strategy in action dcc lpg east and west geographic expansion in dcc...

32 DCC plc Annual Report and Accounts 2018

Strategic Report

East and west geographic expansion in DCC LPG

Strategy in ActionDCC LPG

Strategic linkageDCC LPG's vision is to be a global leader in the sales, marketing and distribution of LPG, natural gas and electricity and related products and services.

The Retail West acquisition gives DCC LPG a material footprint in the US and a substantial base for further development in one of the world’s largest LPG markets.

The DSG business is ideally positioned in Hong Kong and Macau to expand and develop the business locally but also to provide a platform for longer term growth in the growing and maturing Australasia LPG market.

Market leading positions

Extend our geographic footprint

Read more: Strategy on pages 2 and 3

What we did in 2018

Retail WestDCC LPG made its entry in to the very large, fragmented and growing US LPG market through the acquisition of Hicksgas LLC (the Retail West LPG division) from NGL Energy Partners with effect from 31 March 2018.

The business, headquartered in Illinois, has been in existence for over 70 years, employs 390 people and trades under three key regional brands, Hicksgas, Pacer Propane and Propane Central. There is a well-invested asset base supporting the business, comprising a fleet of 150 company owned vehicles, c.100 bulk storage facilities and company ownership of the majority of tanks on customer premises.

Annual sales of c.130,000 tonnes of LPG are made to over 65,000 customers from 43 customer service locations and 58 satellite facilities. The business holds market leading positions in Illinois, Indiana and Kansas and has further operations in seven other states across the Mid-West and North-West regions.

The experienced management team, including the President and COO, Shawn Coady, have all been retained and ensures the business is very well placed to continue its track record of profitable organic growth and to provide a base for further synergistic acquisitions.

Shell Hong Kong and MacauIn January 2018, DCC LPG completed the acquisition of Shell’s Hong Kong and Macau LPG business, which will operate under a long-term brand licence agreement with Shell as 'DSG Energy Limited' to distribute c.75,000 tonnes annually of branded LPG.

The business is the market leader in Hong Kong in supplying piped LPG to over 100,000 households based in very large apartment complexes under long-term supply agreements, has a number three position in the cylinder market and supplies autogas on Shell’s retail network. It also has a market leadership position in the smaller Macau market.

A new headquarters has been established in Kowloon with some key individuals, including the new Managing Director, Samson Lam, transferring from Shell. A significant recruitment and training program has been completed to establish new sales, finance and administration teams to ensure a smooth transition. The business now employs 47 people and has traded strongly since go-live with no disruption to our customers.

33DCC plc Annual Report and Accounts 2018

Supplementary InfoFinancial StatementsGovernanceStrategic Report


Strategic Report

Strategy in ActionDCC Retail & Oil

Tokenisation of bankcards on our French network

The need for paper receipts at our Esso branded service stations in France has been all but removed by making digital receipts available via a web portal or email. The innovative Cardivation technology, developed internally by the Retail & Oil division, saves the business money and enhances the customer experience.

When a customer fills up and pays with a bankcard at a Cardivation activated terminal, a digital copy of their receipt is automatically and anonymously stored ('tokenised').

Through the Club Certas web portal (www.club-certas.com), customers can elect to have receipts automatically sent directly to their phone or computer or they can download specific receipts, making it easy for drivers on business to track travel expenses and reclaim VAT.

For the first time we have a complete picture of how our different customer types are behaving across the network and all data complies fully with the new General Data Protection Regulation (GDPR).

Cardivation also makes it possible for Certas to cost-effectively personalise loyalty rewards.

The Cardivation web portal for digital receipts has enhanced the customer experience and improved operational efficiency in Certas France. The multi-lingual system is fully proven and scalable and there are plans to expand it to Certas service station networks in other countries as well as to external customers as a revenue-generating product.

Strategic linkageThe connection we have created with the customer using a state of the art, internally developed technology, further enhances the customer experience, increasing customer loyalty and thus fuelling organic growth.


Operating efficiency


What we did in 2018


Strategic Report

DCC Healthcare’s first acquisition in the US

Strategy in ActionDCC Healthcare

DCC Health & Beauty Solutions (DCC H&BS) has a strong track record of organic growth and bolt on acquisitions in the European market. Over the last several years DCC H&BS has built an excellent profile with health & beauty brand owners in the European market, other contract manufacturers and acquisition intermediaries. We have ambitious plans to continue our growth record in Europe both organically and by acquisition.

More recently, DCC identified a strengthening deal flow in the US health & beauty contract manufacturing ('CMO') sector with an increasing number of good quality businesses transacting. The US nutritional market has a retail value of c.$40 billion, approximately five times the size of the of the equivalent market in Europe due to higher levels of consumer penetration. The same strong market growth rates being experienced in Europe also prevail in the US market and are projected to continue. The market scale, high levels of innovation and fragmentation of the US contract manufacturing base are attractive to us.

These favourable market dynamics led us to invest time and resources proactively evaluating the US market as a potential growth platform for DCC H&BS with a focus initially on the nutritional sector. With the support of a local market expert, we undertook a market landscaping exercise to build our understanding of local trends and dynamics and to identify a long list of potential acquisition targets.

This evaluation resulted in a strategy to seek to build a group of health & beauty CMO businesses in the US operating in a similar manner to our existing European business i.e. individual facilities with their own specialist focus areas (product or technology)and their own strong local management teams accountable for driving growth at an individual facility level. This would be supported by a small central team focused on oversight and governance, driving cross selling, best practice and other synergies and business development.

Over the last two years, we have spent time building relationships in the US nutritional CMO market, attending industry events and building DCC’s profile as a credible acquirer. One of the businesses that we identified as part of our initial research was Elite One Source Nutritional Services ('Elite'). DCC made a direct approach to the shareholders of Elite and during autumn 2017 entered into detailed discussions which culminated in the acquisition of Elite in January 2018.

Strategic linkageThe acquisition of Elite provides DCC with an entry into the US nutritional CMO market. Elite has a specialist focus on complex formulation nutritional products in tablet and capsule formats and is led by a strong management team. This is the first stepping stone in building a larger DCC H&BS business in the US.


Extend our geographic footprint


What we did in 2018


Strategic Report

Expansion of the Exertis service offering

Strategy in ActionDCC Technology

What we did in 2018

In July 2018, DCC Technology acquired MTR, a fast growing UK based provider of second lifecycle solutions for mobile and tablet devices, primarily to the insurance market.

Based in Harlow, Essex, MTR partners with retailers, mobile handset manufacturers and insurance companies to source and refurbish mobile phones and tablets for resale to customers in the UK and abroad. Employing 60 people at the date of acquisition, the business has grown to 77 employees on the back of significant growth in demand for solutions from key vendor partners.

Since completion, DCC Technology has successfully marketed the MTR service offering to a number of UK retail customers, allowing them to create further efficiencies in elements of their reverse logistics processes.

DCC Technology is now investigating methods of replicating the MTR processes and systems across other Exertis locations, allowing the service offering to be rolled out to customers outside the UK. The first step in this development is in Ireland, where we have acquired premises and are beginning the roll out of the IT system.

Strategic linkageDCC Technology has a leading position in the UK & Ireland market for IT distribution, with a strong presence in mobile distribution. Increasingly, our vendor and customer partners are seeking a variety of value added services from distributors. The acquisition of MTR develops this service offering to both customers and suppliers which will, in turn, help to strengthen our market leading position, in particular with solutions for network operators.




Strategic Report

Strategy in ActionPeople Development

I joined the Qstar business, an unmanned retail station chain in Sweden, in 1998 where I built a strong knowledge of the business through holding a number of roles across different functions, including sales, marketing and business development. When Qstar joined the DCC Group in 2014, I transitioned to the Managing Director role and since then, having had prior experience of the bulk industry, I was promoted to become Managing Director of another DCC business, Swea, which distributes bulk fuel to domestic, commercial and industrial customers in Sweden.

Being part of DCC has expedited the growth not only of the Qstar and Swea businesses but it has also offered personal development opportunities. I have been afforded the opportunity to move into a larger role but have remained part of the Qstar business which I am very committed to and proud of. Qstar and Swea have very different business models, being retail and bulk businesses respectively, and this has given my new role a greater breadth of exposure.

DCC has supported me in the transition to this larger leadership role through their Leadership Development programme and the network of support that comes with being part of the DCC Group. I have built strong relationships through DCC and have leveraged other senior leaders’ expertise from all across the European market.

DCC’s culture balances a strong focus on drive for results together with our values of safety, integrity, partnership and excellence. This, when combined with the autonomy DCC gives its leaders to drive and operate their own businesses, results in strong and open relationships. The sense of ownership and autonomy I have to drive results, with the support of DCC behind me, is something unique.

I joined DCC’s Group Internal Audit function in 2013. That role provided me with exposure to many of DCC’s businesses and I gained insights into each of the DCC divisions, whilst establishing relationships with senior management across the Group.

DCC has a track record of accelerating the development of Group Internal Audit personnel through international assignments and promotions into Group, divisional and subsidiary roles.

My first international assignment was as a Finance Manager, based in Paris and working in the LPG and Technology divisions, where I was involved in various operational and developmental projects, involving both local senior management and divisional management. This included working on the overall integration of these businesses.

When DCC completed the acquisition of Shell’s LPG business in Hong Kong and Macau, now renamed DSG Energy, I was offered a secondment where my role is to assist with the integration of the business into the Group. Having worked on many integration projects within DCC businesses, I have been able to share my knowledge and experience with the DSG Energy management team.

It is an exciting time to be part of DCC as the Group continues to grow in its existing markets as well as entering new markets in the US and Asia. DCC offers invaluable opportunities to develop your skills and experience as well as the global mind-set and the cross cultural competence needed to operate on an international basis.

Maria HaddManaging Director, Qstar and Swea

Finance Manager, DSG Energy

Paul Mallon

strategy in action dcc lpg east and west geographic expansion in dcc...

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