RNS Number:7154V
Axis Intermodal PLC
30 April 2007
27 April 2007
Axis Intermodal plc
Preliminary results for the year ended 31 December 2006
Axis Intermodal ("Axis", "the Group" or "the Company"), the European transport
equipment contract hire group, today announces audited preliminary results for
the year ended 31 December 2006.
Corporate highlights
* Sale of the majority of the German swapbody fleet to a German
investment fund - the first contract of its type
* Merger of the UK subsidiaries Trailerent, Tailored Hire and Assetcare
under the Axis Intermodal brand
* Restructuring creates UK and German businesses under one brand
Financial highlights
* German financing transaction significantly strengthens balance sheet and
substantially reduces gearing
* Turnover increased by 76.4% to #9.1m (2006: #5.2m)
* Profit before tax, amortisation and share based payment increased by 19%
to #601,000 (2005: #505,000)
* Final dividend of 0.17p which represents a total maiden dividend of
0.30p for the year
Robert Montague, Executive Chairman of Axis Intermodal, said: "Having now
completed the Group restructure, we enter 2007 with tremendous opportunities and
with the services and products which we believe constitute a very attractive
offering to customers both in continental Europe and the UK. We have a highly
experienced management team in place and with our pipeline of prospects I am
confident that the Group will continue to make good progress this year.
"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."
For further information:
Robert Montague CBE Executive Chairman +44 (0) 1993 883148
Jonathan Gollins/Marylene Guernier M:Delta +44 (0) 20 7153 1268/69
Chairman's statement
During the year under review, we have made significant changes to the structure
of our business with the reorganisation of our trading activities and
operational processes. This was completed with the merging of the various UK
contract hire businesses and departments under one single brand as Axis
Intermodal which took effect from 4 January 2007. Consistent with this approach,
on 29 December 2006, an EGM of the Company approved the change of the name of
the Company to Axis Intermodal plc.
The business has now been refocused as a single platform and we continued our
policy of matching our vehicle acquisitions to the contractual requirements of
our clients as we expanded the fleet.
Our continued objective is to build our contract hire and rental businesses in
the UK and continental Europe in a low risk manner, with positive cash flow and
minimising our residual value exposure.
Review of Operations
Axis Germany
Our European subsidiary based in Germany, which provides swapbodies, had a
successful year in 2006. The results reflected the good level of demand and our
drive for growth. During the period under review, sales increased by 9% and
utilisation rose from 90% to 96% at the end of December 2006, when the fleet
stood at 2,488 swap bodies.
In June 2006, Heiner Mangels joined the Germany company as Geschaeftsfuehrer
(Managing Director) and has, since the year end, joined the Board of Axis
Intermodal plc.
During the latter part of the financial year, we concluded the sale of the
majority of our swapbody fleet to a German owned limited partnership finance
house ("DCM"), and entered into a long-term agreement whereby we retain an
agreed proportion of the gross rentals achieved. We also sold our remaining
chassis trailer fleet to Paul Guenter GmbH.
Additionally, DCM and another German finance house have agreed to fund the
purchase of 1,300 new swapbodies to be delivered during 2007. This arrangement
provides the business with a strong platform for growth and further de-risks the
balance sheet, enabling free cash to be applied to the further development of
our activities and expansion into trucks and trailers in Europe.
We have gained margin benefit through a continual programme of refurbishment of
older swapbodies, lengthening these units from 7.15m to the favoured
specification of 7.45m, for subsequent placement on long-term contracts. These
long term contracts, which extend from one to three years, now represent
approximately 70% of revenues. During the year we successfully renewed all the
long term contracts due for renewal and, since the year end, we have renewed our
contract with our largest client, to whom we supply over 700 swapbodies, for a
further two years.
We expect to see further growth in the swapbody business generated by our higher
profile and the improving trading conditions in Germany. In addition, the road
toll system in Germany, the MAUT, has helped to underpin customer demand. The
MAUT has been introduced to encourage further use of rail and barge transport
route facilities in Germany as well as to raise funds for transport
infrastructure investment.
Axis UK
In April 2004 we established Trailerent in the UK and we acquired the truck
contract hire business of Tailored Hire Limited in July 2005.
During the year we acquired the outstanding 49% in Assetcare and the inspection
and monitoring activities of Millar Europe Limited. As part of our strategic
review it was decided to sell the Millar activity at the original purchase
price, bring the Assetcare fleet management function in-house and outsource all
other services.
We had a lot of work to do to rectify certain problems that emerged in Tailored
Hire Limited, in which we have been greatly assisted by the newly appointed
management. We have now completed firm actions to effect the necessary changes
and will see the benefit coming through by 2008, subject to market conditions.
There is no doubt that, at the time of aquisition, we underestimated the amount
of change necessary to manage this business. The Group is preparing a claim
against the vendors of Tailored Hire Limited under warranties given at the time
of purchase in July 2005.
Of the overall fleet of trucks and trailers operated in the UK, the rental
market accounts for 30% of trailers on the road and we believe there is
significant scope for us to develop our presence in this area.
We intend to further develop Axis UK as a national provider, focusing on term
contract business of between one and five years' duration. With our dedicated
sales team we have established a substantial pipeline of quotations. We are
confident that a large proportion of these will convert into firm contracts in
2007.
Board Changes
Christopher Rogers retired in December 2006 and, on behalf of the Board, I would
like to thank him for his efforts and support since he joined at the time of our
listing in 2004. In view of the current size of the Group and my own experience,
the Board decided that I should combine my role of Chief Executive with that of
Chairman and, accordingly, I was appointed Executive Chairman following
Christopher Rogers' retirement. Additionally, the Managing Director of Axis
Germany, Heiner Mangels, was appointed to the Board in January 2007.
We also intend to make appointments during the current year, at the
non-executive level, to further strengthen the Board.
Management and staff
We have been through a sea-change during the year and this has been made
possible with the tremendous support and efforts of the teams both in Germany
and the UK. I welcome our new colleagues and express our appreciation to all our
colleagues working within the Group and would like to record my and the Board's
thanks and appreciation for everyone's efforts, commitment and hard work.
Dividend
Based on the results for the year, and the Board's view of future prospects, the
Board has decided to recommend to shareholders a final dividend of 0.17p per
share. This will produce a total dividend for the year of 0.3p per share.
Subject to shareholder approval, the final dividend will be payable on 13 July
2007 to those shareholders on the register on 22 June 2007.
Outlook
Having now completed the Group restructure, we enter 2007 with tremendous
opportunities and with the services and products which we believe constitute a
very attractive offering to customers both in continental Europe and the UK. We
have a highly experienced management team in place and with our pipeline of
prospects I am confident that the Group will continue to make good progress this
year.
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.
Robert J Montague CBE
Executive Chairman
27 April 2007
FINANCIAL REVIEW
Profit and loss account
Year ended 31 December 2006 2005
restated
#000 #000
Turnover 9,148 5,186
--------- --------
Profit before interest tax depreciation amortisation
and share based payment 1,736 1,565
Net interest (318) (271)
Depreciation (817) (789)
--------- --------
Profit before tax amortisation and share based
payment 601 505
Amortisation and share based payment (260) (163)
--------- --------
Profit before tax 341 342
Tax (26) (14)
--------- --------
Profit after tax 315 328
Equity minority interests (1) 1
--------- --------
Retained profit 314 329
--------- --------
Turnover in the Group has increased by 76.4% during the year reflecting a full
year contribution from the Tailored Hire acquisition and the general growth in
the Group's activities.
Group overheads have increased in the year due to additional costs associated
with both expansion and the integration of the Tailored Hire acquisition. The
strengthened infrastructure has created a solid platform for future growth.
Interest cover (based on profit before interest, tax, amortisation and share
based payment) remained steady at 2.9 times (2005: 2.9 times).
Balance sheet
At 31 December 2006 2005
restated
#000 #000
Fixed assets 2,564 6,515
Debtors 2,422 1,386
Cash 1,417 4
Creditors and accruals (2,654) (1,356)
Debt - short term (717) (2,457)
Long term debt and provisions (1,585) (2,696)
--------- ---------
Net assets before goodwill 1,447 1,396
Goodwill 3,331 3,121
--------- ---------
Net assets 4,778 4,517
--------- ---------
The major financial event affecting the balance sheet was the sale of the
swapbody fleet in Germany which occurred in the latter part of the year giving
rise to cash at the year end amounting to #1,417,000.
As a result of the sale, bank debt, loans and amounts due under finance leases
have reduced to #2,256,000 from #4,991,000.
Gearing reduced to 18% from 110%.
An additional benefit arising from the sale of the swapbody business is the
development of new relationships with financiers in Germany two of whom have
committed to funding the current expansion of the swapbody fleet by 1,300 units,
and the trailer fleet by 360 units.
Fleet numbers
The fleet consisted of the following at 31 December 2006, compared with a year
before.
2006 2005
Swapbodies 2,488 2,265
Trailers 295 313
Trucks 309 288
Total 3,092 2,866
Since the year end, more than 200 units have been added to the overall fleet
number.
Foreign exchange
The Group is exposed to fluctuations in the value of the Euro. Overseas trading
results have been translated using a euro exchange rate of 1.467. The movement
in the exchange rate during 2006 had a marginal impact on the results for the
year.
Dividend
The Directors recommend a final dividend of 0.17p per share (2005: nil) giving a
total for the year of 0.3p per share (2005: nil).
Share price and earnings per share
The price of the Company's ordinary shares as quoted on AIM at the close of
business on 31 December 2006 was 6.5p.
Basic earnings per share for 2006 amounted to 0.53p (2005 restated: 0.65p).
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2006
Year ended Year ended
31 Dec 06 31 Dec 05
restated
#000 #000
Turnover 9,148 5,186
Cost of sales (5,757) (2,976)
--------- ---------
Gross profit 3,391 2,210
Administrative expenses (2,732) (1,597)
--------- ---------
Operating profit 659 613
Net interest payable (318) (271)
--------- ---------
Profit on ordinary activities before taxation 341 342
Tax on profit on ordinary activities (26) (14)
--------- ---------
Profit on ordinary activities after taxation 315 328
Equity minority interests (1) 1
--------- ---------
Profit for the financial year 314 329
--------- ---------
Basic earnings per share - pence 0.53 0.65
Diluted earnings per share - pence 0.53 0.62
GROUP BALANCE SHEET
As at 31 December 2006
Restated
2006 2005
#000 #000
Fixed assets
Intangible assets 3,331 3,121
Tangible assets 2,564 6,515
--------- ----------
5,895 9,636
--------- ----------
Current assets
Debtors 2,422 1,386
Cash at bank and in hand 1,417 4
--------- ----------
3,839 1,390
Creditors - amounts falling due within one year 3,371 3,813
--------- ----------
Net current assets/(liabilities) 468 (2,423)
--------- ----------
Total assets less current liabilities 6,363 7,213
Creditors - amounts falling due after more than one year 1,539 2,534
Provision for liabilities 46 162
--------- ----------
4,778 4,517
--------- ----------
Capital and reserves
Called up share capital 2,943 2,943
Share premium account 1,070 1,070
Share based payment reserve 131 59
Other reserve 180 180
Profit and loss account 454 266
--------- ----------
Shareholders' funds 4,778 4,518
Equity minority interests - (1)
--------- ----------
Capital employed 4,778 4,517
--------- ----------
GROUP CASH FLOW STATEMENT
For year ended 31 December 2006
Year ended Year ended
31 Dec 06 31 Dec 05
#000 #000
Net cash inflow from operating activities 1,263 1,128
--------- ----------
Returns on investments and servicing of finance
Interest received 4 1
Interest paid (172) (153)
Finance lease interest paid (150) (119)
--------- ----------
Net cash outflow from investments and servicing of
finance (318) (271)
--------- ----------
Taxation
Taxation paid (38) -
--------- ----------
Capital expenditure
Purchase of tangible fixed assets (1,591) (750)
Sale of tangible fixed assets 4,895 444
--------- ----------
Net cash inflow/(outflow) from capital expenditure 3,304 (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/(outflow) before financing 4,186 (1,389)
--------- ----------
Financing
Issues of shares - 1,819
Expenses relating to issues of shares - (87)
Dividend paid to equity shareholders (77) -
Other loans new advances 549 377
Other loans repayments (1,342) (440)
Bank loans new advances - 270
Bank loans repayments (811) -
New finance leases 232 -
Capital repayments of finance leases (883) (714)
--------- ----------
Net cash (outflow)/inflow from financing (2,332) 1,225
--------- ----------
Increase/(decrease) in cash 1,854 (164)
Movement in overdraft (449) 91
Effect of exchange rate fluctuations 8 71
--------- ----------
Increase/(decrease) in cash at bank and in hand 1,413 (2)
--------- ----------
NOTES TO PRELIMINARY ANNOUNCEMENT
1. Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The summarised balance sheet at 31 December 2006 and the summarised profit and
loss account, summarised cash flow statement and associated notes for the year
then ended have been extracted from the Group's 2006 statutory financial
statements upon which the auditors opinion is unqualified and does not include
any statement under Section 237 of the Companies Act 1985.
These financial statements have not yet been delivered to the registrar of
companies.
Basis of preparation
The financial information has been prepared on the basis of the accounting
policies set out in the Group's 2005 financial statements except for the
adoption of FRS20 Share based payments which has resulted in the prior year
adjustment shown in Note 3.
2. Subsidiary undertakings
The subsidiary undertakings are owned directly by Axis Intermodal plc. All
subsidiaries have been consolidated.
Formed/ Nature of
Holding acquired business
-------- ----------- ---------
Trailerent Limited 100% 5 Aug 2004 Contract hire
Axis Intermodal GmbH (incorporated
in Germany) 100% 6 Aug 2004 Contract hire
Asset Care Transport Solutions
Limited 100% 30 Sep 2004 Maintenance
Irfin Limited 100% 3 Nov 2004 Contract hire
Axis Intermodal (UK) Limited
(formerly Tailored Hire Limited) 100% 11 Jul 2005 Contract hire
-------- ----------- ---------
On 15 February 2006, Axis Intermodal plc acquired the remaining 49 shares in Asset
Care Transport Solutions Ltd for #25,000 all of which was allocated to goodwill.
On 15 February 2006, Asset Care Transport Solutions Limited acquired the business,
assets and goodwill of Millar Europe Limited for a total consideration of #20,000
payable in cash. On 30 December 2006, Asset Care Transport Solutions Limited sold the
business, assets and goodwill to Millar Europe Limited for #20,000 payable in cash.
The group used acquisition accounting to account for the purchase of Tailored Hire
Limited which was acquired on 11 July 2005. Best estimates of the fair values for the
net assets acquired were included in the financial statements for the year ended 31
December 2005. Since the date of acquisition, management have introduced tighter
controls over the contracts to which the group is party. As part of this process,
management identified during 2006 certain contracts acquired with THL that were
onerous at the date of acquisition and certain additional creditors. Management now
believe they have established the final fair values of the net assets acquired. As a
result, a provision of #373,000 in respect of onerous contracts and creditors has
been included in the fair value of the net assets acquired. An increase in goodwill
has been recognised for the same amount. This adjustment is in addition to those
adjustments disclosed in the 2005 financial statements.
The contracts mainly finished in 2006, and the provision relates to the onerous
element for completing those contracts. The onerous element of these contracts
accounted for in the 2005 financial statements was not material, so the 2005 results
have not been restated.
Full identification of the required adjustment occurred subsequent to the publication
of the 2006 interim financial statements.
Provisional Fair Value Final
fair value adjustments fair value
to the Group to the Group
2005 2006 2006
#000 #000 #000
-------- ----------- ---------
Tangible fixed assets 2,816 - 2,816
Debtors 901 - 901
Bank overdraft (91) - (91)
Creditors (638) (373) (1,011)
Finance leases (2,556) - (2,556)
Provision for liabilities and
charges (193) - (193)
-------- ----------- ---------
Net assets at date of 239 (373) (134)
acquisition
Goodwill arising 1,910 373 2,283
-------- ----------- ---------
Consideration 2,149 - 2,149
-------- ----------- ---------
3. Reconciliation of movements in shareholders' funds
Share Share Share Other Profit and Total
capital premium payment reserve loss account 2006
Group #000 #000 #000 #000 #000 #000
------ ------- ------- ------ -------- ------
At 1 January
2005 as
previously
stated 2,038 123 - - - 2,161
Share based
payment
adjustment - - 12 - (12) -
------ ------ ------ ------ ------
At 1 January
2005 restated 2,038 123 12 - (12) 2,161
Shares issued 23
March 2005 231 369 - - - 600
Shares issued 7
July 2005 re THL 674 665 180 - 1,519
Costs of issuing
shares - (87) - - - (87)
Retained profit
for the year - - - - 376 376
Net exchange
movements - - - - (51) (51)
------ ------ ------ ------ ------
At 31 December
2005 as restated 2,943 1,070 12 180 313 4,518
FRS 20 share
based payment
adjustment - - 47 - (47) -
------ ------ ------ ------ ------
At 31 December
2005 as restated 2,943 1,070 59 180 266 4,518
Retained profit
for the year - - - - 314 314
Net exchange
movements - - - - (49) (49)
Share based
payment reserve - - 72 - - 72
Dividends paid
to ordinary
shareholders - - - - (77) (77)
------ ------ ------ ------ ------
At 31 December
2006 2,943 1,070 131 180 454 4,778
------ ------ ------ ------ ------
The restatement results from the adoption of FRS20 - referred to in Note 1.
4. Net cash inflow from operating activities
Year ended Year ended
31 Dec 06 31 Dec 05
restated
#000 #000
------------ ---------
Operating profit for the year 659 613
Depreciation 817 789
Amortisation of goodwill 188 116
Share based payment 72 47
Profit on sale of tangible fixed assets (258) (73)
Increase in debtors (1,021) (277)
Increase/(decrease) in creditors 806 (87)
------------ ---------
1,263 1,128
------------ ---------
5. Reconciliation of net cash flow to movement in net debt
Year ended Year ended
31 Dec 06 31 Dec 05
#000 #000
------------ ---------
Increase/(decrease) in cash for the year 1,854 (164)
Other loans new advances (549) (377)
Other loan repayments 1,342 440
Bank loan new advances - (270)
Bank loan repayments 811 -
New finance leases (232) -
Finance lease repayments 883 714
------------ ---------
Change in net debt from cash flows 4,109 343
Exchange rate fluctuations 39 71
Finance leases acquired with subsidiary
undertaking - (2,556)
------------ ---------
Movement in net debt in the year 4,148 (2,142)
------------ ---------
Net debt at 1 January 2006 (4,987) (2,845)
------------ ---------
Net debt at 31 December 2006 (839) (4,987)
------------ ---------
6. Earnings per ordinary share
The calculation of the basic earnings per ordinary share is based upon the
profit attributable to ordinary shareholders divided by the weighted average
number of ordinary shares in issue during the period.
7. Annual Report
The annual report and financial statements will be posted to shareholders prior
to 27 May 2007. Further copies will be available after that date from the
Company Secretary, 8 Fenlock Court, Lower Road, Long Hanborough, Oxfordshire,
OX29 8LN
8. Annual General Meeting
The Annual General Meeting of Axis Intermodal plc will be held at 1 Westminster
Way, Oxford OX2 0PZ on Wednesday, 20 June 2007 at 11.00am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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