18th Jan 2005 07:00
DCC PLC18 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 contractmanufacturer. The aggregate initial consideration for the businesses, net ofcash balances, was €19.3 million, satisfied in cash. In total the businesses aregenerating annual operating profits of approximately €7 million and haveaggregate net operating assets of approximately €3 million. Dyneley acquisitionDCC Energy has completed the acquisition of 100% of the share capital of DyneleyHoldings Limited ("Dyneley"), a British company based in Horsforth near Leeds.Dyneley, through its subsidiaries, Fuel Network Limited, Network Card Limitedand Fuel Card Services Limited, sells approximately 150 million litres of motorfuels per annum via fuel cards under the BP, Esso and Texaco brands. Dyneleymarkets these cards under formal agreements with the respective oil majors andsells to more than 6,400 commercial customers throughout Britain. Dyneley is currently generating annual operating profits of approximately €2.8million (Stg£2 million) on sales of approximately €150 million (Stg£106million). At 31 December 2004 Dyneley had net assets of approximately €4.3million (Stg£3.2 million), including net cash of approximately €5.7 million(Stg£4 million). The consideration, payable in cash, for the business was €14.7million (Stg£10.3 million) inclusive of the cash balance. This results in a costof approximately €8.9 million (Stg£6.2 million) net of cash balances. Dyneley is complementary to DCC Energy's existing businesses as there is asignificant opportunity to work in conjunction with the oil majors to marketfuel cards to DCC Energy's large customer base in the UK. Laleham Healthcare acquisitionDCC 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 ofLaleham Healthcare for a consideration of €10.4 million (Stg£7.3 million) incash. The remaining 22.5% of the share capital is held by the senior managementteam, all of whom are continuing with the business, and is subject to put andcall 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 costsSerCom Solutions, DCC's supply chain management subsidiary, is currently extending its Limerick facility. It has been decided to restructure andconsolidate kitting and assembly activities in this facility and to close theloss-making Dublin facility. Following the SerCom Solutions restructuring programme, the business should beprofitable and cash generative. The business will continue to implement itsstrategy of providing world class supply chain management services to itsexisting customers, while broadening its customer base into new sectors andselective geographies. DCC Energy's integration of the business of Shell Direct UK is progressing asplanned and the business is performing in line with expectations. As part of theintegration, exceptional restructuring costs will be incurred, arising in partfrom an overlap of operations with DCC's Scottish Fuels business, in order toimprove the overall efficiency of the business. DCC is incurring ongoing exceptional costs in relation to the Fyffes plc legalaction. DCC has already set out very comprehensively the confidence of the Boardin relation to the outcome of this action in a Stock Exchange Announcement on 24January 2002 and again on 3 August 2004. DCC is also incurring modest ongoing exceptional costs in relation to thepursuit in Taiwan of the damages, costs and interest awarded to DCC by the HighCourt in London following the successful legal action against Pihsiang MachineryManufacturing Company Limited, a Taiwanese public company, Donald Wu, itsChairman and major shareholder, and Jenny Wu, his wife and Director (theDefendants). The total amount currently owing jointly and severally by theDefendants is Stg£13.2 million (€18.8 million). DCC has not recognised thisamount in its accounts pending its collection. In aggregate, combined exceptional restructuring and legal action costs for theyear ending 31 March 2005 are expected to be of the order of €16 million. For reference:Jim Flavin, Chief Executive/Deputy Chairman - DCC plcRe. Dyneley acquisition: Tommy Breen, Managing Director - DCC EnergyRe. Laleham acquisition: Kevin Murray, Managing Director - DCC HealthcareKieran Conlon, Investor Relations Manager Tel.: +353 1 2799 400Email: investorrelations@dcc.ieWeb: www.dcc.ie This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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