Acquisitions & Exceptionals
DCC PLC
18 January 2005
Acquisitions and Exceptional Costs
DCC Energy has acquired Dyneley Holdings Limited, a British fuel card business,
and DCC Healthcare has acquired Laleham Healthcare, a British based contract
manufacturer. The aggregate initial consideration for the businesses, net of
cash balances, was €19.3 million, satisfied in cash. In total the businesses are
generating annual operating profits of approximately €7 million and have
aggregate net operating assets of approximately €3 million.
Dyneley acquisition
DCC Energy has completed the acquisition of 100% of the share capital of Dyneley
Holdings Limited ('Dyneley'), a British company based in Horsforth near Leeds.
Dyneley, through its subsidiaries, Fuel Network Limited, Network Card Limited
and Fuel Card Services Limited, sells approximately 150 million litres of motor
fuels per annum via fuel cards under the BP, Esso and Texaco brands. Dyneley
markets these cards under formal agreements with the respective oil majors and
sells to more than 6,400 commercial customers throughout Britain.
Dyneley is currently generating annual operating profits of approximately €2.8
million (Stg£2 million) on sales of approximately €150 million (Stg£106
million). At 31 December 2004 Dyneley had net assets of approximately €4.3
million (Stg£3.2 million), including net cash of approximately €5.7 million
(Stg£4 million). The consideration, payable in cash, for the business was €14.7
million (Stg£10.3 million) inclusive of the cash balance. This results in a cost
of approximately €8.9 million (Stg£6.2 million) net of cash balances.
Dyneley is complementary to DCC Energy's existing businesses as there is a
significant opportunity to work in conjunction with the oil majors to market
fuel cards to DCC Energy's large customer base in the UK.
Laleham Healthcare acquisition
DCC Healthcare has completed the acquisition of 77.5% of Laleham Healthcare,
a contract manufacturer and packer of creams and other liquid products for the
health and beauty market. These activities complement DCC Nutraceuticals'
current service offering to the European nutraceuticals (vitamin and health
supplements) market which includes tablet manufacturing, hard and soft gel
encapsulation and packing. Laleham Healthcare operates from a modern,
custom-built facility in Hampshire, which is licensed by the Medicines and
Healthcare Products Regulatory Agency (MHRA).
Laleham Healthcare is currently generating operating profits of approximately
€4.3 million (Stg£3 million). DCC has acquired 77.5% of the share capital of
Laleham Healthcare for a consideration of €10.4 million (Stg£7.3 million) in
cash. The remaining 22.5% of the share capital is held by the senior management
team, all of whom are continuing with the business, and is subject to put and
call options over the next three years. The maximum further consideration is
€7.1 million (Stg£5 million).
Jim Flavin, Chief Executive/Deputy Chairman of DCC plc, said today:
'Following on from the recent acquisition of the business of Shell Direct
UK, which was completed on 1 November 2004, the acquisition of Dyneley
further strengthens DCC Energy's position as the largest independent oil
marketing and distribution business in the British market.
The acquisition of Laleham Healthcare broadens DCC Nutraceuticals' contract
service offering and creates opportunities to cross-sell products and
services.'
Exceptional restructuring and legal action costs
SerCom Solutions, DCC's supply chain management subsidiary, is currently
extending its Limerick facility. It has been decided to restructure and
consolidate kitting and assembly activities in this facility and to close the
loss-making Dublin facility.
Following the SerCom Solutions restructuring programme, the business should be
profitable and cash generative. The business will continue to implement its
strategy of providing world class supply chain management services to its
existing customers, while broadening its customer base into new sectors and
selective geographies.
DCC Energy's integration of the business of Shell Direct UK is progressing as
planned and the business is performing in line with expectations. As part of the
integration, exceptional restructuring costs will be incurred, arising in part
from an overlap of operations with DCC's Scottish Fuels business, in order to
improve the overall efficiency of the business.
DCC is incurring ongoing exceptional costs in relation to the Fyffes plc legal
action. DCC has already set out very comprehensively the confidence of the Board
in relation to the outcome of this action in a Stock Exchange Announcement on 24
January 2002 and again on 3 August 2004.
DCC is also incurring modest ongoing exceptional costs in relation to the
pursuit in Taiwan of the damages, costs and interest awarded to DCC by the High
Court in London following the successful legal action against Pihsiang Machinery
Manufacturing Company Limited, a Taiwanese public company, Donald Wu, its
Chairman and major shareholder, and Jenny Wu, his wife and Director (the
Defendants). The total amount currently owing jointly and severally by the
Defendants is Stg£13.2 million (€18.8 million). DCC has not recognised this
amount in its accounts pending its collection.
In aggregate, combined exceptional restructuring and legal action costs for the
year ending 31 March 2005 are expected to be of the order of €16 million.
For reference:
Jim Flavin, Chief Executive/Deputy Chairman - DCC plc
Re. Dyneley acquisition: Tommy Breen, Managing Director - DCC Energy
Re. Laleham acquisition: Kevin Murray, Managing Director - DCC Healthcare
Kieran Conlon, Investor Relations Manager
Tel.: +353 1 2799 400
Email: investorrelations@dcc.ie
Web: www.dcc.ie
This information is provided by RNS
The company news service from the London Stock Exchange
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