DCC Energy is the leading oil and liquefied petroleum gas (LPG), sales, marketing and distribution business in Britain and Ireland. DCC sold 5.3 billion litres of product to c.600,000 domestic, commercial, industrial and agricultural customers from its extensive network of 230 depots throughout Britain and Ireland.

 

DCC Energy currently employs 2,960 people.

			Change on prior year
	2009	2008	Reported	Constant Currency
Revenue	€4,130.8m	€3,420.0m	+20.8%	+39.9%
Operating profit	€100.7m	€74.3m	+35.5%	+59.3%

Business and Markets
Oil
DCC Energy’s oil distribution business supplies heating oils, transport fuels and fuel oils to domestic, commercial, agricultural and industrial customers in Britain and Ireland. DCC is the largest distributor in Britain, selling c. 4 billion litres of product per annum, which gives DCC approximately 12% of the market*. DCC has been a consolidator of the highly fragmented oil distribution market in Britain, having first entered the market in 2001 with the acquisition of BP’s oil distribution business in Scotland. DCC significantly increased the scale of its oil distribution business through the acquisition of Chevron’s UK oil distributor business in September 2008. The Chevron business has now been fully integrated into DCC’s existing oil distribution business in Britain. DCC Energy sells oil under a portfolio of strong brands including Carlton Fuels, CPL Petroleum, Shell and Texaco.

 

In Northern Ireland, DCC Energy is the largest oil distributor, with a market share of approximately 20%, while in the Republic of Ireland, DCC Energy has approximately 6% of the market.

DCC Energy announced on 19 May 2009 that it has reached conditional agreement with Shell Denmark to acquire the trade, assets and goodwill of Shell’s oil distribution business in Denmark, which distributes heating oils and transport fuels to domestic and small commercial and industrial customers throughout Denmark.

 

LPG
DCC Energy is the second largest LPG sales, marketing and distribution business in Britain and Ireland. The LPG business supplies propane and butane in bulk and in cylinders to domestic, commercial, agricultural and industrial customers for heating, cooking, transport and industrial processes. Trading under the Flogas brand, DCC has approximately 20% of the market in Britain and 37% of the market in Ireland. Unlike the oil market, which remains highly fragmented, the LPG market in both Britain and Ireland is relatively consolidated. The LPG business also distributes a range of LPG fuel appliances such as mobile heaters, barbecues and patio heaters.

 

Fuel Cards
DCC Energy is one of the leading sales and marketing businesses for branded fuel cards in Britain. The business now sells in excess of 500 million litres of motor fuel annually via its portfolio of fuel cards under the BP, Esso, Shell, Texaco, Diesel Direct and ReD brands. Fuel cards have become an essential tool for commercial organisations to manage their transport fuel costs. DCC Energy provides its customers with access to the breadth of the UK retail petrol station and bunker networks through its portfolio of branded fuel cards and with detailed information on their fuel utilisation to enable them to minimise their spend on transport fuels.

 

DCC Energy purchases its oil and LPG from the major oil companies with which it has established excellent long standing relationships. DCC Energy’s supply strategy is to maintain a portfolio approach to sourcing of its oil and LPG products. DCC’s significant financial strength enables DCC Energy to obtain more favourable credit terms to manage its working capital.

Performance Management - key performance indicators	2009	2008
Volumes	5.3bn litres	4.3bn litres
Organic volume growth	-2.8%	6.2%
Operating profit per litre	1.90 cent	1.75 cent
Operating cash flow	€200.7m	-€1.5m
Working capital	1.5 days	8.0 days
ROCE incl. intangible assets	24.9%	20.6%
ROCE excl. intangible assets	63.7%	45.8%
10 year CAGR	18.7%	18.9%

 

Performance for the Year Ended 31 March 2009
DCC Energy achieved exceptionally strong constant currency operating profit growth of 59.3% in the year, of which approximately two thirds was organic. Each of the division’s businesses generated excellent operating profit growth. The overall result benefited from the successful integration of a number of acquisitions, a more favourable product cost environment than in recent years and a particularly cold winter. The temperatures during the key weather dependent months of April and from October through March were below the 30 year average and significantly colder than the prior year.

 

DCC Energy sold 5.3 billion litres of product, an increase of 24.9% on the prior year, further strengthening its position as the leading oil and LPG distribution business in Britain and Ireland. Organic volumes declined by 2.8% due to both the weaker economic environment and management taking a more prudent approach towards the extension of credit.

 

The oil business in Britain benefited from continued operating cost efficiencies derived from the growth of its extensive infrastructure. The Chevron UK oil distributor business, acquired during the year, performed well ahead of expectations. The Irish oil business was impacted by the particularly weak economic environment and action is being taken to significantly reduce the cost base of this business.

 

The LPG distribution business in Britain and Ireland generated good sales volume growth as it benefited from the colder weather conditions and the more favourable product cost environment.

 

The Fuel Card business had an excellent year driven by strong organic growth and the first time contribution from the Cooke Fuel Cards business, which performed in line with expectations.

 

Strategy and Development
DCC Energy’s strategy is to continue to grow and develop its business both organically and through acquisition in each of the sectors in which it operates.

 

In oil distribution, DCC’s strategy is to achieve a 20% share of the British market. DCC Energy will continue to leverage its extensive nationwide operational infrastructure to drive high levels of organic growth with a particular focus on the non heating dependent segments of the market and on national accounts. DCC Energy is also focused on cross-selling add-on products and services such as lubricants and boiler maintenance services to its extensive customer base.

 

In the LPG market, DCC Energy will continue to leverage its strong market positions to drive organic growth on a sector by sector basis in both Britain and Ireland.

 

In fuel cards, DCC will continue to target high levels of organic growth through its extensive portfolio of branded fuel cards by investing in new telesales teams and cross selling fuel cards to its extensive oil distribution customer base. DCC Energy will continue to position itself as the partner of choice for all the providers of branded fuel cards in both the retail and bunker card networks.

 

Having established strong market positions in both Britain and Ireland, DCC Energy is seeking to extend its business into continental Europe. The acquisition of Shell’s oil distribution business in Denmark, while modest, is an important step in this strategic development.

 

Outlook
After an exceptionally strong performance in the year to 31 March 2009, DCC Energy currently expects operating profit, on a constant currency basis, to be broadly in line with the prior year, as it is anticipated that the weather pattern and the product cost environment will not be as favourable.

 

 

 

* The market is defined as fuels sold to the domestic, commercial, agriculture, industrial and haulage sectors of the transport fuels market (i.e. excluding the retail petrol station market).