Interim Results
Intermodal Resource Plc
28 September 2006
28th September 2006
INTERMODAL RESOURCE PLC
('Intermodal' or 'the Group')
Interim Results
for the six months ended 30 June 2006
Intermodal Resource plc, the European transport equipment contract hire group,
today announces its unaudited interim results for the six months ending 30 June
2006.
Group Highlights:
• Turnover up by 247 % to £4.24 million (2005: £1.22 million)
• EBITDA before exceptional items up by 97% to £875,000 (2005:
£445,000)
• Operating profit, before exceptional items, of £202,000 up 16%
(2005:£174,000)
• Agreement reached to sell Axis Intermodal Deutschland Gmbh (Axis)
swapbody fleet at a surplus to net book value of £450,000 in return for
entering into a 12 year management contract
• Continued growth of the German and UK businesses
• Restructuring and integration of UK businesses undertaken to deliver
efficiencies and a stronger sales resource
• Assetcare successfully established as the customer service arm to
the UK contract hire businesses
• Maiden interim dividend of 0.13p per ordinary share to be paid
Robert Montague, Chief Executive Officer, commented:
'We are encouraged by the strong performance from Axis and its management team's
ability to seize the opportunities being created by the recovery of the German
economy.
Although the recently acquired UK contract hire business of Tailored Hire Ltd
underperformed in the first-half of the year we have taken the necessary steps
to maximise the efficient running of these operations which is expected to lead
to improved performance in the second half of the year.
The successful sale of the Axis swapbody fleet, and the setting up of a 12 year
agreement to manage it, has strengthened and de-risked our balance sheet
increasing our ability to grow the business going forward. '
Enquiries:
Intermodal Resource plc Tel: 01993 883148
Robert Montague, Chief Executive Officer
ForrestScott Communications Tel: 01527 578707
Claire Forrest
INTERMODAL RESOURCE PLC
CHAIRMAN's AND Chief EXECUTIVE Officer's statement
We are pleased to report an increase in revenue in the first half of 2006 driven
by the strong performance of our German business. The acquisition last year of
Tailored Hire proved to be challenging for the UK contract hire business,
requiring major restructuring during the first six months, followed by its
integration with our Trailerent business.
We continue to focus on building the business in a risk-free manner, today
completing the sale of our Axis swapbody fleet on the back of a 12 year
management agreement. This has strengthened our balance sheet, eliminating our
exposure in Axis to residual value risk and substantially increasing our ability
to grow the business.
On 12 July 2006 the Group was reclassified to the Support Services Sector of the
London Stock Exchange by the FTSE Global Classification Committee. This change
of stock market sector classification properly recognises that Intermodal
Resource's business is to provide high quality customised contract hire and
maintenance management to its customers.
Financial Results
Turnover for the period was £4.24 million (2005: £1.22 million) on which the
Group achieved an operating profit before interest and exceptional items of
£202,000 (2005: £174,000).
After exceptional costs associated with the relocation and restructuring of the
UK businesses of £98,000 (2005: Nil) and interest of £166,000 (2005: £96,000) a
loss before tax of £62,000 (2005: profit of £78,000) resulted.
Review of Operations
Germany
Axis benefited from a good demand for its equipment and utilisation is currently
running at 96%. Continuing demand for our swapbodies gave us confidence to order
600 new units for delivery starting in the second half of the year. These new
units will increase the fleet by approximately 26%.
Business activity in Germany continues to strengthen and your Board is confident
that Axis is well placed to take advantage of the opportunities this affords.
New contracts and extensions to existing ones were secured with several major
high profile customers including DHL, General Logistics Systems (GLS), and
Steinle GmbH, a subsidiary of DFDS.
In May 2006 the Board appointed Heiner Mangels as Managing Director of Axis.
Heiner's leadership allied to the expertise of the existing team will play a key
part in securing new business throughout Europe.
United Kingdom
Demand for both trucks and trailers remains slow exacerbated by the enforced
changes to truck specifications following the European Emissions Standard which
comes into effect in October 2006. Consequently many new customer orders have
been delayed.
Despite that, new contracts generating revenue of £3.7million over the life of
the contracts were secured and the UK fleet has grown by 15% to 582 units. New
customers included Interfloor, Dairy Farmers and Londis.
Tailored Hire underperformed in the first six months, delivering below target
results. Following an internal review of the business two members of Tailored
Hire's senior management left the company and the service and maintenance
functions were transferred to Assetcare.
We completed the acquisition of the remaining 49% of Assetcare 1 March 2006 which
has now taken over all of the service and maintenance functions for the entire UK fleet.
Sale of Axis Swapbody fleet and the signature of a management contract.
The Group's strategy to de-risk exposure to residual asset values and gearing
resulted in the decision to sell the Axis swapbody fleet to Unitas Containers
Ltd ('Unitas') for a cash consideration of €6.2 million (£4.1 million) realising
a surplus of £450,000 to the book value of £3.65 million. In conjunction with
the sale of the swapbody fleet, Axis has entered into a management arrangement
with Unitas to manage the fleet for 12 years. After repayment of Axis debt and
costs associated with the sale, a net surplus of approximately £1.5 million will
provide a strong base for new investment and augment the Group's working capital
position.
Under the terms of the management agreement Axis will earn a fee based upon a
percentage of the gross revenues together with procurement and disposal fees on
all new additions and disposals.
The agreement also provides for further expansion of the fleet by 1200 units in
the coming year of which 600 have already been ordered, as mentioned above. The
impact on Group profits before tax in 2007 is anticipated to be broadly neutral
and earnings enhancing from 2008.
Dividend
Following the conclusion of the aforementioned Axis swapbody transaction the
Board intends to declare payment of the Group's first interim dividend of 0.13p
per ordinary share and looks forward to further dividend payments.
Outlook
Following the restructuring of the UK operation and the immediate impact of the Axis swapbody
transaction the outcome for the year, excluding the exceptional gain on the
sale of the fleet, is now going to be below current market expectations. The
Group is well positioned to take advantage of an upturn in business in the
second half of the year and we remain focused on increasing profitability and
shareholder value driving our business forward through organic growth and
strategic acquisitions utilising our strengthened balance sheet to develop new investment
opportunities.
The sale of the Axis swapbody fleet and the setting up of a new management
contract for them represents a new approach and is expected to prove a highly
successful business model.
The Board is confident its actions will deliver improved shareholder value in
the second half of the year and further growth in subsequent years.
Robert J Montague CBE Christopher Rogers
Chief Executive Officer Chairman
Intermodal Resource plc
Interim Report 2006
Consolidated profit and loss account
Six months Six months Year
ended 30 June ended 30 June ended 31
December
2006 2005 2005
restated restated
Unaudited Unaudited Audited
£000 £000 £000
Turnover 4,240 1,221 5,186
Cost of sales 2,777 460 2,976
---------------------------- --------- -------- ---------
Gross profit 1,463 761 2,210
---------------------------- --------- -------- ---------
Administrative expenses 1,141 535 1,434
Amortisation of
goodwill 82 35 116
Share based payment 38 17 47
Exceptional non
recurring items 98 - -
---------------------------- --------- -------- ---------
Total administrative
expenses 1,359 587 1,597
---------------------------- --------- -------- ---------
Operating profit 104 174 613
Net interest payable 166 96 271
---------------------------- --------- -------- ---------
(Loss) Profit on
ordinary activities
before taxation (62) 78 342
Tax on profit on
ordinary activities - - (14)
Equity minority
interests - - 1
---------------------------- --------- -------- ---------
Retained (loss) profit
for the period (62) 78 329
---------------------------- --------- -------- ---------
Basic (loss)/earnings
per share (pence) (0.11) 0.18 0.65
Diluted (loss)/earnings
per share (pence) (0.11) 0.17 0.62
Statement of total recognised gains and losses
Six months Six months Year
ended 30 June ended 30 June ended 31
December
2006 2005 2005
Unaudited Unaudited Audited
£000 £000 £000
(Loss) Profit for the
financial period (62) 78 329
Foreign exchange
movements (10) (52) (51)
---------------------------- --------- -------- ---------
Total gains and losses
recognised since last
financial statements (72) 26 278
---------------------------- --------- -------- ---------
All activities are continuing.
Consolidated balance sheet
30 June 30 June 31 December
2006 2005 2005
restated restated
Unaudited Unaudited Audited
£000 £000 £000
Fixed assets
Intangible assets 3,105 1,292 3,121
Tangible assets 5,812 3,919 6,515
---------------------------- -------- -------- -------
8,917 5,211 9,636
Current assets
Debtors 1,645 379 1,386
Cash at bank and in
hand 6 8 4
---------------------------- -------- -------- ---------
1,651 387 1,390
Creditors - amounts
falling due within one
year 3,551 1,736 3,813
---------------------------- ------- -------- ---------
--------- -------- ---------
Net current liabilities (1,900) (1,349) (2,423)
---------------------------- --------- -------- ---------
Total assets less
current liabilities 7,017 3,862 7,213
Creditors - amounts
falling due after more
than one year 2,330 1,076 2,534
Provision for
liabilities 162 162
---------------------------- ------- -------- ---------
4,525 2,786 4,517
------- -------- ---------
Capital and reserves
Called up share capital 2,943 2,269 2,943
Share premium account 1,070 474 1,070
Share-based payment
reserve 97 29 59
Other reserve 180 - 180
Profit and loss account 235 14 266
---------------------------- -------- -------- --------
4,525 2,786 4,518
Equity minority
interest - (1)
---------------------------- --------- -------- ---------
4,525 2,786 4,517
--------- -------- ---------
Consolidated cash flow statement
Six months Six months Year
ended 30 June ended 30 June ended 31
December
2006 2005 2005
Unaudited Unaudited Audited
Note £000 £000 £000
Net cash inflow from
operating activities 5 846 125 1,128
------------------------ ------ --------- -------- --------------
Returns on investments and servicing of finance
Interest received 1 1 1
Interest paid (96) (70) (153)
Finance lease interest
paid (71) (27) (119)
---------------------------- --------- -------- --------------
Net cash outflow from
investments and
servicing of finance (166) (96) (271)
---------------------------- --------- -------- --------------
Capital expenditure
Purchase of tangible
fixed assets (676) (129) (750)
Sale of tangible fixed
assets 776 156 444
------------------------ --------- -------- --------------
Net cash inflow from
capital expenditure 100 27 (306)
------------------------ --------- -------- --------------
Acquisitions and disposals
Purchase of subsidiary
undertakings (25) (1,849)
Net overdrafts acquired
with subsidiary
undertakings - - (91)
------------------------ --------- -------- --------------
Net cash outflow from
acquisitions and
disposals (25) (1,940)
------------------------ --------- -------- --------------
Cash inflow before
financing 755 56 (1,389)
------------------------ --------- -------- --------------
Financing
Issue of shares - 600 1,819
Expenses relating to
the issue of shares - (19) (87)
Net movement on other
loan finance 150 45 (63)
Net movement on bank
loans (149) (329) 270
Capital element of
finance leases (859) (267) (714)
------------------------ --------- -------- --------------
Net cash inflow
(outflow) from
financing (858) 30 1,225
------------------------ --------- -------- --------------
Net (decrease) increase
in cash (103) 86 (164)
Movement in overdraft 115 (20) 91
Effect of exchange rate
fluctuations (10) (64) 71
------------------------ --------- -------- --------------
(Decrease) Increase in
cash at bank and in
hand 2 2 (2)
------------------------ --------- -------- --------------
Notes to the interim financial statements
1 Preparation of the interim financial statements
The unaudited results for the six months ended 30 June 2006 have been prepared in accordance with applicable UK
accounting standards.The accounting policies applied are those set out in the Group's annual report and accounts for
the year ended 31 December 2005 with the exception that FRS 20 'Share Based Payments' has been adopted in the interim
financial statements.
In accordance with FRS 20, the fair value of equity-settled share-based payments is determined at the date of grant and
is expensed on a straight-line basis over the vesting period based on the Company's estimate of the options that will
eventually vest. The adoption of FRS 20 has resulted in a charge to the profit and loss account of £38,000.
Following the adoption of FRS 20, a prior year adjustment has been made which results in a decrease in the profit and
loss reserve brought forward at 1 January 2006, and the creation of a share-based payment reserve, of £59,000. The
profit and loss account for the period ended 30 June 2005 and the year ended 31 December 2005 have been restated for
charges of £17,000 and £47,000 respectively.
The figures for the year ended 31 December 2005 have been extracted from the Annual Report and Financial Statements
which have been filed with the Registrar of Companies, amended for the adoption of FRS 20. The auditor's report on
those accounts was unqualified and did not contain any statements under Section 237(2) or (3) of the Companies Act
1985. The financial information set out in this interim report does not constitute statutory financial information
within the meaning of Section 240 of the Companies Act 1985.
The interim financial information has been neither audited nor reviewed by the Company's auditor.
2 Earnings per share
The calculation of the basic and diluted loss per share is based on a loss on ordinary activities after tax of £62,000
at 30 June 2006 (profit of £78,000 at 30 June 2005) and weighted average number of issued shares of 58,856,842. As the
average share price during the period has been less than strike prices there is no dilutive effect of securities.
3 Post balance sheet event
On 28th September 2006, it was agreed that the swap body assets of Axis Intermodal Gmbh (Axis) be sold to Unitas
Containers Ltd for a consideration of €6.2million. A new management contract was entered into on that date whereby Axis
undertakes to manage and operate the swapbodies the fleet of swapbodies for an annual management fee.
4 Dividend
The directors' intention is to declare an interim dividend following completion of the sale of assets referred to in
note 3 above. This will be payable on
30 November 2006 to shareholders on the register as at the close of business on 10 November 2006
5 Reconciliation of operating profit to net cash inflow from operating activities
ended ended ended
30 Jun 30 Jun 31 Dec
£000 £000
Unaudited Unaudited Audited
£000 £000
Operating profit 104 174 613
Amortisation of
goodwill 82 35 116
Share option charge 38 17 47
Depreciation 553 219 789
777 445 1,565
Loss on sales of
fixed assets 50 9 (73)
Increase in debtors (259) (171) (277)
Increase(decrease)
in creditors 278 (140) (87)
Net inflow from
operating activities 846 125 1,128
6 Copies of interim report
Copies of the interim statement wil be sent to shareholders. Further copies will be available from the company
secretary at 8 Fenlock Court, Lower Road, Long Hanborough, Oxfordshire OX29 8LN.
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