InterBulk Group plc
("InterBulk")
Preliminary Results for the year ended 30 September 2008
InterBulk Group plc, a leading provider of global logistics solutions for the
movement of dry and liquid bulk materials, announces its preliminary results
for the year ended 30 September 2008.
Key Points - Financial
2008 2007 Change
£'000 £'000
Revenue 250,167 162,129 +54%
Gross profit 37,065 22,727 +63%
EBITDA 23,301 13,609 +71%
(before exceptional items)
Operating profit 15,105 8,396 +80%
(before exceptional items and
amortisation)
Profit before tax 4,605 1,562 +195%
(before exceptional items)
Profit/(loss) before tax 719 (4)
* Turnover growth of £89.0m to £250.2m, an increase of 54% against 2007, and
£26.1m (12%) on a pro-forma basis
* Operating profit (before goodwill amortisation and exceptional items)
growth of £6.7m to £15.1m, an increase of 80% against 2007, and £3.1m (26%)
on a pro-forma basis
* EBITDA (before exceptional items) growth of £9.7m to £23.3m, an increase of
71% against 2007, and £3.3m (17%) on a pro-forma basis
The prior year group results only include the results of the UBC acquisition
from 10 April 2007. In the 2007 financial statements we disclosed pro forma
figures for the year to 30 September 2007 based on including the full year of
UBC.
Key Points - Operational
* Improved customer service and increased InterBulk brand recognition
* Liquid Bulk: Excellent performance in the year in a volatile market with
fleet growth and higher utilisation
* Dry Bulk: Significant improvement in margin performance
* Geographic expansion with offices opened in Russia and China
* Two business development initiatives during 2008, namely ISO-veyors and
flexi-tanks expected to break even during the 2009 financial year
* Lower volumes in November 2008 were, we believe caused by onset of
de-stocking in our customers' value chain, especially in Dry Bulk Polymer
business
* David Rolph appointed as Non-Exec Chairman, and Bill Thomson stepping down
as Executive Chairman to focus on growing InterBulk's business in China
Bill Thomson, outgoing Chairman of Interbulk, commented:
"We achieved significant progress in the year with £3.1m growth in operating
profit (before goodwill amortisation and exceptional items) on a pro-forma
basis. We have implemented a number of measures over the last 12 months in
terms of both operational diversity and expanding our geographical footprint
that, coupled with our stable financial position, we hope will hold the Company
in good stead for the challenging times ahead. Like many other companies,
InterBulk is currently experiencing challenging trading conditions which we
expect to continue throughout 2009.
The Board has confidence in our strategic position and believes that the
quality and strength of our business model will enable us to benefit as the
general economic position improves. "
For further information, please contact:
InterBulk Group plc Tel: 01355 575 000
Bill Thomson, outgoing Chairman
Koert van Wissen, CEO
Scott Cunningham, Finance Director
Dowgate Capital Advisers (NOMAD) Tel: 020 7492 4777
James Caithie
Arden Partners Tel: 020 7398 1600
Chris Hardie
Buchanan Communications Tel: 020 7466 5000
Charles Ryland, Jeremy Garcia, Ben Romney
Chairman's Statement
I am pleased to present the results of InterBulk Group for the year ended 30
September 2008 and am able to report that InterBulk has made significant
progress. Revenue has increased by 12% and operating profit (before
amortisation and exceptional items) by 25% compared to pro-forma prior year.
We primarily serve the chemical and plastics industries and the global economic
problems have affected us, with a reduction in physical movement which was
particularly pronounced in plastics as we approached our year end.
Nevertheless, we were able to increase volumes year on year in Liquid Bulk due
to our geographic and product diversity, which helped offset a decline in Dry
Bulk. Significant improvements in operational performance and customer service
have had a beneficial impact on our financial results.
We have created a Group with a clear strategy for growth and with a robust
business model. We have completed the majority of the reorganisation of our
management structure and this has supported the improvement in quality of our
operational performance. The portfolio of growth opportunities across our
business remains strong.
On a separate issue, I will be stepping down as Chairman from 16 December 2008
and I am pleased to announce that David Rolph has agreed to join the Board as
Non-Executive Chairman. David brings a wealth of experience from operating at
the highest level in the chemical sector, having previously been a board
director with Borealis Group and European Vinyls Corporation (EVC).
The last three years for InterBulk have been very exciting as we strived to
create a global business with a market leading position ensuring a strong
platform for future growth. I will remain a director of InterBulk and will
focus more time and energy on developing our business in China. We have
assembled a strong team of people and I would like to take this opportunity to
thank each and every employee for their contribution to the Group.
Financial Highlights
Consolidated Exceptional Intangible 2008 2007 2007
Income Items Amortisation Adjusted (pre Adjusted (pre Pro-forma
Statement exceptional exceptional
items and items and
amortisation) amortisation)
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 250,167 - - 250,167 162,129 224,100
Gross 37,065 - - 37,065 22,727
margin
Operating 14,301 (441) (363) 15,105 8,396 12,000
profit
Profit 831 (2,759) - 3,590 1,375
after tax
EBITDA 23,301 13,609 20,000
Net debt 104,244 96,216
* Revenue growth of £89.0m to £250.2m an increase of 54%; £26.1m (12%) on a
pro-forma basis
* Operating profit (before goodwill amortisation and exceptional items)
growth of £6.7m to £15.1m an increase of 80%; £3.1m (26%) on a pro-forma
basis
* Operating profit (before goodwill amortisation and exceptional items) as a
% of turnover increased from 5.2% to 6.0%
* Profit after tax (before exceptional items) increased to £3.6m
* EBITDA (before exceptional items) growth of £9.7m to £23.3m an increase of
71%; £3.3m (17%) on a pro-forma basis
* £8.8m of the increase in the net debt is due to the Euro/£ exchange rate
movement on debt (including finance lease liabilities) with long maturity
The prior year group results only include the results of the UBC acquisition
from 10 April 2007. In the 2007 financial statements we disclosed pro-forma
figures for the year to 30 September 2007 based on including the full year of
UBC.
We targeted an improvement in customer service. Statistics for on-time delivery
performance and positive customer feedback demonstrate that we gained
substantial ground during the year and we are now rated amongst the best in the
industry. This has provided the basis for productive discussions with a number
of customers regarding rates, business retention and development. The year also
saw major increases in fuel costs. Our team has successfully managed these
operational cost increases and maintained margins. These two key areas have
allowed us to improve the quality of the business reflected in the increase in
operating profit (before goodwill amortisation and exceptional items) as a % of
turnover.
The Liquid Bulk business has achieved our targets both in revenue and margin
performance with strong growth in most areas in comparison to the prior year.
The global spread and broad mix of products carried brings stability.
In Dry Bulk, European polymer demand declined resulting in lower volumes. Our
customer base has been stable and we have therefore been able to maintain our
substantial existing market share. Future growth will come from expansion
outside Europe, and broadening the range of dry bulk products transported with
our intermodal equipment.
The two business development areas of ISO-veyors and flexi-tanks reported a
combined operating loss of approximately £1 million. Business set-up and market
penetration have taken longer than planned, but we have plans in place that
should at minimum ensure a break even position for these areas.
We have taken the decision to close our UK site for liner manufacturing. This
has resulted in an exceptional charge of £0.4 million being taken. This
reorganisation will ensure an appropriate cost base exists for this important
area of our Dry Bulk business going forward.
Finance expenses include an unrealised non-cash exchange loss of £3.4 million
(2007: £0.6m) on an element of long-term bank debt denominated in Euros driven
by the weakening of the £/EUR rate during the year. As reported in our March 08
interim report, we have re-designated the majority of this to a balance sheet
hedge and thus have only seen a £0.2 million movement in the second half of the
year.
We have recently renegotiated our debt facility with HBOS and this provides the
Group with a strong and stable financial base for the medium term, with
acceptable covenant headroom to cater for short-term business fluctuations and
growth versus our five year business plan. HBOS remain very supportive of
InterBulk.
The net debt position of £104.2 million consists of £82.4 million of HBOS
senior debt, £2.4 million of other bank loans, £28.7 million of asset finance
lease less £9.3 million of cash and cash equivalents. Of the HBOS senior debt,
only £15.9 million is repayable on a smooth amortising profile for the period
to March 2013. Finance lease funding is the standard form of finance for
equipment fleet in this sector. In our business model the finance lease
interest cost is treated as an operational cost and included in our customer
pricing. Given the continued investment in our fleet, finance lease liabilities
will be a constant factor, with care taken to ensure our operating margins
fully reflect all related costs. The EBITDA multiple on our senior debt only
(net of cash and cash equivalents) is 3.1.
Our Vision, Values and Strategy
Our Vision is clear; we aim to be the leader in providing Intermodal supply
chain solutions for liquid and dry bulk materials anywhere in the world.
Our Values are clear;
Customer focus Working in a spirit of partnership
with our customers to achieve
performance excellence
A Passion for our Stakeholders Creating value for all shareholders,
customers, employees, suppliers and
partners
Innovation and a Can Do attitude Delivering tailored technical and
supply solutions to adapt to ever
changing global conditions
Respect for People We recognise and respect that
InterBulk's success is a result of all
its people's expertise and commitment
Sustainability of our actions Acting according to uncompromising
levels of Responsible Care and
environmental standards to protect
people and nature
Honesty , Openness and Integrity Treating everyone we come across as we
would expect to be treated and
delivering the service we would expect
ourselves
Our Strategy is clear; InterBulk has changed its acquired companies from just
transport providers to a centrally controlled marketing and supply chain
solution orientated company with "one vision, one company, one brand" being
core to this change. The integrated InterBulk organisation with its product
portfolio, significant equipment resources and global geographic reach is now
an important strategic partner for its customer base.
We will:
* Provide the best combination of local network interaction and central
office back-up to ensure high levels of customer service and reliability
* Deliver tailored, cost effective supply chain solutions to our customers
* Develop innovative technical solutions such as linerbags and ISO-Veyors
* Position our business to capture growth in the chemicals, food and minerals
industries
* Expand our operations in the geographic growth areas of China , CIS
countries and exports from the Middle East
* Market the environmental benefits of substituting road transport with
Intermodal and transitioning from packed to bulk
* Broaden our dry bulk business base by developing solutions for food, other
chemicals and industrial products
* Expand our terminal and material handling business by operating our own
multi-customer terminals in Germany and other locations
* Develop our strategic alliance with Groupe Norbert Dentressangle
Outlook
Forecasting in the current general economic climate involves a higher than
usual degree of uncertainty for many companies. Nevertheless, taking into
account a number of trading updates from our customers, we expect volume
decline in the USA and Western Europe. However, due to our variable cost base
and flexible operating model, InterBulk is in a less vulnerable position in the
current environment.
Our core business has internal budget expectations set some months back which
forecast positive growth. However, based on the first two months of the
financial year and the unexpected reduction in volumes coupled with the
increasingly negative business sentiment surrounding our customers, we can only
conclude that 2009 will be a challenging year.
Since early November 2008 we have seen a more pronounced reduction in volume,
especially in the Dry Bulk Polymer business. We believe this has been partly
caused by deep de-stocking activity in our customers' value chains driven by
falling prices and bearish sentiment. We do anticipate a recovery of volume
levels in 3 to 4 months.
We expect China, Asia and Eastern Europe to be our strongest growth areas in
the New Year. The work we have done in the last year to establish our own teams
in these regions, with new offices in St Petersburg and Beijing, should provide
a sound foothold for the future growth.
We had two business development initiatives during the 2008 financial year,
namely ISO-veyors and flexi-tanks which reported operating losses of
approximately £1m combined. As we start our new financial year we have plans in
place which should at a minimum ensure a break even position for these two
areas.
In closing and in my last statement as Chairman, we start this challenging
period in a stronger position owing to the positive progress made over the last
12 months. The Board remains confident in our strategic position and the
quality and strength of our business model leaves us well positioned to benefit
when the general economic climate improves.
William Thomson
Executive Chairman
16 December 2008
Chief Executive's Review
Operational Highlights
* Customer Good progress achieved on customer service levels and
Service retention. InterBulk brand increasingly recognised
* Reorganisation Completion of organisational structure based on local
customer contact supported by central group functions.
The principal of "one vision, one company, one brand"
was at the core of the plans
* Liquid Bulk Excellent performance in the year in a volatile market
with fleet growth and higher utilisation
* Dry Bulk Significant improvement in the margin performance with
operating profit from Dry Bulk increasing from 5.0% to
6.8% in the year
* Geographical Strengthening of our team in China, with first contract
expansion secured. Establishment of St Petersburg, Russia office
and team in the current year
* Innovation Re-engineering of ISO-Veyor technology with lower
manufacturing cost without reductions in performance.
Liner developments, including assurance of food
accreditation for supply chain
The Liquid Bulk business has seen significant growth in both revenue and
margins. We were able to react quickly to changing trade flows to ensure high
utilisation of our fleet of approximately 7,500 tankcontainers. On the back of
growing demand from Europe, Asia and the Americas we increased the mix to
deep-sea activity which we believe offers greater growth opportunities
potentially in a less competitive environment. While underlying chemical growth
is expected to slow down in the short-term, there are still opportunities to
grow by the substitution from other methods of packaging and transportation
such as drums, road tankers and parcel tanker vessels. Transport of chemical
products by tankcontainers still accounts for a small percentage of the liquid
chemicals being moved worldwide and offers significant potential growth for the
foreseeable future especially given the economic and environmental benefits
which arise from intermodal solutions.
On the Dry Bulk business, based on fleet size, we are the leading dry bulk
intermodal logistics company in Europe operating approximately 12,500 special
dry bulk containers and a fleet of approximately 370 special tipping trailers.
Our customer service has improved in the last 12 months. This along with a more
proactive management of third party costs has made a large improvement in the
margins achieved. It is somewhat unfortunate that market conditions have
reduced the volumes available to us during this year. The Dry Bulk business is
currently focused on the polymer sector of the petrochemical industry which
does not allow for easy compensation in the event of lower market demand from
this sector. We are currently executing commercial and technical activities to
reduce our reliance on the European polymer sector. Some small successes have
been achieved and we hope these can be accelerated in the next 12 months. There
are many opportunities to develop the bag-in-box container technology for the
wider chemical, minerals and food industries worldwide and we intend to use the
existing global reach of InterBulk network to extend our Dry Bulk solutions
into new geographical areas.
The InBulk ISO-Veyor business provides a unique technology to transport dense
bulk solids. We have had some commercial activity in the current year putting
around 70 units into successful operations via both rental and capital sales.
Some re-engineering has been performed on the technology which has lowered the
manufacturing costs especially for the Asian market. We have two letters of
intent for customers in Asia which provide some comfort that at least a break
even position can be achieved in the next financial year.
We have almost completed the majority of the reorganisation of the enlarged
group. The largest remaining area which we are working on is the consolidation
of the Information System into one group system and we expect this to go live
during the next financial year. As well as providing greater consistency and
standardisation to our processes and controls, one global IT system will act as
a facilitator for improved operational efficiency.
Key business strengths
The following are the key business strengths which are critical to the
execution of our strategy. These provide a unique combination of technical
knowledge and resources with supply chain insight.
Expertise 432 experienced management and staff
who combine both logistics and
technical skills to exceed our
customer's expectations
Information Technology Bespoke IT system which we call
SWIFT-XP. This provides the business
with detailed operational information
plus B2B capability and equipment
tracking
Capacity Approximately 20,000 specialist ISO
bulk containers being the largest
combined global operator fleet for
movement of products in bulk. A global
network of owned offices and agencies
Reputation An uncompromising focus on service and
health and safety leadership. This
creates high barriers to entry
Global Partnerships Long term relationships with logistics
service providers creating a complete
global operational flexibility
Innovation Innovation in equipment and technology
such as ISO-Veyors and liner design
along with operational modes and
relationships. This maintains a market
leading service and capability
Variable Cost Model No owned transport capability: no
trucks and drivers, no trains, no
ships, no cleaning/maintenance depots
Of significant relevance in the current economic climate is our variable cost
business model, in which the majority of transportation resources, such as
trucking, ship and rail services are outsourced to logistics service providers.
The key advantage of this approach is that we avoid incurring fixed costs for
operational services if containers are not being transported which,
differentiates us from other operators that utilise their own vehicles and
truck drivers. In addition, we have a fleet of Tankcontainers that is partly
rented so that we can accommodate a higher demand quickly by on-hiring new
equipment or can off-hire equipment in case of lower demand. Approximately 10%
to 15% of the fleet can be returned annually to the rental companies in the
event of lower demand.
The Market Place
Due to the economic climate the overall transport volume in Western Europe and
the USA has been declining. Transport of bulk products in other parts of the
world has been growing steadily with production output growth and at the
expense of the more traditional way of transportation in packed form. Still, a
large part of our growth potential comes from environmental and cost pressures
because intermodal transport forms such as sea, river and rail transport are a
lower contributor to CO2 emissions than long distance road transport.
We expect the areas less affected by the global downturn to be:
* Eastern European countries and Russia
* China, with strong domestic and North East Asia demand
* Middle East exports of polymers and chemicals to consumers around the world
By fleet size the InterBulk Group is a leader in European intermodal container
logistics for bulk products. We have been upgrading our fleet quality by a
combination of introduction of new build equipment, refurbishment of medium
life time containers and scrapping of some older equipment. The fleet size of
about 20,000 containers differentiates us positively from the competition as
this scale allows us to service volatility in our customers supply chain
including the ability to provide temporary storage solutions.
We started the 2008 financial year with the transport and logistics market in
Europe being characterised by a shortage of shipping, trucking and rail
capacity and high congestion in ports and industrial clusters. Towards the end
of our financial year the situation has quickly changed with a reduction in
demand and an overcapacity of trucking transport equipment. Another large
factor during the financial year has been the cost of oil that has never seen
such high and low points. This caused high volatility both in our customers'
production volumes and our cost base.
These dynamics have changed our position towards our customers, but also our
position towards the logistics providers for road, rail and shipping. We have
managed these changing circumstances well via our variable cost business model
and proactive approach to pricing in all areas of our business. Our information
systems and processes are designed to immediately recognise these changes and
ensure that our cost base is aligned to changing situations.
Global Developments
Dry Bulk - Europe
Due to volatility of oil prices, high manufacturing cost and uncertainty of
forecasts the European polymers production output and transport demand has been
unpredictable. The trend has been towards end users de-stocking and also
sourcing products from a variety of polymer suppliers including from outside
Europe. We faced major production plant reliability issues in the polymer
market which also affected our volumes. Towards the end of our financial year
this resulted in some plant closures. These factors resulted in an 11%
reduction in the number of moves although rate increases and favorable currency
impact means that a 6% revenue growth was achieved and improvement in our
operating profit from prior year.
We were very successful in improving our quality of service to a much higher
level. This is proven by positive feedback and performance reports received
from key customers rating us among the best performers in the industry. Thanks
to the full commitment and focus of our people we managed in a relatively short
period to exceed quality expectations and regain customer's confidence. With
this strong backdrop we are in a better negotiation position with our customers
and successfully achieved rate increases and recovered the increased fuel and
bunker costs during the year.
We did not lose any material customer contracts during the financial year, and
renewed a two year contract with our biggest customer with higher volume
predictions. In addition, we managed to achieve business wins in co-operation
with our alliance partner Groupe Norbert Dentressangle for which the full
benefits will be realised during the second quarter of 2009.
We go into the 2009 financial year with opportunities to win several major
tenders with a much stronger service position but against market conditions
which are putting a downward pressure on rates. Most of our customers'
production plants are operating below capacity in response to a weakening
demand resulting in lower volumes.
During the second half of the year we started a product diversification project
to attract bulk food, chemicals, minerals and other industrial products that
could compensate for the expected lower polymer volumes. This is a key
initiative for our commercial team in the next 12 months and given that it
revolves around mainly conversion of bulk movements to intermodal solutions,
should not be fully reliant on general economic growth.
Dry Bulk - Asia
Due to conflicting business interests with our joint venture partner we
terminated our joint venture in Malaysia. We now have a dry bulk business that
will now be further developed under InterBulk brand name and merged with the
existing deep sea dry bulk activities which are serviced from Europe.
Leadership will be provided from the European base with operating teams in
Europe, Singapore, China and the Americas. The expansion of Dry Bulk activities
to non-European business flows is an important area for growth.
Dry Bulk - ISO-Veyors
Due to delayed capital sales orders and tough market conditions in the
construction and cementitious industry the ISO-Veyor business closed the year
with an operating loss. We have two specific prospects with signed letters of
intent which we hope to benefit from in the second quarter of our financial
year 2009. Although at lower levels we have managed during the year to get the
Iso-Veyor units introduced on a commercial basis with the largest four cement
companies and it is also encouraging to see geographical spread over four
continents. Measures to achieve at least a break even situation in 2009 have
been taken.
Liquid Bulk - Europe
The operational execution of the liquids business in Europe for most of this
financial year was faced with a shortage of tankcontainers to meet demand. This
was caused by an increased export demand from Europe to Asia, Middle East and
the Americas. Compared to prior year the European continental deep sea export
activity increased by 7% in terms of number of moves.
The intra European business activity suffered from both equipment shortages and
a reducing demand towards the end of the financial year in line with the
general economic situation. Although this Intra European activity declined by
6% on number of moves compared to prior year both the revenue and margin per
move were higher which along with currency impact allowed the revenue to grow
by 11%. This improved quality in work performed is encouraging in the current
environment.
Liquid Bulk - Asia
The Asian business has seen a strong volume growth in terms of number of moves
of 17% with margins that were stable and at a satisfactory level. The
percentage of deep sea traffic between Asia - Europe and the Americas increased
considerably compared to the share of the Intra Asian traffic. The Intra Asia
traffic is lower margin due to the higher competition and imbalanced traffic
flows. However it is important in repositioning the equipment for onwards deep
sea activity.
North East Asia continues to be the most attractive market with strong export
demand especially from China and Korea. In China where we now have two
established InterBulk offices, we have started by winning our first domestic
contract for movement of MDI liquid chemical which is the reference for other
customers requiring a tank container operating service with high European
quality and safety standards.
Our Singapore office also looks after the Middle East were we experienced an
increase in the export market, primarily from Saudi Arabia.
Liquid Bulk - Americas
The lack of containers going to the Americas continued up to the fourth quarter
in the current financial year and provided continued fleet management
challenges which we dealt with well. In quarter four the imbalance reversed
with more containers being shipped from Europe to the USA and export activity
was impacted by Hurricane "Ike" which closed down many chemicals production
plants in the USA Gulf area. We believe that due to the general economic
situation some of the plants and productions lines that were impacted by the
hurricane may extend the closure for the rest of the calendar year and may not
restart until the second quarter of our new financial year. The overall South
American business performed satisfactorily.
Despite this situation in the USA, the activity for the region for the whole
year increased by 6% on number of moves.
While the above commentary on the Liquid Bulk activities is described by
geography the tankcontainer liquid bulk business is global and performance of
the regions (Europe, Asia and the Americas) is characterised by a strong
interdependency. We have an integrated tank container fleet whereby we balance
and compensate for fleet shortages and over capacity between the regions.
Traffic flows and prices are monitored closely both centrally and regionally by
our fleet management function and pricing is used as the main tool in
controlling the balance.
Liquid Bulk - Flexi-tanks
The Flexi-tanks business that operates as a supply and fit basis in Malaysia,
Singapore, Vietnam, Thailand, Indonesia, Philippines, India and Middle East was
responsible for an operating loss in the year.
We expected this new business to perform on at least a break even or small
profit base, but throughout the year we ascertained that changing business
conditions and strong competition in this area forced us to lower pricing.
Although the Flexi-tanks business is a rapidly growing market with low capital
cost requirements the margins are minimal in this region.
We have strategically decided to change the business model for this sector. We
expect this business to perform on a cost neutral basis during the next
financial year and we will re-consider the business geographical scope next
year.
Logistics terminals
In our capacity as full supply chain solutions provider we currently operate 6
logistics terminals in Europe which are connected to our customer's
manufacturing plants and provide on and off site support to production and
material handling. In addition we will establish our largest tri-modal terminal
to date for intermodal shipments in the Port of Duisburg. This central European
hub of 20,000 m2 in the port will feature a bulk container and material
handling terminal serving customers in the chemical, food and mineral industry.
We believe this hub is ideally placed to receive and transfer containerised
shipments from Europe and overseas and also perform logistics and value added
services such as packaging, de-bagging and warehousing. The terminal is planned
to be operational in May 2009. The InterBulk network will be used for transport
to and distribution from the new terminal.
People
We have completed the base organisation structure. We understand that Human
Resource management is a continuous process to deal with the ever changing
business requirements and worldwide conditions. The Group aims to retain and
attract top performing individuals within the industry by focusing on key human
resource issues; namely involvement of employees in the business using good
communication and performance reviews, management development programs,
appropriate incentive schemes, commitment to Health and Safety and equal
opportunities for all staff.
Corporate Social Responsibility
InterBulk Group is dedicated to maintaining a high level of corporate social
responsibility. All aspects of Quality, Health, Safety, Security and
Environmental ("QHSSE") performance are considered in detail during Board
meetings. Given the nature of our business QHSSE is of paramount importance.
InterBulk is one of the first logistics companies incorporating "Responsible
Care" as a commitment to continuous improvement in all aspects of safety,
security, health and environmental performance. "Responsible Care" enables
businesses to make a strong contribution to sustainable development.
Acting according to uncompromising levels of Responsible Care and environmental
standards to protect people and nature is a core value of the InterBulk Group.
Koert van Wissen
Chief Executive Officer
16 December 2008
Group Income Statement
For the year ended 30 September 2008
Total Exceptional Total Total Exceptional Total
before items before items
exceptional exceptional
items items
2008 2008 2008 2007 2007 2007
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 250,167 - 250,167 162,129 - 162,129
Cost of sales (213,102) - (213,102) (139,402) - (139,402)
Gross profit 37,065 - 37,065 22,727 - 22,727
Administrative (22,323) (441) (22,764) (14,542) (849) (15,391)
expenses
Operating profit 14,742 (441) 14,301 8,185 (849) 7,336
Analysed as:
Operating profit
before
depreciation & 23,301 (441) 22,860 13,609 (153) 13,456
amortisation
Depreciation of (8,196) - (8,196) (5,213) (696) (5,909)
tangible assets
Amortisation of (363) - (363) (211) - (211)
intangible assets
Finance income 241 - 241 319 - 319
Finance expenses (10,378) (3,445) (13,823) (6,942) (717) (7,659)
(10,137) (3,445) (13,582) (6,623) (717) (7,340)
Profit/(loss) 4,605 (3,886) 719 1,562 (1,566) (4)
before taxation
Taxation (1,015) 1,127 112 (187) 466 279
Profit/(loss) for 3,590 (2,759) 831 1,375 (1,100) 275
the year
Earnings per
share (pence)
Basic (GBP) 0.27p 0.14p
Diluted (GBP) 0.27p 0.14p
Group Statement of Recognised Income and Expense
For the year ended 30 September 2008
2008 2007
£'000 £'000
Net exchange differences on retranslation of foreign 3,805 362
operations
Net losses on net investment hedge taken to equity (1,232) (383)
Net losses on cashflow hedge transferred to income - 80
statement, net of tax
Net losses on cashflow hedge transferred to equity, net (41) (452)
of tax
Actuarial (loss)/gains on retirement benefit obligations (118) 48
Movement of deferred tax on retirement benefit 31 (12)
obligations
Net gains/(losses) recognised directly in equity 2,445 (357)
Profit for the financial year 831 275
Total recognised income/(expenses) for the year 3,276 (82)
Group Balance Sheets
At 30 September 2008
Group Group
2008 2007
£'000 £'000
ASSETS
Non-current assets
Goodwill 118,397 113,212
Other intangible assets 4,074 4,342
Property, plant and equipment 64,790 57,705
Investments - 46
Retirement benefits obligations - 133
Deferred tax assets 821 434
188,082 175,872
Current assets
Inventories 3,308 3,054
Trade and other receivables 39,978 38,195
Current tax - 1,158
Cash at bank and in hand 9,317 7,401
52,603 49,808
Total assets 240,685 225,680
LIABILITIES
Current liabilities
Financial liabilities (10,270) (9,960)
Trade and other payables (58,891) (56,348)
Current tax liabilities (97) -
(69,258) (66,308)
Non-current liabilities
Financial liabilities (104,081) (94,916)
Deferred tax liabilities (5,359) (5,811)
Retirement benefit obligations (38) -
(109,478) (100,727)
Total liabilities (178,736) (167,035)
Net assets 61,949 58,645
SHAREHOLDERS' EQUITY
Ordinary shares 30,289 30,289
Share premium 26,431 26,431
Consideration warrants 1,424 1,424
Retirement benefit obligations reserve (27) 60
Cumulative translation reserve 2,564 (9)
Share option reserve 55 27
Hedge reserve (487) (446)
Retained earnings 1,700 869
Total equity attributable to shareholders 61,949 58,645
Group Cash Flow Statement
For the year ended 30 September 2008
2008 2007
£'000 £'000
Cashflows from operating activities
Cash generated from operations 21,091 13,438
Tax received/(paid) 509 (465)
Net cash flow from operating activities 21,600 12,973
Cashflows from investing activities
Interest received 241 319
Sale of property, plant and equipment 384 115
Acquisition of subsidiaries - (4,702)
Overdraft acquired on purchase of - (1,531)
subsidiaries
Purchases of property, plant and equipment (2,189) (1,376)
(net of finance lease)
Payments to acquire intangible fixed assets (95) (27)
Payment of deferred consideration (543) (509)
Net cash flow from investing activities (2,202) (7,711)
Cashflows from financing activities
Interest paid (10,125) (6,100)
Proceeds from share issues (net of issue - 25,853
costs)
Proceeds from borrowings - 78,622
Repayment of borrowings (2,807) (100,238)
Finance lease proceeds from refinancing of - 340
equipment
Repayment of capital element of finance (5,238) (2,945)
leases
Net cash flow from financing activities (18,170) (4,468)
Increase in cash and cash equivalents 1,228 794
Effect of exchange rates on cash and cash 688 55
equivalents
Cash and cash equivalents at the beginning 7,401 6,552
of the year
Cash and cash equivalents at the end of the 9,317 7,401
year
1. Notes to the preliminary results
The financial information set out in the preliminary announcement does not
constitute the Group's statutory accounts within the meaning of Section 240 of
the Companies Act 1985 and has been extracted from the full accounts for the
years ended 30 September 2008 and 30 September 2007 respectively. A copy of the
statutory accounts for the period ended 30 September 2007 has been delivered to
the Registrar of Companies. The auditors' report on the financial statements
was unqualified and did not include a statement under section 237(2) or (3) of
the Companies Act 1985. The statutory financial statements for the year ended
30 September 2008 have been finalised and approved by the Directors but not yet
signed. They will be signed on the basis of the financial information presented
by the directors in the preliminary announcement and will be delivered to the
Registrar of Companies in due course.
These financial statements have been prepared in accordance with the accounting
policies based on International Financial Reporting Standards ("IFRS") and
IFRIC interpretations endorsed by the European Union (EU) and with those parts
of the Companies Act 1985 applicable to companies reporting under IFRS. The
financial statements have been prepared under the historical cost convention as
modified by the revaluation of derivative financial instruments.
2. Segment Information
The Directors consider that the risks and rates of return are strongly affected
by both differences in its services and differences in the geographical areas
in which it operates. The Directors consider that there are two business
segments being the provision of logistics services for Dry Bulk material and
Liquid Bulk material. Other activities such as capital sales of specialist dry
bulk containers ("ISO-Veyors") are business segments, but are below 10% of the
Group's activity, and therefore are not reportable segments.
The operations are based on three geographical areas. The analysis by
geographical area of the Group's turnover and segment result is set out below.
The sales analysis set out below is based on the location where the order is
received and invoiced and where the assets are located.
Europe Americas Asia Eliminations Total
Year to 30 September 2008 £'000 £'000 £'000 £"000 £'000
Revenue
Sales to external customers 215,808 18,995 15,364 - 250,167
Results
Segment result before 15,038 719 (73) - 15,684
exceptional items
Exceptional items (441) - - - (441)
Segment result after exceptional 14,597 719 (73) - 15,243
items
Unallocated expenses (942)
Group operating profit (after 14,301
exceptional items)
Net finance expenses (including (13,582)
exceptional items)
Profit before taxation 719
Taxation 112
Net profit for the year 831
Dry Liquid Others Eliminations Total
Bulk Bulk
Year to 30 September 2008 £'000 £'000 £'000 £"000 £'000
Revenue
Sales to external customers 126,190 122,427 1,550 - 250,167
Results
Segment result before 8,634 7,715 (665) - 15,684
exceptional items
Exceptional items (441) - - - (441)
Segment results after 8,193 7,715 (665) - 15,243
exceptional items
Unallocated expenses (942)
Group operating profit (after 14,301
exceptional items)
Net finance expenses (including (13,582)
exceptional items)
Profit before taxation 719
Taxation 112
Net profit for the year 831
Europe Americas Asia Eliminations Total
Year to 30 September 2007 £'000 £'000 £'000 £"000 £'000
Revenue
Sales to external customers 135,554 15,680 10,895 - 162,129
Results
Segment result before 8,658 455 (84) - 9,029
exceptional items
Exceptional items (600) (149) (100) - (849)
Segment result after exceptional 8,058 306 (184) - 8,180
items
Unallocated expenses (844)
Group operating profit (after 7,336
exceptional items)
Net finance expenses (including (7,340)
exceptional items)
Loss before taxation (4)
Taxation 279
Net profit for the year 275
Dry Liquid Others Eliminations Total
Bulk Bulk
Year to 30 September 2007 £'000 £'000 £'000 £"000 £'000
Revenue
Sales to external customers 58,388 101,556 2,185 - 162,129
Results
Segment result before exceptional 2,903 6,417 (291) - 9,029
items
Exceptional items (125) (724) - - (849)
Segment results after Exceptional 2,778 5,693 (291) - 8,180
items
Unallocated expenses (844)
Group operating profit (after 7,336
exceptional items)
Net finance expenses (including (7,340)
exceptional items)
Loss before taxation (4)
Taxation 279
Net profit for the year 275
3. Exceptional items
The net exceptional items in the year to 30 September 2008 of £3,886,000
consists of:
Items charged to operating profit:
(a) Exceptional charges of £441,000 in the year relating to the closure of the
UK factory involved in the manufacturing of the specialist liners used for the
transportation of dry bulk materials.
Items charged to finance expenses:
b. Included in the finance expense is an unrealised non-cash loss of £
3,445,000, (2007:£600,000) on an element of long-term debt denominated in
Euros to create a hedge against annual Euro trading income. The designation
of this loan was changed to a balance sheet hedge at the end of June 2008.
Since that date exchange gains and losses have been recorded within a
separate component of equity, the cumulative exchange reserve. This loss
also includes £349,000 of unrealised exchange loss relating to some asset
finance which is maintained in currencies other than sterling to match cash
inflows.
The unrealised non-cash loss of £600,000 for the year ended 30 September 2007
was not specifically highlighted on the face of the income statement as an
exceptional item in prior year.
The net exceptional items in the year to 30 September 2007 of £1,566,000
consist of:
Items charged/(credited) to operating profit:
a) Exceptional charges in the year of £1,221,000 relates to the acquisition of
United Transport International Limited on 10 April 2007 and comprises £696,000
in relation to write-off of capitalised IT costs due to the implementation of
one group-wide IT system and reorganisation costs of £525,000.
b) During the year, UTT released accruals of £372,000 previously maintained to
cover disputed items with UBC. This accrual is no longer required.
Items charged to finance expenses:
c) On 10 April 2007 as part of the funding of the United Transport
International Limited acquisition the existing senior debt package of the
pre-acquisition Group was replaced. At this date deferred finance cost of £
717,000 remained unamortised on the balance sheet. Due to this debt being
replaced this non-cash amount was required to be immediately written-off.
4. Finance expenses
2008 2007
£'000 £'000
Interest payable on bank loans and 8,405 4,877
overdrafts
Amortisation of deferred finance costs 265 188
Finance charges payable under finance 1,694 1,268
leases and hire purchase contracts
Unrealised exchange loss on long-term - 600
bank debt
Interest on pension scheme assets/ 14 9
liabilities
Finance expense (before exceptional 10,378 6,942
items)
Exceptional item 3,445 717
Total finance expenses 13,823 7,659
5. Earnings per ordinary share
The basic earnings per share is calculated by dividing the profit for the
financial year attributable to shareholders by the weighted average number of
shares in issue. In calculating the diluted profit per share, warrants and
options outstanding have been taken into account.
2008 2007
Profit for the year (£'000) 831 275
Weighted average number of shares 302,892,041 194,494,780
(number)
Effect of outstanding warrants and - -
options
Adjusted weighted average number
of ordinary shares (number) 302,892,041 194,494,780
Basic profit per share (pence) 0.27p 0.14p
Diluted profit per share (pence) 0.27p 0.14p
InterBulk Group plc assesses the performance of the Group by adjusting earnings
per share, calculated in accordance with IAS 33, to exclude items it considers
to be non-recurring and believes that the exclusion of such items provides a
better comparison of business performance. The calculation of earnings per
ordinary share on a basis which excluded exceptional items is based on the
following adjusted earnings:
2008 2007
£'000 £'000
Profit for the year 831 275
Exclude exceptional items (net of 2,759 1,100
attributable taxation)
Adjusted earnings 3,590 1,375
An adjusted earnings per share figure
is presented below:-
Basic earnings per share 1.19p 0.71p
pre-exceptional items (pence)
Diluted earnings per share 1.19p 0.71p
pre-exceptional items (pence)
6. Cash flow from operations
2008 2007
£'000 £'000
Profit/(loss) before taxation 719 (4)
Adjustments for:
Depreciation 8,196 5,213
Impairment of other fixed assets - 696
Amortisation of intangible assets 363 211
Loss on sale of fixed assets 34 96
Finance income (241) (319)
Finance expenses 13,823 7,659
(Increase) / decrease in inventories (254) 1,237
Increase in trade & other receivables (2,751) (3,447)
Increase/ (decrease) in retirement benefit 171 (890)
(obligations)/assets
Increase in payables 1,031 2,986
Cash generated from operations 21,091 13,438
7. Analysis of Group net debt
30
1 October Exchange Non-cash September
2007 Cashflow differences movements 2008
£'000 £'000 £'000 £'000 £'000
Cash and cash 7,401 1,228 688 - 9,317
equivalents
Loans (81,474) 2,807 (6,442) 265 (84,844)
Finance leases (22,143) 5,238 (2,367) (9,445) (28,717)
(96,216) 9,273 (8,121) (9,180) (104,244)
We have recently renegotiated our debt facility with HBOS and this provides the
Group with a strong and stable financial base for the medium term, with
acceptable covenant headroom to cater for short-term business fluctuations and
growth versus our five year business plan. The condition associated with these
discussions was that an updated syndication process was agreed. This allows
HBOS to adjust the pricing of our senior debt to an agreed maximum level to
facilitate a successful syndication programme but also allows HBOS to benefit
from this re-pricing in the event that no syndication takes place. The target
timetable is 31 March 2009 and the maximum adjustment is 100 basis point on
interest margins either via a pricing adjustment or re-allocations of principal
amounts between tranches. We believe the actions we have taken to ensure
long-term targets are adjusted is worth the additional interest cost which
might arise in the second half of next year and onwards.
8. Availability of Accounts
Copies of the full Report and Accounts for the year ended 30 September 2008 are
being sent to shareholders. Further copies will be available from 1 Redwood
Crescent, East Kilbride, Glasgow, G74 5PA.