DCC PLC · LSE:DCC
DCC — Investor Day (June 2013)
122 slides from DCC's investor day presentation, Jun 6, 2013
Slide 1: Investor Day - 6 June 2013 Introduction
Investor Day - 6 June 2013 Introduction Investor Day 6 June 2013
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. While DCC b
Slide 3: Agenda
Agenda 09.00 Introduction Tommy Breen 09.30 DCC Energy Donal Murphy, MD Eddie O’Brien, MD, Oil Henry Cubbon, MD, LPG 10.15 DCC SerCom Niall Ennis, MD Gerry O’Keeffe, Group MD, Micro-P 11.00 Coffee 11.15 DCC Healthcare Conor Costigan, MD Rory O’Riordan, Head of Pharma 12.00 Financial Review Fergal O’
Slide 4: Speakers
Speakers Tommy Breen, CEO, 28 years Fergal O’Dwyer, CFO, 24 years Donal Murphy, Niall Ennis, SerCom, Conor Costigan, Energy, 15 years 15 years Healthcare, 16 years Gerry O’Keeffe, Rory O’Riordan, Eddie O’Brien, Micro-P, 6 years Pharma, 2 years Oil, 1 year Henry Cubbon, LPG, 5 years 4
Slide 5: DCC
DCC DCC is a sales, marketing, distribution and business support services Group operating across 5 divisions Profit by division* Profit by geography* DCC Energy 6% 3% 11% DCC SerCom UK 12% 15% DCC Healthcare Continental Europe 57% ROI 22% DCCEnvironmental DCC Enviornment 74% DCC Food & Beverage DCC
Slide 6: Strong track record of EPS Growth
Strong track record of EPS Growth Reported Earnings per Share (€ cent) 210.0 203.2 19 year CAGR * 178.0 11.9% 165.1 169.1 163.5 10 year CAGR 143.5 7.5% 115.1 124.0 101.5 106.0 5 year CAGR 94.9 82.2 4.9% 65.3 55.4 44.4 37.5 28.4 31.9 24.8 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Ye
Slide 7: Strong Cash Flow generation which supports development activities
Strong Cash Flow generation which supports development activities Dividends DCC converts profits into Convert cash... profits to cash • 14 year free cash flow conversion of 96% Profit Bolt on ...and uses cash to fund generation acquisitions expansion and reward shareholders • Acquisition spend of ov
Slide 8: ...along with Consistent Dividend Growth
...along with Consistent Dividend Growth Reported Dividend (€ cent) 19 year CAGR * 85.7 14.7% 77.9 74.2 10 year CAGR 67.4 62.3 11.8% 56.7 49.3 5 year CAGR 42.9 8.6% 37.3 32.4 28.2 24.5 21.1 17.6 14.7 12.2 8.8 10.2 6.4 7.8 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 Years ended 31 Mar
Slide 9: DCC TSR from flotation to March 2013
DCC TSR from flotation to March 2013 % 1,600 DCC FTSE 250 FTSE All Share FTSE 350 Support Services 1,400 +1,364% 1,200 1,000 800 +560% 600 +304% 400 200 +285% +285% 0 May-94 Jun-96 Jul-98 Aug-00 Oct-02 Nov-04 Dec-06 Jan-09 Feb-11 Mar-13 9
Slide 10: DCC's Strategy
DCC’s Strategy Our Objective: To continue to build a growing, sustainable and cash generative business which consistently provides returns on total capital employed significantly ahead of its cost of capital Our strategic priorities: • Creating and sustaining leading positions in each of the markets
Slide 11: Business Overview
Business Overview DCC Sales, marketing and distribution Energy of oil and liquefied petroleum gas products 57% of group profit Sales, marketing and distribution of IT, DCC communications and home entertainment products. SerCom Supply chain management services 22% of group profit Sales, marketing and
Slide 12: Investor Day - Objectives
Investor Day - Objectives • Outline DCC’s strategy and ambition • Provide background to DCC’s three largest divisions – 91% of profits • Highlight DCC’s key growth opportunities 12
Slide 13: DCC Energy
Investor Day – 6 June 2013 DCC Energy
Slide 14: Agenda
Agenda • DCC Energy - Overview • DCC Energy (Oil) - Business Model • DCC Energy (LPG) - Business Model • DCC Energy - Vision & Strategy • Summary 14
Slide 15: DCC Energy
DCC Energy DCC Energy is the leading oil and liquefied petroleum gas (“LPG”) FY 2013 sales, marketing and distribution business in Europe Revenue £8,112.1m • Oil for transport, heating and industrial / agricultural processes • LPG for heating, cooking, transport and industrial / agricultural Operati
Slide 16: DCC Energy – Business of Scale
DCC Energy – Business of Scale Market Geography Volume Market Share Business Statistics (FY2013) Position Britain – oil c. 6,700mL c. 18% – oil #1 Britain – LPG c. 270kT c. 27% – LPG #2 c. 11 billion Litres Volumes (annualised including acquisitions) Ireland – oil c. 900mL c. 10% – oil #5 Ireland –
Slide 17: DCC Energy – Track Record
DCC Energy – Track Record Volumes Operating Profit Liters (£’m) (bn) 12 5 Yr. CAGR 15.3% 9.6 140.0 10 120.0 117.0 7.9 106.2 8 100.4 7.1 100.0 72.5 83.2 6.2 80.0 6 5.3 60.0 52.2 4.2 4 3.2 40.0 2.9 2.5 2.1 20.0 2 0.0 08 09 10 11 12 13 0 -20.0 04 05 06 07 08 09 10 11 12 13 -40.0 Underlying Profits Esti
Slide 18: DCC Energy 10 Year Cash Flow
DCC Energy 10 Year Cash Flow Oil LPG Total £’m £’m £’m Operating profit 420.4 254.8 675.2 Decr/(incr) in working capital and other 103.4 (18.2) 85.2 Depreciation 97.1 109.3 206.4 Operating cash flow 620.9 345.9 966.8 Capex (net) (97.5) (125.5) (223.0) Free cash flow 523.4 220.4 743.8 Acquisitions (4
Slide 19: Key Competitive Advantages
Key Competitive Advantages Large diversified customer base (c. 1 million) Sales & Platform for Operational further growth expertise Extensive Strength of the acquisition and Group Balance integration Sheet experience Broad portfolio of suppliers 19
Slide 20: Market Development & Growth Projections for Europe
Market Development & Growth Projections for Europe 500,000 ‘000 tonnes Western European fuel market c. 420m tonnes 450,000 400,000 DCC Energy supplies <2.5% of this market 350,000 Lubricants Demand relatively robust 300,000 HFO despite the difficult economic Gasoil environment 250,000 Other Kerosene
Slide 21: DCC Energy - Oil
DCC Energy - Oil
Slide 22: DCC Oil's position in the Supply Chain
DCC Oil’s position in the Supply Chain Domestic Inland Depots Agriculture Inbound Logistics Exploration & Production Aviation Marine Commercial / Industrial Importation Terminal Fuel Card Outbound Logistics Retail Forecourts Note: DCC‘s activities highlighted in orange 22
Slide 23: Oil Britain
Oil Britain Volume Split % Key Data 9% Market Share % 18% 22% Retail Domestic Employee No. 2.700 13% Commerial Depots / Trucks 225 / 1,200 56% Other Volume c. 6.0bn Litres • # 1 oil distributor in Britain • First entered the market in Sept. 2001 • Acquired and integrated 28 oil distributors includin
Slide 24: Oil Britain
Oil Britain • Highest market share in Scotland but opportunity for further growth in all regions 30% • Varying market shares by product segment: c. 30% market share in Kerosene and Gas Oil, but only c.7% share of road transport fuels • Largest supplier to dealer owned retail sites: 20% c. 1,600 site
Slide 25: Oil Denmark
Oil Denmark Volume Split % Key Data 8% Market Share % 13% 19% Employee No. 70 Depots / Trucks Nil / 80 outsourced 73% Volume c. 250m Litres Domestic Commerial Other • # 2 oil distributor in Denmark • Strong differentiated mix in heating oil & diesel • Growing presence in marine fuels & lubricants •
Slide 26: Oil Sweden
Oil Sweden Volume Split % Key Data 5% 5% Market Share % 17% Employee No. 59 Depots / Trucks Nil / 40 outsourced 90% Volume c. 400m Litres Domestic Commerial Other • # 1 oil distributor in Sweden • No physical infrastructure • Highly fragmented market with further consolidation possible
Slide 27: Oil Austria
Oil Austria Volume Split % Key Data 12% Market Share % 13% 13% Employee No. 194 Depots / Trucks 15 / 54 75% Volume c. 0.9 bn Litres Retail Domestic Commerial • Largest independent distributor in Austria • Shell Branded • Strong mix of differentiated products
Slide 28: Oil Bavaria
Oil Bavaria Volume Split % Key Data 12% Market Share % < 4% 13% Employee No. 35 75% Depots / Trucks 3 / 10 Volume c. 300m Litres Retail Domestic Commerial • Top Oil Bayern - start-up operation in Straubing in November 2012 • Bronberger & Kessler acquired in May 2013 • Eni branded business • Good por
Slide 29: Oil Ireland
Oil Ireland Volume Split % 2% Key Data 19% Market Share % 10% 14% Employee No. 250 65% Depots / Trucks 27 / 150 Volume c. 900m Litres Retail Domestic Commerial Other • A leading distributor of oil products on island • Strong growth in retail petrol station market • First unmanned forecourt operator
Slide 30: DCC Oil – A growing retail mix
DCC Oil – A growing retail mix DoDo Forecourt Ireland DoDo Forecourt Britain Site Type Number Site Type Number Ireland Britain Volume : 160 m Litres Volume : 1.29 Bn Litres DoDo – Brand 73 DoDo – Brand 865 Unmanned Forecourt Ireland – Spot 765 – Spot 20 Unmanned 5 Unmanned Nil Retail 19 Retail Nil C
Slide 31: Fuel Cards – Britain
Fuel Cards – Britain • Fuel Card Services - largest independent Key Data agent for fuel cards in Britain Market Share % 10% • Key products: BP, Diesel Direct, Shell, Employee No. 240 Esso, Texaco, UK Fuels Offices 5 • Excellent nationwide coverage Volume c. 700m Litres – c. 75% of all sites availabl
Slide 32: Health, Safety & Environmental
Health, Safety & Environmental • Strong focus on HSE at all levels of the organisation • Strong financial investment in all parts of the business ensuring asset integrity • Key focus areas across all businesses Increasing training and awareness of behavioural safety Strong focus on process safet
Slide 33: DCC Energy - LPG
DCC Energy - LPG
Slide 34: Sources of LPG
2 Sources of LPG 1. Oil fractionation at refinery 2. Gas Separation Fractionation of piped gas from gas fields into: • Moisture • Sulphur • Nitrogen • Ethane, Pentanes • Methane (CH4) • Propane (C3H8) • Butane (C4H10) 34
Slide 35: How is LPG used?
How is LPG used? • Conveniently transported and stored under pressure in liquid form – in tanks and cylinders • Used in areas where there is no natural gas grid • Customers include: homes, hotels, pubs, hospitals, factories, caravan parks, farms, garages, and bio gas plants 35
Slide 36: Overview of LPG Supply Chain in Britain
Overview of LPG Supply Chain in Britain Oil refinery & Gas Inland LPG Terminals Propane and butane Separation facilities (82% of volume*) cylinders (21% of volume) (94% of volume) Bulk Domestic 16% Mini Bulk Tankers (79% of volume) LPG Import Terminal Refinery based tankers (6% of volume) Bulk Comme
Slide 37: Flogas Britain
Flogas Britain Key Data Market Share % 27% Employee No. 760 Depots / Trucks 46 / 350 and tankers Volume 270kt • # 2 LPG distributor in Britain • First entered the market in 1980s • Acquired British Gas LPG 2001, and BP LPG in 2012 • Full nationwide coverage • Branded as Flogas in England and Wales,
Slide 38: Flogas Ireland
Flogas Ireland Key Data Market Share % 39% Employee No. 140 Depots / Trucks 8 / 40 Volume 68.5kt • # 2 in market with 39% share • Three import and storage terminals • DCC invested as a start-up in 1977 and has built the business both organically and through acquisition to 39% market share • Organic
Slide 39: Benegas
Benegas Key Data 1% Market Share % 24% Employee No. 46 Depots / Trucks 1 / NA Volume 56kt • Acquired from BP in 2012, trading as Benegas • Located at Putten, 1hr south east from Amsterdam • All deliveries outsourced • Supplier of aerosol propellant across Europe with a 53% share in the Netherlands •
Slide 40: Flogas in Scandinavia
Flogas in Scandinavia 5% Key Data Market Share (Swe) % 47% Market Share (Nor) % 43% Employee No. 25 Depots / Trucks 8/31 (+80 railcars) Volume 275kt Stjördal Luleå • Business acquired from SFR ex Statoil in 2012 Årdal • # 1 distributor of bulk LPG to industrial and commercial customers in Sweden (47
Slide 41: HSE Agenda
HSE Agenda • Continuous improvement against safety KPIs • Develop Safety Culture Improvement Programmes: (e.g. ‘Take 5’ & ‘Hearts & Minds’ initiatives) • Focus on Human Factors, Process Safety and Managerial Competence • Review and align plant design and safety systems and PPE across existing and ac
Slide 42: Vision & Strategy
Vision & Strategy
Slide 43: DCC Energy – Vision
DCC Energy – Vision 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 • With strong local market shares • Operating under multiple brands • Consolidating fragmented markets • Selling a
Slide 44: DCC Energy Growth Initiatives
DCC Energy Growth Initiatives Oil • Continue to consolidate existing markets to drive greater customer density • Expand sales of differentiated products • Cross sell add-on products and services e.g. Fuel Cards, Lubricants • Optimise and build greater flexibility into logistics operations • Expand i
Slide 45: Significant Market Opportunity in Europe
Significant Market Opportunity in Europe • DCC only has a presence in 9 countries in Europe with c. 2.5% share of the European market • Significant opportunity to expand activities in existing markets and into new geographies • Market characteristics similar across most geographies 45
Slide 46: Summary
Summary • DCC Energy is a business of scale Scale • c. 11bn litres of sales • c. 1m customers across 9 countries • Asset light Financial • Recurring revenues Characteristics • Strong Cash Conversion and High ROCE • Platform to drive organic profit growth Organic Growth • Oil (incl. Fuel Cards & Reta
Slide 47: DCC SerCom
Investor Day – 6 June 2013 DCC SerCom DCC SerCom 47
Slide 48: Agenda
Agenda • DCC SerCom – Overview • IT Distribution Market Structure • DCC SerCom – Market Position – Business Model – The Value Proposition – Mobile Development • Track Record • Vision & Strategy • Focus for Growth 48
Slide 49: DCC SerCom at a glance
DCC SerCom at a glance FY 2013 The route to market partner for leading global IT, Revenue £1,850.3bn communications and home entertainment brands Operating profit £41.5m ROCE 16.4% Figures shown are reported euro numbers translated at the average fx rate IT, 10,000+ communications customers 350 indu
Slide 50: Principal markets
Principal markets Revenues by Geography FY13 Revenues by End User FY13 7% 9% UK 37% 12% France Consumer SME Ireland 63% Other 72% 50
Slide 51: Structure of European IT Distribution
Structure of European IT Distribution Western European IT Market - €300bn IT Distribution - €65bn €150bn Tier 1: Indirect VARs(€85bn) Sales Tier 2 : IT Distribution Distribution Market sizes €bn: (€65bn) DCC SerCom Germany €11.5 IT Vendors Retail UK €10.0 France €7.0 €300bn Etail / Mail order Nordic
Slide 52: Market Position
Market Position Benelux / Sweden - Niche Ireland - #1 player UK - #2 player France - #7 player Note –Supply Chain Management unit is HQ’d in Dublin with operations in Ireland, Poland, China & USA 52
Slide 53: Market Position – Europe
Market Position – Europe Rank Company HQ Y/E Focus Sales €Bn Op Mrg% 1. Tech Data US Jan 13 Broadline 12.0 1.1% 2. Ingram Micro US Dec 12 Broadline 8.2 1.0% 3. Actebis / Also Ger/CH Dec 12 Broadline 6.3 1.3% 4. Avnet US Jun 12 Enterprise 2.5 N/D 5. DCC SerCom Ire Mar 13 Multi 2.3 2.2% 6. Esprinet It
Slide 54: DCC SerCom – Business Model
DCC SerCom – Business Model IT, 10,000+ communications customers Consumer 350 industry & home leading vendors Retail, etail, & SME entertainment products reseller 54
Slide 55: Trusted Partner of the world's leading IT vendors
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller 350 Industry Leading Vendors • Trusted Partner of the world’s leading IT vendors - The route-to-market to access retail and reseller channels - Technical and product
Slide 56: Strategic relationships with vendors
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller 350 Industry Leading Vendors • Strategic relationships rather than purely transacting relationships - Capacity to lead the market by future innovation - Opportunity
Slide 57: 350 Industry Leading Vendors
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller 350 Industry Leading Vendors DCC SerCom Share of Distribution in Represented Markets No.1 No.1 No.1 No.1 No.1 No.1 80% 60% 60% 45% 55% 35% PC No.1 No.1 No.1 No.1 No.
Slide 58: IT, Communications and Home Entertainment Products
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller IT, Communications and Home Entertainment Products • Devices to access content – central to product strategy • Convergence driving innovation & growth • Unique marke
Slide 59: Revenues by product type
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller IT, Communications and Home Entertainment Products Revenues by product type – year ended 31 March 2013 Computing (Tablet/PC/Server) Communications & Mobile 14% Print
Slide 60: 10,000 + customers: Leading Retailers
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller 10,000 + customers Leading Retailers • Strong relationships across the full breadth of the Retail channel • Particular focus on grocer / etail / catalogue retailers
Slide 61: 10,000 + customers: Resellers
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller 10,000 + customers • Huge breadth of customers across the Reseller channel Reseller • Scale of our business allows us to provide considerable value to resellers - Te
Slide 62: Consumer & SME end-user focus
IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller Consumer & SME end-user focus • Convergence and BYOD changing the way technology is delivered – to home, office / education and Home on-the-move SerCom Focus • SerCo
Slide 63: Risk Management
Risk Management IT, communications & home 10,000+ customers 350 industry leading vendors Consumer & SME entertainment products Retail, etail, reseller • Our business involves doing a “a thousand things right, every day” • Focus on value and top class service in addition to diligent financial managem
Slide 64: Value Proposition & Mobile Development
Value Proposition & Mobile Development 64
Slide 65: The Value Proposition
The Value Proposition DCC Hil
Slide 66: The Value Proposition
The Value Proposition 66
Slide 67: The Value Proposition
The Value Proposition Driving sales for vendors - • Sales and marketing organisation driving increased sales for our vendors - Over 800 people focussed on selling and managing our vendors and customers - Full market coverage • Considerable resources in technical and product expertise • Unique market
Slide 68: Service Led Approach
Service Led Approach • The only distributor delivering pro-active focussed marketing and sales reach to 10,000 SMB resellers • Partnership approach to market and service development – solving problems and identifying opportunities • Full – service approach Packaging design white label products marke
Slide 69: DCC SerCom - Mobile Development FY09-11
DCC SerCom - Mobile Development FY09-11 • Strategic move into mobile market through the acquisition of Portix (Expansys Company) – April 08 • Launch of ‘Market Converged Proposition’ • Supply and range management of laptops into UK’s leading Networks • Sub distribution of branded and customer brande
Slide 70: DCC SerCom - Mobile Development FY12 -13
DCC SerCom - Mobile Development FY12 -13 • Awarded Nokia exclusive supply agreement – Mobile and retail customer base • Award of LG distribution agreement • BlackBerry partnership • Launch of MVNO / Salary Sacrifice Scheme • Build B2B value-add proposition (Windows Phone) and become strategic partne
Slide 71: DCC SerCom - Mobile Development FY14
DCC SerCom - Mobile Development FY14 • Launch ‘Attach’ division to maximise accessories opportunity • ‘Connect’ programme - umbrella scheme to enable recurring revenue models • Become Samsung primary UK distributor • Launch lease rental finance options – market leading proposition • Establish DCC Se
Slide 72: DCC SerCom - Value Added Approach
DCC SerCom - Value Added Approach PRODUCT SALES MARKETING Focussed BDM Team Windows Phone Accreditation Re-brandable Campaigns Specialist internals Returns and Warranty (24/24) MSF / Rebate Management Incentive programmes Seeding / dummy units Asset management Joint Business Plans Cross selling expe
Slide 73: DCC SerCom - Campaign Examples
DCC SerCom - Campaign Examples 73
Slide 74: SerCom mobile evolution – market opportunity
SerCom mobile evolution – market opportunity 74
Slide 75: Track Record
Track Record 5 Year Revenue Growth Stg£’m 2,000 1,850 5 Year Revenue CAGR 17.0% 1,800 1,599 1,600 1,400 1,353 1,192 1,200 1,069 1,000 844 800 600 400 200 0 2008 2009 2010 2011 2012 2013 Figures shown are reported euro numbers translated at the average fx rate for each year 75
Slide 76: PBIT & ROCE track record
PBIT & ROCE track record 5 Year Operating Profit Growth and ROCE 5 Year Op Profit CAGR 10.0% Stg£’m ROCE 16.4% 45 42 16.5% 16.2% 42 16.1% 40 36 16.0% 15.7% 35 15.5% 33 15.3% 15.5% 30 29 26 25 15.0% 20 14.5% 15 14.0% 10 13.5% 5 - 13.0% 2008 2009 2010 2011 2012 2013 Figures shown are reported euro num
Slide 77: DCC SerCom – Vision & Strategy
DCC SerCom – Vision & Strategy DCC SerCom’s vision is to be the leading specialist Consumer and SME IT sales, marketing and distribution business in Western Europe • With strong local market shares • Generating high levels of ROCE • Expanding into new geographies • The obvious partner for a new vend
Slide 78: Areas of Focus for Future Growth
Areas of Focus for Future Growth • Convergence: Be the leading distributor of converged devices in our core markets – Handsets – expand vendor set, continue market share gains – Accessories – first party, white label proposition – higher margin – Home Ent – Xbox One – digital hub – Services – BYOD m
Slide 79: DCC SerCom – Key Messages
DCC SerCom – Key Messages • Proven value-added approach driving market-leading returns • Robust business model with track record of market outperformance • Risk management focus • Excellent growth prospects - opportunity to build significant European business 79
Slide 80: DCC Healthcare
Investor Day – 6 June 2013 DCC Healthcare
Slide 81: Agenda
Agenda • DCC Healthcare - Overview • Business activities • DCC Health & Beauty Solutions • DCC Vital – Devices – Logistics – Pharma • Strategy and conclusions 81
Slide 82: DCC Healthcare overview
DCC Healthcare overview FY 2013 Sales, marketing and distribution of Revenue £320.6m Operating profit £22.2m pharmaceuticals and medical devices ROCE 13.1%* and provision of services to health & beauty brand owners * Includes Kent Pharma acquisition cost, completed 26/2/13 Operating Profit (£m) 22.2
Slide 83: DCC Healthcare overview – Business Model
DCC Healthcare overview – Business Model Vendors / Market Coverage Service / Customers Product Offering DCC Vital • Sales, marketing & • Hospitals • Pharma brand owners / distribution of • Pharma retailers manufacturers pharmaceuticals and and wholesalers • Medical device medical devices • Pharma br
Slide 84: DCC Healthcare overview – Our Business
DCC Healthcare overview – Our Business Geographic markets Geography Market Positions (post acquisition of Kent Pharma) Britain • A leading position in sales, marketing & distribution of pharmaceuticals and 17% medical devices • #1 Health & Beauty contract UK manufacturing service provider 18% ROW •
Slide 85: DCC Healthcare overview – Our Business
DCC Healthcare overview – Our Business Pro-forma sales spilt Business Statistics (FY2013) (post acquisition of Kent Pharma) Employees c. 1,600 SKUs c. 24,000 26% DCC Vital Space c. 81,000 sq m Beta Lactam antibiotics DCC Health & c. 11 million packs manufactured Beauty 74% Solutions VMS manufactured
Slide 86: DCC Healthcare overview – Strategically well placed...
DCC Healthcare overview – Strategically well placed... Positive market dynamics Changing Lifestyle Trend to Increasing Fragmented Demographics government Innovation factors outsourcing regulation markets policies DCC Vital DCC Health & Beauty Solutions Patient care – predominantly government funded
Slide 87: DCC Health & Beauty Solutions
DCC Health & Beauty Solutions
Slide 88: Health & Beauty market background
Health & Beauty market background • Vitamins & Health Supplements market – Estimated value (at RSP): UK £0.5bn (incl. mail order), Europe €3bn, Global $30bn • Beauty products – Estimated value (at RSP): UK c.£6bn (excl. fragrances and colour cosmetics), Europe c.€60bn • Dynamics – Robust market desp
Slide 89: DCC Health & Beauty Solutions – overview
DCC Health & Beauty Solutions – overview FY2013 Sales c.£93m • Provision of outsourced services to the health & beauty sector in Europe • Focused on nutrition products, creams and 34% liquids • Five licensed facilities (GMP) in Britain and 66% Sweden - #1 UK based service provider Nutrition Beauty -
Slide 90: DCC Health & Beauty Solutions – leading brands we support
DCC Health & Beauty Solutions – leading brands we support • Branded nutrition products companies • Branded beauty products companies • Consumer healthcare companies • Leading mail order companies • Specialist retailers • Private label suppliers 90
Slide 91: DCC Health & Beauty Solutions – business activities
DCC Health & Beauty Solutions – business activities • Product development and formulation Services • Regulatory and technical services • Manufacturing: - Tablets, effervescents, soft and hard gel capsules, - Creams, liquids, nasal sprays • Packing Product areas • Nutrition: vitamins, dietary supplem
Slide 92: DCC Vital
DCC Vital (Pharma - Devices - Logistics) 92
Slide 93: DCC Vital overview
DCC Vital overview • Sales, marketing and distribution of pharmaceuticals and medical devices • Excellent sales coverage across Britain and Ireland: - Broad own and third party product portfolio Pro forma sales c.£285m - Broad customer base – public & private (post acquisition of Kent) hospital, pro
Slide 94: DCC Vital overview - leading own & third party brands we support
DCC Vital overview - examples of leading own & third party brands we support * DCC owned brands = 55% of total DCC Vital sales in FY13 (including own brand service revenues) * Pharma companies * Medical device companies Clinical diagnostics / life sciences companies 94
Slide 95: DCC Vital – Devices business activities
DCC Vital – Devices business activities Sales Split Sales • FY2013: c.£85 million Activities • Sales, marketing & distribution - Single use medical devices, diagnostic UK 49% 51% equipment, consumables Irl - Anaesthesia, critical care, ENT, general surgery, life sciences, neuro surgery, orthopaedics
Slide 96: DCC Vital – Logistics business activities
DCC Vital – Logistics business activities Sales • FY2013: c.£90 million Services • Stock management and just-in-time logistics services - Focus on theatre supplies - Supplier / Contract consolidation Quality • Three distribution centres providing nationwide coverage in Britain infrastructure Vendors
Slide 97: DCC Vital Pharma – a deeper dive
DCC Vital Pharma – a deeper dive! 97
Slide 98: Pharma - global market overview
Pharma - global market overview • Ageing populations - increased consumption of pharmaceuticals • Government healthcare reforms and cost saving initiatives - increased prescribing/dispensing of generic pharmaceuticals • Established niche products a number of years post patent expiry - generally stab
Slide 99: Pharma – UK generics market overview
Pharma – UK generics market overview • Total UK pharma market - Approximately £13 billion in value (Source: NHS) - Retail pharmacy c.80% / hospital c.20% • Generic prescribing - scope for further increase - By volume 69%, by value 29% (Source: British Generic Manufacturers’ Association) • Leading ge
Slide 100: DCC Vital – Pharma business activities
DCC Vital – Pharma business activities Sales by activity * Activities • Sales, marketing & distribution - Innovative and generic pharmaceuticals 10% - Own licence and third party agency products Own Licences • Niche manufacturing of beta lactam antibiotics 3rd Party 50% • Compounding and homecare se
Slide 101: DCC Vital - Pharma development to date
DCC Vital - Pharma development to date Historical focus Current sales • Hospital channel run rate • Agency products c.£110m • Ireland Post Kent – Strong platform for growth • Comprehensive British & Irish market coverage – Hospital, Retail and Homecare channels • Balance of own licences and agency •
Slide 102: DCC Healthcare Strategy and conclusions
DCC Healthcare Strategy and conclusions 10
Slide 103: DCC Vital – Strategy
DCC Vital – Strategy Build a significant European pharma business, leveraging the growth platform created following the acquisition of Kent Pharma • Organic international sales development leveraging the strength of the combined product portfolio and regulatory capability • Continued expansion of th
Slide 104: DCC Health & Beauty Solutions – Strategy
DCC Health & Beauty Solutions – Strategy Build a leading European contract manufacturing business servicing the health & beauty and consumer healthcare sectors • Focus on continued organic growth with existing customers • Leverage existing facilities and product development strengths • Cross–selling
Slide 105: DCC Healthcare – Poised for accelerated growth
DCC Healthcare – Poised for accelerated growth Operating Profit (£m) DCC Healthcare’s vision is to build a substantial 22.2 European healthcare business principally focused 20.3 on sales, marketing and distribution of 19.2 pharmaceuticals and medical devices and 17.7 provision of services to the hea
Slide 106: Financial Review
Investor Day - 6 June 2013 Financial Review
Slide 107: Business scale through Revenue Growth...
Business scale through Revenue Growth... Revenue Growth 10.6 19 year CAGR * 21.9% 8.7 10 year CAGR 19.9% 7.1 5 year CAGR 5.5 5.2 18.6% 4.5 3.3 2.8 2.2 1.5 1.7 1.7 1.4 1.0 0.4 0.5 0.6 0.2 0.3 0.4 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Years
Slide 108: … Driving Operating Profit Growth...
… Driving Operating Profit Growth... Operating Profit 187 187 19 year CAGR * 13.0% 157 151 147 10 year CAGR 136 9.0% 114 5 year CAGR 99 89 6.5% 79 83 74 68 55 44 34 22 24 18 20 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Years ended 31 March (£
Slide 109: ...with Strong Cash Flow Generation
...with Strong Cash Flow Generation which Supports Development Activities 14 Year • Free cash flow (before interest and tax) FY 2000 – FY 2013 £m CAGR of £1.6bn Operating profit 1,615 11.4% Decrease in working capital 41 • Revenue increased from £0.6bn to £10.6bn Depreciation 443 Other (38) • Operat
Slide 110: ...along with Consistent Dividend Growth
...along with Consistent Dividend Growth Dividend Growth 69.9 ** 19 year CAGR * 63.5 60.5 14.7% 55.0 10 year CAGR 50.8 46.2 11.8% 40.2 5 year CAGR 35.0 8.6% 30.4 26.4 23.0 20.0 17.2 14.4 12.0 9.9 7.2 8.3 5.2 6.4 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201
Slide 111: Cash Conversion – Deployment of Free Cash Flow
Cash Conversion – Deployment of Free Cash Flow £ millions 2000 - 2003 2004-2008 2009-2013 1999-2013 Operating profit 266 520 829 1,615 EBITDA 343 668 1,047 2,058 Operating cash flow 320 539 1,202 2,061 Free cash flow* 220 372 958 1,550 Free cash flow conversion 83% 72% 116% 96% Dividends / share buy
Slide 112: Net Working Capital (NWC) Days
Net Working Capital (NWC) Days Group Group (excl Energy) 35 29.2 30 25.8 25 22.2 21.6 19.2 20 Days 15 11.9 10 4.6 4.9 5 2.5 2.2 0 2009 2010 2011 2012 2013 • Since 2000 working capital has decreased by £41m, notwithstanding organic revenue growth of £2.8 billion • From 2009 to 2013: • Group NWC days
Slide 113: Capex & Depreciation
Capex & Depreciation Capex & Depreciation Capex Capex Depreciation 70 £70m 63 57 14% 60 £43m 53 54 8% 50 45 43 £34m £279m 41 7% 55% 40 38 37 £‘m 29 £84m 30 16% 20 Energy SerCom 10 Healthcare Food & Beverage Environmental 0 2009 2010 2011 2012 2013 14 Year Total: £0.5bn • Since 2000 capex has exceede
Slide 114: Acquisitions
Acquisitions Cash spent on acquisitions By Division 180 169 160 144 Energy, £645m 137 140 4% 120 109 7% SerCom, £159m 100 86 15% £‘m 83 Healthcare, 80 72 £159m 66 64 59% 60 15% 48 45 Environmental, £80m 40 31 21 20 11 Food & Beverage, £43m - '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 No
Slide 115: Balance Sheet is Strong …
Balance Sheet is Strong … 2013 £’m 2012 £’m Net Debt / EBITDA 0.8 Fixed assets 442 376 0.7 0.7 Working capital 65 80 0.6 0.6 Other net operating liabilities (102) (76) 0.5 0.6 Net tangible assets 405 380 0.4 Goodwill / intangible assets 749 655 0.3 0.2 0.2 Capital employed 1,154 1,035 0.2 0.1 Net de
Slide 116: ….Well Funded and Highly Liquid
….Well Funded and Highly Liquid 31 March 2013 £’m £’m Cash and short term bank deposits 861 Overdraft (88) Cash and cash equivalents 773 Bank debt repayable within 1 year (1) US private placement debt repayable*: • Average maturity Y/e 31/3/2014 (56) of debt at 31 Y/e 31/3/2015 (184) March 2013 was
Slide 117: Return on Total Capital Employed
Return on Total Capital Employed* Total Capital Employed 31 March 2013 Total Capital Employed by Division % 20.0 19.9 18.4 £68m 18.0 17.8 £136m 5% 15.6 11% 16.0 14.2 14.0 £211m, £642m, 12.0 16% 49% 10.0 8.0 £243m, 6.0 19% 4.0 2.0 Energy SerCom 0.0 Healthcare Environmental 2009 2010 2011 2012 2013 Fo
Slide 118: 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 the cost of capital • High cash conversion is used to finance further acquisitions and pay divi
Slide 119: Wrap Up / Q&A
Investor Day - 6 June 2013 Wrap Up / Q&A
Slide 120: Vision and Opportunity
Vision and Opportunity • Energy: – To become a global leader in the sales, marketing and distribution of fuels and related products • SerCom: – To become the leading Consumer and SME IT sales, marketing and distribution business in Western Europe • Healthcare: – To build a substantial European healt
Slide 121: DCC TSR from flotation to March 2013
DCC TSR from flotation to March 2013 % 1,600 DCC FTSE 250 FTSE All Share FTSE 350 Support Services 1,400 +1,364% 1,200 1,000 800 +560% 600 +304% 400 200 +285% +285% 0 May-94 Jun-96 Jul-98 Aug-00 Oct-02 Nov-04 Dec-06 Jan-09 Feb-11 Mar-13 121
Slide 122: Q&A
Q&A 122