DCC : 2020 Interim Report - six months ended 30 September 2020

Press Release

10 November 2020

DCC Delivers Very Robust First Half Performance with

Strong Growth in Operating Profit

DCC, the leading international sales, marketing and support services group, is today announcing its results for the six months ended 30 September 2020.

Highlights	2020	2019	% change
Revenue	£5.931bn	£7.312bn	-18.9%
Adjusted operating profit1	£176.1m	£162.6m	+8.3%
DCC LPG	£45.6m	£49.0m	-7.1%
DCC Retail & Oil	£65.2m	£59.7m	+9.2%
DCC Technology	£25.5m	£25.4m	+0.7%
DCC Healthcare2	£39.8m	£28.5m	+39.7%
Adjusted earnings per share1	117.9p	110.2p	+7.0%
Interim dividend	51.95p	49.48p	+5.0%
Free cash flow3	£120.7m	£30.4m

• DCC performed strongly during the seasonally less significant first half of the year, with Group adjusted operating profit increasing by 8.3% (up 8.6% on a constant currency basis) to £176.1 million. Given the difficult and uncertain trading environment, in particular during the first quarter but throughout the first half of the financial year, the performance of the Group has been very robust with improving momentum through the second quarter
• Adjusted earnings per share up 7.0% to 117.9 pence
• Interim dividend increased by 5.0% to 51.95 pence per share
• Excellent free cash flow generation, up £90.3 million on prior year, driven by a strong working capital performance
• Notwithstanding the ongoing disruption caused by the pandemic, the Group committed approximately £90 million in capital to new acquisitions in both Europe and North America since May 2020. The Group remains very active from a development perspective
• The Group balance sheet remains very strong and liquid, with net debt (excluding lease creditors) of £137 million at 30 September 2020, gross cash of approximately £1.5 billion and undrawn, committed bank facilities of £400 million. This excellent financial position will facilitate the continued growth and development of the Group

1. Excluding net exceptionals and amortisation of intangible assets.
2. DCC Healthcare's reported prior year figures include its UK generic pharmaceutical activities and related manufacturing facility in Ireland (Kent Pharma and Athlone Laboratories) which were disposed of in September 2019. Operating profit excluding these activities was 65.9% higher than the prior year.
3. After net working capital and net capital expenditure but before net exceptionals, interest and tax payments.

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• With Covid-19 related restrictions now increasing again generally, the outlook for all economies in which DCC operates remains very uncertain. However, DCC's diverse and resilient business model, the essential nature of the Group's products and services and its extremely strong balance sheet ensure that the Group is well placed to navigate this ongoing uncertainty and continue its growth and development into the future

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

"I am pleased to report that since our last trading update on 17 July 2020 the trading performance of the Group continued to improve and resulted in strong growth in operating profit in the first half of the year. Despite the unprecedented disruption experienced by all economies during the period, every DCC business unit operated effectively, ensuring our customers continued to receive DCC's range of essential products and services. The uncertainty created by the pandemic continues at elevated levels and in this difficult environment DCC's priority remains keeping our employees safe and well while we continue to supply the essential products and services our customers require.

Whilst the first half of the financial year is seasonally less significant, the strong performance demonstrates the resilience and agility of our business model. It also highlights the essential nature of the Group's products and services and the benefit of the diversity of the Group's operations, in terms of sectoral focus, customer and supplier breadth and geographic mix.

Diversity also provides us with optionality with respect to acquisition activity and development capital expenditure. During the period DCC deployed capital in several acquisitions, each of which have brought new capability and reach to the Group and we remain very active from a development perspective. We also continued to invest in increasing the capacity of our businesses to deliver excellence to our customers, ensuring that we continue to fulfil DCC's purpose of enabling people and businesses to grow and progress. DCC continues to have the platforms, opportunities and capability to build the Group into a global leader in its chosen sectors.

With Covid-19 related restrictions now increasing again generally, the outlook for all economies in which DCC operates remains very uncertain. However, DCC's diverse and resilient business model, the essential nature of the Group's products and services and its extremely strong balance sheet ensure that the Group is well placed to navigate this ongoing uncertainty and continue its growth and development into the future."

For reference, please contact:
Donal Murphy, Chief Executive	Tel: [phone]
Kevin Lucey, Chief Financial Officer	Email: [e-mail]
	Web:www.dcc.ie
For media enquiries: Powerscourt (Lisa Kavanagh)	Tel: [phone]
	Email: [e-mail]

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Presentation of results and dial-in / webcast facility

DCC will not be hosting a physical results presentation, reflecting the restrictions currently in place. Instead there will be a webcast and audio call of the presentation at 9.00 a.m. today. The slides for this presentation can be downloaded from DCC's website, www.dcc.ie. The access details for the live presentation are as follows:

Ireland:	[phone]
UK:	[phone]
International:	[phone]
Passcode:	3754027
Webcast Link:	https://edge.media-server.com/mmc/p/bo56f6px

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

Document contents	Pages
Divisional Operating Reviews		4 - 7
Group Financial Review		8
Income Statement Review	9	- 11
Cash Flow, Development & Financial Position	12	- 15
Interim Financial Statements (Condensed)	16	- 35
Alternative Performance Measures	36	- 39

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Divisional Operating Reviews

DCC LPG	2020	2019	% change
Volumes (thousand tonnes)	726.3kT	798.5kT	-9.0%
Operating profit	£45.6m	£49.0m	-7.1%
Operating profit per tonne	£62.72	£61.40

DCC LPG traded robustly during the first half of the year, particularly given the difficult operating conditions in the first quarter. Operating profit declined by 7.1% (7.4% behind on a constant currency basis) to £45.6 million.

DCC LPG sold 726.3k tonnes of product in the first half, a 9.0% reduction on the prior year. Given the typical seasonal weighting to commercial and industrial customers during the first half of the financial year, good cylinder and domestic demand was more than offset by lower commercial and industrial demand in Britain and Ireland, especially during the first quarter. Volumes were also generally impacted by the relatively warmer weather conditions during the first half, while operating profit per tonne benefited from good cost control and the positive mix impact of strong cylinder and domestic demand.

The French business performed in line with expectations, driven by a resilient performance in the cylinder and domestic sectors, despite the adverse impact of the relatively warmer weather conditions. The cylinder business benefited from the maturing of the 'Click & Collect' offering, which proved particularly attractive to customers during the lockdown restrictions, and the business continues to broaden its energy product and service offering to customers. In particular, the business increased its presence in the B2B gas and power market in France during the period, with continued good growth in customer numbers.

In Britain and Ireland, the business experienced good domestic and cylinder demand, with commercial and industrial demand most impacted by restrictions, although demand improved as the first half of the year progressed. Importantly, the pipeline of 'Oil2LPG' conversions remains robust, with commercial and industrial customers remaining very interested in the potential to both lower their energy costs and significantly reduce their carbon emissions. Development expenditure on new conversions continued, particularly in the second quarter, following the easing of restrictions. In Ireland, the gas and power offering benefited from the successful integration of Budget Energy early in the financial year. Budget Energy has performed well since acquisition and continues to win new customers, leveraging its attractive renewable energy offerings.

Given its strong domestic customer focus, the US business performed well and delivered good organic volume and operating profit growth, albeit in the seasonally less significant first half of the year. In addition to the good trading performance, the business remained active from a development perspective and completed the material bolt-on acquisition of the NES Group in the north-east of the US in September 2020, as well as two small bolt-on acquisitions. The US business now has operations across 14 states in the US, up from 10 states since the initial entry into the US LPG market just over two years ago. The business in Hong Kong & Macau traded robustly and in line with expectations, notwithstanding the material impact of the Covid-19 pandemic in the region.

The business in the Benelux region traded ahead of the prior year with a strong cylinder performance offsetting reduced autogas and aerosol demand. As previously announced, DCC LPG has agreed to acquire Primagaz in the Netherlands from SHV Energy, subject to competition authority approval. In Germany, while again the domestic sector remained robust, the business was impacted by significantly reduced demand for refrigerant gases, as the lockdown restrictions curtailed the operations of industrial customers, during the first quarter in particular. In Scandinavia, the business performed well, with relatively fewer restrictions in place and most commercial and industrial customers continuing to operate as normal.

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