DCC to return €950m to shareholders after sale of healthcare division
DCC, the energy to technology distribution and services group, said it plans to return £800 million (€950 million) to shareholders after agreeing last month to sell its healthcare division.
The group also reported on Tuesday that its operating profit rose 4.9 per cent to £703.6 million in its financial year to the end of March, driven by its energy group.
It continued to prepare its technology arm for sale, by appointing a new head of its North American unit, exiting some loss-making businesses, and focusing on operational and capital efficiency.
DCC said it expects the current financial year to be one of 'good operating profit growth on a continuing basis, strategic progress and continued development activity'. Still, the operating profit in its technology division fell by 15.7 per cent to £82 million.
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'We are pleased to report that we delivered another year of good growth, while making strategic progress to simplify the group to focus on our opportunity in energy,' said chief executive Donal Murphy. 'Our sale of DCC Healthcare enables a material return of capital to shareholders. We will focus our efforts on energy, our largest and highest‐returning business. We are energised about the future."
DCC, founded in 1976 by businessman Jim Flavin as a provider of venture capital for start-ups before floating almost two decades later, revealed in November it was abandoning its conglomerate roots with a plan to sell its healthcare division and review 'strategic options' for its technology business, in order to focus on its energy unit.
The Dublin-based but London-listed company promised at the time to return cash generated by asset sales to shareholders
DCC agreed last month to sell its healthcare unit to HealthCo Investment, which is owned by funds run or advised by London-based private equity firm Investindustrial Advisors.
The planned deal is on a cash-free, debt-free basis and is subject to various regulatory approvals. It will involve a cash consideration of £945 million, with £130 million deferred for payment within two years. Leases, taxes owing and other liabilities transferring with the healthcare unit bring the total enterprise value of the transaction to £1.05 billion.
It plans to start a £100 million share buyback programme shortly and follow up with a £600 million repurchase programme once the healthcare deal is completed. A final £100 million will be paid after the deferred payment is handed over.
DCC's energy division posted a 6.5 per cent increase in operating profits last year to £535.5 million.
Most of its profits have been coming from the sale of fossil fuels, including oil and gas sold for household heating and fuel pumped through about 1,175 petrol stations across Scandinavia, France, Britain and Ireland.
However, Mr Murphy's team has invested heavily in recent years – mainly through acquisitions – in products and services to help businesses and households make the green transition. These include solar panel and heat pump installation businesses.
The company now has pumps offering low-carbon renewable diesel (hydrotreated vegetable oil, or HVO) in fuel service stations across Europe as well as an expanding network of electric vehicle (EV) charging points.
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