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The Bidvest Group Limited - Bidcorp Plc Preliminary Report
BIDcorp plc
PRELIMINARY REPORT OF THE AUDITED RESULTS
FOR THE EIGHTEEN MONTHS ENDED 30 JUNE 2003
Bidcorp plc (Bidcorp) is listed on the London Stock Exchange in the transport
sector and comprises of three divisions: Automotive Services; Shipping Services;
Property and Outsourced Services.
The Bidvest Group Limited (Bidvest) in South Africa acquired a 56.7% interest in
Bidcorp with effect from January 2002.
FINANCIAL HIGHLIGHTS
Eighteen Twelve
months months
to to
June 30 Dec 31
2003 2001
GBPmillion
GBPmillion
- Turnover - continuing operations 189.8 114.1
- Operating profit (loss) - continuing operations 0.8 (11.9)
- Loss on ordinary activities after taxation (2.1) (14.2)
- Loss per share (pence) (0.9) (13.9)
OPERATIONAL HIGHLIGHTS
- Ferryline, Individual Driver Movements and the vehicle preparation centre in
Goole were discontinued during the period
- Extensive restructuring of some continuing operations
- Effects of the slowing global economic growth and the Iraqi war delayed
recovery of Bidcorp
- Ongoing focus of management on cost reductions and operational efficiencies
Strategic intention remains to pursue opportunities to ensure Bidcorp"s
participation in the trade between southern Africa, the United Kingdom and
continental Europe
Brian Joffe, Chairman, commented:
"The restructuring and the weaker markets have delayed the turnaround of Bidcorp
but significant progress has been made in establishing a solid foundation from
which to move forward."
Rodger Graham, Chief Executive, commented:
"Being an eighteen-month reporting period our results are not directly
comparable, but do reflect the changes initiated. The loss-making operations
have all been closed, disposed of or turned around. Although trading conditions
in the last six months were particularly difficult, we believe that better times
lie ahead."
August 14 2003
Enquiries:
Bidcorp plc
Brian Joffe, Chairman Tel: +27 (11) 772 8700
Rodger Graham, Chief Executive Tel: +44 (207) 408 0123
The Bidvest Group Limited
Jack Hochfeld, Investor Relations Tel: +27 (11) 772 8705
David Cleasby, Investor Relations Tel: +27 (11) 772 8706
Beachhead Media and Investor Relations Tel: +27 (11) 214 2400
Jennifer Cohen
Jaqui Swan
CONSOLIDATED PROFIT & LOSS ACCOUNT
for the eighteen months ended June 30 2003
18 months 12 months
ended ended
June 30 Dec 31
GBP000"s Note 2003 2001
Turnover - continuing operations 189,758 114,075
Turnover - discontinued operations 14,726 15,411
1 204,484 129,486
Operating loss 1 (2,044) (12,642)
Operating profit (loss) - continuing operations 810 (11,949)
Operating loss - discontinued operations (2,854) (693)
Profit (loss) on disposal of fixed assets 219 (367)
Loss on termination of logistics business - (187)
Profit on sale of investments 435 -
Loss on ordinary activities before interest (1,390) (13,196)
Net interest payable (1,343) (2,772)
Other finance expense (210) (35)
Loss on ordinary activities before taxation (2,943) (16,003)
Tax credit on loss on ordinary activities 3 799 1,831
Retained loss on ordinary activities after
taxation for the financial period 4 (2,144) (14,172)
Loss per share (pence) 4 (0.9) (13.9)
Diluted loss per share (pence) 4 (0.9) (13.8)
CONSOLIDATED BALANCE SHEET
at June 30 2003
June 30 Dec 31
GBP000"s Note 2003 2001
Fixed assets
Tangible assets 56,161 52,789
Investments 2,077 6,606
58,238 59,395
Current assets
Stocks and work in progress 3,027 2,472
Debtors 30,060 28,122
Cash at bank and in hand 1,626 3,437
34,713 34,031
Current liabilities
Creditors: Amounts falling due within one year (37,753) (56,270)
Net current (liabilities) assets (3,040) (22,239)
Total assets less current liabilities 55,198 37,156
Creditors: Amounts falling due after
more than one year (816) (10,807)
Provisions for liabilities and charges (4,371) (5,213)
Net assets excluding pension liability 50,011 21,136
Pension liability (2,637) (1,606)
Net assets including pension liability 47,374 19,530
Capital and reserves
Called up share capital 49,644 20,463
Share premium 13,228 11,353
Merger reserve 9,327 9,327
Capital reserve 480 480
Profit and loss account
excluding pension liability (22,668) (20,487)
Pension liability (2,637) (1,606)
Profit and loss account including
pension liability (25,305) (22,093)
Equity shareholders" funds 47,374 19,530
Net asset value per share (pence) 5 19.1 19.1
CONSOLIDATED CASH FLOW STATEMENT
for the eighteen months ended June 30 2003
18 months 12 months
ended ended
June 30 Dec 31
GBP000"s Note 2003 2001
Cash inflow from operating
activities 6 11,498 9,713
Interest received 334 188
Interest paid (514) (1,067)
Interest element of finance lease payments (1,074) (1,345)
Returns on investments and
servicing of finance (1,254) (2,224)
Taxation (paid) received (213) 373
Capital expenditure and financial investment (13,373) (1,269)
Purchase of tangible fixed assets (14,951) (4,878)
Sale of tangible assets 1,578 1,014
Sale of investment properties - 2,467
Sale of investments - 128
Acquisitions and disposals - (2,000)
Cash outflow in respect of termination
of logistics business - (2,000)
Net cash (outflow) inflow before financing (3,342) 4,593
New shares issued 31,056 -
Repayment of secured loans 7 (3,776) (1,195)
Repayment of loan notes 7 (913) -
Repayment of Blue Circle loan 7 (9,000) -
New hire purchase agreements - 2,642
Repayment of capital element of
hire purchase agreements 7 (9,678) (8,146)
Financing 7 7,689 (6,699)
Increase (decrease) in net cash 4,347 (2,106)
STATEMENT OF TOTAL CONSOLIDATED RECOGNISED GAINS AND LOSSES
for the eighteen months ended June 30 2003
18 months 12 months
ended ended
June 30 Dec 31
GBP000"s 2003 2001
Loss attributable to equity shareholders
for the financial period (2,144) (14,172)
Actuarial loss on defined benefit schemes (1,263) (2,315)
Deferred tax arising thereon 379 695
Currency translation differences
on foreign currency net investments (184) 28
Total recognised losses since
last annual report (3,212) (15,764)
RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS" FUNDS
for the eighteen months ended June 30 2003
18 months 12 months
ended ended
June 30 Dec 31
GBP000"s 2003 2001
Loss for the period (2,144) (14,172)
Actuarial loss on defined
benefit schemes (1,263) (2,315)
Deferred tax arising thereon 379 695
Currency translation differences
on foreign currency net investments (184) 28
New shares issued (net) 31,056 -
27,844 (15,764)
Shareholders" funds at the beginning
of the period 19,530 35,294
Shareholders" funds at the end
of the period 47,374 19,530
Shareholders" funds are all attributable to equity interests.
NOTES TO THE ACCOUNTS
for the eighteen months ended June 30 2003
1. Principal activities
Loss Net assets
Turnover before taxation (liabilities)
GBP000"s 2003 2001 2003 2001 2003 2001
Analysis by activity
Automotive Services
- continuing
operations 128,930 69,579 (565) (124) 24,622 19,185
Automotive Services
- discontinued
operations 9,893 9,257 (1,881) (435) (72) 950
138,823 78,836 (2,446) (559) 24,550 20,135
Exceptional items
excluding goodwill
impairment - - 125 (1,092) - -
Goodwill amortisation
and impairment - - - (9,733) - -
Total Automotive
Services 138,823 78,836 (2,321) (11,384) 24,550 20,135
Shipping Services
- continuing
operations 56,268 31,435 947 445 33,635 35,528
Shipping Services
- discontinued
operations 4,833 6,154 (973) (258) 188 423
61,101 37,589 (26) 187 33,823 35,951
Exceptional items
excluding goodwill
impairment - - 517 (1,251) - -
Goodwill amortisation
and impairment - - - (494) - -
Total Shipping
Services 61,101 37,589 491 (1,558) 33,823 35,951
Property and
Outsourced Services 4,560 13,061 428 492 2,100 4,193
Exceptional items - - 12 (746) - -
Total Property and
Outsourced Services 4,560 13,061 440 (254) 2,100 4,193
Interest and
similar charges - - (1,553) (2,807) - -
Net debt - - - - (13,099) (40,749)
204,484 129,486 (2,943) 16,003) 47,374 19,530
Analysis by
geographical area
of operations
UK 186,910 117,472 (2,638) (13,984) 46,265 19,142
Europe 17,574 12,014 (305) (2,019) (1,109) 388
204,484 129,486 (2,943) (16,003) 47,374 19,530
There is no significant difference between turnover by origin and destination.
The segmental analysis for 2001 has been restated for the movement of the Car
Parking operations from Automotive Services to Property and Outsourced Services.
Net assets have been adjusted to exclude inter-company balances.
Analysis of continuing and discontinued operations
Conti- Discon- Conti- Discon-
nuing tinuing nuing tinuing
opera- opera- Total opera- opera- Total
GBP000"s tions tions 2003 tions tions 2001
Turnover 189,758 14,726 204,484 114,075 15,411 129,486
Cost of
sales (159,455) (14,821) (174,276) (93,933) (13,651) (107,584)
Gross profit 30,303 (95) 30,208 20,142 1,760 21,902
Total
administrative
expenses (29,493) (2,759) (32,252) (32,091) (2,453) (34,544)
Administrative
and distribution
expenses excluding
goodwill
amortisation
and impairment (29,493) (2,759) (32,252) (21,864) (2,453)
(24,317)
Goodwill
amortisation
and impairment - - - (10,227) - (10,227)
Operating profit
(loss) 810 (2,854) (2,044) (11,949) (693) (12,642)
2. OPERATING EXCEPTIONAL ITEMS
GBP000"s 2003 2001
Directors" termination and notice payments 319 -
Earn out provision not required (308) -
Set-up costs of European recovery operation 62 -
Impairment of fixed assets - 421
Write down of investment - 421
Restructuring and reorganisation - 1,693
Impairment of goodwill - 9,635
Charged to operating profit 73 12,170
3. TAX CREDIT ON LOSS ON ORDINARY ACTIVITIES
Analysis of tax charge in the year
The charge based on the loss for the year comprises:
GBP000"s 2003 2001
UK corporation tax 30%, (2000: 30%):
- adjustment in respect of the previous period 176 (177)
Foreign tax:
- adjustment in respect of the previous period (70) 32
Total current tax 106 (145)
UK deferred tax:
- movement in respect of the current period (837) (1,124)
- adjustment in respect of prior years (5) (388)
Total deferred tax (842) (1,512)
Deferred tax on pension liability (63) 105
Total deferred tax (905) (1,407)
ACT written back - (279)
Tax credit on loss on ordinary activities (799) (1,831)
4. LOSS AND DILUTED LOSS PER ORDINARY SHARE
The calculation of the basic and diluted loss per share is based on the
consolidated loss after taxation of GBP2,144k (2001: GBP14,172k loss) and the
weighted average number of ordinary shares in issue during the year of
248,219,402 (2001: 102,317,460).
5. NET ASSET VALUE PER ORDINARY SHARE
The calculation of net asset value per ordinary share is based on the total of
equity shareholders" funds and the closing number of ordinary shares in issue.
2003 2001
Number of shares in issue 248,219,402 102,317,460
Net assets (GBP000"s) 47,374 19,530
6. RECONCILIATION OF OPERATING LOSS TO NET CASH INFLOW FROM OPERATING
ACTIVITIES
GBP000"s 2003 2001
Operating loss (2,044) (12,642)
Amortisation and impairment of goodwill - 10,227
Depreciation and amortisation of other fixed assets 14,087 9,760
Write up of investments (13) -
Loss on disposal of fixed assets - 42
(Increase) decrease in stocks and work in progress (484) 1,697
Increase in debtors (751) (1,739)
Increase in creditors 985 2,510
Other non-cash movements (282) (142)
Net cash inflow from operating activities 11,498 9,713
7. ANALYSIS OF NET DEBT
At Jan 1 Other non- Cash Exchange At June 30
GBP000"s 2002 cash items flow adjustment 2003
Cash and cash
equivalents
Cash in hand 3,437 - (1,811) - 1,626
Overdrafts (15,365) - 6,158 - (9,207)
(11,928) - 4,347 - (7,581)
Loans and
other financing (28,821) (89) 23,367 25 (5,518)
Repayable within
one year
Bank loans (1,194) - 1,156 38 -
Loan notes (913) - 913 - -
Other loans (8,911) (89) 9,000 - -
Hire purchase
agreements (6,996) - 2,335 (41) (4,702)
Repayable after
one year
Bank loans (2,686) - 2,620 66 -
Hire purchase
agreements (8,121) - 7,343 (38) (816)
Total (40,749) (89) 27,714 25 (13,099)
8. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
GBP000"s 2003 2001
Increase (decrease) in cash in the period 4,347 (2,106)
Cash outflow from decrease in debt and
leasing financing 23,367 6,699
Change in net debt resulting from cash flows 27,714 4,593
Unwinding of discount on loan (89) (405)
Write down of ring fenced loan - 150
Translation difference 25 (131)
Movement in net debt for the period 27,650 4,207
Net debt at the beginning of the period (40,749) (44,956)
Net debt at the end of the period (13,099) (40,749)
9. POST-BALANCE SHEET EVENTS
There are no material post-balance sheet events.
10. DIVIDENDS
There will be no dividends proposed for the period ended 30 June 2003 (December
31 2001: Nil).
11. BASIS OF PREPARATION
The preliminary announcement for the eighteen-month period ended 30 June 2003
has been audited. The accounting policies used to prepare these accounts are as
set out in the statutory accounts for the period to 30 June 2003. This financial
information does not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. The financial information for the period ended 30 June
2003 has been extracted from the statutory accounts for the period, which have
not yet been delivered to the Registrar of Companies. The audit report on these
accounts was unqualified and did not contain a statement under Section 237(2) or
(3) of the Companies Act 1985. The statutory accounts for the year ended
December 31 2001 have been delivered to the Registrar of Companies.
12. ANNUAL REPORT
A full copy of the annual report and accounts will be sent to shareholders
shortly and will be delivered to the Registrar of Companies after approval by
shareholders.
13. ANNOUNCEMENT
Copies of the announcement are available from the Company"s registered office at
6 Stratton Street, London W1J 8LD.
CHAIRMAN"S REPORT
INTRODUCTION
Bidcorp plc has over the past eighteen months been recapitalised and a process
begun of stabilising the businesses. A strategic assessment of all the areas of
the business activities was conducted. Management was tasked with reducing costs
and addressing returns on the assets employed. This task continues with some
initial benefits being realised.
During the period we experienced a slow down in market activity particularly in
the automotive services sector as well as other setbacks. Whilst it is
disappointing not to be able to show markedly improved financial results, I
remain optimistic about Bidcorp"s future. We have avoided pursuing other
expansion opportunities until a stable foundation has been achieved.
STRATEGY
The strategic assessment resulted in the closure of a number of businesses at
significant cost. Our focus has been on restructuring the continuing businesses
and establishing the appropriate processes, structures and philosophies to
generate sustainable growth. Once achieved we will turn our attention to
exploring growth opportunities and new strategic initiatives, one of which is to
ensure Bidcorp"s participation in the trade between the United Kingdom,
continental Europe and southern Africa.
The reorganisation of the group is progressing satisfactorily. Sustainable
business transformations require persistence and perseverance. Bidcorp"s
turnaround has taken place in incremental stages while carefully building the
critical mass required to create `breakthrough" opportunities.
Unlocking value is a difficult and demanding task, but the implementation of a
decentralised and entrepreneurial culture has brought new energy to the group.
Management"s focus on cost savings and operational efficiencies is ongoing and
we believe the businesses are now appropriately structured to benefit from
opportunities, especially once the markets improve.
ECONOMIC CONDITIONS
First world countries recorded slower real growth rates in the reporting period.
Uncertainty in the world economy was exacerbated by the war in Iraq and the
disruption occurring during an economic slowdown. Leading indicator industries
such as the automotive industry were particularly hard hit.
FINANCIAL HIGHLIGHTS
Group turnover from continuing operations amounted to GBP189.8 million.
Operating profit, excluding exceptional items and discontinued operations,
amounted to GBP0.8 million. Finance costs for the period were GBP1.6 million,
reflecting the reduction in the group"s gearing to 28% (2001: 209%). Turnover
and operating losses, including closure costs in respect of discontinued
operations, amounted to GBP14.7 million and GBP2.9 million respectively.
PROSPECTS
Significant progress has been made in establishing a solid foundation to support
long-term sustainable growth and profitability for Bidcorp. Change is always
difficult and it has been a demanding time for the group. My thanks go to the
management and staff for their efforts in trying circumstances.
Whilst tough economic conditions have slowed the turnaround, Bidcorp is well
positioned to benefit from market improvements.
Brian Joffe
(Chairman)
CHIEF EXECUTIVE"S REVIEW OF OPERATIONS
The financial period under review is from 1 January 2002 to 30 June 2003, to
bring the group into line with the reporting period of its principal
shareholder. The trading figures in this report therefore compare this eighteen-
month period with those of the previous twelve months to the end of December
2001.
The focus has been on identifying those businesses that fit our strategic
vision, ensuring that the appropriate management and structures are in place,
and disposing of or closing those businesses, which do not fit our strategy. A
number of the continuing businesses have required extensive restructuring. There
have been significant costs associated with this process and these are reflected
in the results of both the continued and discontinued operations.
The combination of adverse market conditions and a number of trading incidents
resulted in a disappointing operating loss for the six months to the end of June
2003. These incidents included an accident involving one of our ferries, the
write-off of amounts owing by an insolvent Dartline debtor and the costs of
terminating an unacceptable longstanding contract with an automotive customer.
There were also a number of once-off costs associated with the reorganisation of
the group
The balance sheet is extremely sound with gearing of 28%, following an equity
injection of GBP32 million and despite the expenditure of GBP15 million on a
capital equipment replacement programme and GBP9.7 million hire purchase
repayments in respect of commitments made in earlier periods. Long-term
borrowings of GBP2.7 million were also repaid. The business generated cash at an
operating level despite the losses recorded.
The operations are grouped into three divisions - Automotive Services, Shipping
Services, and Property and Outsourced Services.
MARKET CONDITIONS
Market conditions were tough, particularly in the first half of the 2003
calendar year. This was especially true of the Automotive Volume Distribution
business where it proved difficult to maintain margins in a highly competitive
market and in the Automotive Specialist Operations business where manufacturers"
promotional activities were severely curtailed. A further round of cost
reductions was instituted as a result.
The demand for cross-Channel freight ferry services on the routes which that we
operate was markedly reduced during the period of the war in Iraq, and is only
now returning to pre-war levels.
OPERATIONAL REVIEW
AUTOMOTIVE SERVICES
Bidcorp"s Automotive Services division provides an extensive range of services
to the automotive industry including volume and specialised transport, pre-
delivery inspection and preparation as well as specialised transportation of
vehicles across the Channel and throughout Europe. The division is also a
significant player in the Rescue and Recovery industry in the United Kingdom.
The automotive industry experienced difficult trading conditions with a
resultant drop in the volumes of new vehicle sales and pressure on margins. The
industry as a whole is actively focused on cost savings and Bidcorp"s automotive
operations concentrated on cost reductions and operational efficiencies.
The Automotive Services division reported turnover of GBP128.9 million (2001:
GBP69.6 million) and an operating loss of GBP0.6 million (2001: operating loss
of GBP0.1 million) in respect of continuing operations. In addition, turnover of
GBP9.9 million and operating losses of GBP1.9 million (2001: GBP0.4 million)
were attributable to discontinued operations.
The Individual Driver Movements (IDM) business operated at a loss for the
period. Attempts to find a buyer for the business were unsuccessful and the
operation was closed at the end of June 2003.
The Automotive Services division is now grouped into the Volume Distribution and
Specialist Operations.
The `Ontime" brand is gaining recognition in the United Kingdom and, wherever
appropriate, our automotive operations have been rebranded `Ontime".
VOLUME DISTRIBUTION
Operating as Ontime Automotive in the United Kingdom and SVTV in France, the
Volume distribution operations offer a safe and reliable contractual automotive
delivery service to numerous blue-chip customers.
The United Kingdom operations moved in excess of 730 000 vehicles utilising 150
of our own transporters as well as a number of sub-contractors to cater for peak
demand periods. SVTV moved over 290 000 vehicles with a fleet of 150
transporters.
To meet the challenge of reducing margins and the need for greater efficiencies,
significant restructuring has commenced, centralising some of the functions that
were being performed regionally, without destroying the decentralised culture
and ethos that has been introduced.
SPECIALIST OPERATIONS
The Specialist Operations also operate under the Ontime Automotive brand
utilising a fleet of 85 enclosed and 23 conventional transporters to provide
specialised automotive transport solutions, moving premier automotive brands in
closed, and sometimes temperature-controlled vehicles. During the period 39 000
vehicles were transported.
Ontime Automotive also provides a wide range of specialist services including
market research, clinic management, specialist transportation of clay models,
prototypes and test vehicles, as well as on-site technical liaison at
photographic shoots, international motor shows and product launches.
The pre-delivery inspection and vehicle refurbishment centres processed over 190
000 vehicles. The Wellesbourne centre, opened early in 2002, has seen a steady
rise in the volumes of vehicles processed and is now profitable. A contract with
one of the major motor manufacturers has been concluded and will provide
substantial ongoing business for the facility.
The loss-making vehicle preparation centre in Goole was closed in March 2003.
The Rescue and Recovery business performed well. Using a recovery fleet of 220
specialised vehicles despatched from the 24-hour control centres located
throughout southeast England, the division responded to nearly 300 000 calls for
assistance. Clients include the major motoring organisations, police forces and
an extensive number of truck and bus operators and manufacturers. This
previously loss-making business is now contributing to the group"s profits.
As a result of certain long-standing unprofitable contracts, the Traffic
Management business" results were disappointing. A new storage facility in
central London was leased to reduce transportation costs and the end of an
unprofitable contract will improve the performance of this unit and it is
expected to contribute positively to Bidcorp"s performance in the year ahead.
SHIPPING SERVICES
Bidcorp"s Shipping Services division operates scheduled roll-on, roll-off (ro-
ro) freight ferry services from the Thames to Dunkerque in France, Zeebrugge in
Belgium and Vlissengen in Holland under the brand name `Dartline".
Bidcorp owns and operates a fleet of six multi-purpose ro-ro freight ferries -
three Kawasaki deep-sea ferries and three smaller Bazias class vessels. Direct
ownership of two of the Bazias vessels was acquired out of the joint venture
structure in which they were held.
The operations in the United Kingdom are based at Thames Europort, close to the
M25 and the Bluewater business park. The port has two ro-ro berths and a stand-
by berth with an operating draft of eleven metres. The port is operational 24-
hours a day, seven days a week. The port also provides storage, parking and
office facilities to Bidcorp group companies and third parties.
The general market for cross-Channel freight on the routes serviced by Dartline
grew slowly during 2002. The Iraqi war had a negative effect on the demand for
cross-Channel freight ferry services, which dropped significantly from the
beginning of 2003. Activity on Bidcorp"s cross-Channel routes has improved more
recently.
The unprofitable Ferryline business, which in many respects was in competition
with our customers, was closed.
The Shipping Services division reported turnover of GBP56.3 million (2001:
GBP31.4 million) and an operating profit of GBP0.9 million (2001: GBP0.4
million) in respect of continuing operations. In addition, turnover of GBP4.8
million (2001: GBP6.2 million) and operating losses of GBP1.0 million (2001:
operating loss of GBP0.3 million) were attributable to discontinued operations.
Whilst cargo rates increased on all routes, the positive effects were offset by
a decline in the profitability of the product mix carried.
The trade imbalance between the United Kingdom and Europe shifted further in
Europe"s favour, resulting in the increased repositioning of empty containers
back to Europe. In addition the chartered-in vessels had a different load
configuration, which resulted in a drop in accompanied traffic.
The port of Dartford was physically reorganised, resulting in the carrying
capacity increasing by more than 30%, with still more to be achieved.
The marketing function of Dartline has been strengthened to establish a stronger
presence in Europe, from where the majority of traffic originates.
A significant Belgian customer went into liquidation in the last month of the
period. In addition to the resultant loss of trading turnover a provision of
GBP244 000 was made for debts that are not likely to be recovered.
An investment in a company, which held a 25% share in a Very Large Crude Carrier
(VLCC), was sold, yielding a profit of GBP0.4 million, not included in the
operating results above. Proceeds of GBP2.9 million arising from this
transaction were received in July 2003.
The heads of terms signed with P & O Ports for the development of a ro-ro
facility at Shellhaven lapsed without a formal and binding contract being
concluded. Other opportunities are under investigation.
Opportunities for deepwater terminals on the European seaboard are under
investigation in line with the strategy to offer Bidvest"s customers an
extension of the services performed in South African ports.
ROPNER SHIP MANAGEMENT
Ropner Ship Management, based at Dartford, has continued to maintain the
Dartline fleet to full international safety management standards. Ropner ensures
that all ships comply with Bureaux Veritas "class" requirements, ensuring that
operational and maintenance procedures are performed to the highest standards.
From January 2003 the second and third Kawasaki vessels operated by Dartline
were chartered to the Ministry of Defence (MoD) and two smaller vessels were
chartered in to replace them, increasing both charter turnover and chartering-in
costs.
PROPERTY AND OUTSOURCED SERVICES
The Traffic Management business was transferred to the Automotive Services
division to maximise synergies with the Rescue and Recovery operation.
On turnover of GBP4.6 million (2001: GBP13.1 million) the Property and
Outsourced Services operations recorded operating profit of GBP0.4 million
(2001: GBP0.5 million).
CAR PARK MANAGEMENT
The Car Park Management unit continues to benefit from a strong relationship
with its principal customer and manages nine car parks in and around London. The
high quality of service provided is recognised and the business can be expanded
within the present management and resource structure.
PROPERTY MANAGEMENT
The Property Management division offers specialist management services for the
development and management of workspace properties to third parties, as well as
Bidcorp"s substantial operational portfolio. The division is actively pursuing
development opportunities for the group"s surplus property assets.
The group retains an interest in any upliftment in the value of the Haddenham
Airfield site, which was sold in 1999. The planning report in response to an
application to develop the site was released, which did not increase the land
allocated for further development beyond that already approved. No consideration
will be given by the relevant authorities to further development of the site
within the next three years.
PROSPECTS
The difficult market conditions with pressure on costs and margins as are
currently being experienced by the automotive industry are expected to continue.
Management is focused on improving efficiencies in the Volume Distribution
business through process and system upgrades, which will require extensive
reorganisation. The Specialist Operations are well niched and can be expected to
perform acceptably. Rescue and Recovery is now established as a steady
performer.
Demand for cross-Channel freight carriage has improved in recent months and with
the return of the three more cost-effective Kawasaki vessels from charter with
the MoD, larger volumes will be able to be carried, generating increased
efficiencies. The Shipping Services division"s results should improve further.
The Parking Management operation should maintain its profitability and further
contracts are being pursued.
The Property and Outsourced Services division is currently negotiating the sale
of two properties. Should these be successfully concluded, the division expects
improved results in the year ahead.
CLOSING
This has been a difficult period, but Bidcorp is a leaner, more focused company
than it was eighteen months ago. With a continuation of the present corrective
actions, the balance sheet is expected to strengthen further, providing a solid
base for the exploitation of opportunities as they arise.
There still remains quite a bit to be done to improve the trading activities of
the group. Although immediate results might not represent a substantial
improvement, I believe that Bidcorp is close to turning the corner.
Rodger Graham
(Chief Executive)
FINANCIAL REPORT
GROUP PERFORMANCE
Turnover from continuing operations was GBP189.8 million (2001: GBP114.1
million). Discontinued operations" turnover was GBP14.7 million (2001: GBP15.4
million).
Under difficult trading conditions, particularly in the last six months of the
reporting period, continuing operations recorded operating profit of GBP0.8
million, before profit from the sale of assets and investments of GBP0.7 million
(2001: profit of GBP0.2 million before operating exceptional charges of GBP12.2
million and the loss on the sale of assets and termination of the logistics
business of GBP0.6 million).
As published in the interim results in February 2003, a decision was taken to
close or dispose of the Individual Driver Movements operation and the Ferryline
trailer rental business. Closure of these businesses was completed in the last
six months. The group also discontinued the vehicle preparation centre in Goole.
The operating losses and total closure costs of these discontinued operations
amounted to GBP2.9 million (2001: GBP0.7 million operating loss).
Bidcorp disposed of its passive indirect investment in Golden Tide Corporation,
owners of a VLCC, for a profit of GBP0.4 million. The GBP2.9 million cash
proceeds on this sale were received in July 2003 and will reduce debt going
forward.
Until sustainable profits are achieved and reserves are available for
distribution, no dividend can be declared.
It remains the intention of the Board to apply to the courts in due course for
permission to cancel part of Bidcorp"s share premium and merger reserves. The
cancelled amount would be transferred to the profit and loss account to negate
the deficit in distributable reserves.
INTEREST COST
The group"s interest cost reduced to GBP1.6 million for the eighteen months
(2001: GBP2.8 million), reflecting the ongoing reduction in group borrowings.
Interest in respect of long-term funding and lease purchase arrangements
amounted to GBP0.2 million and GBP1.1 million respectively (2001: GBP0.3 million
and GBP1.3 million).
TAXATION
There is no tax charge for the current period as a result of the net losses
position. The tax credit is primarily due to current year deferred tax in the
shipping division where tax values are lower than book values. This credit has
been reduced by the settlement of a prior year tax charge relating to the sale
of the Haddenham property.
Bidcorp Shipping Services has the option to enter into the Tonnage Tax regime,
whereby pure shipping profits would become taxable on notional profits
determined by tonnage rather than normal corporate tax rules. We continue to
assess whether or not Bidcorp will benefit from entering into this regime.
BALANCE SHEET
The balance sheet is strong, despite the costs incurred in restructuring the
operations. After the cash injection of GBP32.0 million by Bidvest, the net
asset value of the group has improved to GBP47.4 million (2001: GBP19.5 million)
with the net debt gearing reducing to 28% (2001: 209%).
Net debt has reduced to GBP13.1 million (2001: GBP40.7 million), and apart from
hire purchase debt of GBP5.5 million, all borrowings have been consolidated into
a single overdraft facility of which GBP4.8 million was undrawn at the end of
the period.
The value of tangible assets has increased to GBP56.2 million (2001: GBP52.8
million). The vehicle replacement programme is up-to-date. The group has also
taken direct ownership of the Dart 3 and Dart 4, previously held in the Rosal SA
joint venture.
CASH FLOW
The group generated GBP11.5 million from operating activities in the reporting
period (2001: GBP9.7 million) and GBP1.6 million from the sale of replaced
assets (2001: GBP3.6 million).
After a period of little or no capital expenditure, the group spent GBP15.0
million on replacing assets (2001: GBP4.9 million).
No new asset finance agreements have been entered into in the last eighteen
months and all capital expenditure has been funded through cash generation and
the overdraft facility. The existing hire purchase agreements will be repaid in
full in 2005.
TREASURY
The underlying philosophy of the group"s treasury policy remains one of risk
management and control. No speculative transactions were undertaken.
The group has exposure to the US dollar and Euro in its shipping operations. Net
exposures are negated and converted into sterling on a regular basis.
Appropriate currency hedges are taken out, if required. No outstanding currency
hedges were in place as at June 30 2003.
The group has entered into fuel hedges until the end of December 2003 for its
expected bunker usage in order to limit its exposure to the fluctuating oil
prices.
Kevin Torlage
(Financial Manager)
London
August 14 2003
Bidcorp plc
("Bidcorp" or "the group")
Directors: B Joffe* (Chairman), R Graham (Chief Executive), S Bender*, B
Connellan*, A Cooke*, MJ Kingshott*, J Pamensky*, L Ralphs*, D Rosevear*, I
Spry, D Winduss, E Worrall*
*Non-executive
Registration number: 231534
Registrars: Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA,
United Kingdom
Administration and registered office: 6 Stratton Street, London WIJ 8LD, United
Kingdom
Date: 15/08/2003 08:10:46 AM Supplied by www.sharenet.co.za
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