Interbulk Group plc

Transcription

Interbulk Group plc

InterBulk Group plc
Report & Financial Statements
For the year ended 30 September 2007
A recognised leader in
global intermodal logistics
InterBulk Group plc
InterBulk Group ranks amongst the world’s most diverse and
innovative intermodal logistics companies for bulk materials,
providing full door to door logistics and supply chain solutions
to our customers.
Our vision is to create a global platform capable of providing
a comprehensive range of intermodal solutions for any liquid,
powder or granular material, anywhere in the world.
Our people use a range of innovative technologies to ensure
a vast array of liquid and dry bulk materials reach their
destination, in the right condition, at the right time.
Investment in resources and infrastructure continues to
grow and our commitment to our customers is paramount.
Contents
1
1
2
6
10
14
16
19
21
Technology Matrix
Locations
Chairman’s Statement
Chief Executive’s Review
Financial Review
Directors and Advisors
Directors’ Report
Corporate Governance Report
Directors’ Remuneration Report
23 Statement of Directors’ Responsibilities in Respect of the
Annual Report and the Financial Statements
24 Independent Auditors’ Report
26 Group Income Statement
27 Group and Company Statement of Recognised Income & Expense
28 Group and Company Balance Sheets
30 Group Cash Flow Statement
31 Company Cash Flow Statement
32 Notes to the financial Statements
Annual Report & Accounts 2007
Interbulk Group plc
1
Technology Matrix
InterBulk Group use the
technology matrix to provide
full intermodal logistics and
supply chain solutions
TECHNOLOGY
ISO TANKS
ISO VEYORS
FLEXI TANKS
FLEXI LINERS
Solids
Liquids
Tanks
Flexies
Locations
Rotterdam
Hull
Stockton
East Kilbride
Le Havre
Fos Sur Mer
Worms
Luebeck
Dusseldorf
Gothenburg
Oslo
Milan
Houston
New Jersey
Rio de Janeiro
Shanghai
Beijing
Singapore
Porvoo
Schwechat
Uentrop
Lillebonne
Sarralbe
Carrington
2
Interbulk Group plc
Chairman’s Statement
I am pleased to present the first year-end results
for InterBulk Group plc since the acquisition of
United Transport International Limited (referred
to as “UBC”) on 10 April 2007.
UBC is proving to be an excellent acquisition bringing market
leadership in the dry bulk sector with significant opportunities
to expand the business into new geographies beyond Europe
using the expanding InterBulk network. In addition, these
financial results include for the first time a full year from
United Transport Tankcontainers (“UTT”) and InBulk
Technologies (“InBulk”) which were acquired on 28 February
2006. In a period of 14 months we have completed two
significant acquisitions. These major developments have
created a global business with a market leading position
for intermodal logistics of dry and liquid bulk materials.
This position along with the significant growth opportunities
that exist, creates an exciting time for our business. We are
currently re-organising the business under the InterBulk brand
and are beginning to see the initial impact of this action
coming through in results.
Financial Highlights
The financial highlights table on page 3 are extracted from the
reported results but only include the UBC results since 10 April
2007 being the date of its acquisition. The following pro-forma
information is presented by including the period from 1
October 2006 to 10 April 2007 for the UBC business on a
comparable basis. This provides an equivalent pro-forma
historic 12 months result for the year to 30 September 2007.
2007 Pro-forma
Annual
Turnover
£224.1m
Operating profit (before exceptional
items and intangible amortisation)
£12.0m
EBITDA (before exceptional items)
£20.0m
We believe we are well-positioned to develop the profitability
of the Group further in the current year, when a full 12 months’
contribution will be included from all our businesses.
This year has been a period of significant development for the
Group. The acquisition of UBC by the Group has created a
substantial business, which now operates one of the largest
specialist container fleets in Europe. As was known, UBC’s
performance had been poor prior to acquisition but this was
arrested following acquisition and performance in the last
quarter of the financial year has steadily improved. The UTT
liquid bulk business performed well in the first half of the year;
the second half of the year progress was delayed by some fleet
imbalances and operational cost pressures.
Included in finance expense is an unrealised non-cash
exchange loss of £0.6 million on an element of long-term bank
debt denominated in Euros to create a hedge against Euro
trading income. This unrealised exchange loss is the reason
why the interest expense is above expectations.
We have a strong and stable financial position as a result of
cautious structuring of the balance sheet when executing the
main acquisitions. The net debt position of £96.2 million
consists of £79.1 million of Bank of Scotland Senior debt,
£2.4 million of other bank loans, £22.1 million of asset finance
lease less £7.4 million of cash and cash equivalents. Of the
Bank of Scotland senior debt only £17.6 million is repayable on
an amortising profile for the period to March 2013. Using the
proforma 12 months EBITDA (before exceptional items) noted
above the bank debt net of cash and cash equivalents is a
multiple of 3.7. 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.
Interbulk Group plc
Financial Highlights
Consolidated
Income
Statement
£’000
Turnover
Gross margin
Operating profit
Profit after tax
EBITDA
Exceptional
Items
£’000
Intangible
Amortisation
£’000
Year to
30 September
2007 Adjusted
(pre exceptional
items and
amortisation)
£’000
Period to
30 September
2006
£’000
162,129
-
-
162,129
59,090
22,727
-
-
22,727
8,845
7,336
849
211
8,396
3,431
275
1,100
1.375
916
13,456
153
13,609
5,103
96,216
45,175
Net debt
Turnover growth of 60%* to £162.1 million
EBITDA (before exceptional items) growth of 56%* to £13.6m
* Growth based on annualisation of 9 months prior period (being a 7 month trading period)
Operational Highlights
•
Enlarged Group - Two significant acquisitions in a 14 month
period creating a market leader for intermodal logistics for
dry and liquid bulk materials
•
Dry Bulk (UBC) - Falling performance prior to and
immediately post acquisition improved due to positive
actions by management
•
Liquid Bulk (UTT) - High demand for tankcontainers
solutions, utilisation improved
•
Reorganisation - The merger and reorganisation of the new
enlarged group is well underway with improvement in
customer service, efficiencies and strength of management
•
Rebranding - We are focused on branding the Group
under InterBulk for dry and liquid bulk, positive reaction
from our customers
•
China - InterBulk have established a wholly owned logistics
company in China with significant opportunities for growth
•
Geographical expansion - With a full product offering and
an expanding global infrastructure growth opportunities
are being harnessed in areas such as Middle East, Russia,
South America and Asia
•
Innovation - ISO-Veyor and Flexi-tank technology are being
developed to ensure we can provide our customers with new
solutions to their supply chain and logistics challenges.
The tankcontainer market worldwide is still growing and
is driven by underlying growth in the chemical industry
and substitution from other methods of packaging and
transportation such as drums, road tankers and parcel tanker
vessels. The market for tankcontainers has grown from almost
nothing 25 years ago to circa 180,000 units today. This still
accounts for a small percentage of the liquid chemicals being
moved worldwide and offers significant potential growth for
the foreseeable future.
With the acquisition of UBC we are now the leading dry bulk
intermodal logistics company in Europe operating
approximately 13,000 special dry bulk containers and a fleet
of approximately 370 special tipping trailers. The Dry Bulk
business is currently focused on the polymer sector of the
petrochemical industry. Over the last 12 months there has been
good growth in the transportation of food products such as
sugar and starch with an increasing number of multinational
agri-product and food manufacturing customers. Food will
provide additional opportunities in the future and remove
reliance on the polymer sector. Although UBC has operated
primarily in Europe there are many opportunities to develop the
bag-in-box container with liner technology and service for the
petrochemical and food industries worldwide. We intend to use
the existing global reach of InterBulk to extend our Dry Bulk
solutions into new geographical areas.
The InBulk ISO-Veyor business provides a unique technology
to transport dense bulk solids and is at an early stage of
development. Unusually for a logistics business this brings
innovation to our business model which we believe is an
exciting factor.
We have a great team of people at InterBulk. The recent
reorganisation has led us to strengthen our management
team with the addition of some key senior executives.
We will strengthen our team further as and when required
to ensure that InterBulk is fully equipped to deal with all the
developments happening in the modern logistics arena and
ensure we are at the forefront of those changes. I would like
to take this opportunity to thank each and every employee
for their contribution to the Group during the last year.
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4
Interbulk Group plc
Chairman’s Statement (continued)
First delivery of new rebranded
specialist 30 foot dry bulk
containers.
InterBulk Group’s Shanghai
office is located on the Bund,
at the heart of Shanghai’s
business district. New Beijing
office recently opened.
InterBulk Strategy
The vision of InterBulk is to provide a complete service offering
to customers for the intermodal movement of any dry or liquid
bulk material on a global basis. InterBulk is focused on offering
our customers a Technology Matrix that includes ISO-Tanks and
ISO-Veyors, Flexi-Tanks and Flexi-Liners representing the four
main ways to transport and store bulk liquids and dry bulk
products intermodally in container sized units. The acquisition
of UBC makes InterBulk a leader in Europe for Flexi-Liners
(bag-in-box) and places us in an excellent position to develop
the business organically in other regions of the world. All four
of these technologies will continue to be developed and
supported by the global network. We see growing strength in
external drivers of increased intermodal movement of bulk
material including environmental factors, road congestion, fuel
costs and flexibility in the supply chain, continuing to grow.
The Company’s longer term acquisition plans are split into two
key areas, being the consolidation of the liquid tankcontainer
operator market and completing the technology matrix in both
liquid and dry bulk intermodal solutions. Both of these areas
will leverage off the Company’s existing infrastructure and
management skills and should achieve efficiency improvements
via optimisation of trade flows, extending geographical spread,
improving utilisation and improving procurement results
through scale. At present we see significant opportunities
to develop our customer offerings via organic developments.
On the tankcontainers side we believe opportunities exist but
at the moment we have no specific targets. Our focus in the
next year is on the reorganisation and maximisation of the
existing opportunities that we have in hand.
The Company has started to make inroads into China which
we view as the major region for organic growth in the business
over the short to medium term. As announced on 1 October
2007, InterBulk has established a wholly foreign owned
enterprise (WFOE) in China that will allow us to participate
directly in the domestic market. InterBulk has established its
own offices in Beijing and Shanghai and will develop a strong
team of local talent to take the business forward in conjunction
with our long-term agent and partner in the region. The first
target in China is to develop business with some of our key
customers from Europe and North America who have
themselves made substantial investments in China. The Group
is also developing partnerships and alliances with a number of
major Chinese companies in the Chemical and Transportation
sectors to leverage future growth potential.
Outlook
The reorganisation of the enlarged Group is well underway.
This has been well received by our customers and is creating
opportunities for the Group’s existing European activities. We are
also seeing high demand and significant opportunities for growth
beyond Europe. The demand for our intermodal logistics services
is high, creating a positive operating environment for the Group.
The ongoing reorganisation will take time to deliver the full
financial benefit to the Group. We expect to start seeing
the benefits in six months via improved customer service,
improved supplier relationships and internal systems being
fully integrated. The geographic expansions, such as China,
are expected to have a financial impact in the second half
of this current financial year as we are already working on
positioning the Group in these high growth areas.
Trading for the current financial year has been encouraging and
accordingly your Board is confident about the Group’s
prospects for the current financial year and beyond.
William Thomson
Executive Chairman
20 December 2007
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Interbulk Group plc
Chief Executive’s Review
Business Overview
InterBulk’s strategy is focused on providing global intermodal
logistics solutions for the movement of dry and liquid bulk
material for the petrochemical, food and minerals industry.
The “one company, one vision, one brand” strategy was
adopted after the acquisition of UBC in April 2007. An
integration programme was started with a focus on people,
organisation and systems to optimise the service offered to
our customers. The two major companies in the group are
now UTT and UBC although we are concentrating our
reorganisation and rebranding efforts on InterBulk and
refer more nowadays to Dry Bulk and Liquid Bulk.
We execute our strategy through a network of offices and
agencies in a number of geographic areas. These areas are
Europe (84% of the business), the Americas (10% of the
business) and Asia (6% of the business). We have recently
re-organised to focus on growing the business in each of
these regions.
Market Position
The transportation of bulk products around the world is
growing steadily. This is caused by ongoing globalisation
and a shift in manufacturing locations. In addition, a large part
of our growth potential comes from environmental and cost
pressures. Our intermodal solutions provide a positive
contribution to reduce these pressures for our customers,
for example by taking products off the roads and also ensuring
product integrity since there is no need for intermediate
product handling.
Strong growth areas are:
• Europe where we see more traffic flows going to Eastern
European countries and Russia to meet growing demands;
• China with strong consumer demand to be satisfied by
domestic manufacturing supported by logistics services; and
• Middle East where in the next 3 years significant volumes
of mostly dry bulk chemical products will be produced
and exported to consumers around the world.
Since the acquisition of UBC the Group now controls a fleet of
more than 20,000 units. The fact that approximately 55% of the
liquid bulk fleet and the entire dry bulk fleet of 13,000 units are
being used in Europe makes the InterBulk Group a leader in
European intermodal container logistics for bulk products.
Transport and Logistics in Europe is currently characterised
by a shortage of shipping, trucking and rail capacity and
congestion in ports and industrial clusters. As a result of this,
along with further globalisation and changes in legislation such
as the European Drivers Working Time Directive, we expect the
capacity shortages to persist for the next few years. Cost of
fuel has never been as high or volatile. These dynamics have
changed the strategic position of the logistics providers for
road, rail and shipping and resulted in a sharp rise in
operational costs in the last 6 months. Our customer
agreements generally include fuel escalation clauses so such
costs can be passed on. Our information system and
processes are designed to ensure all direct cost increases are
identified and notified to our commercial teams. This is an area
of the business that we have focused on to improve the
response time to passing such cost increases onto customers.
Global Developments
Europe – Dry Bulk
After the acquisition of UBC our main target was to retain
existing business and regain confidence from the customer
base to reposition ourselves as market leader in operations,
fleet capacity and service levels. We believe that sustainable
quality improvement has been recognised by our customers
through our commitment to training and development, the new
organisation structure and evidence of investments in new
equipment and refurbishment of the existing fleet.
Post acquisition we continued to see deterioration in financial
performance. This was due to some specific issues on certain
UK customer plants in terms of unplanned closure and also
direct cost increases. Quarter 4 improvement has been
achieved with each month seeing improved performance.
Interbulk Group plc
InterBulk Group has a team of
389 employees around the world.
This is mainly due to successful commercial rate discussions
with key customers and also the stabilisation of supplier
relationships. The foundation of this success has been the
improvement in customer service during the period.
Asia – Dry Bulk
The dry bulk business started by United Transport Bulk
(“utb”) was in direct competition to the joint venture UBC
has in Malaysia. We are in the process of merging these
two businesses. The utb division in its development phase
made a small operating loss in the year.
ISO-Veyors Dry Bulk
The ISO-Veyor technology continues to grow in terms of
customer awareness and technological acceptance. The
performance has improved from the prior period with only
a small operating loss in the year. Predicting the exact timing
of order bookings remains difficult although we do start the
next financial year with higher levels of enquiries than in the
prior period. We did continue to invest in the business in
terms of internal resources and R&D as we believe this
technology can provide a unique solution for many of our
customers. The acquisition of UBC has provided a greater
depth of Dry Bulk expertise and customer knowledge and
we have added focused sales resources in North America
to further improve penetration.
Europe Liquid Bulk
Our turnover in Europe is still the major part of the InterBulk
business; the liquid bulk business performed to plan in the first
half of the financial year although a reduction in rates occurred
for export traffic from Europe to China due to our Chinese
export demand outweighing the volume of our inbound
tankcontainers. This reduction in rates was successfully
compensated by increased intra- European activity, which
showed the strength of our flexible and integrated fleet. The
intra-European volumes are up against 2006, which is a positive
development. Costs accelerated in the second half of our
financial year and a delay in recharging those cost increases to
customers impacted on our results. The improvements in our
systems and processes will improve our response times.
Our strategic alliance with Norbert Dentressangle proved to
be consistently successful both on the customer development
and the operational support side of the business.
After the challenges in 2006 the Scandinavian business has
stabilised and the feedback from our customers is encouraging
as we have built their confidence in our quality of service.
This will remain a competitive market for us.
The second half of the year was characterised by two factors:
•
a lack of export traffic from Europe to the USA that we
believe was partly caused by the effect of the weakness
of the US $ making European chemical supply expensive.
We have taken measures to overcome this situation and
managed to normalise the balance of flows by the year
end; and
•
a capacity shortage of transportation resources including
drivers and trucking for the execution of the intra-European
business occurred that put some pressure on our service
levels. We have introduced an enhanced procurement
function in the organisation that will focus on ensuring
sufficient capacity in the new financial year.
Asia Liquid Bulk
In the first half of the financial year the Asian business was
affected by a fleet imbalance in China as demand out of China
exceeded our import activity. This was successfully resolved in
the second half of the year. A challenge for all operators is the
fact that due to high demand, especially from China, space on
deep-sea vessels is limited. Our connection with our longstanding agent partner in Asia ensured valuable support to
overcome the problem.
7
8
Interbulk Group plc
Chief Executive’s Review (continued)
The Rio de Janeiro office has
seen strong growth during 2007.
The intra-Asia business is competitive in spite of high demand
and rates are still an issue with the customer base. Our ability
to serve both the intra-Asian and the international market
mitigated our exposure to the lower rates in the local market.
Americas Liquid Bulk
The lack of containers going to the Americas caused a
reduction of capacity for American exports in the second half
of the financial year and affected the container storage income.
The shortage of equipment required us to focus on selective
business acceptance. The high demand in this market
supported our selective approach. This situation normalised
towards the end of the year.
The South American business, especially Brazil, experienced
high growth both on imports and exports. Mexico has also
grown and has become a profitable destination. Although the
lack of business to USA affected our results this was partly
compensated by the combination of intra-North-South
American traffic and the global traffic flows.
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.
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.
Flexi-tanks liquid
The Flexi-tanks performance exceeded budget as business fast
tracked throughout the agency network in Asia. We now have
activities in Malaysia, Singapore, Vietnam, Thailand, Indonesia,
Philippines, India and Middle East with Australia about to come
on stream, to be followed soon by China and Japan.
Flexi-tanks is a rapidly growing market with low capital cost
requirements. Next year’s target is to extend this business into
the rest of the world. Additional investments primarily in people
and systems are being made.
People
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, appropriate
incentive schemes to all staff, commitment to Health and
Safety and equal opportunities.
Corporate Social Responsibility
InterBulk Group plc 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.
We believe we have best practice processes and reporting
embedded into the business. QHSSE excellence is a core
value of the InterBulk Group.
Koert van Wissen
Chief Executive Officer
20 December 2007
10
Interbulk Group plc
Financial Review
Hull, UK Centre of Excellence
for the UBC acquisition.
Acquisitions and readmission to AIM
On the 10 April 2007, by means of a reverse takeover, the
Company acquired the entire issued share capital of United
Transport International Limited (referred to as “UBC”) for a
total consideration of £79.5 million on a debt and cash free
basis (excluding finance lease obligations).
On the 10 April 2007 the Company raised £28 million by means
of a placing of 140 million ordinary shares at a price of 20 pence
per share. Also on that day 65 million ordinary shares at a
price of 20p were issued as part of the consideration for
the UBC acquisition.
Whilst the financial statements cover a full year it is important
to note that the results only include 5.7 months for the recent
UBC acquisition. The prior period results covered the nine
month period to 30 September 2006 but represented only
seven months of trading activity.
Valuation of assets for purchase accounting
During the period the fair value of the equipment fleet, customer
relationships and IT software acquired on the acquisition of
UBC was determined. The valuation of the equipment fleet was
prepared using a depreciated replacement cost approach and
for customer relationships an excess earnings method was used.
The nature of this exercise required judgement with regard to
both asset value and economic asset lives.
Taxation
The Group’s tax charge is based on the profit for the year and
tax rates in force at the balance sheet date. Estimation of the
tax charge requires an assessment to be made of the potential
tax treatment of certain items which will only be resolved once
finally agreed with the relevant tax authorities.
Operating Performance and Key Performance Indicators
Critical accounting policies
Group
The Group’s principal accounting policies are set out on
pages 32 to 39 of the financial statements and, conform to EU
endorsed International Financial Reporting Standards. We need
to use estimates and make judgements in the preparation of
the financial statements. The most sensitive areas affecting
the financial statements are discussed below.
Revenue
As at 30 September 2007, £113.2m of goodwill is carried on
the balance sheet. IAS 36 requires this carrying value to be
compared to its value in use calculations using cash flow
forecasts. As a result, judgement is required in preparation
of the forecasts and uncertainty exists which could cause
the actual cash flow to differ.
9 month period
to 30 September
2006
£162.1m
£59.1m
Contribution %
14.0%
15.0%
Headline operating profit
(before exceptional items)
£8.2m
£3.4m
5.0%
5.8%
£6.6m
£1.9m
0.71 pence
1.2 pence
122,559
38,447
18.4%
(0.7%)
Operating profit %
Net interest (before exceptional
items)
Impairment of goodwill
Year to
30 September
2007
Headline earnings per share
(before exceptionals)
No of container paid moves
Tankcontainer utilisation
rate – % change in period (2)
(1)
Headline EBITDA (before
exceptional items) (3)
£13.6m
£5.1m
Cashflows from operating
activities/EBITDA %
99%
133%
(1) Container moves are the number of moves performed on
behalf of customers (includes UBC since 10 April 2007).
(2) Utilisation is measured based on paid days divided by
total available days (excluded from paid days would be
any empty repositioning, cleaning and maintenance days).
Key Performance Indicator is the % change in the utilisation
percentage in the period.
Interbulk Group plc
11
Exceptional items
Exceptional items of £0.8m have been reported in the current
year against operating profit. Note 7 provides a full explanation.
The largest element of this amount relates to the non-cash
impairment of capitalised IT costs due to the implementation
of one group-wide IT system. The balance relates to
reorganisation costs.
(3) Earnings before interest, tax, depreciation and amortisation.
Finance expense
Revenue
Group revenue, as reported for the year was £162.1m (period to
30 September 2006: £59.1m). Number of liquid moves performed
during the year to 30 September 2007 was 69,663 which
represents a 6% increase on an annualisation of the prior
period. The number of dry bulk moves performed during the
post acquisition period by UBC was 52,896.
Utilisation of the tankcontainer fleet compared to the prior
period equivalent showed an improvement of 18.4% due to
the high demand market.
Operating profit
Group operating profit before exceptional items for the year
was £8.2m or 5.0% return on revenue (period to 30 September
2006: £3.4m or 5.8%). After adding back depreciation and
amortisation the EBITDA (before exceptional items) generated
in the year was £13.6m or 8.4% return on revenues (period to
30 September 2006: £5.1m or 8.7%). Group operating profit
after charging exceptional items for the year was £7.3m
(period to 30 September 2006: £3.4m).
Net finance expense (before exceptional items) for the Group
for the year was £6.6m (period to 30 September 2006: £1.9m).
The Group has entered into a three year interest rate swap
arrangement which will fix approximately 95% of the Group’s
senior debt interest cost until September 2010. This significantly
reduces the sensitivity to future changes to interest rates. The
recent change in the credit markets and future expectations for
interest rates does mean these swap arrangements are “out of
the money”. A market value liability of £0.7m is recorded at
30 September 2007 to reflect this fact.
Included in finance expense is an unrealised non-cash
exchange loss of £0.6m on an element of long-term bank debt
denominated in Euros to create a hedge against Euro trading
income. Due to the reduction in Euro/£ exchange rate in the
last 2 weeks of the financial year there is a variance between
the average exchange rate (for which the Euro trading income
is translated) and closing rate (for which the hedge loan is
translated). This unrealised exchange loss is the reason why
the interest expense is higher than expectations.
Finance expenses includes a £0.7m exceptional write off
associated with the capitalised finance costs which was
written off due to the refinancing of the senior debt in April
2007 as opposed to being amortised over the period of the debt.
12
Interbulk Group plc
Financial Review (continued)
Profit before tax
Cash flow
Group loss before tax for the year was £4,000 (period to
30 September 2006: £1.5m profit). Group profit before tax
for the year before exceptional items was £1.6m (period
to 30 September 2006: £1.5m profit).
Net cash inflow from operating activities for the year was
£13.0m (period to 30 September 2006: £5.8m). This includes tax
cash outflows of £0.5m (period to 30 September 2006: (£1.0m).
Consequently the cash generated from operations (prior to tax
paid) was £13.4m (period to 30 September 2006: £6.8m). This
presents a 99% (period to 30 September 2006: 133% ) conversion
of the EBITDA (pre exceptional items) generated in the year.
Taxation
The tax credit for the year was £0.3m (period to 30 September
2006: £0.6m charge). Due to the small loss before tax in the year
an exercise to determine the effective tax rate from simply the
financial statements is somewhat meaningless as even small
differences in tax treatments can cause disproportionate
variances to the headline accounting effective rate. Our
European businesses are subject to corporation tax rates of
26% to 30%. As the majority of our profit before tax is recorded
in Europe plus differences in tax treatment are not significant
a rate of 30% is considered to be reasonable effective tax rate
for underlying profits.
Earnings per share
Basic earnings per share as reported on the Income Statement
post exceptional items for the year were 0.14 pence (period to
30 September 2006: 1.2 pence). Basic earnings per share (before
exceptional items) for the year were 0.71 pence (period to 30
September 2006: 1.2 pence). A number of non-cash items are
recorded in the current year. This included an unrealised
exchange loss of £0.6m on Euro denominated bank debt as
noted above plus £0.2m of intangible amortisation. Adjusting
for these items and the taxation effect would result in earnings
per share of 1.03 pence.
The cash flow from investing activities was significantly
impacted by the payments associated with the 10 April 2007
acquisition. Excluding these items the only material investing
activity was the £1.4m (period to 30 September 2006: £0.4m)
of net capital expenditure on fixed assets.
The cash flow from financing activities was similarly impacted
by the 10 April 2007 acquisition. The UBC acquisition was on a
debt free basis, excluding certain finance lease obligations but
in line with normal practice the debt was repaid at completion
by the relevant company. In addition, at the same time the
existing senior debt package of InterBulk Group plc was
replaced as part of an enlarged Group facility. As a result, cash
flow from financing includes new borrowings of £78.6m and net
proceeds of £25.9m from the cash placing on the 10 April 2007.
Included in the £100.2m of repayments of borrowings is some
£61.9m which relates to the debt of the previous owners of
United Transport International Limited repaid at completion
plus £36.7m for the replacement of the InterBulk Group plc
existing senior debt package. The balance of repayments of
borrowings relates to the scheduled repayment of our term
debt during the year.
At 30 September 2007, the Group had £7.4m in cash and cash
equivalents (30 September 2006: £6.6m). The Group has access
to a committed working capital and ancillary facility from the
Bank of Scotland of £10m.
Interbulk Group plc
13
New rebranded tankcontainers
for hazardous liquids.
Balance sheet
At 30 September 2007, the Group’s net assets amounted to
£58.6m being an increase of £36.4m from the opening position.
This increase is attributable to mainly the cash placing, and
the share for share exchange on the 10 April 2007, release
of the earn-out shares which will not be issued (note 29)
plus underlying profit for the year.
During the year, a one-off cash contribution of £0.9m was
made to the Dutch defined pension benefit scheme. This cash
contribution has reversed the pension liability to a £0.1m asset
at September 2007 (note 32). This scheme is insured and thus
the risk of any future IAS19 pension deficit is limited.
The repayment profile of the Bank of Scotland senior debt is
fully explained in note 25. Only the Term A loan of £17.6m is
repayable on an amortising basis over the period to March 2013.
Finance lease creditors are the standard form of finance for our
equipment fleet. In our business model the interest costs are
treated as an operational cost and thus included in our
customer pricing. Given the continued investment in our
equipment fleet, finance lease liabilities will be a constant
factor, with care taken to ensure our operating margins fully
reflect all related costs.
US Department of Justice
There have been no material developments since the
publication of the readmission document dated 16 March 2007,
which contains details of the background to this matter.
As at 30 September 2007, no provision is recorded, other
than expected professional legal cost accrual, related to
the DOJ investigation.
Debt
The Group has net debt (defined as bank loans, overdrafts
and obligations under finance leases less cash and cash
equivalents) at 30 September 2007 of £96.2m (30 September
2006: £45.2m).
This net debt position is split as:
30 September 2007
£’000
30 September 2006
£’000
79,090
36,402
2,384
-
Asset finance lease creditor
22,143
15,325
Less: Cash and cash equivalents
(7,401)
(6,552)
96,216
45,175
Bank of Scotland senior debt
Other bank loans
Scott Cunningham
Finance Director
20 December 2007
14
Interbulk Group plc
Directors and Advisors
From L to R: Bill Thomson,
Koert van Wissen and
Scott Cunningham.
As an executive director he has worked within the Clyde
Blowers portfolio of companies since 1992, holding many and
varied posts in the UK and overseas. He has been responsible
for the development of the Clyde Blowers portfolio in China,
setting up four companies. Before its sale in October 2002,
Bill Thomson was the Chief Executive of CleanCut Technologies
Limited, a subsidiary of Clyde Materials Handling Ltd, which
developed solutions to environmental challenges in the offshore
oil and gas industry. He is an Officer of the Order of the British
Empire (OBE) for services to British exports, mainly in China,
and was recently awarded an honorary degree from London
Metropolitan University. He is also a Vice President of the China
Britain Business Council. Bill Thomson is a Chartered Engineer
with a BSc in Mechanical Engineering and is a member of the
Institution of Mechanical Engineers.
assurance services to both public and private companies
in a wide variety of industries including transport, oil support
services, construction and engineering. During this period
he performed audit work on financial statements and other
reporting documents for companies listed on the London Stock
Exchange. During his last 2 years at Arthur Andersen he moved
to focus on transaction support services, where he was involved
in the provision of acquisition support for both companies
and private equity/institutional investors. Scott left Arthur
Andersen in 2001 and joined the Clyde Blowers group as Group
Corporate Finance Manager. In this position he was responsible
for the review of acquisition targets, overview of consolidated
financial reporting, business planning reviews and worldwide
treasury and tax matters. Scott was appointed Director of
Corporate Finance on 28 February 2006 and subsequently
on 25 April 2007 the Group Finance Director.
Koert van Wissen, Chief Executive Officer
Non-Executive Directors
Koert van Wissen joined UTT’s predecessor, United Bos BV,
in 1980 and, from 1980 to 1983, was employed as general
manager of the Rotterdam Europoort office and was responsible
for day-to-day running of the liquid bulk business between
England and the European continent in road-tankers. Between
1983 and 1989, Koert had a number of roles, including General
Manager of the Rotterdam business unit with responsibility for
the restructuring of the packed logistics of Shell-Pernis. He
was, during this time, General Manager for the newly founded
Tankcontainer Division of United Bos BV and purchased the
first Tankcontainers in its fleet. From 1989 to 1996, Koert was
Operations Director of United Transport Tankcontainers.
He started with a fleet of 350 Tankcontainers focused mainly
on Europe, which grew into a worldwide business with a fleet
of 4,500 Tankcontainers. He was subsequently appointed as
Business Development Director for worldwide operations and
pricing structure during the time when UTT was owned by
BET and Rentokil Initial. Between 1996 and 2000, Koert was
Operations and Business Development Director of Initial Tank
Containers, with responsibility for all world wide operations and
business development. In 2000, he was appointed managing
director of UTT’s predecessor, a subsidiary of Rentokil Initial,
and led the management buy-out of UTT in 2002. He was
appointed as InterBulk Group’s CEO on 28 February 2006.
Koert is a Board member of the ECTA (European Chemical
Transportation Association).
James (known as “Jim”) McColl
William (known as “Bill”) Thomson, Executive Chairman
Scott Cunningham, Group Finance Director
Scott Cunningham has a Bachelor of Accountancy degree
from the University of Glasgow. He obtained admission to the
Institute of Chartered Accountants of Scotland in 1995. He was
previously a senior manager with Arthur Andersen. His role in
his first 7 years with Arthur Andersen was in the provision of
Jim McColl started his career as an engineering apprentice with
Weir Pumps Limited in Glasgow. After six years in engineering
and six years of part-time study, he left work to take up full-time
study for a BSc degree in Technology and Business Studies on
a four year course at Strathclyde University. After achieving a
BSc degree with Honours in 1978, he returned to Weir Pumps
Limited where he remained for three years while studying parttime for a Masters Degree in Business Administration. In 1981
he moved to a senior management position with Diamond
Power Speciality Limited, an engineering company supplying
equipment to the power industry worldwide. From 1981-1985
he studied part-time for a Masters Degree in International
Accounting and Finance. In 1985 Jim was headhunted by
Coopers & Lybrand as a senior consultant involved mainly in
“corporate care” assignments. This meant working in various
companies who were in financial difficulties and in need of
turnaround. In 1986 he left Coopers & Lybrand to become
a self employed “company doctor” and, after two successful
turnarounds, in 1992 he bought 29.9 per cent. of Clyde Blowers
plc, a small engineering company with a full listing on the
London Stock Exchange. Prior to purchasing his stake in Clyde
Blowers plc, it had a market capitalisation of £2.2m. In 1999
Jim led a management buy-out of Clyde Blowers plc to take the
company private. Over the past 10 years the Clyde Blowers
portfolio has grown significantly and has developed into a
portfolio of global companies. During 2001 the Clyde Blowers
business was reorganised into discrete independent companies
focusing on core markets. These businesses each have their
own ownership structure but what is common is that the Clyde
Blowers executive team has been the driver of the strategic
direction. Jim’s achievements have been recognised across the
industry and he has been presented with a series of awards,
which include the Ernst & Young Master Entrepreneur of the Year
2001, an OBE in 2001, awarded as part of the Queen’s Birthday
Honours List, a Scottish international business achievement
award presented by HRH Princess Royal in 2006, and more
recently, was named the Insider Elite Leader of the Year 2006.
Interbulk Group plc
15
Benedikt Olgeirsson
Benedikt Olgeirsson was appointed as a Managing Director
of Atorka Group in September 2005. He is an engineering
graduate from the University of Iceland and completed his
Master’s degree in Project Management at the University of
Washington in Seattle in 1987. From 1988 to 1993 he worked
Graeme Bissett
as a construction project manager until he joined Eimskip.
Graeme Bissett is a Chartered Accountant, who was a senior
From 1993 until 1997 he directed Eimskip’s operations in the
partner with Arthur Andersen before becoming Group Director
Reykjavík container terminal at Sundahöfn, whereupon he
of Finance at Kwik-Fit Holdings plc from 1998-2001. He was a
became director of domestic transport for Eimskip. During
non-executive director of Belhaven Group plc, Scotland’s largest
the period 1999-2003 he served as managing director of Eimskip
brewing and pub group, until it was sold to Greene King plc in
in Hamburg. From 2004 to 2005 he was managing director of
2005 for £190m. He is currently providing consultancy services
Parlogis hf., one of Atorka’s subsidiaries.
and non-executive roles to a number of organisations including
acting as a non-executive director of Macfarlane Group plc, the
listed packaging group.
Herve Montjotin
Eric van der Werff
Eric van der Werff spent 34 years working for Royal Dutch Shell
plc in a variety of roles, but latterly as Global Land Logistics
Manager, where he had responsibility for procuring logistic
services and managing logistic activities in the areas of
transport, storage, warehousing and packaging for all chemical
production and business locations globally. He is currently
developing his consultancy business advising on logistic
services.
Magnús Jónsson
Magnús Jónsson became CEO of Atorka Group on 16 November
2005. Magnús has extensive experience of investment
operations. During the years from 1998-2001 he acted as a fund
manager for Kaupthing. In the following year he served as
Managing Director of the venture fund Uppspretta. From 20022005 he served as Managing Director of Ránarborg hf. and
related investments, and he was a member of the Board of
numerous companies, including Jardboranir hf., Afl Investments
hf., MP Securities hf., and Saeplast hf. He was also Chairman
of the Board of Parlogis hf., A. Karlsson hf., Promens hf., and
Atorka. Magnús was elected Chairman of the Board of Atorka
in February 2004. He is Chairman of the Board of Renewable
Energy Resources, Jardboranir, and Promens, and he is a
member of the Board of Enex and Björgun. Magnús was
executive chairman of the Board of Atorka from April 2005
until November 2005 when a change in management structure
resulted in him becoming CEO.
Herve Montjotin is a member of the Executive Board of Norbert
Dentressangle Group and managing Director of the transport
division. He graduated from the Ecole Normale Supérieure
with an ESCP Masters. Herve joined the Nobert Dentressangle
Group in 1995 and was Human Resources manager from 1996 to
2001. He has been a member of the Executive Board since 1998.
From 2001 to 2005, he was General Manager in charge of
Organisation and Human Resources and also MD of the
Transport Division since 2005.
Advisors:
Registered auditors:
PricewaterhouseCoopers LLP
Kintyre House
209 West George Street
Glasgow G2 2LW
Nominated Adviser:
City Financial Associates Limited
46 Worship Street
London EC2A 2EA
Solicitors:
Dundas & Wilson
191 West George Street
Glasgow
G2 2LD
Brokers:
Arden Partners
Nicholas House
3 Laurence Pountney Hill
London
EC4R 0EU
Bankers:
Bank of Scotland
110 Queen Street
Glasgow G1 3BY
Registrars:
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Registered number:
5308244
Registered office:
One London Wall
London
EC2Y 5AB
16
Interbulk Group plc
Directors’ Report
The Directors present their annual report and the audited
financial statements for the year to 30 September 2007.
Principal activity
The principal activity of the Group is the provision of intermodal
logistic solutions for the movement of dry and liquid bulk
material. The Company’s principal subsidiary undertakings
are listed in note 18 to the financial statements.
Quality, health, safety, security and environmental compliance
As some parts of the Group are involved in the movement of
hazardous chemicals, high standards are required on health
& safety, security and environmental matters. Systems and
procedures are in place for quality, health, safety, security
and environmental compliance to support assessments under
industry standard schemes.
Utilisation and balancing of fleet
Business review
The information that fulfils the requirements of the business
review can be found contained in the Chairman’s statement,
(highlights sections on pages 2 and 3 and outlook section
on page 4), the Chief Executive’s Review (on pages 6 to 8)
and the Financial Review (on pages 10 to 13).
These financial statements include the financial results of
United Transport International Ltd (referred to as “UBC”) since
10 April 2007. The prior year period is for the nine months to
30 September 2006 but includes only seven months of actual
trading activities. The Group Income Statement for the year
is set out on page 26.
On 27 July 2007 the company changed its name from InterBulk
Investments plc to InterBulk Group plc.
As the container and equipment fleet is one of the Group’s main
assets, it is critical that utilisation is maximised. Repositioning
of containers, when empty, from one region of the world to
another, is expensive. As a result, the challenge is to ensure
that the fleet is well balanced around the world having regard
to anticipated demand in the various regions.
Adoption of innovative technology
If adoption of the innovative technology offered to customers
and substitution away from the traditional methods of
transporting bulk material are slower to take place than
anticipated, this may prevent the Group from meeting its
target growth rates.
Results and dividends
Principal risks and uncertainties
The management of business and execution of the Group’s
strategy is subject to a number of risks. The business risks
affecting the Company are set out below. Risks are formally
reviewed by the Board and appropriate processes put in place
to monitor and mitigate them. If more than one event occurs,
it is possible that the overall effect of such events would
compound the possible adverse effects on the Group.
Competition
The Group operates in a competitive market. The Group cannot
predict the pricing or promotional activities of its competitors or
their effect on its ability to market and sell its services. In order
to ensure that its services remain competitive, the Group may
be required to reduce its prices as a result of price reductions
or promotions by its competitors.
Key individuals
The Group’s future performance, and that of any activities in
which it invests, depends heavily on its ability to retain the
services of its directors and managers and to be able to retain
and attract the services of suitable personnel and motivate
them. Although such directors and managers have entered
into service agreements, the loss of the services of any such
directors and managers could have a material adverse affect
on the business and prospects of the Group.
Group profit after taxation for the financial year amounted to
£275,000 (period to 30 September 2006: £916,000). No interim or
final dividend was proposed during the year. No dividends were
paid or proposed in the prior period.
Issue of shares
On 10 April 2007, 140 million 10p ordinary shares were issued
for cash consideration and 65 million 10p ordinary shares were
issued to satisfy part of the consideration for the acquisition
of UBC.
Directors
The Directors during the year under review were:
Executive:
W Thomson (Chairman)
K van Wissen
S Cunningham
R Molenaar
- resigned 25 April 2007
Non-Executive:
J McColl
G Bissett
E van der Werff
M Jonsson
B Olgeirsson
H Montjotin
- appointed 11 May 2007
The Directors holding office at 30 September 2007 held
beneficial interests in the issued share capital of the Company
as follows. During the year none of the directors sold any
shares. At the date of resignation of R Molenaar he held
1,217,500 shares in the Company.
Interbulk Group plc
17
were appointed subsequent to the last Annual General Meeting
and will also offer themselves for re-election at the forthcoming
Annual General Meeting.
Indemnity of officers
1 October 2006 or
date of appointment
10p Ordinary
Shares
Number
30 September 2007
W Thomson
2,939,988
3,905,398
K van Wissen
1,217,500
1,217,500
S Cunningham
10p Ordinary
Shares
Number
121,511
121,511
J McColl
8,136,726
10,911,661
G Bissett
-
-
E van der Werff
-
-
M Jonsson
(a)
(a)
B Olgeirsson
(a)
(a)
H Montjotin
(b)
(b)
a) M Jonsson and B Olgeirsson are also directors and
shareholders in Atorka Group hf. The shares held by
Atorka Group hf in the Company via Atorka Holdings BV
are shown below.
b) H Montjotin is a director and shareholder in Groupe Norbert
Dentressangle SA. The shares held by Groupe Norbert
Dentressangle SA in the Company are shown below.
On 12 October 2006 the Company granted options under its
Unapproved Share Option Scheme to the following Directors
of the Company over ordinary shares, all with an exercise price
of 20 pence.
Number
W Thomson
587,352
K van Wissen
978,920
S Cunningham
587,352
These Unapproved Share Options may not be exercised for
three years from the date of their issue and are subject to
certain performance conditions. During the year, 978,920
options were issued to R Molenaar. Subsequent to the year
end these options were noted as cancelled and have been
excluded from the above table.
W Thomson and S Cunningham, who both retire by rotation,
offer themselves for re-election at the forthcoming Annual
General Meeting. M Jonsson, B Olgeirsson and H Montjotin
Under Article 184 of the Company’s Articles of Association and
subject to the provisions of the Companies Acts, the Company
may indemnify any Director or other officer against any liability
incurred by him in the execution or discharge of his duties or
the exercise of his powers and including but not limited to any
liability for the costs of legal proceedings where judgement is
given in their favour.
In addition, the Company may purchase and maintain for any
Director or other officer or auditor, insurance against any
liability, and the Company does maintain appropriate insurance
cover again legal action brought against its Directors and
officers and the Directors and officers of its subsidiaries.
Substantial shareholders
As at the date of this document, the Company had been notified
of the following beneficial interests in 3% or more of its issued
share capital:
Number of Shares
percentage
123,537,500
40.8%
Close Brothers Private Equity LLP
33,217,205
11.0%
Groupe Norbert Dentressangle SA
20,000,000
6.6%
Victor William Martin
15,600,000
5.2%
Jim McColl
10,911,661
3.6%
John Neilson Adam Marshall
10,400,000
3.4%
Atorka Holdings BV
Employees
The Group places considerable value on the involvement of
its employees and has continued to keep them informed on
matters affecting them as employees and on the various factors
affecting the performance of the Group. This is achieved through
formal and informal meetings. Employee representatives are
consulted regularly on a wide range of matters affecting their
current and future interests.
Applications for employment by disabled persons are always
fully considered, bearing in mind the aptitudes for the applicant
concerned. In the event of members of staff becoming disabled
every effort is made to ensure that their employment with the
Group continues and that appropriate training is arranged. It is
the policy of the Group that the training, career development
and promotion of disabled persons should, as far as possible,
be identical with that of other employees.
18
Interbulk Group plc
Directors’ Report (continued)
Research and development
Auditors and disclosures of information
The Directors consider that product development while not
significant in terms of the overall Group strategy still plays an
important part in the Group’s success and expenditure continues.
Each of the persons who is a Director at the date of approval
of this report confirms that:
1.
So far as the Director is aware, there is no relevant
audit information of which the Company’s auditors are
unaware; and
2.
the Director has taken all the steps that he ought to have
taken as a director in order to make himself aware of any
relevant audit information and to establish that the
Company’s auditors are aware of that information.
Payments to suppliers
Subsidiary companies are responsible for agreeing payment
terms and conditions with their suppliers according to generally
accepted trading practices within their businesses. It is the
Group’s normal practice to pay suppliers promptly provided
that suppliers perform in accordance with agreed terms.
At 30 September 2007 the amount owed to trade creditors
by the Group was equivalent to 58 days of purchases from
suppliers (30 September 2006: 52 days). The Company has
no trade creditors being a holding company only.
Donations
No political donations have been made during the year ended
30 September 2007 (period to 30 September 2006: £nil).
A number of small charitable donations were made amounting
to £91 (period to 30 September 2006: £294).
This confirmation is given and should be interpreted in
accordance with the provision of (S234ZA) of the Companies
Act 1985.
PricewaterhouseCoopers LLP have indicated their willingness
to continue in office and a resolution to re-appoint
PricewaterhouseCoopers LLP will be put to the forthcoming
Annual General Meeting.
By order of the Board:
Financial instruments
Details of the Group’s financial risk management policies are
included in note 27 to the financial statements.
Contracts of significance
Details of material related party transactions during the year
are disclosed in note 35 to the financial statements.
Branch operations
The group operates a small branch of United Transport
Tankcontainers AB in Oslo, Norway.
Scott Cunningham
Director and Company Secretary
20 December 2007
Registered Office:
One London Wall
London
EC2Y 5AB
Interbulk Group plc
19
Corporate Governance Report
The Directors acknowledge the importance of the Principles set
out in The Combined Code on Corporate Governance (“the
code”) issued by the Financial Reporting Council on 23 July
2003. Although the Combined Code is not compulsory for AIM
listed companies, the Directors have applied the principles in
this statement, together with the Remuneration Report set out
on pages 21 to 22 as far as practicable and appropriate for a
public company of its size as follows:
of Director at Board Meetings and the record of attendance
during the year ended 30 September 2007 is as follows:
Board Meetings
W Thomson
7
K van Wissen
7
S Cunningham
7
Roel Molenaar (resigned 25 April 2007)
5
J McColl
5
The Board of Directors
G Bissett
7
As at the date of this report the Board consists of three
executive Directors and six non-executive Directors. The role
of Chairman and Chief Executive are distinct. The Chairman
is responsible for the effectiveness of the Board and ensuring
communication with shareholders and the Chief Executive is
accountable for the management of the Group. The Chairman
has an executive role that is focused on shareholder
communication and relationships plus business development
including China and new technologies. On 25 April 2007, Roel
Molenaar resigned as a Director. On 11 May 2007 the Board
was strengthened with the appointment of three additional
non-executive Directors. Graeme Bissett and Eric van der Werff
are independent non-executive Directors and are available
should a shareholder request direct access for matters which
they believe are not appropriate through the normal channel of
the Chairman. As such no senior independent non-executive
Director has been designated.
E van der Werff
7
The Board meets regularly and is responsible for strategy,
performance, approval of major capital investments, treasury
and financing matters and the framework of internal controls.
The Board has a formal schedule of matters specifically
reserved to it for decision. To enable the Board to discharge its
duties, all Directors receive appropriate and timely information.
Briefing papers are distributed to all Directors in advance of
Board meetings. All Directors have access to the advice and
services of the Company Secretary, who is responsible for
ensuring that Board procedures are followed and that applicable
rules and regulations are complied with. On appointment of a
new Director the Chairman ensures a full, formal and tailored
induction is provided. The appointment and removal of the
Company Secretary is a matter for the Board as a whole.
In addition, procedures are in place to enable the Directors
to obtain independent professional advice in the furtherance
of their duties, if necessary, at the Company’s expense.
The Company Secretary maintains a register of attendance
M Jónsson (appointed 11 May 2007)
-
B Olgeirsson (appointed 11 May 2007)
2
H Montjotin (appointed 11 May 2007)
2
Total Number of meetings
7
Subsequent to the year end, the Board has established a
Nominations Committee to address changes in Board
composition.
Directors are subject to re-election by the shareholders at
Annual General Meetings. The Articles of Association provide
that Directors will be subject to re-election at the first
opportunity after their appointment and the Board will
voluntarily submit to re-election at intervals of three years.
Brief biographies of all Board members, giving details of their
experience and other main commitments are included on pages
14 to 15 allowing shareholders to take an informed decision on
those standing for election or re-election.
Audit Committee
The Audit Committee during the period consisted of G Bissett
(Chairman of the Audit Committee), E van der Werff and J
McColl. The Board is satisfied that at least one member of the
Audit Committee has recent and relevant financial experience.
The Audit Committee meets at least three times a year and
advises the Board on the appointment, reappointment and
removal of external auditors and approves their remuneration
and terms of engagement, including developing and
implementing a policy on the provision of non-audit services
by the external audit firm. It also reviews and monitors the
independence and objectivity of the external auditor. The
Committee is also responsible for monitoring compliance with
20
Interbulk Group plc
Corporate Governance Report (continued)
accounting and legal requirements and for reviewing the annual
and interim financial statements prior to their submission for
approval by the Board. The Audit Committee has assessed the
need for an internal audit function and has concluded that the
size and complexity of the Group now merits such a function
with steps being taken to implement this aspect of assurance
across the Group. The Audit Committee met three times during
the year ended 30 September 2007. These meetings were
attended by the full Audit Committee.
Remuneration Committee
The Remuneration Committee during the period consisted
of E van der Werff (Chairman of the Remuneration Committee),
G Bissett and J McColl. The Committee’s role is to consider
and approve the remuneration and benefits of the Executive
Directors. In framing the Company’s remuneration policy,
the Remuneration Committee has given full consideration
to Section B of The Combined Code. The Report on Directors’
Remuneration is set out on pages 21 to 22. The Remuneration
Committee met five times during the year to 30 September
2007. These meetings were attended by the full
Remuneration Committee.
Internal Control
The Board is responsible for establishing and maintaining
the Group’s system of internal control and for reviewing its
effectiveness. The system is designed to manage rather than
eliminate the risk of failure to achieve the Group’s strategic
objectives, and can only provide reasonable and not absolute
assurance against material misstatement or loss. The key risk
management process and system of internal control procedures
include the following:
•
The Group’s organisational structure has clear lines
of responsibility;
•
The Board is responsible for identifying the major
business risks faced by the Group and for determining
the appropriate courses of action to manage those risks;
•
The Group prepares a comprehensive annual budget that
is approved by the Board. Monthly results are reported
against the budget and variances are closely monitored
by the Directors; and
•
Executive Directors hold regular meetings with the
executive managers of the Group’s business units.
The Directors have reviewed the effectiveness of the
system of internal control as it operated during the year
ended 30 September 2007.
Relations with Shareholders
Communications with shareholders are given high priority. The
Board uses the Annual General Meeting to communicate with
investors and welcomes their participation. The Chairman aims
to ensure that the Directors, including non-executive Directors,
are available at Annual General Meetings to answer questions.
Going Concern
After consideration of the future and taking into account
all information available, the Directors have a reasonable
expectation that the Group has adequate resources to continue
in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in
preparing the financial statements.
Statement by Directors on Compliance with the Provisions
of the Combined Code
The Board considers that they have complied with the
provisions of The Combined Code, as far as practicable and
appropriate for a public company of this size, in accordance
with the recommendations on corporate governance of the
Quoted Companies Alliance. The specific provisions of The
Combined Code not adopted during the year to 30 September
2007 are establishment of a Nominations Committee and the
related provisions of The Combined Code to this plus A1.3,
A2.2, A6.1, B.2.1 and C.3.1. In respect to B.2.1 and C.3.1 the
Board are satisfied that the membership of the relevant
committees is appropriate. Subsequent to the year end, the
Board has established a Nominations Committee. It is the
intention of the Group to develop its procedures in certain
of these areas during the forthcoming financial year where
it would be valuable to do so.
Interbulk Group plc
Directors’ Remuneration Report
Information not subject to audit
Service Agreements
The Remuneration Committee is responsible for determining
and reviewing the terms of appointment and the remuneration
of executive Directors. The Committee takes external advice, as
appropriate, on remuneration issues and takes cognisance of
major surveys covering all aspects of the pay and benefits of
Directors and senior executives in many companies.
K van Wissen has a service agreement, which requires not
more than six months notice of termination. The remuneration
package consists of basic salary and benefits in kind, pension
plus performance-related bonus arrangements.
The services of W Thomson, S Cunningham and J McColl are
provided via a service agreement with Clyde Blowers Limited.
This service agreement has a notice period of three months.
The Committee aims to provide base salaries and benefits
which are competitive in the relevant external market and which The services of G Bissett and E van der Werff are provided via
take account of the Group’s and individual performance thus
an appointment letter until 1 August 2008 unless terminated
enhancing the Group’s ability to recruit and to retain individuals with one months notice.
of the calibre required for its continuing business success. It is
the policy of the Committee to provide financial incentives and
to reward superior performance over the medium and long term
by creating opportunities to enable senior executives to earn
cash bonuses and share-related payments which result from
achievement of performance targets.
The Remuneration Committee consists of E van der Werff
(Chairman of the Remuneration Committee), G Bissett
and J McColl.
21
22
Interbulk Group plc
Directors’ Remuneration Report (continued)
Information subject to audit
Directors’ Detailed Emoluments
Directors’ remuneration for the year to 30 September 2007 (or resignation date) is as follows:
Year ended 30 September 2007
Salary/fees
£
Benefits(1)
£
Bonuses
£
Pension
Contribution
£
Total
£
Executives
W Thomson(2)
134,112
-
-
-
134,112
K van Wissen
146,087
21,130
-
40,580
207,797
(2)
S Cunningham
89,934
-
-
-
89,934
R Molenaar
82,850
14,204
-
23,014
120,068
J McColl(2)
25,473
-
-
-
25,473
G Bissett
30,833
-
-
-
30,833
E van der Werff (3)
60,461
-
-
-
60,461
569,750
35,334
-
63,594
668,678
Non-Executives
Total
(1)
(2)
(3)
Remuneration package for the above executive directors includes non-cash benefits comprising the provision of a company car and private health scheme.
The services of W Thomson, S Cunningham and J McColl are provided via a service agreement with Clyde Blowers Limited (see note 35 to the financial statements). The total fee during the
year to 30 September 2007 was £453,513. From this total fee £134,112, £89,934 and £25,473 are allocated to the directors fees for W Thomson, S Cunningham and J McColl, respectively.
Includes £44,628 in relation to consultancy services provided primarily in assistance with the reorganisation programme.
M Jonsson, B Olgeirsson and H Montjotin received no remuneration.
Performance related bonus for K van Wissen and R Molenaar is calculated based on fixed formulae which are determined in
advance each year by the Remuneration Committee. There is no bonus payable for the year ended 30 September 2007 (period to
30 September 2006: £nil).
The total remuneration and benefits of the highest paid director, K van Wissen, were £167,217 (period to 30 September 2006:
£101,011 for R Molenaar) which comprises emoluments and benefits in kind. In relation to the defined benefit scheme, for the
highest paid director, the accrued pension at the period end was £101,780 (30 September 2006: £61,780). There is no lump sum
which would be payable (30 September 2006: £nil).
9 months to 30 September 2006
Salary/fees
£
Benefits(1)
£
Bonuses
£
Pension
Contribution
£
Total
£
Executives
W Thomson(2)
68,950
-
-
-
68,950
K van Wissen
86,390
12,336
-
28,797
127,523
R Molenaar
86,390
14,621
-
19,198
120,209
S Cunningham(2)
30,673
-
-
J McColl(2)
13,711
-
-
-
13,711
G Bissett
3,333
-
-
-
3,333
2,500
-
-
291,947
26,957
30,673
Non-Executives
E van der Werff
Total
(1)
(2)
-
2,500
47,995
388,899
Remuneration package for the above executive directors includes non-cash benefits comprising the provision of a company car and private health scheme.
The services of W Thomson, S Cunningham and J McColl are provided via a service agreement with Clyde Blowers Limited. The total fee during the period to 30 September 2006 was £222,268.
From this total fee £68,950, £30,673 and £13,711 are allocated to the directors fees for W Thomson, S Cunningham and J McColl respectively.
Directors’ Interests
The Directors’ interests in the ordinary shares of the Company are set out in the Directors’ Report on page 17.
Interbulk Group plc
23
Statement of Directors’ Responsibilities in Respect
of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the Group and Parent company
financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European
Union. The financial statements are required by law to give a
true and fair view of the state of affairs of the Company and
the Group and of the profit or loss of the Group for that period.
In preparing those financial statements, the Directors are
required to:
•
select suitable accounting policies and then apply
them consistently;
•
make judgments and estimates that are reasonable
and prudent;
•
state that the financial statements comply with IFRSs
as adopted by the European Union; and
•
prepare the financial statements on the going concern
basis, unless it is inappropriate to presume that the Group
will continue in business, in which case there should be
supporting assumptions or qualifications as necessary.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The Directors are responsible for keeping proper accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and the Group and to enable
them to ensure that the financial statements comply with the
Companies Act 1985. They are also responsible for safeguarding
the assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and
integrity of the website. Legislation in the UK concerning
the preparation and dissemination of financial statements
may differ from legislation on other jurisdictions.
24
Interbulk Group plc
Independent Auditors’ Report
to the Members of InterBulk Group plc
We have audited the Group and Parent Company financial
statements (the ‘‘financial statements’’) of InterBulk Group plc
for the year ended 30 September 2007 which comprise Group
Income Statement, the Group and Parent Company Statement
of Recognised Income and Expense, the Group and Parent
Company Balance Sheets, the Group and Parent Company
Cash Flow Statements and the related notes. These financial
statements have been prepared under the accounting policies
set out therein.
We read other information contained in the Annual Report
and consider whether it is consistent with the audited financial
statements. The other information comprises only the
Chairman’s Statement, the Chief Executive’s Review, the
Financial Review, the Board of Directors, the Directors’
Report, the Corporate Governance Report and the Directors’
Remuneration Report. We consider the implications for our
report if we become aware of any apparent misstatements
or material inconsistencies with the financial statements.
Our responsibilities do not extend to any other information.
We also, at the request of the directors (because the Company
applies the Financial Services Authority listing rules as if it were
The directors’ responsibilities for preparing the Annual Report
a listed Company), review whether the corporate governance
and the financial statements in accordance with applicable law statement reflects the Company’s compliance with the nine
and International Financial Reporting Standards (IFRSs) as
provisions of the 2003 FRC Combined Code specified for our
adopted by the European Union are set out in the Statement
review by the Listing Rules of the Financial Services Authority,
of Directors’ Responsibilities.
and we report if it does not. We are not required to consider
Our responsibility is to audit the financial statements in
whether the board’s statements on internal control cover all
accordance with relevant legal and regulatory requirements and risks and controls, or form an opinion on the effectiveness of
International Standards on Auditing (UK and Ireland). This
the Company’s corporate governance procedures or its risk
report, including the opinion, has been prepared for and only for and control procedures.
the Company’s members as a body in accordance with Section
235 of the Companies Act 1985 and for no other purpose. We do
Basis of audit opinion
not, in giving this opinion, accept or assume responsibility for
We conducted our audit in accordance with International
any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly Standards on Auditing (UK and Ireland) issued by the Auditing
Practices Board. An audit includes examination, on a test
agreed by our prior consent in writing.
basis, of evidence relevant to the amounts and disclosures
We report to you our opinion as to whether the financial
in the financial statements and the part of the Directors’
statements give a true and fair view and whether the financial
Remuneration Report to be audited. It also includes an
statements have been properly prepared in accordance with
the Companies Act 1985. We also report to you if, in our opinion, assessment of the significant estimates and judgments made
by the directors in the preparation of the financial statements,
the Directors’ Report is not consistent with the financial
and of whether the accounting policies are appropriate to the
statements, if the Company has not kept proper accounting
Group’s and Company’s circumstances, consistently applied
records, if we have not received all the information and
explanations we require for our audit, or if information specified and adequately disclosed.
Respective responsibilities of directors and auditors
by law regarding directors’ remuneration and other transactions
is not disclosed. The information given in the Directors’ Report
includes that specific information presented in the Chairman’s
Statement, the Chief Executive’s Review and the Financial
Review that is cross-referred from the Business Review
sections of the Directors’ Report.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary
in order to provide us with sufficient evidence to give
reasonable assurance that the financial statements are
free from material misstatement, whether caused by fraud
or other irregularity or error.
Opinion
In our opinion:
•
the Group financial statements give a true and fair view, in
accordance with IFRSs as adopted by the European Union,
of the state of the Group’s affairs as at 30 September 2007
and of its profit and cash flows for the year then ended;
•
the Parent Company financial statements give a true and
fair view, in accordance with IFRSs as adopted by the
European Union as applied in accordance with the
provisions of the Companies Act 1985, of the state of
the Parent Company’s affairs as at 30 September 2007
and cash flows for the year then ended; and
•
the financial statements and the part of the Directors’
Remuneration Report to be audited have been properly
prepared in accordance with the Companies Act 1985.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Glasgow
20 December 2007
Notes:
1.
Uncertainty regarding legal requirements is compounded as information published on the
internet is accessible in may countries with different legal requirements relating to the
preparation and dissemination of financial statements.
2.
The maintenance and integrity of the InterBulk Group plc website is the responsibility of
the Directors; the work carried out by the auditors does not involve consideration of these
matters and, accordingly, the auditors accept no responsibility for any changes that may
have occurred to the financial statements since they were initially presented on the
website.
3.
Legislation in the United Kingdom governing the presentation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Interbulk Group plc
25
26
Interbulk Group plc
Group Income Statement
Notes
Revenue
Cost of sales
3
Gross profit
Administrative expenses
Other expenses
Total before
exceptional
items
Year to
30 September
2007
£’000
Exceptional
items
Year to
30 September
2007
£’000
Total
Year to
30 September
2007
£’000
9 month
period to
30 September
2006
£’000
162,129
(139,402)
-
162,129
(139,402)
59,090
(50,245)
22,727
-
22,727
8,845
(14,542)
-
(849)
-
(15,391)
-
(5,396)
(18)
8,185
(849)
7,336
3,431
Analysed as:
Operating profit before
depreciation & amortisation
13,609
(153)
13,456
5,103
Depreciation of tangible assets
Amortisation of intangible assets
(5,213)
(211)
(696)
-
(5,909)
(211)
(1,634)
(38)
319
(6,942)
(717)
319
(7,659)
72
(2,007)
(6,623)
(717)
(7,340)
(1,935)
(1,566)
(4)
Operating profit
Finance income
Finance expenses
4
8
9
Profit/(loss) before taxation
Taxation
Profit/(loss) for the period
1,562
10
(187)
1,375
466
(1,100)
1,496
279
(580)
275
916
The above results relate to continuing operations and all profit for the period is attributable to equity shareholders of the Company
Earnings per share (pence)
Basic (GBP)
0.14p
1.2p
Diluted (GBP)
0.14p
1.2p
Interbulk Group plc
27
Group and Company Statement of Recognised
Income and Expense
Year to
30 September
2007
£’000
Period to
30 September
2006
£’000
362
21
Net losses on net investment hedge taken to equity
(383)
(9)
Net losses on cashflow hedge taken to income statement, net of tax
Net losses on cashflow hedge taken to equity, net of tax
Actuarial gains on retirement benefit obligations
Movement of deferred tax on retirement benefit obligations
80
(452)
48
(12)
(74)
34
(10)
Net losses not recognised in income statement
(357)
(38)
Profit for the financial period
275
916
Total recognised (expenses)/income for the period
(82)
878
Net exchange differences on retranslation of foreign operations
The company had no recognised income and expenses in either period other than the result for the period. Consequently, no
statement of recognised income and expenses is shown for these periods.
28
Interbulk Group plc
Group and Company Balance Sheets
At 30 September 2007
Notes
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments
Financial assets
Retirement benefits obligations
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Current tax
Cash at bank and in hand
14
15
16
18
19
32
10
21
22
Total assets
Liabilities
Current liabilities
Financial liabilities
Trade and other payables
Current tax liabilities
Non-current liabilities
Deferred tax liabilities
Retirement benefit obligations
Total liabilities
Net assets
23
24
23
24
10
32
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
113,212
4,342
57,705
46
133
434
49,485
916
28,866
388
46,399
2,202
-
31,452
2,139
-
175,872
79,655
48,601
33,591
3,054
38,195
1,158
7,401
1,273
14,825
6,552
15,541
287
-
4,508
184
-
49,808
22,650
15,828
4,692
225,680
102,305
64,429
38,283
(9,960)
(56,348)
-
(3,972)
(23,853)
(107)
(4,501)
(708)
-
(2,370)
(294)
-
(66,308)
(27,932)
(5,209)
(2,664)
(94,916)
(5,811)
-
(48,878)
(332)
(2,074)
(815)
-
(12,209)
-
(100,727)
(52,099)
-
(12,209)
(167,035)
(80,031)
(5,209)
(14,873)
58,645
22,274
59,220
23,410
Interbulk Group plc
Notes
Shareholders’ Equity
Ordinary shares
Share premium
Earn-out shares
Consideration warrants
Retirement benefit obligations reserve
Cumulative translation reserve
Share option reserve
Hedge reserve
Retained earnings
29
30,289
26,431
1,424
60
(9)
27
(446)
869
29
58,645
28
29
29
29
29
29
29
29
Total equity attributable to shareholders
Group
30 September
2007
£’000
Group
30 September
2006
£’000
9,789
8,079
3,850
24
12
(74)
594
22,274
29
Company
30 September
2007
£’000
Company
30 September
2006
£’000
30,289
26,431
1,424
27
1,049
9,789
8,079
3,850
1,692
59,220
23,410
The financial statements on pages 26 to 68 were approved by the Board of Directors on 20 December 2007 and were signed on its
behalf by:
Koert van Wissen
Chief Executive Officer
Scott Cunningham
Finance Director
30
Interbulk Group plc
Group Cash Flow Statement
Notes
Cashflows from operating activities
Cash generated from operations
Tax paid
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
13,438
(465)
6,795
(1,025)
Net cash flow from operating activities
12,973
5,770
Cashflows from investing activities
Interest received
Sale of property, plant and equipment
Proceeds from sale of investment
Acquisition of subsidiaries
(Overdraft)/cash acquired on purchase of subsidiaries
Purchases of property, plant and equipment (net of finance lease)
Payments to acquire intangible fixed assets
Payment of deferred consideration
319
115
(4,702)
(1,531)
(1,376)
(27)
(509)
53
97
39
(24,493)
5,003
(400)
(11)
-
Net cash flow from investing activities
(7,711)
(19,712)
(6,100)
25,853
78,622
(100,238)
340
(2,945)
(1,969)
12,516
37,170
(26,225)
(1,039)
30
Cashflows from financing activities
Interest paid
Proceeds from share issues (net of issue costs)
Proceeds from borrowings
Repayment of borrowings
Finance lease proceeds from refinancing of equipment
Repayment of capital element of finance leases
Net cash flow from financing activities
(4,468)
Increase in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
The accompanying notes are an integral part of this cash flow statement.
30
20,453
794
55
6,552
6,511
(136)
177
7,401
6,552
Interbulk Group plc
31
Company Cash Flow Statement
Notes
Cashflows from operating activities
Tax paid
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
(936)
-
(515)
-
(936)
(515)
68
(4,376)
(509)
(7,734)
(1,881)
3
(24,493)
(100)
(600)
-
Net cash flow from investing activities
(14,432)
(25,190)
Cashflows from financing activities
Interest paid
Proceeds from share issues (net of issue costs)
Borrowing issue costs paid
Repayment of borrowings
(639)
25,853
(12,277)
(466)
12,516
12,133
(188)
Net cash flow from financing activities
12,937
23,995
Decrease in cash and cash equivalents
Effect of exchange rates on cash and cash equivalents
Cash and cash equivalents at the beginning of the period
(2,431)
(13)
(1,533)
(1,710)
177
(3,977)
(1,533)
30
Net cash flow from operations
Cashflows from investing activities
Interest received
Acquisition of subsidiaries
Investment in subsidiaries
Payment of deferred consideration
Loans to subsidiary
Borrowing issue costs paid on behalf of subsidiaries
Cash and cash equivalents at the end of the period
30
32
Interbulk Group plc
Notes to the financial statements
30 September 2007
1.
Authorisation of Financial Statements and Statement of Compliance with IFRSs
This financial information comprises Balance Sheets for the Group and Company as of 30 September 2007 and Group Income
Statement, Group and Company Statements of Recognised Income and Expenses, Cash Flow Statements and related notes
for the year then ended of InterBulk Group plc (hereinafter referred to as ‘financial information’).
The Group’s and Company’s financial statements of InterBulk Group plc (the ‘Company’) for the year ended 30 September
2007 were authorised for issue by the board of the directors on 20 December 2007 and the Balance Sheets were signed on
the board’s behalf by Koert van Wissen and Scott Cunningham. InterBulk Group plc is a public limited company incorporated
in England. The Company’s ordinary shares are traded on the London Stock Exchange Alternative Investment Market (AIM).
Basis of preparation
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) International Accounting Standards (IAS) and IFRIC interpretation endorsed by the European Union (EU). The
Company’s financial statements have been prepared in accordance with IFRSs as adopted for use in the EU and as applied
in accordance with the provisions of the Companies Act 1985 applicable to companies reporting under IFRS. The principal
accounting policies adopted by the Group and by the Company are set out in note 2. These policies have been consistently
applied to the periods presented, unless otherwise stated. The Company has taken advantage of the exemption provided
under section 230 of the Companies Act 1985 not to publish its individual income statement and related notes.
The financial statements have been prepared under the historical cost convention as modified by the revaluation of
derivative financial instruments.
The accounting policies which follow are a summary of the more important group accounting polices and set out those
policies which apply in preparing the financial statements for the year ended 30 September 2007.
The consolidated financial statements are presented in Sterling and all values are rounded to the nearest £’000 except where
otherwise indicated.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements, are set out in the financial review on pages 10 to 13. Although these estimates are
based on management’s best knowledge the amounts, events, actions or actual results ultimately may differ.
2.
Accounting policies
Basis of consolidation
The Group financial statements consolidate the financial statements of InterBulk Group plc and the entities it controls
(its subsidiaries) drawn up to 30 September each year.
Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial
and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect
ownership of voting rights; currently exercisable or convertible potential voting rights; or by way of contractual agreement.
The financial statements of subsidiaries are prepared for the same reporting year as the Parent Company, using consistent
accounting policies. All inter-company balances and intra-group transactions, including unrealised profits arising from
them, are eliminated.
Foreign currency translation
Company
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement,
except where hedge accounting is applied. Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.
Group
Transactions in foreign currencies are initially recorded in the functional currency by applying the spot exchange rate ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the balance sheet date. All differences are taken to the income statement,
except when hedge accounting is applied and for differences on monetary assets and liabilities that form part of the Group’s
net investment in a foreign operation. These are taken directly to equity until the disposal of the net investment, at which
time they are recognised in profit or loss.
Interbulk Group plc
33
The assets and liabilities of foreign operations are translated into sterling at the rate of exchange ruling at the balance
sheet date. Income and expenses are translated at weighted average exchange rates for the year. The resulting exchange
differences are taken directly to a separate component of equity, the cumulative translation reserve. On disposal of a foreign
entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the
income statement.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was determined.
Business combinations
Under the requirements of IFRS 3, all business combinations are accounted for using the purchase method
(“acquisition accounting”).
Under this method, the acquiree’s identifiable assets, liabilities and contingent liabilities that satisfy the recognition
criteria of IFRS 3 are measured initially at their fair values as at the date of acquisition, except for non-current assets
classified as held for sale, which are measured at fair value less costs to sell.
Only identifiable liabilities that satisfy the criteria for recognition as a liability by the acquiree are recognised in a business
combination. Consequently, restructuring liabilities are not recognised as a liability of the acquiree unless the acquiree has
an obligation as at the date of the acquisition to carry out the restructuring.
The cost of a business combination is the aggregate of the fair values, at the date of exchange, of assets given, liabilities
incurred or assumed, equity instruments issued by the acquirer and any costs directly attributable to the business
combination. The cost of a business combination is allocated at the acquisition date by recognising the acquiree’s
identifiable assets, liabilities and contingent liabilities that satisfy the recognition criteria, at their fair values at that date.
The acquisition date is the date on which the acquirer effectively obtains control of the acquiree. An intangible asset, such
as customer relationships, brands, patents and royalties, is recognised if it meets the definition of an intangible asset in
IAS 38 ‘Intangible assets’, and its fair value can be measured reliably.
Adjustments to the values of assets and liabilities initially determined provisionally (pending the results of independent
valuations or further analysis) are recognised as a retrospective adjustment to goodwill if they are made within twelve
months of the acquisition date. Once this twelve-month period has elapsed, the effects of any adjustments are recognised
directly in the income statement, unless they qualify as an error correction.
Joint venture
A joint venture is an entity in which the Group holds an interest on a long term basis and which is jointly controlled by
the Group and one or more other venturers under a contractual arrangement. The Group’s interest in the results and assets
and liabilities of its joint ventures, which are jointly controlled entities, are accounted for using the equity method.
These investments are carried in the balance sheet at cost plus post-acquisition changes in the Group’s share of net assets
less any impairment in value. The income statement reflects the share of results of operations of these investments after tax.
Where there has been a change recognised directly in the investee’s equity, the Group recognises its share of any changes
and discloses this when applicable in the statement of recognised income and expense.
Goodwill
Any excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets,
liabilities and contingent liabilities is recognised in the balance sheet as goodwill and is not amortised. To the extent that the
net fair value of the acquired entity’s identifiable assets, liabilities and contingent liabilities is greater than the cost of the
investment, a gain is recognised immediately in the income statement.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses, with the carrying value being
reviewed for impairment, at least annually and whenever events or changes in circumstances indicate that the carrying value
may be impaired.
For the purpose of impairment testing, goodwill is allocated to the related cash-generating units monitored by management,
usually at business segment level or statutory company level as the case may be. Where the recoverable amount of the cashgenerating unit is less than its carrying amount, including goodwill, an impairment loss is recognised in the income
statement. Impairment losses on goodwill are not reversed.
The carrying amount of goodwill allocated to a cash-generating unit is taken into account when determining the gain or loss
on disposal of the unit, or of an operation within it.
34
Interbulk Group plc
Notes to the financial statements (continued)
2.
Accounting policies (continued)
Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired separately from a business are carried initially at cost. An intangible asset acquired as part of
a business combination is recognised separately from goodwill if the asset is separable or arises from contractual or other
legal rights and its fair value can be measured reliably. Expenditure on internally developed intangible assets, excluding
development costs, is taken to the income statement in the year in which it is incurred. Development expenditure is
recognised as an intangible asset only after its technical feasibility and commercial viability can be demonstrated.
Intangible assets with a finite life are amortised on a straight line basis over their expected useful lives, as follows:
•
•
•
•
Patents, licences and trademarks – over the duration of the legal agreement;
Development expenditure – 3 to 6 years
Computer software – 5 years
Customer relationships – 15 years
The carrying value of intangible assets is reviewed for impairment whenever events or changes in circumstances indicate
the carrying value may not be recoverable. In addition, the carrying value of capitalised development expenditure is reviewed
for impairment annually before being brought into use.
Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Such
cost includes costs directly attributable to making the asset capable of operating as intended. Borrowing costs attributable
to assets under construction are recognised as an expense as incurred.
Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual
value based on prices prevailing at the balance sheet date, of each asset evenly over its expected useful life as follows:
•
•
•
•
•
Tankcontainers – 5% per annum
Specialist box containers – 6.7% per annum (10% residual)
Specialist discharge trailers – 8.3% per annum
ISO-Veyor units – 12.5% per annum
Others, which consists of mainly computer equipment and office furniture – 20-33% per annum
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. The
carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate the carrying value may not be recoverable.
Leases
Assets held under finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership
of the leased item, are capitalised at the inception of the lease, with a corresponding liability being recognised for the fair
value of the leased asset or, if lower, the present value of the minimum lease payments. Lease payments are apportioned
between the reduction of the lease liability and finance charges in the income statement so as to achieve a constant rate
of interest on the remaining balance of the liability. Assets held under finance leases are depreciated over the shorter of the
estimated useful life of the asset and the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating
leases and rentals payable are charged in the income statement on a straight line basis over the lease term.
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s
recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs
to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. Impairment losses of continuing operations
are recognised in the income statement in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment
losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the
Interbulk Group plc
35
asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have
been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is
recognised in profit or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s
revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Financial assets
Financial assets in the scope of IAS 39 are classified as loans and receivables or held-to-maturity investments, as
appropriate. The Group determines the classification of its financial assets at initial recognition and re-evaluates this
designation at each financial year end. When financial assets are recognised initially, they are measured at fair value,
being the transaction price plus, in the case of financial assets not at fair value through profit or loss, directly attributable
transaction costs.
All regular purchases and sales of financial assets are recognised on the trade date, being the date that the Group commits
to purchase or sell the asset. Regular transactions require delivery of assets within the timeframe generally established
by regulation or convention in the market place. The subsequent measurement of financial assets depends on their
classification, as follows:
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity
when the Group has the positive intention and ability to hold to maturity. Held to maturity investments are carried at
amortised cost using the effective interest method. Gains and losses are recognised in income when the investments are
derecognised or impaired, as well as through the amortisation process. Investments intended to be held for an undefined
period are not included in this classification.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market, do not qualify as trading assets and have not been designated as either fair value through profit and loss or
available for sale. Such assets are carried at amortised cost using the effective interest method if the time value of money
is significant. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as
well as through the amortisation process.
Assets carried at amortised cost
If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred,
the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s
original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the
asset is reduced, with the amount of the loss recognised in administration costs.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed.
Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying
value of the asset does not exceed its amortised cost at the reversal date.
Impairment of financial assets
The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.
Investments
Fixed asset investments are shown at cost less provision for impairment.
Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is based on estimated selling
price, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow moving
stock or defective items where appropriate.
Trade receivables, which generally have 30-60 day terms, are recognised and carried at the lower of their original invoiced
value and recoverable amount. Where the time value of money is material, receivables are carried at amortised cost.
Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances
are written off when the probability of recovery is assessed as being remote.
36
Interbulk Group plc
2.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at banks and in hand and short-term deposits with
an original maturity of three months or less. For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at fair value less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using
the effective interest method.
Gains and losses arising on the repurchase, settlement or otherwise cancellation of liabilities are recognised respectively
in finance income and finance expense.
Taxation including deferred tax
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation
authorities, based on tax rates and laws that are enacted or substantively enacted by the balance sheet date.
Deferred tax is recognised in full on all temporary differences arising between the tax bases of assets and liabilities and
their carrying amounts in the financial statements, with the following exceptions:
•
where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of the transaction affects neither accounting
nor taxable profit or loss;
•
in respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures,
where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future; and
•
deferred income tax assets are recognised only to the extent that it is probable that taxable profit will be available
against which the deductible temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the
balance sheet date.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to equity. Otherwise
income tax is recognised in the income statement.
Provisions
A provision is recognised when the Group has a legal or constructive obligation as a result of a past event and it is probable
that an outflow of economic benefits will be required to settle the obligation. If the effect is material, expected future cash
flows are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance policy, the
reimbursement is recognised as a separate asset but only when recovery is virtually certain. The expense relating to any
provision is presented in the income statement net of any reimbursement. Where discounting is used, the increase in the
provision due to unwinding the discount is recognised as a finance cost.
Derivative financial instruments and hedging
The Group uses derivative financial instruments such as forward currency contracts and interest rate swaps to hedge
its risks associated with foreign currency and interest rate fluctuations. Such derivative financial instruments are initially
recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair
value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
The fair value of forward currency contracts is calculated by reference to current forward exchange rates for contracts
with similar maturity profiles. The fair value of interest rate swap contracts is determined by reference to market values
for similar instruments.
For those derivatives designated as hedges and for which hedge accounting is desired, the hedging relationship is
documented at its inception. This documentation identifies the hedging instrument, the hedged item or transaction,
the nature of the risk being hedged and how effectiveness will be measured throughout its duration. Such hedges are
expected at inception to be highly effective.
Interbulk Group plc
37
For the purpose of hedge accounting, hedges are classified as
•
fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability; or
•
cash flow hedges when hedging exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction.
Any gains or losses arising from changes in the fair value of derivatives that do not qualify for hedge accounting are taken
to the income statement. The treatment of gains and losses arising from revaluing derivatives designated as hedging
instruments depends on the nature of the hedging relationship, as follows:
Cash flow hedges
For cash flow hedges, the effective portion of the gain or loss on the hedging instrument is recognised directly in equity,
while the ineffective portion is recognised in profit or loss. Amounts taken to equity are transferred to the income statement
when the hedged transaction affects profit or loss, such as when a forecast sale or purchase occurs. Where the hedged item
is the cost of a non-financial asset or liability, the amounts taken to equity are transferred to the initial carrying amount of
the non-financial asset or liability.
If a forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to profit or
loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation
as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs and
are transferred to the income statement or to the initial carrying amount of a non-financial asset or liability as above. If the
related transaction is not expected to occur, the amount is taken to profit or loss.
Employee benefits
Wages, salaries, social security contributions, paid annual leave and sick leave, bonuses and non-monetary benefits are
accrued in the year in which the associated services are rendered by the employees of the Group. Where the Group provides
long-term employee benefits, the cost is accrued to match the rendering of the services by the employees concerned.
Pension arrangements
The Group has a defined contribution pension scheme under which it pays fixed contributions to a third party insurance
company. The Group also operates a defined benefit scheme for one of the Directors and one ex-Director.
For defined benefit schemes the amounts charged to operating profit are the current service costs and gains and losses
on settlements and curtailments. They are included as part of staff costs. Past service costs are recognised immediately
in the income statement if the benefits have vested. If the benefits have not vested immediately, the costs are recognised
over the period until the vesting occurs. The interest cost and the expected return on assets are shown as a net amount of
other finance costs or credits. Actuarial gains and losses are recognised immediately in the statement of recognised gains
and losses.
Defined benefit schemes are funded, with the assets of the scheme held separately from those of the Company, in separate
trustee administered funds. Pension scheme assets are measured at fair value and liabilities are measured on an actuarial
basis using the projected unit method and discounted at a rate equivalent to the current rate of return on a high quality
corporate bond of equivalent currency and term to the scheme liabilities. The actuarial valuations are obtained annually
at the balance sheet date. The resulting defined benefit asset or liability is shown on the face of the balance sheet.
For defined contribution schemes the amount charged to the income statement in respect of pension costs and other postretirement benefits is the contributions payable in the period. Differences between contributions payable in the period and
contributions actually paid are shown as either accruals or prepayments in the balance sheet.
Share based payments
The cost of equity-settled transactions with employees or officers is measured by reference to the fair value at the date
at which they are granted and is recognised as an expense over the vesting period, which ends on the date on which the
relevant employees or officers become fully entitled to the award. Fair value is determined by an external value using an
appropriate pricing model. In valuing equity-settled transactions, no account is taken of any vesting conditions, other
than conditions linked to the price of the shares of the company (market conditions).
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a
market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided
that all other performance conditions are satisfied.
At each balance sheet date before vesting, the cumulative expense is calculated, representing the extent to which the
vesting period has expired and management’s best estimate of the achievement or otherwise of non-market conditions
number of equity instruments that will ultimately vest or in the case of an instrument subject to a market condition, be
treated as vesting as described above. The movement in cumulative expense since the previous balance sheet date is
recognised in the income statement, with a corresponding entry in equity.
38
Interbulk Group plc
2.
Where the terms of an equity-settled award are modified or a new award is designated as replacing a cancelled or settled
award, the cost based on the original award terms continues to be recognised over the original vesting period. In addition,
an expense is recognised over the remainder of the new vesting period for the incremental fair value of any modification,
based on the difference between the fair value of the original award and the fair value of the modified award, both as
measured on the date of the medication. No reduction is recognised if this difference is negative.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any cost not yet
recognised in the income statement for the award is expensed immediately. Any compensation paid up to the fair value of
the award at the cancellation or settlement date is deducted from equity, with any excess over fair value being treated as
an expense in the income statement.
Classification of shares as debt or equity
When shares are issued, any component that creates a financial liability of the Company or Group is presented as a liability
in the balance sheet; measured initially at fair value net of transaction costs and thereafter at amortised cost until
extinguished on conversion or redemption. The corresponding dividends relating to the liability component are charged
as interest expense in the income statement. The initial fair value of the liability component is determined using a market
rate for an equivalent liability without a conversion feature.
The remainder of the proceeds on issue is allocated to the equity component and included in shareholders’ equity,
net of transaction costs. The carrying amount of the equity component is not remeasured in subsequent years.
Transaction costs are apportioned between the liability and equity components of the shares based on the allocation
of proceeds to the liability and equity components when the instruments are first recognised.
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can
be reliably measured. Revenue is measured at the fair value of the consideration received, excluding discounts, rebates, VAT
and other sales taxes or duty. Revenue from logistics services using tankcontainers and box containers is recognised on
the stage of completion of such services at the year-end date, recognising the greater significance of specific acts in the
successful completion of contractual obligations. Revenue from other services such as storage and terminal services are
recognised as the service is rendered. Capital sales are recognised on transfer of ownership of the containers.
Finance income
Interest income is recognised as interest accrues.
Finance expense
Borrowing costs are recognised as an expense when incurred.
Exceptional items
Items are classified as exceptional gains or losses where they are considered by the Group to be material and are different
from events or transactions which fall within the ordinary activities of the Group and which individually, or if of a similar type,
in aggregate, need to be disclosed by the virtue of their size or incidence if the financial statements are to be properly
understood. Exceptional items are separately disclosed to assist the user of the accounts in their understanding of the
financial performance achieved and in making projections of future results. Details of the exceptional items are provided
in Note 7 to the financial statements.
Segmental reporting
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.
Interbulk Group plc
39
New standards and interpretations not applied
The following standards and interpretations issued by the IASB and IFRIC are effective for accounting periods beginning
on or after the dates noted:
International Accounting Standards (IAS/IFRSs)
Effective date
IFRS 7: Financial instruments: Disclosures
1 January 2007
Amendment to IAS 1: Capital disclosures
1 January 2007
Revised IAS 1: Presentation of financial statements
1 January 2009
Revised IAS 23: Borrowing costs
1 January 2009
IFRS 8: Operating segments
1 January 2009
International Financial Reporting Interpretations Committee (IFRIC)
IFRIC 10: Interims and impairment
1 November 2006
IFRIC 11: IFRS 2 - Group and treasury share transactions
1 March 2007
IFRIC 14: IAS 19 – The limit on a defined benefit asset, minimum funding
requirements and their interaction
1 January 2008
IFRIC 12: Service concession arrangements
1 January 2008
IFRIC 13: Customer loyalty programmes relating to IAS 18, Revenue
1 July 2008
The Directors do not anticipate that the adoption of these standards and interpretations, where relevant for the Group,
will have a material impact on the Group’s financial statements in the period of initial application.
40
Interbulk Group plc
3.
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. In the prior period the European activities were split into UK, Mainland Europe
and Scandinavia. With the acquisition in the current year of UBC and the reorganisation of the enlarged group Europe
requires to be considered as a whole. The prior period segmental analysis shown below has been adjusted accordingly.
Year to 30 September 2007
Revenue
Sales to external customers
Inter-segment sales
Results
Segment result before exceptional items
Exceptional items
Segment result after exceptional items
Europe
£’000
Americas
£’000
Asia
£’000
Eliminations
£”000
Total
£’000
135,554
-
15,680
-
10,895
-
-
162,129
-
135,554
15,680
10,895
-
162,129
8,658
(600)
8,058
455
(149)
306
(84)
(100)
(184)
-
Unallocated expenses
9,029
(849)
8,180
(844)
Group operating profit (after exceptional items)
7,336
Net finance expenses (including exceptional items)
(7,340)
Loss before taxation
Taxation
(4)
279
Net profit for the year
275
Assets and liabilities
Segment assets
Unallocated assets
214,269
2,428
1,761
(179)
(53,328)
(1,952)
(1,586)
179
Total assets
Segment liabilities
Unallocated liabilities
225,680
Total liabilities
Other segment information
Capital expenditure (including acquisitions
in the period):
– Property, plant & equipment (NBV)
– Intangible fixed assets (NBV)
Depreciation in the year
Impairment classified as exceptional item in the year
Amortisation in the year
218,279
7,401
(56,687)
(110,347)
(167,034)
2,090
3,637
5,166
522
211
8
7
104
-
133
41
70
-
-
2,231
3,637
5,214
696
211
Interbulk Group plc
41
Dry Bulk
£’000
Liquid Bulk
£’000
Others
£’000
Eliminations
£’000
Total
£’000
Revenue
Inter-segment sales
58,388
-
101,556
-
2,185
-
-
162,129
-
58,388
101,556
2,185
-
162,129
Results
Segment result before exceptional items
Exceptional items
Segment results after exceptional items
2,903
(125)
2,778
6,417
(724)
5,693
(291)
(291)
-
9,029
(849)
8,180
(844)
Group operating profit (after exceptional items)
7,336
Net finance expenses (including exceptional items)
(7,340)
Loss before taxation
Taxation
(4)
279
275
Segment assets
Unallocated assets
118,950
84,850
(30,532)
(22,980)
12,236
2,243
Total assets
Segment liabilities
225,680
(932)
(2,243)
Total liabilities
in the period):
Depreciation in the year
Impairment classified as exceptional item in the year
Amortisation in the year
218,279
7,401
(56,687)
(110,347)
(167,034)
1,130
3,610
2,301
145
666
2,845
696
-
435
27
68
66
-
2,231
3,637
5,214
696
211
42
Interbulk Group plc
3.
Segment Information (continued)
9 months to 30 September 2006
Revenue
Inter-segment sales
Results
Segment result
Europe
£’000
Americas
£’000
Asia
£’000
Eliminations
£’000
Total
£’000
44,535
-
8,896
-
5,659
-
-
59,090
-
44,535
8,896
5,659
-
59,090
3,160
476
141
-
3,777
(346)
Group operating profit
3,431
Net finance expenses
(1,935)
Profit before taxation
Taxation
1,496
(580)
916
Segment assets
Unallocated assets
88,846
2,015
1,929
2,963
Total assets
Segment liabilities
102,305
(21,011)
(904)
(1,633)
(2,963)
Total liabilities
in the period):
Depreciation in the period
Amortisation in the period
95,753
6,552
(26,511)
(53,520)
(80,031)
28,426
916
1,614
38
6
3
-
434
17
-
-
28,866
916
1,634
38
In the period to 30 September 2006 given that activity in this period was conducted almost exclusively in Liquid Bulk activity
no business segmental information is shown.
Inter–segment transfers or transactions are entered into under the normal commercial terms and conditions that would also
be available to unrelated third parties.
Unallocated expenses relate to expenditure on the entity as a whole and are controlled by head office through their strategic
decision making process.
Unallocated assets comprise primarily cash and derivatives as well as those assets which are used for general head office
purposes. Unallocated liabilities primarily comprise group borrowings, income tax payable as well as liabilities relating to
general head office activities.
4.
Interbulk Group plc
43
Group operating profit
Operating profit is stated after charging/(crediting):
Depreciation of containers:
– owned
– held under finance lease contracts
Depreciation of other assets
– owned
Impairment of other assets (classified as exceptional item)
Cost of inventories recognised as an expense
Repair and maintenance expenditure
Research and development expenditure
Amortisation of acquired other intangible assets
Amortisation of patents
Loss on disposal of fixed assets
Gain on sale of investment
Exchange loss/(gain) on foreign currency borrowings less deposits
Operating lease rentals:
– containers & equipment
– other assets
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
2,655
2,060
624
742
498
696
2,192
4,998
70
182
29
96
250
268
56
1,725
122
22
16
(29)
(175)
260
77
886
72
During the year the Group (including overseas subsidiaries) obtained the following services from the Group’s auditor as
detailed below:
Audit services
– Fees payable to the Company auditor for the audit of the
Parent Company and consolidated accounts
Fees payable to the Company auditor for other services:
– The auditing of accounts of associates of the Company
pursuant to legislation (including that of companies and territories outside Great Britain)
– Services relating to taxation
– Transaction support services
– Other services pursuant to legislation
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
141
100
191
318
471
50
73
68
200
90
Fees paid to the auditors for non-audit services in the year to 30 September 2007 include £714,000 (period to 30 September
2006: £274,000) payable in the UK.
Included in the Group audit fees and expenses paid to the Group’s auditor, £46,000, (30 September 2006: £43,000) was paid
in respect of the Parent Company.
44
Interbulk Group plc
5.
Employee information
The average monthly number of employees, including executive Directors for the Group, during the periods represented was:
Operations / commercial
Administration / finance
Tank maintenance & repair
Year to
30 September
2007
Number
9 months to
30 September
2006
Number
255
101
33
112
27
12
389
151
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
6,176
898
435
27
2,492
330
154
-
7,536
2,976
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
669
319
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Retirement benefit obligation costs (note 32)
Share based payment costs (note 33)
6.
Directors’ emoluments
Aggregate emoluments
Retirement benefits are accruing to 1 director under a defined benefit scheme at 30 September 2007 (30 September 2006: 2).
At each period end, the contributions to the defined benefit scheme were in an accruals position.
A detailed analysis of Directors’ remuneration, shareholdings, share options, long-term incentive schemes and pension
benefits is provided in the Remuneration Report on pages 21 to 22.
7.
Exceptional items
The net exceptional items in the year of £1,566,000 consist of:
Items charged/(credited) to operating profit:
a)
Exceptional charges in the period 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)
8.
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 costs of £717,000 remain
unamortised on the balance sheet. Due to this debt being replaced this non-cash amount was required to be
immediately written-off.
Finance income
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
Bank interest receivable
319
72
Total finance income
319
72
9.
Interbulk Group plc
45
Finance expenses
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
Interest payable on bank loans and overdrafts
Amortisation of deferred finance costs
Finance charges payable under finance leases and hire purchase contracts
Unrealised exchange loss on long-term bank debt
Interest on pension scheme assets/liabilities
4,877
188
1,268
600
9
1,322
84
582
19
Finance expense (before exceptional items)
6,942
2,007
Exceptional item (note 7)
Total finance expenses
717
-
7,659
2,007
Included in finance expenses is an unrealised non-cash exchange loss of £0.6m on an element of long-term bank debt
denominated in Euros to create a hedge against Euro trading income.
10.
Taxation
(a)
Analysis of (credit)/charge in year
Year to
30 September
2007
£’000
Current tax:
UK Corporation tax on profits of the period
Foreign tax
Deferred tax:
Origination and reversal of temporary differences
Tax (credit)/charge in the income statement
Tax relating to items charged or credited to equity
Deferred tax:
Tax credit in the statement of recognised income and expense
(b)
9 months to
30 September
2006
£’000
(253)
777
(253)
777
(26)
(197)
(279)
580
(12)
(10)
Reconciliation of the total tax (credit)/charge
The current tax rate and effective rate on profit on ordinary activities in the year varied from the standard rate
of UK corporation tax as follows:
Year to
30 September
2007
£’000
(Loss)/profit on ordinary activities before tax
(Loss)/profit on ordinary activities multiplied by standard rate in the UK (30%)
(c)
9 months to
30 September
2006
£’000
(4)
(1)
1,496
449
Effects of:
Unrecognised tax losses
Temporary difference associated with Group investments
Different tax rates in subsidiaries operating in other jurisdictions
Prior period adjustment
Change in tax rates
Capital allowances in excess of depreciation
Others
16
21
(347)
(400)
328
104
96
35
-
Total tax (credit)/expense reported in the income statement
(279)
580
Unrecognised tax losses
The Group has tax losses which arose in the UK with a tax effect of £nil (30 September 2006: £0.7m) and tax losses
which arose in Singapore with a tax effect of £0.1m (30 September 2006: £0.9m) that are available indefinitely for
offset against future taxable profits of the companies in which the losses arose. Deferred tax assets have not been
recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group and
they have arisen in subsidiaries that have been loss-making for some time.
46
Interbulk Group plc
10.
Taxation (continued)
(d)
Temporary differences associated with Group investments
At 30 September 2007, there was no recognised deferred tax liability (30 September 2006: £nil) for taxes that would
be payable on the unremitted earnings of certain of the Group’s subsidiaries as the Group has determined that
undistributed profits of its subsidiaries will not be distributed in the foreseeable future. If the earnings were
remitted no additional tax would be payable.
(e)
Deferred tax
Group
The movement on net deferred tax liability is shown below:
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
Beginning of the period
Acquisition
Credit to income statement
Change in tax rates to income statement
Charge to equity
Exchange differences
(1,686)
(3,679)
(374)
400
(12)
(26)
(1,863)
197
(10)
(10)
End of the period
(5,377)
(1,686)
In the 2007 budget the UK government announced its intention to propose Parliament to reduce the UK Corporate
Income tax rate from 30% to 28%. This was subsequently enacted on 19 July 2007. Therefore, the impact on the balance
sheet is a reduction in the deferred tax liability of £400,000.
(e)
Deferred tax (continued)
The deferred tax included in the balance sheet is as follows:
Year to
30 September
2007
£’000
Deferred tax liability
Accelerated capital allowances
Other temporary differences
Deferred tax asset
Other temporary differences
30 September
2006
£’000
(5,683)
(24)
(104)
(2,000)
(74)
(5,811)
(2,074)
434
241
147
434
388
Company
The Company has no deferred tax balances at 30 September 2007 (30 September 2006: £nil).
11.
Profit attributable to members of the Parent Company
As permitted by section 230 of the Companies Act 1985, the holding company’s Income Statement has not been presented
in these financial statements. The result in the financial statements of the Parent Company was £643,000 loss (period to
30 September 2006: £1,903,000 profit).
12.
Interbulk Group plc
47
Earnings per ordinary share
The basic earnings per share is calculated by dividing the profit for the financial period 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.
Year to
30 September
2007
9 months to
30 September
2006
Profit for the period (£’000)
Weighted average number of shares (number)
Effect of outstanding warrants and options
275
194,494,780
-
916
78,711,639
16,732
Adjusted weighted average number
of ordinary shares (number)
194,494,780
78,728,371
0.14p
0.14p
1.2p
1.2p
Basic profit per share (pence)
Diluted profit per share (pence)
In the 12 months to 30 September 2007 the effects of the outstanding warrants and options increase the profit per share
and thus are anti-dilutive. As a result, the diluted profit per share is the same as the basic profit per share. As a result,
the outstanding warrants and options are not added to the adjusted weighted average number of ordinary shares.
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:
13.
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
Profit for the period
Exclude exceptional items (net of attributable taxation)
275
1,100
916
-
Adjusted earnings
1,375
916
An adjusted earnings per share figure is presented below:Basic earnings per share pre-exceptional items (pence)
Diluted earnings per share pre-exceptional items (pence)
0.71p
0.71p
1.2p
1.2p
Dividends paid and proposed
No dividend has been declared and paid during the year to 30 September 2007 (period to 30 September 2006: £nil).
No dividend has been proposed.
14.
Goodwill
Group
Goodwill
£’000
Cost:
Opening balance at 1 October 2006
Adjustment to provisional value (note 29)
Acquisition of subsidiary (note 20)
49,485
(3,850)
66,416
1,161
113,212
Accumulated amortisation and impairment:
At 30 September 2007 and 30 September 2006
-
Net book value at 30 September 2007
113,212
49,485
The adjustment to provisional value relates to InBulk Technologies Limited. As part of the initial consideration for InBulk
Technologies Limited on 28 February 2006 was £3,850,000 in relation to earn-out shares. These shares were contingent on a
certain EPS target being achieved for the year to 30 September 2007. This target was not achieved and as a result the full
value has been removed from the initial consideration value.
Company
The Company has no goodwill.
48
Interbulk Group plc
15.
Group
Acquired
Customer
Relationships
£’000
Acquired
Software
£’000
Acquired patent
and Licences
£’000
Patents
and Licences
£’000
Total
£’000
Cost:
Acquisition of subsidiary (note 20)
Additions
3,110
-
500
-
747
-
207
27
954
3,610
27
3,110
500
747
234
4,591
Accumulated amortisation and impairment:
Amortisation during the year
(97)
(48)
(22)
(37)
(16)
(29)
(38)
(211)
(97)
(48)
(59)
(45)
(249)
3,013
452
688
189
4,342
-
-
725
191
916
Company
The Company has no other intangible assets.
The amortisation charge in the year for other intangible assets has been charged to administrative expenses.
16.
Property, plant & equipment
Group
Freehold
Land and
Buildings
£’000
Containers &
direct
equipment
£’000
Computer
equipment
and others
£’000
Total
£’000
Cost:
Acquisition of subsidiary
Additions
Disposals
1,020
-
29,099
30,671
1,742
(733)
1,145
1,303
326
489
(227)
82
30,402
32,017
2,231
(960)
1,227
1,020
61,924
1,973
64,917
Accumulated depreciation and impairment:
Depreciation during the year
Impairment during the year (classified as exceptional item)
Disposals
(10)
-
(1,286)
(4,715)
573
(430)
(250)
(488)
(696)
176
(86)
(1,536)
(5,213)
(696)
749
(516)
(10)
(5,858)
(1,344)
(7,212)
1,010
56,066
629
57,705
-
27,813
1,053
28,866
The depreciation charge for the year of £5,909,000 (period to 30 September 2006: £1,634,000), £4,715,000 has been charged
(period to 30 September 2006: £1,366,000) in cost of sales and £1,194,000 (period to 30 September 2006: £268,000) in
administration expenses.
Interbulk Group plc
49
The net book value of containers & direct equipment held under finance leases and hire purchase contracts at 30 September 2007
was £32,209,000 (30 September 2007: £20,247,000). £8,968,000 (30 September 2006: £20,120,000) of containers held under finance
leases and hire purchase were obtained via business combinations in the period. Additions during the year include £855,000
(period to 30 September 2006: £622,000) of plant and equipment held under finance leases and hire purchase. Leased assets
and assets under hire purchase contracts are pledged as security for the related finance lease and hire purchase liabilities.
As disclosed in note 25 the Governor and Company of the Bank of Scotland have been granted various securities.
This specifically includes a first legal charge over the freehold land and buildings.
Company
The Company has no property, plant and equipment in either period.
17.
Impairment of goodwill
Goodwill acquired through business combinations has been allocated for purposes of impairment testing to cash-generating
units as follows:
While both the United Transport Tankcontainers Holdings BV group and the United Transport International Limited group
are monitored for internal management purposes on a geographic or product line segment for certain key performance
indicators (such as revenue and gross margin), it is not appropriate to allocate the goodwill to such segments. This is due to
the global structure of the business and the central control of key business activities such as container management, capital
expenditure decisions and cash management. As a result, the total of United Transport Tankcontainers Holdings BV and the
total of United Transport International Limited group are viewed as two separate CGUs for goodwill purposes.
The carrying amounts of goodwill by CGU are as follows:
Goodwill
UBC
£’000
UTT
£’000
InBulk
£’000
Total
£’000
66,416
40,493
6,303
113,212
All of the recoverable amounts were measured based on value in use.
The recoverable amounts of the CGU’s are determined from value in use calculations using cash flow forecasts based on
the latest strategic five year plan projections approved by the Board. These projections are based on historical performance
and the most recent financial forecasts available. Cash flows beyond the period of the projections are extrapolated based
on expected growth rates for the geographical area. The growth rates do not exceed the average long term growth rates for
these areas. A composite global growth rate of 4% beyond the period of management plans is used for both CGU’s. The
discount rate applied to the cash flow forecast is based on the weighted average, nominal, risk adjusted pre-tax cost of
capital in the various geographical regions. The weighted average pre-tax discount rate used was 12.2%.
Key assumptions used in value in use calculations are set out below and are consistent with past experience.
• Retention of existing business and securing new business;
• Gross margins; and
• Growth rate used to extrapolate cash flows beyond the budget period.
Sensitivity to changes in assumptions
All of the recoverable amounts were measured based on value in use. With regard to the assessment in value in use for
each cash generating unit, management believes that no reasonable possible change in any of the above key assumptions
would cause the carrying value of the unit to exceed its recoverable amount.
50
Interbulk Group plc
18.
Investments
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
46
-
46,399
-
31,452
-
46
-
46,399
31,452
Investment in subsidiary
Investment in joint ventures
Investment in joint ventures arose in the year via the acquisition of United Transport International Limited and are:
Name of Company
Class of Shares
Country of registrations/
incorporation
Nature of business
E-Log European Logistics BV
Ordinary
Netherlands
International logistics
UBC Bulk (Malaysia) Sdn Bhd
Ordinary
Malaysia
Manufacture of liners & logistics
The proportion of voting rights held in both joint ventures is 50%. Subsequent to the year end date procedures to wind-up
E-log European Logistics BV commenced thus investment carried at cost. The share of the assets of UBC Bulk (Malaysia)
Sdn Bhd is not materially different from the cost of investment. The profit earned from the joint ventures is nil.
The movement in investment in subsidiaries is as follows:
£’000
Cost
At 1 January 2006
Additions
Disposals
1,583
29,879
(10)
Additions
Adjustment to provisional value (note 14)
31,452
18,797
(3,850)
46,399
The Company’s principal subsidiary undertakings at 30 September 2007 are shown below. The accounting dates of the
subsidiary undertakings are all 30 September.
Principal subsidiaries
For all subsidiaries 100% of voting rights and shares are held.
The principal subsidiary undertakings whose shares are all owned directly by the Company are marked with an asterisk (*):
Name of Company
Class of Shares
incorporation
Nature of Business
InBulk Technologies Limited
Ordinary
UK
Logistics Services
CleanCat Technologies Limited
Ordinary
UK
Catalyst Handling
United Transport Tankcontainers Holdings BV
Ordinary
Netherlands
Holding Company
United Transport Tankcontainers BV *
Ordinary
Netherlands
Logistic Services
United Transport Tankcontainers Holdings Ltd *
Ordinary
UK
Holding Company
United Transport Tankcontainer Ltd*
Ordinary
UK
Logistics Services
IBT Ltd*
Ordinary
UK
Dormant
United Transport Tankcontainers Pte Ltd *
Ordinary
Singapore
Logistics Services
United Transport Tankcontainers SAS *
Ordinary
France
Logistics Services
United Transport Tankcontainers Holdings AB *
Ordinary
Sweden
Holding Company
United Transport Tankcontainers AB*
Ordinary
Sweden
Logistics Services
United Transport Tankcontainers Ltda *
Ordinary
Brazil
Logistics Services
Tony Trailerfracht AB*
Ordinary
Sweden
Trucking
United Transport Tankcontainers Inc *
Ordinary
USA
Logistics Services
United Transport Tankcontainers GmbH *
Ordinary
Germany
Logistics Services
United Transport International Limited
Ordinary
UK
Holding Company
UBC Limited *
Ordinary
UK
International logistics
19.
Interbulk Group plc
51
Name of Company
Class of Shares
incorporation
Nature of Business
Linertech Limited *
Ordinary
UK
Manufacture of liners
IBC Europa BV *
Ordinary
Netherlands
International Logistics
CTU Gmbh *
Ordinary
Germany
UBC BV *
Ordinary
Netherlands
United Transport Gmbh *
Ordinary
Germany
UBC Austria GmbH *
Ordinary
Austria
UBC SAS *
Ordinary
France
UBC Espana SA *
Ordinary
Spain
UBC Finland OY *
Ordinary
Finland
United Transport Europe Limited *
Ordinary
UK
Holding Company
Yardbrace Limited *
Ordinary
UK
Holding Company
Financial assets
Company
30 September
2007
£’000
30 September
2006
£’000
2,202
2,139
Financial assets
Preference shares held in subsidiary
The preference shares held are issued by United Transport Tankcontainers Holdings BV. Preference shares are eligible for a
ten per cent dividend and for receipt of any distribution owed from assets remaining after payment of all debts, in advance
of ordinary shares, in the event of a winding up. Preference shares are cumulative. Each preference share confers the right
to cast one vote. The movement in the year relates to foreign exchange movement only.
20.
Business combinations
(a)
United Transport International Limited
On 10 April 2007, the Company acquired the entire issued share capital of United Transport International Limited on a
debt and cash free basis (excluding finance lease obligations). This investment has been accounted for as an acquisition.
If the combination had taken place at the beginning of the period, the profit after tax for the Group would have been
£0.7m, revenue from continuing operations would have been £224.1m and net cash flow from operating activities would
have been £14.5m. This is based on removal of the capital structure of the acquired companies under the previous
owners and estimating the likely impact of the new InterBulk Group plc capital structure as if this was in place on
1 October 2006. This information is not necessarily indicative of the results of operations that would have occurred
had the purchases been at the beginning of the year.
Book and fair values of the net assets at date of acquisition were as follows:
Book values
£’000
Fair value
to Group
£’000
Goodwill
Other intangibles
Investments
Inventories
Receivables
Current tax recoverable
Payables
Deferred taxation
Loans
Finance lease creditor
Dividends
46,513
35
37,923
46
3,018
20,531
333
(1,536)
(34,398)
(3,679)
(77,155)
(11,366)
(2,397)
3,610
31,670
46
3,018
20,531
333
(1,536)
(28,363)
(3,679)
(69,678)
(11,368)
-
Net liabilities
(22,132)
(55,416)
Goodwill
66,416
Consideration
11,000
52
Interbulk Group plc
20.
Business combinations (continued)
(a)
United Transport International Limited (continued)
Book values
£’000
Discharged by:
Cash consideration (including value of preference shares)
Shares issued
Warrants issued
Costs associated with the acquisition, settled in cash
Fair value
to Group
£’000
3,109
5,200
1,424
1,267
11,000
The outflow of cash and cash equivalents on the acquisition of United Transport Tankcontainers International Limited
is calculated as follows:
£’000
Cash consideration (including fees)
Overdraft acquired
4,376
1,536
5,912
From the date of acquisition, United Transport International Limited has contributed £57.1m to revenue, £(0.4)m to the
loss after tax and £8.1m to net cash flow from operating activities of the Group.
The residual excess over the net assets acquired is recognised as goodwill. The goodwill on the acquired balance sheet
has been reduced to nil value. However, this has no net impact on the overall Group goodwill. Goodwill represents the
value of synergies and assembled workforce.
(b)
Tony Trailerfracht AB
On 21 December 2006, the Group acquired the entire issued share capital of Tony Trailerfracht AB for a cash
consideration of £309,000. Tony Trailerfracht AB is a small Swedish company providing services to the local market.
United Transport Tankcontainers BV is its largest customer.
21.
Inventories
Group
Raw material
Work in progress
Spare parts
Finished liners
Company
The Company has no inventory in either period.
30 September
2007
£’000
30 September
2006
£’000
391
82
2,581
1,224
49
-
3,054
1,273
22.
Interbulk Group plc
53
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Trade receivables
Less: provision for impairment of receivables
35,507
(1,035)
14,933
(815)
Trade receivables
Loans owed by subsidiary
Amounts due from subsidiaries
VAT
Prepayments and accrued income
Other debtors
Dividends receivable from subsidiary
Balances due by JV undertakings
28,819
441
817
1,295
1,170
14,118
268
307
132
-
38,195
14,825
Company
30 September
2007
£’000
Company
30 September
2006
£’000
-
3
-
8,334
3,696
(166)
34
3,643
15,541
3
600
1,335
33
37
2,500
4,508
Concentrations of credit risk with respect to trade receivables are limited due to the Group’s customer base being large
and unrelated. Due to this, management believe there is no further credit risk provision required in excess of normal
provision for doubtful debts.
23.
Current
Bank overdraft
Current obligations under finance leases and
hire purchase contracts (note 26)
Current instalments due on bank loans (note 25)
Interest rate swap
Deferred consideration on acquisition
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
-
-
3,977
1,533
6,105
2,596
732
527
2,141
1,217
106
508
524
329
508
9,960
3,972
4,501
2,370
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
16,038
78,878
-
13,184
21,410
13,775
509
-
11,700
509
94,916
48,878
-
12,209
Non-current
Non-current obligations under finance leases and
hire purchase contracts (note 26)
Non-current instalments due on bank loans (note 25)
Revolving credit loan (note 25)
Deferred consideration on acquisition
The bank overdrafts and revolving credit facility are secured via the Group’s Bank of Scotland facility (note 25). The bank
overdraft recorded by the Company is subject to legal offset with bank accounts held by subsidiary companies. As a result,
for the Group balance sheet this amount is netted with positive cash, except cash held in the Netherlands and Sweden.
54
Interbulk Group plc
24.
Current
Trade payables
Accruals and deferred income
Taxation and social security
Interest payable
Pension contributions accrued
Amounts due to JV undertakings
Other creditors
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
30,064
25,196
258
593
44
193
15,144
7,014
159
19
201
1,316
502
193
13
54
237
3
-
56,348
23,853
708
294
30 September
2007
£’000
30 September
2006
£’000
30 September
2007
£’000
30 September
2006
£’000
-
332
-
-
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
15,616
1,966
18,096
7,856
25,430
10,126
2,384
-
12,505
2,151
7,971
5,840
7,935
-
1,907
2,151
7,971
-
81,474
36,402
-
12,029
(2,596)
(1,217)
-
78,878
35,185
-
Non-current
Other creditors and accruals
25.
Bank loans
Group
Bank loans comprise the following:
Senior Term A – Euro
Senior Term A – GBP
Senior Term B – Euro
Senior Term B – GBP
Senior Term C- GBP
Senior Second lien - Euro
Other bank loans – Euro
Senior Term A – Euro
Senior Term A – GBP
Senior Term B – Euro
Senior Revolving credit – Euro
Senior Revolving credit – GBP
Less: current instalments due on bank loans
(329)
11,700
The above bank loans are recorded at fair value less directly attributable transaction costs. The value of the unamortised
transaction costs at 30 September 2007 for the Group was £1,751,000 (30 September 2006: £763,000) and for the Company
was £nil (30 September 2006: £252,000).
Loan as at 30 September 2007:
Senior Term Loan A
Term Loan A has scheduled quarterly repayments commencing 30 June 2007 and ending 31 March 2013 on the basis of the
following annual percentage 10%, 15%, 16%, 17.5%, 20% and 21.5%.
The loan bears interest based on the relevant currency LIBOR plus bank margin. However, all of the interest has been fixed
as a result of interest rate swap agreements which results in the effective charge being 4.5% versus floating LIBOR until
30 September 2010.
Interbulk Group plc
55
Senior Term Loan B
Term Loan B is repayable on a single repayment date falling on 31 March 2014.
The loan bears interest based on the relevant currency LIBOR plus bank margin. However 94% of the interest has been
fixed as a result of interest rate swap agreements which results in the effective charge being 5.0% versus floating LIBOR
until 30 September 2010.
Senior Term Loan C
Term Loan C is repayable on a single repayment date falling on 31 March 2015.
The loan bears interest based on the relevant currency LIBOR plus bank margin. However 77% of the interest has been
fixed as a result of interest rate swap agreements which results in the effective charge being 6.3% versus floating LIBOR
until 30 September 2010.
Senior Second Lien
Second Lien debt is repayable on a single repayment date falling on 31 March 2016.
The loan bears interest based on the relevant currency LIBOR plus bank margin. However all of the interest has been fixed
30 September 2010.
Other Bank Loans
Other bank loans consists of mainly local finance arrangements in Finland and Austria in relation to container terminals.
The loans are repayable in monthly and quarterly instalments with the final repayment in January 2010 and October 2012.
The loans bear interest at Euro LIBOR plus bank margin.
Group Bank Facility
The above Senior loans are sourced from facility agreements between the Governor and Company of the Bank of Scotland
(“BOS”) and the company dated 16 March 2007 totalling £80.5m. In addition, the Group has a committed revolving credit and
ancillary facility of £10m for the working capital purposes of the Group. As at 30 September 2007 this amount was undrawn.
The facilities were granted after various securities were provided which includes fixed and floating charges, share pledges
and cross company guarantees.
In addition, the continued availability of the facilities are subject to warranties, general undertakings, financial covenants
and certain defined events of default.
Loan as at 30 September 2006:
Term Loan A
Term Loan A has scheduled quarterly repayments commencing 30 June 2006 and ending 31 March 2013 on the basis of the
following annual percentages 8.7%, 9.24%. 10.32%, 15.2%, 17.4%, 19.57% and 19.57%.
30 September 2009.
Term Loan B
Term Loan B is repayable on a single repayment date falling on 31 March 2014.
30 September 2009.
Revolving Credit Loan
As described below the Group bank facility includes a revolving credit and ancillary facilities including overdraft. The
revolving credit loan is a committed facility available through to 31 March 2013. There is no intention to repay any of the
revolving credit loan in the next twelve months and on this basis has been classified as long term. The revolving credit loan
bears interest on the relevant currency LIBOR plus bank margin.
56
Interbulk Group plc
25.
Bank loans (continued)
Group Bank Facility
The above loans are sourced from a facility agreement between the Governor and Company of the Bank of Scotland (“BOS”)
and the Company dated 1 February 2006 totalling €55m. The facility comprises term loans plus revolving credit and ancillary
facility of €20m.
The facility was granted after various security was provided which includes fixed and floating charges, share pledges and
cross company guarantees.
In addition, the continued availability of the facilities are subject to warranties, general undertakings, financial covenants
and certain defined events of default.
26.
Obligations under leases
The Group has entered into commercial leases on containers. These leases have an average duration of 5 years. There are
no restrictions placed upon the lessee by entering into these leases. The leased assets and assets under hire purchase
contracts are pledged as security for the related lease and hire purchase liabilities.
Obligations under finance leases and hire purchase contracts
Future minimum lease payments under finance leases and hire purchase contracts fall due as follows:
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
Not later than one year
After one year but not more than 5 years
Greater than 5 years
6,236
15,114
5,070
3,047
9,616
6,542
-
-
Less finance charges allocated to future periods
26,420
(4,277)
19,205
(3,880)
-
-
Present value of minimum lease payments
22,143
15,325
-
-
The present value of minimum lease payments is analysed as follows:
6,105
11,643
4,395
2,141
7,292
5,892
-
-
22,143
15,325
-
-
Group
30 September
2007
£’000
Group
30 September
2006
£’000
Company
30 September
2007
£’000
Company
30 September
2006
£’000
2,391
2,101
-
3,092
4,377
75
-
-
4,492
7,544
-
-
Obligations under operating leases
Future minimum rentals payable under non-cancellable operating leases are as follows:
27.
Financial instruments
The Group is exposed to interest rate, liquidity, foreign currency and credit risks. The Board reviews and agrees policies for
managing each of the risks associated with interest rate, liquidity, foreign currency and credit risks. It is the Group’s policy
that no trading in financial instruments shall be undertaken. These policies have remained unchanged throughout the period,
are consistent with the previous periods and are summarised below:
Interest rate risk
The Group borrows in the desired currencies at floating rates of interest and can use forward rate agreements or interest
rate swaps to generate the desired interest profile and to manage the Group’s exposure to interest rate fluctuations. At 30
September 2007, 90% (30 September 2006: 73%) of the Group’s financial liabilities were at fixed rates after taking account of
interest rate swaps.
Interbulk Group plc
57
Liquidity risk
The Group has a medium term loan facility which is regularly reviewed to ensure that it provides adequate liquidity
for the Group. The facility is managed on a centralised basis with appropriate local availability.
Foreign currency risk
The Group has several significant overseas subsidiary undertakings whose revenues and expenses are denominated in a
variety of currencies. It is the Group’s policy to borrow in the same foreign currencies to ensure appropriate natural hedging
is undertaken in the business which removes the need for financial instruments to be put in place. This takes the form of
matching the gains or losses on the retranslation of the borrowings with the gains or losses on translation of the net
investments in subsidiaries.
Credit risk
The risk of financial loss due to a counterparty’s failure to honour its obligations arises principally in relation to transactions
where the Group provides goods and services on deferred credit terms. Group policies are aimed at minimising such losses,
and require that deferred credit terms are granted only to customers who demonstrate an appropriate payment history and
satisfy creditworthiness procedures. The Group has no significant concentrations of credit risk.
Fair values of financial assets and financial liabilities
The following table provides a comparison by category of the carrying amounts and the fair values of the Group’s financial
assets and financial liabilities at each period end. Fair value is the amount at which a financial instrument could be
exchanged in an arm’s length transaction between informed and willing parties, other than a forced or liquidation sale,
and excludes accrued interest. Where available, market values have been used to determine fair values. Where market values
are not available, fair values have been calculated by discounting expected cash flows at the prevailing interest rate and by
applying year end exchange rates. The carrying amounts of short term borrowings approximate to book value.
Group
The fair value of the Group’s financial assets and liabilities are:
Financial Assets:
Investments - Unlisted shares
Cash at bank and in hand
Financial Liabilities:
Current bank loans
Non-current bank loans
Interest rate swaps
Finance leases
30 September
2007
Book value
£’000
30 September
2007
Fair value
£’000
30 September
2006
Book value
£’000
30 September
2006
Fair value
£’000
46
7,401
46
7,401
6,552
6,552
(2,596)
(78,878)
(732)
(22,143)
(2,596)
(78,878)
(732)
(19,639)
(1,217)
(35,185)
(106)
(15,325)
(1,217)
(35,185)
(106)
(12,475)
Trade and other receivables, trade and other payables, other current liabilities and non current deferred consideration whose
carrying value is a reasonable approximation to the fair value have been excluded from the table above. The only item above
which is a derivative financial instrument is the interest rate swap, designated as a cash flow hedge.
The fair values are based on cashflows discounted using a rate (based on borrowings) of 6.5%.
Company
The fair value of the Company’s financial assets and liabilities are:
Financial Assets:
Preference shares in subsidiary
Financial Liabilities:
Bank overdraft
Current bank loans
Interest rate swaps
30 September
2007
Book value
£’000
30 September
2007
Fair value
£’000
30 September
2006
Book value
£’000
30 September
2006
Fair value
£’000
2,202
2,202
2,139
2,139
(3,977)
-
(3,977)
-
(1,533)
(329)
(11,700)
(58)
(1,533)
(329)
(11,700)
(58)
58
Interbulk Group plc
27.
Financial instruments (continued)
Trade and other receivables, trade and other payables, other current liabilities and non current deferred consideration whose
carrying value is a reasonable approximation to the fair value have been excluded from the table above. The only item above
which is a derivative financial instrument is the interest rate swap, designated as a cash flow hedge.
Bank overdraft and current bank loans
The fair value of the Group’s overdrafts and bank loans is equivalent to
the carrying value reported in the balance sheet as they are floating rate
borrowings where payments are reset to market rates at intervals of up
to three months.
The fair value of the Group’s long term borrowings has been calculated
using values equivalent to the carrying value reported in the balance
sheet given that they are floating rate borrowings where payments reset
to market rates at intervals of up to three months.
Interest rate swaps
The fair value of interest rate swaps is based on market prices of
comparable instruments at the balance sheet date.
Finance leases
The fair value is assessed by calculating the discounted cash flows
at prevailing interest rates and by applying year end exchange rates.
Preference shares
Fair value has been determined by reference to market value using recent
transactions at the balance sheet date.
Investments – unlisted shares
Fair value has been determined by reference to market value at the
balance sheet date.
In accordance with IAS 39, ‘Financial Instruments: Recognition and measurement’, the Group has reviewed all contracts for
embedded derivatives that are required to be separately accounted for if they do not meet certain requirements set out in
the standard. None were recognised that were required to be separately accounted for.
Interest rate risk profile of financial assets and liabilities
The following tables set out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to
interest rate risk after taking account of the interest rate swaps used to manage the interest rate profile.
Group
Interest rate risk profile of financial assets are as follows:
Currency
Sterling
Euro
US Dollars
Swedish Krona
Other currencies
Cash at bank
and in hand
30 September
2007
£’000
Cash at bank
and in hand
30 September
2006
£’000
3,633
(646)
3,468
731
215
233
2,632
3,395
79
213
7,401
6,552
Interbulk Group plc
59
With exception of the US bank accounts on which no interest is earned, cash at bank is held in floating rate interest-bearing
current accounts or deposit accounts. Floating rate interest bearing accounts bear interest at rates based on relevant
national LIBOR equivalents plus a margin as defined in the terms and conditions of the accounts.
Interest rate risk profile of financial liabilities is as follows:
Period ended 30 September 2007
Floating rate
Senior debt loans – GBP
Fixed rate
Senior debt loans – GBP
Senior debt loans – Euro
Finance leases – GBP
Finance leases – Euro
Period ended 30 September 2006
Floating rate
Revolving credits loans – GBP
Revolving credit loans – Euro
Fixed rate
Bank loans – GBP
Bank loans – Euro
Within
1 year
£’000
1-2 years
£’000
2-3 years
£’000
More than
3-4 years
£’000
4-5 years
£’000
5 years
£’000
Total
£’000
323
374
391
492
492
7,534
312
7,534
2,384
255
2,018
1,465
4,640
320
2,542
319
3,678
346
2,771
33
3,347
389
3,087
132
2,142
431
3,424
14
1,978
25,977
29,996
80
4,315
27,718
43,838
2,043
20,100
8,701
7,233
6,888
6,242
6,339
68,214
103,617
Within
1 year
£’000
1-2 years
£’000
2-3 years
£’000
More than
3-4 years
£’000
4-5 years
£’000
5 years
£’000
Total
£’000
-
-
-
-
-
7,935
5,840
7,935
5,840
160
1,057
2,141
197
1,274
2,373
247
1,563
1,545
334
2,072
1,835
385
2,364
1,539
828
12,146
5,892
2,151
20,476
15,325
3,358
3,844
3,355
4,241
4,288
32,641
51,727
3 years
£’000
4 years
£’000
5 years
£’000
The exposure of the Group to interest rate changes when borrowings reprice is as follows:
Total borrowings
Effect of interest rate swaps
Total borrowings
Effect of interest rate swaps
1 year
£’000
2 years
£’000
103,617
(73,185)
94,915
(70,820)
87,683
(67,887)
80,795
-
74,553
-
30,432
24,095
19,796
80,795
74,553
1 year
£’000
2 years
£’000
3 years
£’000
4 years
£’000
5 years
£’000
51,727
(22,627)
48,369
(23,845)
44,525
(25,316)
41,169
-
32,641
-
29,100
24,524
19,209
41,169
32,641
The bank loans included above as fixed interest are classified as such due to the effect of interest rate swaps that expire on
the 30 September 2010. The weighted average interests’ rates on the financial liabilities are as follows:
Floating
Senior debt loans – Sterling
Revolving credits loans – Sterling
Revolving credit loans – Euro
Fixed
Senior debt loans – Sterling
Senior debt loans – Euro
Finance leases – GBP
30 September
2007
%
30 September
2006
%
8.4%
5.7%
-
6.6%
4.9%
9.2%
7.5%
8.0%
6.9%
7.5%
6.3%
6.5%
60
Interbulk Group plc
27.
Financial instruments (continued)
Company
The Company bank overdraft at September 2007 of £3,977,000 is split between £2,404,000 denominated in Sterling,
£1,569,000 denominated in Euro and £4,000 US Dollars.
The Company bank overdraft at September 2006 was all Sterling denominated. The bank overdraft is at floating rates with
a maturity of less than one year. The preference shares in subsidiary undertakings are Euro denominated at fixed rates with
a maturity after five years. The bank loans are all at fixed rates, due to the existence of the interest rate swaps, have the
following maturity:
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than 5 years
30 September
2007
Bank loans
£’000
30 September
2006
Bank loans
£’000
-
329
400
493
659
753
9,395
-
12,029
There are no Company bank loans at 30 September 2007. Of the £ 12,029,000 bank loans outstanding at 30 September 2006,
£2,151,000 has a weighted average interest cost of 7.5% and £ 9,878,000 has a weighted average interest cost of 6.6%. These
rates are fixed until 30 September 2009. The denomination of the bank loans in prior period are disclosed in note 25.
Interest on financial instruments classified as fixed rate is fixed until the maturity of the instrument. The weighted average
interest rate on fixed debt is derived from the fixed leg of each interest rate swap. Instruments classified as floating rate are
repriced at intervals of less than one year. The other financial instruments of the Group that are not included in the above
tables are non-interest bearing and are therefore not subject to interest rate risk.
Financial Instruments
The fair value and book value of the derivative financial instruments are as follows:
30 September
2007
£’000
Group
Assets – interest rate swaps
Liabilities – interest rate swaps
Company
Assets – interest rate swaps
Liabilities – interest rate swaps
30 September
2006
£’000
(732)
(106)
(732)
(106)
-
(58)
-
(58)
Cash flow Hedges
At 30 September 2007, the Group had interest rate swaps in place with notional amounts of £45,171,000 and £28,014,000
whereby they receive fixed rates of interest of 4.54% and 6.15%, respectively and pay variable rates based on relevant LIBOR
floating rate. The swap is being used to hedge the exposure to changes in the interest rates. The secured loan and interest
rate swap have the same critical terms. The loss deferred in equity will reverse in the income statement during the next
three years (being the life of the swap).
At 30 September 2006, the Group had interest rate swaps in place with notional amounts of £12,767,000, £8,138,000 and
£1,490,000 whereby they receive fixed rates of interest of 3.880%, 3.895% and 5.265% and pay variable rates based on 3.376%,
3.376% and 5.074% respectively. The swap is being used to hedge the exposure to changes in the interest rates. The secured
loan and interest rate swap have the same critical terms. The loss deferred in equity will reverse in the income statement
during the next three years (being the life of the swap).
Interbulk Group plc
61
Net investments in foreign operations
Included in loans at 30 September 2007 was a borrowing of Euro 14,821,000 (30 September 2006: Euro 14,870,000) which has
been designated as a hedge of the net investment in subsidiaries that are Euro denominated and is being used to hedge the
Group’s exposure to foreign exchange risk on these investments. Gains or losses on the retranslation of this borrowing are
transferred to equity to offset any gains or losses on translation of the net investment in the subsidiary. The fair value of Euro
borrowings, designated as a hedge against the net of investments in subsidiaries, at 30 September 2007 was £10,350,000 (30
September 2006 : £10,085,000) The foreign exchange loss of £ 383,000 (period to 30 September 2006: £9,000) on translation of
the borrowings to Sterling has been recognised in exchange reserves.
There were no derivatives outstanding at the balance sheet date that were designated as fair value hedges (30 September
2006: £nil).
28.
Authorised and issued share capital
Group and Company
The authorised share capital of the Company can be analysed as follows:
30 September
2007
£’000
30 September
2006
£’000
40,000,000
20,000,000
Number
£’000
At 1 October 2006
Allocated for cash on 10 April 2007
Allocated for consideration on 10 April 2007
97,892,040
140,000,000
65,000,000
9,789
14,000
6,500
302,892,040
30,289
Authorised
400,000,000 (2006: 200,000,000) ordinary shares of 10p each
Allotted, called up and fully paid
During the year the following ordinary shares of 10p each were issued:
Share warrants
On 21 December 2004 1,200,000 warrants (adjusted for 28 February 2007 share consolidation) were granted with an exercise
price of 30p (adjusted for 28 February 2007 share consolidation). The exercise period is 30 December 2004 to 31 December
2007. During the period to 31 December 2005 100,000 warrants were exercised. As at 30 September 2007 1,100,000 warrants
remain outstanding.
On 10 April 2007, 10,000,000 warrants were granted with an exercise price of 25p in connection with the acquisition of United
Transport International Limited. These warrants are exercisable for five years from the 10 April 2007.
29.
Reconciliation of movements in equity
Group
At 1 January 2006
Equity
share
capital
£’000
Share
premium
Account
£’000
Consideration
Warrants
£’000
Earn-out
shares
£’000
Retirement
benefit
obligation
reserve
£’000
Cumulative
translation
Reserve
£’000
Hedge
reserve
£’000
Share
option
reserve
£’000
-
-
(211)
-
916
878
-
(111)
(111)
914
1,187
-
-
-
-
Total recognised
income and
expense for
the year
-
-
-
-
24
12
Share of
subsidiaries
loss before full
control
-
-
-
-
-
-
Allotted for cash
Expenses of issue
Shares issued
as consideration
Earn-out shares
At 30 September
2006
7,250
(74)
-
Retained
earnings
£’000
Total
£’000
1,890
7,250
-
-
-
-
-
-
-
14,500
(1,983)
-
-
-
-
-
-
-
(1,983)
1,625
1,625
-
-
-
-
-
-
-
3,250
-
-
-
3,850
-
-
-
-
-
3,850
9,789
8,079
-
3,850
24
12
-
594
22,274
-
(74)
62
Interbulk Group plc
29.
Reconciliation of movements in equity (continued)
At 1 October 2006
Equity
share
capital
£’000
Share
premium
Account
£’000
Consideration
Warrants
£’000
Earn-out
shares
£’000
Retirement
benefit
obligation
reserve
£’000
Cumulative
translation
Reserve
£’000
Hedge
reserve
£’000
Performance
share
plan
£’000
Retained
earnings
£’000
Total
£’000
22,274
9,789
8,079
-
3,850
24
12
(74)
-
594
Total recognised
income and
expense for
the year
-
-
-
-
36
(21)
(372)
-
275
Allotted for cash
14,000
14,000
-
-
-
-
-
-
-
28,000
(2,148)
-
-
-
-
-
-
-
(2,148)
Expenses of issue
Shares issued
as consideration
6,500
6,500
-
Earn-out shares
-
-
-
Performance
share plan
-
-
-
Warrant
consideration
-
-
30,289
26,431
At 30 September
2007
-
(82)
-
-
-
-
-
13,000
-
-
-
-
-
(3,850)
-
-
-
-
27
-
27
1,424
-
-
-
-
-
-
1,424
1,424
-
60
27
869
58,645
(3,850)
(9)
(446)
Part of the consideration for the acquisition of InBulk Technologies Limited was in the form of earn-out shares. These shares
required certain EPS targets to be achieved in the year ended 30 September 2007. These targets were not achieved and thus
the previous assumption that a full issue of 19,249,991 shares at 20p, being the historic placing price, is reversed.
As part of the consideration for the acquisition of United Transport International Limited on 10 April 2007, 10,000,000 warrants were
issued with an exercise price of 25p. A market valuation was performed at this date and recorded as an equity reserve (see note 33).
Company
Equity
share
capital
£’000
Share
premium
Account
£’000
Consideration
Warrants
£’000
Earn-out
shares
£’000
Performance
share plan
£’000
914
1,187
-
-
-
Retained
earnings
£’000
At 1 January 2006
Total recognised income and expense
for the year
Allotted for cash
Expenses of issue
Shares issued as consideration
Earn-out shares
7,250
1,625
-
7,250
(1,983)
1,625
-
-
3,850
-
1,903
-
1,903
14,500
(1,983)
3,250
3,850
9,789
8,079
-
3,850
-
1,692
23,410
Total recognised income and expense
for the year
Allotted for cash
Expenses of issue
Shares issued as consideration
Warrant consideration
Performance share plan
Earn-out shares
14,000
6,500
-
14,000
(2,148)
6,500
-
1,424
-
30,289
26,431
1,424
(3,850)
-
27
27
(211)
Total
£’000
(643)
1,049
1,890
(643)
28,000
(2,148)
13,000
1,424
27
(3,850)
59,220
30.
Interbulk Group plc
63
Cash flow from operations
Net profit
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
275
916
Adjustments for:
Taxation
Depreciation
Impairment of other fixed assets
Amortisation of intangible assets
Loss on sale of fixed assets
Profit on sale of investment
Finance income
Finance expenses
Increase in inventories
(Increase)/decrease in trade & other receivables
(Increase)/decrease in retirement benefit obligations
Increase in payables
(279)
5,213
696
211
96
(319)
7,659
1,237
(3,447)
(890)
2,986
580
1,634
38
(29)
(72)
2,007
(1,170)
1,299
75
1,517
13,438
6,795
30 September
2007
£’000
30 September
2006
£’000
7,401
6,552
Non-cash
movements
£’000
30 September
2007
£’000
(b)
(c)
Analysis of Group net debt
Loans
Finance leases
Loans
Finance leases
(d)
1 October
2006
£’000
Cashflow
£’000
Exchange
differences
£’000
6,552
(36,402)
(15,325)
794
21,545
2,605
55
(1,288)
400
(65,329)
(9,823)
7,401
(81,474)
(22,143)
(45,175)
24,944
(833)
(75,152)
(96,216)
1 January
2006
£’000
Cashflow
£’000
Exchange
differences
£’000
Non-cash
movements
£’000
30 September
2006
£’000
177
-
6,511
(10,945)
1,039
(136)
175
78
(25,632)
(16,442)
6,552
(36,402)
(15,325)
177
(3,395)
117
(42,074)
(45,175)
Non-cash movements
Non-cash movements include £855,000 relating to the inception of new finance leases on the purchase of container
and other direct equipment during the year. In addition, on the acquisition of United Transport International Limited,
as described in note 20, finance lease creditors of £8,822,000 were assumed. In addition, the acquisition of Tony
Trailerfracht AB on 21 December 2006 included £146,000 of assumed finance lease creditors.
64
Interbulk Group plc
30.
Cash flow from operations (continued)
(d)
Non-cash movements (continued)
Also included in non-cash movements was £72,224,000 of debt assumed on the acquisition of United Transport
International Limited of which £61,879,000 was immediately repaid and £7,800,000 was reclassified as an intercompany
debt and thus excluded from the net debt position of the Group. This acquisition was on a debt free basis but the
mechanism requires excluded debt to be repaid by the Company.
Non-cash movements within loans includes the amortisation of deferred finance costs of £905,000 in the year.
Period to 30 September 2006
Non-cash movements include £622,000 relating to the inception of new finance leases on the purchase of
tankcontainers during the period. In addition, on the acquisition of United Transport Tankcontainers Holdings BV,
finance lease creditors of £15,753,000 were assumed. In addition, included in non-cash movements was £25.5m of debt
assumed on the acquisition of United Transport Tankcontainers Holdings BV which was immediately repaid. This
acquisition was on a debt free basis but the mechanism requires excluded debt to be repaid by the Company.
Company
(a)
Cash flow from operations
Year to
30 September
2007
£’000
(b)
Net (loss)/profit
(643)
1,903
Adjustments for:
Amortisation of deferred finance costs
Taxation
Finance income
Finance expense
Non-cash exchange gain
Dividend income from subsidiary
Increase in trade & other receivables
Increase in payables
252
(103)
(741)
572
(123)
(215)
(275)
340
26
(184)
(3)
469
(2,625)
(266)
165
Cash generated from continuing operations
(936)
(515)
30 September
2007
£’000
(c)
9 months to
30 September
2006
£’000
(3,977)
30 September
2006
£’000
(1,533)
Analysis of company net debt
1 October
2006
£’000
Bank loans
Bank loans
Exchange
differences
£’000
(2,431)
(12,029)
12,277
4
(252)
(13,562)
9,846
(9)
(252)
Cashflow
£’000
(13)
Non-cash
movements
£’000
(1,533)
1 January
2006
£’000
Cashflow
£’000
Exchange
differences
£’000
-
-
Non-cash
movements
£’000
-
30 September
2007
£’000
(3,977)
(3,977)
30 September
2006
£’000
177
(1,710)
-
(11,945)
(58)
(26)
(12,029)
(1,533)
177
(13,655)
(58)
(26)
(13,562)
31.
Interbulk Group plc
65
Capital commitments
The Group have capital commitments at 30 September 2007 of £3,712,357 (30 September 2006: £nil). The Company have
no capital commitments at 30 September 2007 (30 September 2006: £ nil).
32.
Pension and other post-retirement benefits
The Group has a defined contribution pension scheme under which the Group pays fixed contributions to a third party
insurance company, except for two of the Directors for which the Group has a defined benefit plan. During the year,
the defined benefit plan was changed from a final salary scheme to an average salary scheme.
(a)
Defined Contribution Pension Scheme
In respect of the defined contribution pension scheme £482,000 (period to 30 September 2006: £124,000) has been
recognised as an administrative expense during the period (note 5).
(b)
Defined Benefit Pension Scheme
The Group operates a defined benefit scheme. The amounts recognised in the balance sheet are determined
as set out below.
The assets and liabilities of the schemes at 30 September 2007 are:
30 September
2007
£’000
30 September
2006
£’000
Scheme assets at fair value
Fair value of plan assets (fixed interest bonds)
(1,105)
Present value of defined benefit obligation
972
Net pension (asset)/liability
(133)
(306)
1,121
815
The pension plans have not invested in any of the Group’s own financial instruments nor in properties or other assets
used by the Group. The fixed interest bonds at 30 September 2007 had an expected long term rate of return of 4.5%
(30 September 2006: 4.5%).
The amounts recognised in the income statement are as follows:
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
47
30
Recognised in the Income Statement
Current service cost (included in administrative charge)
Past service cost (included in administrative charge)
Others
(182)
-
88
-
Recognised in arriving at operating profit (note 5)
(47)
30
Expected return on pension scheme assets
(24)
(10)
Interest on pension scheme liabilities
52
29
Net return
28
19
Year to
30 September
2007
£’000
9 months to
30 September
2006
£’000
Taken to the Statement of Recognised Income and Expense
Actual return less expected return on pension scheme assets
(56)
Change in assumption liabilities
102
Less: experience gains and losses on liabilities
Movement in deferred tax asset
Actuarial gains and losses recognised in the Statement of Recognised Income and Expense
The cumulative actuarial gains and losses recognised in equity at 30 September 2007 is £104,000
(30 September 2006: £48,000).
The actual return on plan assets was £31,000 (30 September 2006: £65,000).
2
82
(48)
48
34
(12)
(10)
36
24
66
Interbulk Group plc
32.
Pension and other post-retirement benefits (continued)
(b)
Defined Benefit Pension Scheme (continued)
Pension contributions are determined with the advice of independent qualified actuaries on the basis of annual
valuations using the projected unit method. Plan assets are stated at their market values at the respective balance
sheet dates and overall expected rates of return are established by applying published brokers forecasts to each
category of plan assets and allowing for plan expenses. The most recent actuarial valuation was performed by HV&P
actuaries as at 30 September 2007. The principal assumptions used by the actuaries include:
30 September
2007
%
30 September
2006
%
Rate of salary increases
2.0%
2.0%
Expected rates of return on scheme assets - bonds
4.5%
4.5%
Discount rate
5.3%
4.5%
Inflation assumption
2.0%
2.0%
Mortality assumption
The average life expectancy of male pensioner retiring at age 65 is 76 years (at 30 September 2006: 76 years).
The average life expectancy of a male pensioner retiring at age 65, 44 years after the balance sheet date is 82 years
(30 September 2006: 82).
The Group made additional contributions of £885,000 in the period to 30 September 2007 (period to 30 September 2006:
£49,000). Further additional contributions of £nil (30 September 2006: £40,000), in addition to the employer’s regular
contributions, are expected to be made in the next financial year. The total contributions to the defined benefit plans
in the next financial year are expected to be £39,000 (30 September 2006: £91,000).
Changes in the present value of the defined benefit pension obligations are analysed as follows:
Year to
30 September
2007
£’000
Start of period
At acquisition on 28 February 2006
Current service cost
Interest cost
Past service cost
Actuarial losses
Exchange movement
End of period
9 months to
30 September
2006
£’000
1,121
47
52
(182)
(104)
28
1,125
30
29
(48)
(15)
962
1,121
£’000
£’000
306
25
885
(89)
(56)
34
379
10
(82)
(1)
Changes in the fair value of plan assets are analysed as follows:
Start of period
At acquisition on 28 February 2006
Expected return on plan assets
Employer contribution
Expenses
Actuarial gains
Exchange movement
End of period
1,105
306
Interbulk Group plc
67
History of experience gains and losses:
30 September
2007
£’000
Fair value of scheme assets
Present value of defined benefit obligation (£’000)
Surplus/(deficit) in the scheme (£’000)
Difference between actual return on scheme assets
Amount (£’000)
Percentage of scheme assets
Experience gains and losses on scheme liabilities
Amount (£’000)
Percentage of scheme liabilities
Changes in assumptions liabilities
Amount (£’000)
Total amount recognised in statement of recognised income and expense
Amount (£’000)
33.
962
(1,105)
30 September
2006
£’000
1,121
306
(56)
5%
(82)
27%
2
1%
(66)
6%
102
11%
-
48
4%
24
2%
Share based payments
(a)
Share option scheme
The Company operates a share option scheme under which options could be granted to those senior executives of the
Group whose skills and experience the Remuneration Committee believe to be important to the success of the Group.
The contractual life of the options is three years. There is no cash settlement alternative.
The scheme was approved by shareholders on 24 February 2006. Under the scheme share options have been granted at
a value of 20p. The right to exercise an option is subject to performance conditions as determined by the Remuneration
Committee at the date of grant. The performance conditions are linked to growth of the Company’s EPS growth.
The fair value of the equity settled options were measured at the grant date using the Black-Scholes method, taking
into account the terms and conditions upon which the instruments were granted. The model inputs were the share
price at the grant date of 18p, the exercise price of 20p, the term of 3 years, the expected volatility of 64% which was
based on historic volatility and a risk free interest rate of 5%.
During the year, 3,132,544 share options were granted with a weighted average exercise price of 20 pence. No share
options were forfeited, exercised or expired during the year. No share options were exercisable at 30 September 2007.
No share options existed in the prior period.
The expense recognised for share based payments during the year ended 30 September 2007 is £27,000 (2006: nil).
(b)
Share warrants
As part of the consideration for the acquisition of United Transport International Limited on 10 April 2007, 10,000,000
warrants were issued with an exercise price of 25p. The warrants are exercisable in whole or in part until 10 April 2012,
after which time they will lapse. A market valuation was performed at this date and recorded as an equity reserve.
The fair value of the warrants were measured at 10 April 2007 using the Black-Scholes method, taking into account the
terms and conditions upon which the instruments were issued. The model inputs were the share price at the grant date
of 20p, the exercise price of 25p, the term of 5 years, the expected volatility of 92% which was based on historic
volatility and a risk free interest rate of 5%.
34.
Contingent liabilities and guarantees
The Company and Group has given guarantees in relation to the bank and other borrowings of certain subsidiary companies.
The debt facilities are described in note 25.
The Group at 30 September 2007 has issued bank guarantees to suppliers in the ordinary course of business to a value
of £480,000 (30 September 2006; £nil) and guarantees to HM Revenue and Customs with a value of £100,000 (30 September
2006: £nil).
68
Interbulk Group plc
35.
Related party transactions
The Group has entered into certain management service agreements with Clyde Blowers Limited, a company in which
Bill Thomson and Jim McColl are Directors. These service agreements cover the services of Scott Cunningham, Bill Thomson
and Jim McColl, in-house legal services, general administrative services and office space. For the current period fees
payable under these arrangements were £453,513, excluding out of pocket expenses (period to 30 September 2006: £222,268).
In addition, during the current period the Group entered into an engagement letter in relation to services provided in respect
of acquisitions and the readmission process which was performed during the current period. The fee payable in accordance
with this engagement letter was £364,000 (period to 30 September 2006: £275,000), excluding out of pocket expenses.
As at 30 September 2007 amounts due to Clyde Blowers Limited were £116,634 (30 September 2006: £45,317).
The Group has obtained services including research and development resources, certain financial and administrative
support, site service personnel and equipment parts from Clyde Materials Handling Limited, a company in which Bill
Thomson and Jim McColl are Directors of the parent company, Clyde Process Solutions plc. For the current year amounts
payable under these arrangements were £49,420 (period to 30 September 2006: £131,427). In addition, the Group has obtained
capital equipment from Clyde Materials Handling Limited with a value of £180,308 (period to 30 September 2006: £nil).
As at 30 September 2007 amounts due to Clyde Materials Handling Limited were £125,154 (30 September 2006: £9,092).
The Group had entered into certain management service agreements with Griffin Corporate Finance Limited, a company in
which Stephen Dean and Vince Nicholls are Directors. Both of these individuals resigned from the Group on 28 February 2006
and such service agreements were cancelled and thus no fees were paid in the current year (period to 30 September 2006:
£3,750). In addition, during the prior period the Group entered into an engagement letter for services provided in relation to
acquisitions and the readmission process which was performed during the prior period. The fees payable in the prior period
in relation to this engagement letter were £275,000 (excluding out of pocket expenses).
Bill Thomson was a Director and shareholder of both the Company and InBulk Technologies Limited. As a result,
the acquisition of InBulk Technologies Limited in the prior period was a related party transaction.
Purchases from JV undertakings during the year were £305,000 (period to September 2006 ; £nil) and goods sold to associate
undertakings during the year were £306,000 (period to 30 September 2006 : £nil). Amounts recoverable from associate
undertakings and payable to associate undertakings at the year end are shown in note 22 and 24.
Smith Brands Limited
10594
www.interbulkgroup.com

Interbulk Group plc

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