DCC plc

Hello everyone, and thank you for joining us today for the DC Interim presentation for the six months ended 30th September 2025. My name is Sammy and I'll be coordinating the call today. During the presentation, you can register a question by pressing star followed by one on your telephone keypad. If you change your mind, please press star followed by two on your telephone keypad to remove yourself from the question queue. Now hello to your host, Donald Murphy, Chief Executive of DCC to begin. Please go ahead, Donald.

Good morning and welcome to DCC's interim results presentation for the six-month end of 30 September 2025. Thank you all for joining us this morning on our webcast. I'm joined today by our Group CFO, Conor Murphy. Here's our standard disclaimer. Thankfully, I don't have to read it out. So this morning, I will outline the significant strategic progress we have made to build DCC into a simpler, stronger, and more focused business since announcing our change in strategy this time last year. Conor will give you an update on the trading performance in the first half of the year. And we'll finish with our outlook statement and a summary before we open up the session for your questions. So let's get started with an overview of the significant strategic progress we have made over the last 12 months. On the 12th of November 2024, we announced a strategic plan to maximise shareholder value by focusing solely on our compelling opportunity in our energy business and simplifying the group's operations through portfolio actions. Over the last 12 months, we have made very significant progress to simplify the group, with the majority of the planned changes now complete. More on this shortly. We announced in May that we intended to return up to £800 million of the proceeds from the sale of DCC Healthcare to shareholders. We completed the initial on-market buyback of £100 million in September, and we will shortly commence a tender offer for £600 million of our equity. On the 21st of October, we announced that we had acquired two liquid gas businesses in Europe, a priority development area for the group. And last, we have to perform while transforming the group. I am pleased that our trading performance improved through the first half of the year after a difficult start in a challenging environment and that we are maintaining our guidance for the year as a whole. So let's look in a little bit more detail on our strategic progress over the past 12 months. The plan we announced last November to maximise shareholder value had three actions. Firstly, we said the group will now focus solely on our most compelling growth opportunity, our energy business. Secondly, we launched a process to sell DCC Healthcare. Thirdly, we said that within the next 18 to 24 months, we would review our strategic options for DCC technology. We have made significant progress since last November. In September, we completed the sale of DCC Healthcare. In May, we commenced an initial £100 million share buyback programme, which we completed in September. We will shortly commence a tender offer, returning a further £600 million of the proceeds to shareholders. On 14 July, we announced that we had reached agreement for the sale of DCC's Infotech business in the UK and Ireland to Aurelius, a globally active private equity investor. The business had revenues of approximately £2 billion and represented approximately 1% of DCC's continuing profits in FY25. We announced on November 3 that the sale completed. While the cash proceeds to DCC are not material, the business was responsible for about half of our entry-year working capital swing for the group. It was also the only business within the group availing of supply chain financing. The removal of both factors further strengthens DCC's financial position. The final component of DCC's infotech activities is a very small and unprofitable business in the Netherlands, which we will exit in the second half of the year. we have commenced the proprietary work for the sale of the remaining part of DCC Technology. This business is a global leader in the sales, marketing and distribution of specialist Pro AV, Pro Audio and related products and services. It is predominantly based in North America. We are on schedule with the integration plan we outlined last November. It is our intention to have reached agreement for the sale of our specialist technology business by the end of calendar 2026. To set DCC up for growth as a single sector energy business, we have made a number of leadership changes, both at executive director level and at management team level. The new DCC leadership team is fully in place. has extensive experience in the energy sector and the commercial agility and drive to build DCC into a global energy leader. DCC is a unique energy business, providing multi-energy solutions to our customers for five decades. We operate across solutions, energy products and energy services, and mobility. we have built a strong capability in engineering-led, decentralized energy solutions, particularly in our liquid gas business. Our ambition is to be a global leader in the sales, marketing and distribution of energy products and services, delivering high growth and high returns for our shareholders. We have scalable growth opportunities across our sectors, particularly in liquid gas and energy services. Our strategy is to grow our customer base by being the provider of choice for secure, competitive and cleaner energy products and to sell more services to our energy customers, driving higher organic growth rates. How do we win? We leverage our strong market positions, being typically number one or number two in most of our markets and with our deeply embedded customer relationships. Our aim is to be the best customer company in the energy sector. We are strong operators in the energy sector and have significant experience in consolidating fragmented energy markets. By delivering our strategy, we will drive organic growth of 3-4% and acquisition growth of 6-8% on average per annum to achieve our ambition of delivering double-digit growth in earnings. We aim to turn approximately 90% of our profits into cash and always to deliver returns on capital employed in the high teens. Looking ahead, demand for secure, cleaner, competitive energy is stronger than ever. Our commitment to carbon reduction is clear. we will continue to provide innovative offers to support our customers with the multi-energy solution capability we have built over the last five years in biofuels and energy services. Emissions reduction will be an output rather than a driver of our strategy. We still believe that energy systems are going to decentralise and move closer to the customer. That is where we win, through our closeness to our customers, meeting them where they are at. Now, to focus on the large capital return to shareholders. The sale of DCC Healthcare enabled us to return 800 million of capital to shareholders. As I mentioned earlier, the process began in May with an on-market share buyback programme of 100 million pounds. Following the completion of the sale of DCC Healthcare on September 9th, we announced our intention to return £600 million to shareholders shortly after these half-year results via tender offer. The final £100 million return will take place after the receipt of the unconditional deferred consideration within the next 24 months. The tender offer will commence shortly and will be completed by the end of calendar 2025. The strength of DCC's balance sheet and the cash-generative nature of our business provide significant capital for growth to deliver on our 2030 vision. In May, we outlined the exciting growth opportunities we have across our energy activities. In energy products, we have an opportunity to scale our liquid gas business in many remaining fragmented markets in Europe and in the US. This opportunity in liquid gas is a key part of our plan to reach £830 million of operating profit by 2030, double our 2022 total. DCC has been in the liquid gas business since 1977. We've built leadership positions in six countries and established growth platforms in a further three markets. Overall, BCC is just 5% share of our total addressable market in Europe and the US. Yet in the markets where we already operate in Europe, we have built approximately 30% market share. In these consolidated European markets, our leadership positions drive higher returns. We drive higher returns by, for example, leveraging network effects, better routing and scheduling of our fleet, and optimizing the depot infrastructure, reducing the cost to serve our customers, and indeed, the cost to acquire new customers. We are strong operators, so we often have opportunities to optimize margin management and drive synergies through procurement. We have a very loyal customer base with low churn rates, These relationships typically last more than 10 years. The infrastructure we install on our customer sites makes it costly for them to move to another supplier or energy type. Liquid gas is seen as a transition fuel in Europe. With its lower carbon characteristics, we are attracting new customers from other higher carbon energy sources who want to reduce their emissions. We have significant opportunities to scale our business by expanding into new fragmented markets and by further consolidating in our existing markets. This is a core competence of DCC. On the 21st of October, we announced that we have agreed to acquire Flaga in Austria and a cylinder business in the UK, both from UGI International. Flaga, founded in 1947, serves over 15,000 customers from its nationwide network in Austria across both bulk liquid gas, where average customer lifetime is more than 15 years, and via a significant cylinder business. The acquisition extends DCC's leadership position in the Austrian energy market, where we already have a leading liquid fuels business and a growing presence in energy services. In the UK, the acquisition of the UGI cylinder business is highly synergistic and further strengthens our liquid gas cylinder proposition in the market. I'll now hand you over to Conor, who will take you through the performance for the first six months of FY26. Conor.

Thanks, Donal, and good morning, everyone. This is my first results presentation since sitting into the CFO seat. I'm really excited to be here, and I'm focused on making sure that we continue to get our messages across in a simple and clear term, particularly as we transition the group to a single sector energy business. As Donal talked through, it has been probably the most significant six months of strategic progress that we have ever had in the group. In contrast, the six months to September is the seasonally less significant part of the year from a fund trading perspective, with the first half representing approximately one third of our expected full year operating profits. Before I start, by way of reminder, the results from our former healthcare business and infotech business in UK and Ireland are now classified as discontinued. What we have set out in this presentation comprises our continuing operations, which is our energy business and the remaining part of DCC technology. Prior year comparatives have been restated accordingly. In the six months to September 2025, our revenue is down from £7.9 billion to £7.4 billion on a continuing basis. I will go through the details of the declines when talking through energy and technology. At a high level, the main drivers were the fact that volumes were down in energy and that commodity pricing is also significantly lower year on year by approximately 15%, which impacts our revenues but is not reflective of our underlying trading. Operating profit is down 5.4% on a reported basis and 5.3% on a constant currency organic basis. Again, I'll talk through the detail in a moment when walking through energy and technology. Our adjusted EPS is down 4.2%, which is lower than the decline in operating profit as a result of the lower finance costs in the first half. The lower finance costs are a result of lower interest rates generally, but also the lower average net debt that we had in the group over the six months. We are declaring a 5% increase in our interim dividend. The Board is conscious of the importance of our dividend to our shareholders, and the increase represents the confidence that we have in the business as we enter the seasonally more material second half of the financial year. Finally, our net debt at the end of September was just £522 million, reflecting the proceeds from the disposal of healthcare, as mentioned earlier. On a pro forma basis, this will be £600 million higher once we complete the capital return by way of tender offer, which is expected to complete by the end of the calendar year. I won't delay on this divisional results slide. It sets out the split of our operating profit between energy, which now accounts for 84% of the operating profit in the first half, and technology, which accounted for 16%. Given the weighting of energy to the second half of the year, we expect that the full year weighting will be more like 88% energy and 12% technology. Focusing on our energy results for the six months ended 30 September 2025. In the full year results presentation in May, we presented energy in a more intuitive way and in the way that it is managed commercially. We split energy between our solutions business, which itself splits between energy products and energy services, and then our mobility business. Overall, DCC operating profit was 5.2% behind the prior year and 5.9% on a constant currency basis. In our trading statement in July, we highlighted that the first quarter was in line with our expectations, although behind the prior year. We knew that the business had a tough set of comparative numbers in the first half of the prior year and particularly in the first quarter. It has been good to see that energy was slightly ahead of the prior year in the second quarter. Solutions operating profit declined by 10%, driven by energy products, while mobility operating profit increased by 2.8%. I will now take each of these in turn. In solutions, our energy products business accounted for 50% of profits in the first half, though it is a larger proportion of our profitability in the full year. Energy products encompasses our liquid gas, liquid fuels, on-grid gas and power businesses. Energy products volumes were 4.9% lower in the first half, and operating profit was down by 12.8%. There were three main drivers of the decline. Firstly, our businesses experienced warm weather in the early part of the first quarter in France, UK, Ireland and North America. This impacted on the volume demand in each of these markets, and while we maintained our market shares, profitability declined. Secondly, we disposed of our Hong Kong and Macau business in the prior year, The removal of that business impacted both volumes and profitability, accounting for four percentage points of the decline in the energy products business. Thirdly, we are seeing the impact on demand of a number of software economies, particularly impacting commercial and industrial volumes. To give a little more colour on this, continental Europe was primarily impacted by warmer weather, mainly in France. The decline that we experienced in the UK and Ireland was driven by our natural gas and power business in Ireland after a very strong performance in the prior year, a significant factor in the tough comparatives that we faced overall. Performance in our liquid gas business in the Nordics was a little difficult, however, with lower demand from commercial and industrial customers. Finally, in energy products, our US-based business performed ahead of the prior year, despite warmer weather. We've had a number of cost initiatives in the business, driving better margins and operational efficiencies. The smaller part of solutions is our energy services business, which grew its operating profit by 8.5%. The largest and most mature part of our business in energy services is our business based in France, and it again grew very strongly during the period, continuing to increase revenues and profits while making good progress in integrating acquisitions completed in the prior year. Although the market backdrop in Germany was difficult, our business there achieved good growth. Our energy service businesses in the UK experienced difficult market conditions, with the poor economy impacting on the willingness of commercial customers to invest. Our business in Ireland has continued to perform well. Our mobility business grew its operating profit by 2.8%, which was mostly organic. Volumes were behind the same period a year ago, as we proactively manage margins across each of the regions in which we operate. The continuing trend towards electrification also impacts volumes, though this of course benefits our non-fuel revenues and margins. We stepped away from a number of lower margin, higher volume contracts, in particular in Nordics and the UK, giving the business a sharper focus. In addition to the fuels which we provide at our stations, we offer a range of non-fuel offerings at our service stations, including EV charging, car wash and convenience retail in a select number of sites. In a six-month period, we develop these across our markets and in France and Luxembourg in particular. The larger part of our non-fuel services encompasses fleet services across fuel cards, telematics and digital truck offerings. We delivered strong organic growth across all of these areas, complemented by a modest contribution from acquisitions. Our non-fuel gross profit grew by 3.5% year-on-year as we expanded our customer offerings. In our full year results presentation, we set out this important slide, but we didn't dwell too much on it in May. I'm going to spend a little more time on it today as it provides much more granular detail on our energy business and is helpful in telling the story of the first half. Firstly, to highlight the split of profits between solutions and mobility. In the full year, this was a 77% weighting of profits to solutions and 23% to mobility. It skews quite significantly towards mobility in the first half, which represented 41% of our operating profits. There's a lot more on-road driving done during the summer months across all the markets in which we operate retail networks. And conversely, our energy products businesses are comparatively quiet in the summer months, given the commercial and residential weighting in those businesses, although energy demand does tend to be higher. I highlighted that our energy products volumes were 4.9% behind in the first half, and I've talked about the main drivers of this decline. We set out in the table both the gross margin at a total level and on a pence per litre basis. The pence per litre decline is really a functional mix resulting from the shape of the volume decline. Firstly, the volumes lost from the disposal of the Hong Kong and Macau business were at relatively high margins, and the warmer weather reduced domestic demand, thereby resulting in a lower pence per litre margin. Overheads are down in excess of the volume decline, however the mix impact results in operating profits declining by 12.8%. In energy services, it was pleasing to see the revenues continue to grow 14.3% ahead of the prior year and growth profit further ahead, achieving 16.3% growth. Operating profit grew by 8.5%, although being lower than growth profit growth. We've continued to invest in the businesses which we've acquired, particularly those that were owner managed, and we've invested to upgrade their infrastructure and management capabilities into the PLC environment. Finally, in mobility, similar to energy products, we experienced a 4.6% decline in volumes. We increased fuel gross margin per litre from 6.2 pence per litre to 6.6 pence per litre, highlighting the resilience of the mobility business model and our proactive margin management. This drove our fuel gross profit up by 2.3% year on year. At the same time, non-fuel gross profit decreased by 3.5%, increased by 3.5%, which demonstrates the focus which we've had on developing and investing in this area of the business. All of this drove 2.8% growth in our operating profit. Moving on to DCC technology. Revenues in DCC technology declined by 2.7% in the first half of the year. And with a slight reduction in gross profit, this resulted in operating profit declining by 6.9%, which is a 2% decline on a constant currency basis, given the weighting to US dollar profits that we have in our business. In our North American business, the pro specialist product business performed well, increasing our market share where we are the market leader. Our lifestyle and consumer-focused product segment experienced weaker consumer demand and some stock availability issues impacting the performance of the business in certain categories. As you can imagine, this sector has been more difficult with tariffs leading to uncertainties and consumers somewhat reluctant to spend. The first quarter was the stronger quarter for the business as customers looked to pull forward stock orders in advance of the impact of tariffs. Understandably, this led to a slower second quarter as customers worked through this stock and as the impact of tariffs became clearer. Our smaller European business delivered growth, particularly in the Nordic region. As we announced on the 3rd of November, we've completed the disposal of DCC Technologies Infotech business in the UK and Ireland to Aurelius. We continue to prepare the remaining DCC Technology businesses for sale next year, and we've made good progress in the integration and operational efficiency program in North America. Our capital allocation framework. We had set out this framework at the time of our results presentation in May of this year. Given the strategic progress that we've made over the last six months, I think it's important to reiterate this framework, to recommit to it, and to put the progress that we have made in the context of this framework. We've allocated over £70 million to capital expenditure, continuing to invest in our businesses and their organic development. The vast majority of this investment has been in energy. We are declaring a 5% increase in our interim dividend, underlining the strength of the business and our confidence in it. We've committed approximately £60 million to acquisitions over the period, including most recently the acquisition of two liquid gas businesses in both Britain and Austria. Finally, we have returned £100 million to shareholders by means of the on-market share buyback and will shortly be launching a £600 million capital return by way of tender offer, all following on from the completion of the disposal of DC Healthcare. And we've done all this while maintaining our strong balance sheet, which we remain committed to, and recently we have had our investment grade rating reaffirmed by credit rating agencies. With that, I'd like to hand back to Donal for a summary.