network Fleet management solutions Partner network Access to multi-fuel solutions at base and roaming payments (i.e. Fuelcards) Services (Parking, Services (telemati
Slide 63: HGV fuels by duty cycle
HGV fuels by duty cycle Average Distance Medium duty Heavy duty Opportunity for Duty Cycles Idle time per day (Km/day) Trucks (3.1-15t) Trucks (>15t) DCC 0. Last mile 2 - 3 x -0.5h At depot charging e.g Door to door city delivery <100 BEV solutions (see EV 1 x 10h charging) 1a. Milk run Multi-fuel c
Slide 64: The shift to EVs introduces new charging locations
The shift to EVs introduces new charging locations; we’ll focus on Conversion and optimization of existing forecourts and new urban hubs Total EV charging market % of 2030 EV charging Forecourts At Home At Work Destination revenue > ~20% ~60%1 ~10% ~10% Motorway Does not exist 1. Convert existing mo
Slide 65: The forecourt transition to EV charging is driven by site location
The forecourt transition to EV charging is primarily driven by site location Format Transition Pathway Opportunity Urban Key role of fast charging in commuter EV fast chargers + retail services; [554 sites] journeys developing urban hubs Motorway Long term multi-fuel role on Motorway mobility hubs [
Slide 66: Retail site profitability will grow through transition
Retail site profitability will grow through transition Traditional Fuel Non-Fuel Income 5-10% Non-Fuel Income EV Charging 30% 25-35% 30-40% Gross Profit 40-50% 40-55% 70% EV Charging Fuel 30-40% Non-Fuel Income Traditional Fuel Time Existing mix contributes approx. Short-term growth in EV Charging a
Slide 67: Growing with energy
GROWING WITH ENERGY Leading with energy 67
Slide 68: Our DCC Energy growth strategy is built on four key drivers
Our DCC Energy growth strategy is built on four key drivers Leading with energy
Slide 69: DCC Energy today
DCC Energy today DCC Energy Business Segments DCC Energy Regional Markets DCC Energy Product & Service Mix Services, Renewables and Other Rest of (<10 kgCO2e/ GJ)1 Mobility the world Traditional Continental Europe (>65 kgCO2e/GJ)1 Solutions 11% 22% 25% 29% 39% 75% 49% 35% 15% Britain & Ireland Lower
Slide 70: Growing, with energy
Growing, with energy A multi-energy product and services provider and transition leader: with strong returns and cash generation £’M ROCE% 450 82% 19.0% 138% 407 18.5% 83% 400 376 93% 368 18.0% 336 350 17.5% 98% 17.0% 300 281 16.5% 250 16.0% 2018 2019 2020 2021 2022 % Free Cash Flow Conversion % Ope
Slide 71: Growth in services and lower carbon products driving lower carbon intensity
Growing, with energy Growth in services and lower carbon products driving reduction in carbon intensity of profits £’M 450 Carbon Emissions / Operating Profit 100 407 80 400 376 368 60 336 350 40 300 281 20 250 0 2018 2019 2020 2021 2022 Carbon Emissions / Operating Profit £’M Operating Profit Leadi
Slide 72: DCC Energy to 2030 and beyond: volumes lower by 2030
DCC Energy to 2030 and beyond: Volumes lower by 2030 driven by decline in traditional products, lower carbon resilient Traditional/lower carbon profit (c. 2% growth p.a.) DCC Energy volumes (c. 6% lower) DCC Energy emissions (c. 15% lower) Leading with energy 72
Slide 73: DCC Energy to 2030 and beyond: resilient profitability
DCC Energy to 2030 and beyond: Resilient profitability and traditional and lower carbon products with good growth in newer energy products and services Services / Renewables / New Energies (c. 5% growth p.a) DCC Energy (c. 2.5% growth p.a) Traditional / Lower carbon profits (c. 2% growth p.a) Leadin
Slide 74: DCC Energy to 2030 and beyond: improving carbon intensity of profitability
DCC Energy to 2030 and beyond: Continued improvement in the carbon intensity of profitability due to growth in renewable, bio and service revenues DCC Energy profit (c 2.5% growth p.a) Further improvement in Carbon: Profit Ratio DCC Energy Scope 3 emission (c. 15% lower) Leading with energy 74
Slide 75: Growth opportunity for DCC Energy, increasingly in transition solutions
Growth opportunity for DCC Energy, increasingly in transition solutions Resilient profits, returns and cash flow, with increasing proportion of higher growth transition solutions over time Cash Flow Profile Delivering organic Growing our transition facilitates transition and profit growth in capabil
Slide 76: Our priorities across DCC Energy
Our priorities across DCC Energy Accelerating transition Acquiring customers with Where we are not capability clear transition pathways allocating capital Significant opportunity in high Longer term growth opportunity is Customers requiring practicable growth new energy as world limited, and transit
Slide 77: Accelerating our transition capability
Accelerating our transition capability Acquiring new capability at strong returns Developing capability organically at strong returns Leading with energy 77
Slide 78: Emissions analysis: e.g. of assumptions
EMISSIONS ANALYSIS: E.G. OF ASSUMPTIONS Leading with energy 78
Slide 79: Emissions profile approach for DCC customer base by 2030
Our approach follows how the emissions profile of the DCC customer base will change by 2030 1 Baseline 2 Trigger point 3 Likelihood to transition 4 Product selection 5 Emissions profile What is the DCC customer Is there a need to replace Are customers making an Which solution do they Based on their
Slide 80: Key hypotheses and assumptions underlying the transition curves
There are some key hypotheses and assumptions underlying the transition curves across personas and markets 2 Trigger point 3 Propensity to transition 4 Solution choice 5 Emissions profile Step Factor Justification Proxy Example • 6% annual boiler replacement rate in the UK based on 15 • Asset replac
Slide 81: Key hypotheses and assumptions underlying all the transition curves
There are some key hypotheses and assumptions underlying all the transition curves across personas and markets 2 Trigger point 3 Propensity to transition 4 Solution choice 5 Emissions profile Step Factor Justification Proxy Example • Likelihood to devote capital In UK, demographic of If customers ar
Slide 82: Appendix: DCC to 2030 and beyond
APPENDIX: DCC TO 2030 and BEYOND Leading with energy 82
Slide 83: We discussed our Group capital allocation priorities in December
We discussed our Group capital allocation priorities in December We assess all opportunities, both M&A and development capital expenditure, through a lens of long term and sustainable growth opportunity Our capital deployment priorities Long term growth drivers and rates Scaling our DCC Health & Bea
Slide 84: Compounding business model to deliver strong growth
Compounding business model to deliver strong growth Divisional growth Clear Group M&A trajectories priorities Strong balance sheet Leadership positions Market opportunities Financial discipline Operation excellence & DCC heritage and track Group-wide ROCE focus innovation record M&A growth c. 85%-90
Slide 85: Strategy and capital allocation will drive change
Strategy and capital allocation will drive change Meaningful change in shape of the Group and reduced reliance on traditional ‘fossil’ profitability FY22 Group Adjusted Operating Profit 2030 vision for shape of Group pro-forma for Almo DCC Technology, DCC Healthcare, DCC Energy - Services & renewabl
Slide 86: Good progress across the last two years in sustainability
Good progress across the last two years in sustainability DCC improved two DCC improved 15 DCC retained its AAA classes, from C to points in the last two Assigned highest rating in December B in December years: from ‘high’ risk Governance rating 2021 2021 to ‘medium’ risk Leading with energy 86
Slide 87: Striving for further improvements, making meaningful changes
Striving for further improvements, making meaningful changes New position at Group Strategy and capital allocation New Revolving Credit Facility is Management Team priorities continue to reduce the Sustainability/ESG-linked, with KPIs carbon intensity of the Group aligned to our sustainability pilla
Slide 88: Our vision for 2030 and beyond is driven by our sustainable strategy
Our vision for 2030 and beyond is driven by our sustainable strategy We are ambitious to grow and develop - while guided by our purpose of enabling people and businesses to grow and progress 50% reduction in Scope 1 and 2 Net Zero Scope 1, 2 & 3 by 2050, or sooner emissions by 2030 Commercial, capit