TIDMDBAY

RNS Number : 6342E

Douglasbay Capital PLC

10 April 2011

11 April 2011

DouglasBay Capital plc

Audited Final Results for the year to 31 December 2010

DouglasBay Capital plc (AIM: DBAY), the active value investment company, today announces final results for the year to 31 December 2010.

Highlights

-- Successful disposal of TDG completed in March 2011 for a total cash consideration of GBP208m. Transaction secures a very attractive return for DouglasBay, equivalent to an IRR of over 30%.

- TDG revitalised and transformed under DouglasBay ownership:

- Underlying operating profit on a like-for-like basis(1) improved by 31% in just two years, in spite of economic recession

- Rapid de-leveraging achieved; successful transition to asset light business model

- Expansion in high growth specialist markets and important new business wins

- Excellent overall 2010 performance

-- Strong 2010 full year results for DouglasBay - underlying operating profit up 14% at GBP25.7m; underlying EPS of 1.50p (2009: 1.34p), up 12%; basic EPS of 1.11p (2009: 0.89p), up 25%.

-- Substantial debt reduction achieved - net borrowing down by 58% to GBP36.5m at year end (2009: GBP86.7m). Following the disposal of TDG and further property sales, the Group is now fully de-geared and has a strong cash position.

-- In line with investment policy, a proposal to return capital to shareholders by way of a Tender Offer to buy back up to 1.23bn of ordinary shares at a price of 16.35p per share. Details of the Tender Offer will be forwarded to Shareholders later this week.

-- DouglasBay team now assessing in depth a small number of larger Majority Investment prospects; first Minority Investment made in high potential US social media business. New investments will be financed through existing cash resources and ad-hoc capital raisings and share placements, with underwriting support from Laxey Partners.

(1) before DouglasBay management charges and adjusting for lease payments arising from planned property sales

David Panter, Chairman, commented: "This has been an exciting and defining period for DouglasBay during which we have successfully realised value from our largest investment and delivered strong full year 2010 operating results in challenging markets. The revitalisation of TDG prior to its onward sale, all achieved in a little over two years, has met our expectations and demonstrated our wide ranging skills in identifying, acquiring, revitalising and managing active value investment opportunities. Current market conditions continue to create some strong new prospects and we are working hard in pursuit of opportunities where we believe our approach can deliver attractive returns."

Alex Paiusco, Chief Executive Officer, commented: "2010 was a good year, with the successful disposal of TDG securing a very attractive return for DouglasBay, equivalent to an IRR of more than 30% over less than two and half years under our ownership. This is an outstanding achievement by the whole team given the difficult economic conditions that surrounded the company during the period of our ownership. We are now pleased to be in the position to reward the investors who have supported us over the past years through the proposed capital return. We will continue to work hard assessing new opportunities with a view to returning to the market to raise new funds for new specific investments, with the support of our seed investor Laxey Partners. 2010 has been a notable year but it's only the start of our journey."

For further information please visit www.douglasbaycap.com or contact:

 
 DouglasBay Capital plc          Peel Hunt LLP ((Nominated Adviser 
                                  & Broker) 
 Alex Paiusco, Chief Executive   Guy Wiehahn 
 Tel: 01624 690900               Tel: 020 7418 8893 
 

Chairman's Statement

Introduction

This latest annual report, the third since our incorporation and listing in late 2008, covers an exciting and defining period for DouglasBay. During the last financial year and in the current year to date we have successfully realised value from our largest investment and delivered strong full year 2010 operating results in challenging markets. In line with our investment policy, we are pleased to be in a position today to propose a capital return to shareholders to reward them for their support over the past years.

Disposal of our investment in TDG

The main event for DouglasBay in 2010 was the announcement in November of the sale of our major investment, the logistics business TDG, to Norbert Dentressangle SA, for cash proceeds of GBP208m. Completed recently in March, this investment is a real success story for DouglasBay. The revitalisation of TDG prior to its onward sale, all accomplished in a little over two years, has met our expectations and demonstrated DouglasBay's wide ranging skills in identifying, acquiring, revitalising and managing active value investment opportunities.

We are pleased also that TDG is transferring to a buyer who is well placed to support the company in the next stage of its development. The transformation of TDG under our ownership has been achieved due in no small part to TDG's skilled and motivated workforce. I want to thank all of TDG's employees for their outstanding service and wish them every success in the future.

With the sale completed this March, TDG traded as part of DouglasBay for the full financial year 2010. Throughout this period the company performed strongly, delivering the anticipated improvements from the far reaching revitalisation programme implemented in 2009.

Chief Executive, Alex Paiusco, provides a more detailed report on progress across the Group in the Investment Review that follows. During 2010 we operated in three business streams - TDG, DouglasBay Property Group and Minority Investments, the latter including the investments in TLIT which have now been substantially realised.

Results

Total underlying operating profit, before exceptional items, was ahead 14% at GBP25.7m (2009: GBP22.5m) on revenues of GBP678.3m (2009: GBP662.1m). Underlying profit before tax improved by 39% to GBP18.9m (2009: GBP13.6m) and underlying earnings per share by 12% to 1.50p (2009: 1.34p).

Profit before tax, after reduced exceptional charges of GBP7.3m due mainly to lower rationalisation costs and net finance charges of GBP6.8m, was significantly higher at GBP11.6m (2009: GBP4.1m). Earnings per share on the same measure was up strongly at 1.11p (2009: 0.89p).

As in 2009, cash generation was a key priority and over the course of the year the Group's financial position was again significantly improved through strong operational cash flows from TDG and proceeds from property disposals and holdings in TLIT, together reducing net debt to GBP36.5m (2009: GBP86.7m). In the current year, following receipt of all proceeds from the TDG disposal as well as further property disposals, the Group holds a substantial cash position. This is a fine achievement.

Further details of these results are contained in the Finance Director's review.

Return of Cash to Shareholders

Having indicated at the time of the TDG disposal that we would evaluate capital returns following realisations, a return of funds by way of a Tender Offer to buy back ordinary shares at a price of 16.35p per share, subject to certain conditions, and limited to 89% of the fully diluted share capital as at today (that is all ordinary shares currently in issue together with any ordinary shares that would be issued if existing share options were fully exercised) will be proposed to shareholders. Should all shareholders accept this Tender a total amount of GBP200m would be returned, although management in the company has already indicated that they will not participate in full in the Tender. This is considered the most efficient way of rewarding shareholders for their support in making the TDG investment. A circular setting out details of the Tender Offer, along with copies of the 2010 Annual Report & Accounts and Notice of AGM, will be forwarded to shareholders later this week.

Next steps and prospects

DouglasBay has achieved a great deal in its short history and our strategy from the outset has remained broadly unchanged. However, as we are still a relatively young company I have asked Alex Paiusco to expand on our approach in the CEO's Investment Review that follows. Our successful investment in TDG is an excellent example of how we work.

Looking to the immediate future, current market conditions are creating some strong new prospects and we are working hard in pursuit of opportunities where we believe our approach can generate attractive returns. We will continue to take a cautious and highly disciplined approach but will move decisively when opportunities meet our strict investment criteria.

It remains for me to thank all our Group colleagues for their commitment and hard work in building DouglasBay and you, our shareholders, for your continued support.

David Panter

Non-executive Chairman,

11 April 2011

CEO's Investment Review

Overview

2010 was a good year for DouglasBay.

The year culminated in the successful disposal of TDG for a total cash consideration of GBP208m. Announced in November and completed in March this year, following competition clearance from the EU Commission, the transaction secured a very attractive return for DouglasBay, equivalent to an internal rate of return of more than 30% during less than two and half years under our ownership. This result was achieved against a backdrop of considerable global economic uncertainty with a very conservative level of leverage on the investment.

Looking ahead, we will build on this major success, but before outlining our investment approach in more detail, let me first recap on just how much was achieved at TDG under our ownership.

TDG and the sale to Norbert Dentressangle

We acquired TDG at the height of the financial crisis in October 2008, less than a month after the collapse of Lehman Brothers. At once we moved decisively to implement a wide ranging revitalisation plan focused on cash generation, return on investment and cost control, working in conjunction with a new management team, under the leadership of Mike Branigan, CEO of TDG and Ian Pringle, TDG's Head of HR/Strategy.

To establish a more competitive cost base immediately, Mike merged two divisions into a single company, cut all non-essential overheads and relocated central functions, closing the London head office. Attention then turned to business growth, with a focus on expanding presence in specialised markets including 4PL transport and freight forwarding, and high growth regions such as Central & Eastern European.

The more active management of TDG's substantial property portfolio was a key element of our investment case. To facilitate this we established DouglasBay Property Group (DBPG), whose task was to assist TDG in maximizing value through selective disposals via sale & leasebacks, moving the company to a more asset-light business model, in line with standard industry practice. Along with improvements to operational cash generation, these cash inflows enabled over 80% of bank debt taken on at the time of the acquisition to be repaid by 31 December 2010.

The improvements in financial performance speak for themselves. Over the period of our ownership we grew the underlying operating profit by over 30% on a like-for-like basis, this during an economic recession.

 
 
 TDG performance improvement 2008 to 
  2010 
                                            2008       2009       2010 
                                            GBPm       GBPm       GBPm 
 
 Underlying Operating Profit(1)             26.8       26.0       27.2 
 - Operating margin %                       3.7%       3.9%       4.0% 
 
 Like-for-like Underlying Operating 
  Profit(2)                                 26.8       28.8       35.0 
 - Growth %                                            7.5%      21.5% 
 - Operating margin %                       3.7%       4.4%       5.2% 
 
 Year End Net Debt                         132.5       73.8       21.8 
 
 Underlying Operating Profit(1) per     GBP3,678   GBP3,983   GBP4,399 
  Employee (GBP) 
 Like-for-like Underlying Operating     GBP3,678   GBP4,412   GBP5,661 
  Profit(2) per Employee (GBP) 
 
 

Notes:

(1) Underlying operating profit before DouglasBay management charges

(2) Underlying operating profit before DouglasBay management charges and adjusting for lease payments

arising from planned property sales

Norbert Dentressangle will be an excellent owner of the business. The strategic fit with TDG is strong and the combination gives TDG scale and global reach. We wish TDG, its management and staff continued success under the new ownership.

Our Investment Approach

DouglasBay's successful investment in TDG powerfully illustrates the benefits of our active value investment model which can be simplified in four phases.

- Our first step is to seek out good businesses which are undervalued but where mispricing is due to temporary issues such as liquidity constraints, poor coverage or sub-scale operations, rather than any fundamental decline. Opportunities are generated in-house through proprietary screening models or through our wide network of contacts. We then rigorously research these companies to identify insights and establish the extent of the value gap. Adopting a balanced view at all times, we strive to understand potential investments in detail. Then we seek clarity from the outset of a value creation path which can lead to financial returns that potentially exceed our minimum hurdle rates.

- Having identified a target, step two of our approach is to secure the business on attractive terms. Here, our in-house expertise in trading in listed securities, structuring transactions in an innovative and flexible way, raising the optimal debt and mezzanine financing, provides an important means to create potentially higher returns on the investment for our shareholders.

- With ownership secured, we integrate rapidly with management teams as business partners to support in implementing a detailed value creation plan. At this stage we take an active 'hands-on' approach, focusing on cash generation, return on investment and control of costs as well as strategy and investment to drive business growth.

- Once performance under our ownership has been optimised and we see that DouglasBay is no longer the best home for a business, the final step is to ensure value realisation and the return of proceeds to shareholders, retaining some funds to secure minority positions in new investments prior to executing new transactions. In the case of TDG our decision to accept the offer from Norbert Dentressangle was thoroughly weighted against the option of further developing the business and the risk reward profile compared to the specific offer that was received.

DouglasBay has important advantages when implementing this business model. We have an established core team with skills to handle the entire investment cycle in-house, combining expertise in mergers and acquisitions, private equity and hedge fund investing with operational and financial skills in the management and revitalisation of companies. This allows us toact rapidly and decisively when opportunities meet our strict investment criteria. We think this approach is a key differentiator.

New investments - target markets and progress to date

In future we intend to organise our investing activities into two categories.

DouglasBay's core focus, and our principle area of activity, will be in assembling and revitalising a diversified portfolio of larger businesses where we can apply our expertise to generate attractive returns for shareholders. Termed Majority Investments and operating across a range of sectors, in these instances we intend to take a majority or even 100% control, utilising leverage prudently to enhance returns. We envisage at any one time an active portfolio of businesses, some in the process of revitalisation, others trading successfully earning above-average returns on capital, and a third group nearing the realisation stage where a third party is better placed to support the next stage of development.

In terms of new investments, whilst uncertainty and volatility remain prominent features in the market, this year we see substantially more attractive risk reward profiles than in the recent past. In particular we feel that though many companies in the recession cleaned up their businesses and are now coming out stronger, in some instances this has not been reflected in their market prices, creating substantial value arbitrage opportunities. We have stepped up our research efforts and are now assessing in depth a small number of specific opportunities.

Our target investment universe comprises currently over 5,000 companies listed on European stock exchanges with market capitalisations around or below GBP200m. We see high return potential in this small and mid-market universe given that some of these businesses, although fundamentally sound, are either unloved by investors or mismanaged.

A second smaller area of activity, classified as Minority Investments, will involve DouglasBay holding minority positions in either deeply undervalued listed companies or unlisted high growth businesses. In the case of listed minority positions, DouglasBay will aim to hedge market risk when appropriate and thus generate alpha returns. Some of these positions may over time develop into Majority Investments. At that point we will approach markets to raise the required capital, with the support of underwritten facilities from our largest investor to date, Laxey Partners.

In the case of unlisted minority positions DouglasBay will ensure risk protection through the negotiation of extensive minority rights. In this area DouglasBay may also provide very selectively initial funding to businesses with high growth potential and likely with a focus on technology, energy and other fast developing sectors. This area of investment is more opportunistic but offers very high potential returns for shareholders. We are selective and measured in our approach, adopting the same rigour as for larger transactions.

In the autumn we made a first investment in this area, injecting an initial GBP0.3m out of a total cost of investment of GBP1.3m, to take a 21% shareholding in an early stage social media business based in the United States. Two further tranches of investment will be made in the first half of the current year, with the service anticipated to launch mid-year. We are deploying DouglasBay's financial, operational and marketing expertise to assist with the company's development. A further 2% shareholding of the company will be owned by DouglasBay employees, who have invested on similar terms to DouglasBay.

TDG

With the sale to Norbert Dentressangle completing this March, TDG traded as part of DouglasBay for the full financial year 2010. Throughout this period the company performed very strongly, benefiting from a full year of benefits from the revitalisation programme implemented in 2009. Headline numbers mask the extent of the turnaround achieved but adjusting for lease payments arising from planned property sales totalling GBP7.8m (2009: GBP2.8m) and DouglasBay management charges of GBP3.0m (2009: GBP1.2m) - as shown in the table at the start of this section - like-for-like underlying operating profits of GBP35.0m (2009: GBP28.8m) were 22% higher than last year's strong outturn. This was an exceptional performance in markets only slowly emerging from recession.

DouglasBay Property Group

Working alongside TDG, DouglasBay Property Group made further rapid progress in maximising value from TDG's real estate portfolio. Further sales have been completed in the current year, as detailed in the Financial Review.

TLIT

Over the year we made good progress in liquidating our listed minority investments in TLIT, comprising a number of legacy tea plantation assets. This process is now substantially complete.

Outlook

The macroeconomic outlook remains uncertain. Seldom have we witnessed a situation where the divergence of views amongst experts is so broad. In the same newspaper on the same day one can find contrasting reports about fears of deflation and inflation. Positive sentiment about economic recovery at the end of last year has now been subdued by the recent sad events in Japan and the tensions in the Middle East. It will take years for the global economy to digest the pre-2008 exuberance and its consequences. But at the same time this environment can present opportunities.

During 2010 we demonstrated the strength of DouglasBay's investment approach. We have an outstanding team of dedicated, experienced and highly motivated individuals with complementary backgrounds. This makes us confident about our ability to identify and secure attractive new opportunities that can create superior returns for our investors.

I would like to take the opportunity of this annual report to express my deepest thanks to the whole DouglasBay team, to our Non-executive directors and the Board who have been so supportive of the management team in very challenging times, and to our investors who supported us through this journey. In particular, on behalf of the entire management team, I would like to thank our main backer and shareholder, Laxey Partners and thus our Non-Executive Director Colin Kingsnorth, for providing us with the opportunity in 2008 to prove our unique investment approach.

This has been a notable year for DouglasBay but it's only the start of our journey.

Alex Paiusco

Chief Executive Officer

11 April 2011

Financial Review

Introduction

Last years annual report was our first covering a full 12 months of trading, following the acquisitions of TDG and TLIT and our listing on the LSE AIM market, together completed in early October 2008. These results for the period 1 January to 31 December 2010 therefore represent the first time that investors can compare DouglasBay's performance with a full prior year reporting period. A table in the CEO's Investment Review above well illustrates the year-over-year improvements at TDG.

Readers should further note that following the signing in November 2010 of the conditional agreement to sell the Group's largest investment, the logistics business TDG, its operating results have been presented in the consolidated income statement as discontinued for the 2010 and 2009 periods, and as held-for-sale assets and liabilities in the 2010 period consolidated statement of financial position, all as required by IFRS 5. When reading these statements we believe that total results for the 2010 and 2009 periods, both of which include a full years trading from TDG, provide the most meaningful comparison of DouglasBay's year-on-year performance. TDG's sale to Norbert Dentressangle completed in March of the current year. Our 2011 reporting period will include the period of TDG trading up until 28 March.

DouglasBay results

DouglasBay's strengthened financial position by the year end reflected strong trading results and further success in deleveraging the Group. As at 31 December 2010, Group net debt had been cut to GBP36.5m (2009: GBP86.7m), a 58% reduction in the 12 month period and close to 80% decrease from the position just two years previously. Major factors contributing to the GBP50.2m reduction in 2010 were improved operational cash flows of GBP22.4m (2009: GBP9.1m) and strong progress with planned property sales. In the case of the former, the Group benefited from lower exceptional cash outflows when compared to the prior year, and a full year's benefit from the revitalisation plan implemented at TDG in 2009. Net cash proceeds from external property sales totalled GBP47.0m, as TDG accelerated its move towards a more asset-light business model.

Over the period, consolidated net assets fell to GBP122.8m from GBP133.5m, due primarily to an GBP18.2m decrease, before deferred tax, in TDG's defined benefit pension scheme surplus calculated on an IAS 19 basis, and the settlement of the TLIT put options for GBP5.8m.

As at 31 December, the balance sheet contained GBP321.7m of assets held for sale, comprising GBP308.9m of assets relating to the sale of TDG and three properties for disposal. Since the year end, three additional property disposals, one held by TDG and two by DBPG, have been completed for proceeds totalling GBP19.7m and a profit of GBP7.1m. In the current year, following receipt of cash proceeds from the sale of TDG sale, the Group has approximately GBP212m in net cash, part of which will be returned to shareholders as stated in our investment strategy.

Group financing

Throughout the period of our ownership of TDG, debt finance was provided by an asset backed facility from a syndicate led by Burdale Financial Limited, scheduled to mature in October 2013. This facility was originally for borrowings of up to GBP165.0m. An additional facility of up to GBP16.0m, available from funds managed by Laxey Partners, was unused and expired in August 2010.

At 31 December 2010 the Burdale facility comprised three elements, a property facility of up to GBP40.6m, a receivables facility of up to GBP65.0m and an equipment facility of up to GBP4.4m. At the year end total borrowings under the facility were GBP53.8m (2009: GBP89.8m) with borrowings under the receivables and equipment facilities being GBP36.2m (2009: GBP38.1m). In the current year, on receipt of proceeds from the sale of TDG, the Burdale loan facility has been fully repaid.

Looking to the future, our announcement today of a proposed Tender Offer will change our balance sheet structure, subject to confirmations. The funding of new investment will depend on the specifics of the situation. We will use our cash resources for Minority Investments and also for taking initial positions in companies which may become Majority Investments. Once the opportunity is presented to pursue a new Majority Investment, the company will seek to raise the required funds. We will use prudent levels of external leverage and raise additional funds on the capital markets with underwriting support from Laxey Partners. With regard to debt financing, the repayment of the Burdale facility - on time and in full - provides a strong platform for future fundraisings and we are encouraged by signs of an easing of restrictions on the availability of finance in capital markets.

A circular containing details of the Tender Offer, which is in line with our policy of one-off distributions to shareholders from the sale of investments, will be forwarded to shareholders later this week.

TDG

TDG's revenue for the full year was 2% higher at GBP678.2m (2009: GBP662.0m), reflecting a general recovery in market momentum and improving trading volumes, particularly in 4PL transport and freight forwarding. Underlying operating profit before DouglasBay management charges was 5% ahead at GBP27.2m (2009: GBP26.0m), with improved operating margins on this measure reflecting the more competitive cost base now in place following the 2009 revitalisation programme.

In line with strong trading, underlying EBITDA, on a like-for-like basis adjusting for the rental impact of the sale & leaseback programme and DBAY management charges, was ahead at GBP39.8m, compared to GBP37.1m in 2009. Operational cash flow was GBP20.6m, up GBP3.9m on 2009, funding capital expenditure of GBP6.4m (2009: GBP7.6m), a level reflecting TDG's more asset-light model. Along with further planned property disposals, these factors combined to reduce TDG's net debt by 70% over the twelve month period.

DouglasBay Property Group (DBPG)

Following on from the West Hallam and Carnforth sites in 2009, during the first half of 2010 a further four TDG properties, at Stretton, Batley, Lancaster and a site in Manchester, were transferred into DBPG in order to be professionally managed by the property team. DBPG received an arm's length rental income from TDG for the use of these properties. During the second half the Lancaster property was sold for net proceeds totalling GBP3.1m, and, as noted previously, since the year end two additional sales from the DBPG portfolio have been completed for proceeds totalling GBP19.2m. Three sites remain, including Carnforth which has longer-term development potential. The bank debt associated with the Property Group has now been fully repaid. The properties remaining have been independently valued at GBP7.9m.

Minority Investments

We made further progress in liquidating TLIT's portfolio, comprising minority stakes in Sri Lankan tea plantations and a small number of holdings in quoted and unquoted companies, securing the sale of three investments, for cash proceeds of GBP2.5m. As at 31 December 2010 the remaining portfolio was valued at GBP2.1m (2009: GBP4.6m). We will seek to complete this process as and when conditions permit.

As set out in the CEO's Investment Review, in September 2010 we made the first of three payments to secure a 21% stake in a US-based social media business. Made through a newly established subsidiary, DouglasBay Media Holdings Limited, this first payment of GBP0.3m will be followed by two further payments in the first half of the current year, together totaling GBP1.3m.

Summary

2010 has been a significant period for DouglasBay with TDG's revitalisation reflected in basic earnings per share ahead 25% at 1.11p (2009: 0.89p) and culminating in the company's successful onward sale. We have strong financial skills in DouglasBay and with our business model now proven, we look forward to building on this platform in 2011.

Geoff Bicknell

Chief Financial Officer

11 April 2011

Consolidated Income Statement

For the Year ended 31 December 2010

 
                        Continuing   Discontinued             Continuing   Discontinued 
                        operations    operations*     Total   operations    operations*     Total 
                              2010           2010      2010         2009           2009      2009 
        Notes                 GBPm           GBPm      GBPm         GBPm           GBPm      GBPm 
 
 Revenue                       0.1          678.2     678.3          0.1          662.0     662.1 
 Operating 
  expenses                   (2.6)        (650.0)   (652.6)        (2.0)        (637.6)   (639.6) 
                       -----------  -------------  --------  -----------  -------------  -------- 
 
 Underlying 
  operating 
  profit/(loss)     4        (2.5)           28.2      25.7        (1.9)           24.4      22.5 
 Amortisation of 
  acquisition 
  intangibles       5            -          (3.0)     (3.0)            -          (3.0)     (3.0) 
 Rationalisation 
  costs             5            -          (2.1)     (2.1)            -          (8.2)     (8.2) 
 Corporate 
  activity & 
  associated 
  costs             5        (1.9)          (0.4)     (2.3)            -              -         - 
 Recycling of 
  exchange gains    5            -              -         -            -          (1.1)     (1.1) 
 Impairment         5            -          (2.7)     (2.7)        (0.4)          (0.6)     (1.0) 
 Gain on sale of 
  properties        5            -            3.2       3.2            -            7.2       7.2 
 Costs of sale of 
  subsidiaries      5            -          (0.1)     (0.1)            -              -         - 
 Site exit costs    5            -          (1.5)     (1.5)            -          (2.6)     (2.6) 
 Dilapidations & 
  onerous leases    5            -            1.2       1.2            -          (0.8)     (0.8) 
 
 Operating 
  profit/(loss)              (4.4)           22.8      18.4        (2.3)           15.3      13.0 
 
 Finance costs      6        (0.1)          (7.0)     (7.1)            -          (9.4)     (9.4) 
 Finance income     7          0.3              -       0.3          0.3            0.3       0.6 
 Share of loss 
  from 
  associates                     -              -         -            -          (0.1)     (0.1) 
                       -----------  -------------  --------  -----------  -------------  -------- 
 
 Profit/(loss) 
  before tax                 (4.2)           15.8      11.6        (2.0)            6.1       4.1 
 
 Income tax 
  income            8            -            3.5       3.5            -            8.1       8.1 
 
 Profit/(loss) 
  for the year               (4.2)           19.3      15.1        (2.0)           14.2      12.2 
                       -----------  -------------  --------  -----------  -------------  -------- 
 
 
 Attributable to: 
 Profit/(Loss) 
 attributable to 
 equity holders 
 of the parent               (4.2)           19.0      14.8        (2.0)           13.9      11.9 
 Profit attributable 
  to non-controlling 
  interests                      -            0.3       0.3            -            0.3       0.3 
 
                             (4.2)           19.3      15.1        (2.0)           14.2      12.2 
                       -----------  -------------  --------  -----------  -------------  -------- 
 
 
 Earnings (pence) 
  per share 
 Basic & fully 
  diluted 
  earnings/(loss) 
  per share         9      (0.32p)          1.43p     1.11p      (0.15p)          1.04p     0.89p 
                       -----------  -------------  --------  -----------  -------------  -------- 
 
 Underlying 
  earnings 
  /(loss) per 
  share             9      (0.21p)          1.71p     1.50p      (0.13p)          1.47p     1.34p 
                       -----------  -------------  --------  -----------  -------------  -------- 
 

* Detailed information related to the Laxey Logistics Group and Property Group discontinued operations is disclosed in note 13.

Consolidated Statement of Comprehensive income

For the Year ended 31 December 2010

 
                                                         2010    2009 
                                                         GBPm    GBPm 
 
 Profit for the year                                     14.8    11.9 
 
 Other comprehensive income 
 Currency translation adjustments                       (0.1)     0.4 
 Actuarial (loss)/gain on defined benefit schemes      (27.4)    28.6 
 Income tax income/(expense) on other comprehensive 
  income                                                  7.7   (8.9) 
 
 Other comprehensive (loss)/income for the year, 
  net of income tax                                    (19.8)    20.1 
                                                      -------  ------ 
 
 Total comprehensive (loss)/income for the year         (5.0)    32.0 
                                                      -------  ------ 
 Attributable to: 
 Equity holders of the parent                           (5.0)    32.0 
 Non-controlling interest                                   -       - 
                                                      -------  ------ 
                                                        (5.0)    32.0 
                                                      -------  ------ 
 

Consolidated Statement of Changes in Equity

For the Year ended 31 December 2010

 
                            Attributable to equity holders 
                                     of the parent 
 
                                          Hedging 
                   Issued                     and                              Non- 
                    share     Share   translation   Retained            controlling    Total 
                  capital   premium       reserve   earnings    Total      interest   Equity 
                     GBPm      GBPm          GBPm       GBPm     GBPm          GBPm     GBPm 
 
 Balance at 1 
  January 2010       66.9      66.9           0.3      (1.2)    132.9           0.6    133.5 
                 --------  --------  ------------  ---------  -------  ------------  ------- 
 
 Currency 
  translation 
  differences           -         -         (0.1)          -    (0.1)             -    (0.1) 
 
 Actuarial loss 
  on defined 
  benefit 
  scheme                -         -             -     (27.4)   (27.4)             -   (27.4) 
 
 Tax on items 
  recognised in 
  other 
  comprehensive 
  income                -         -             -        7.7      7.7             -      7.7 
 
 Other 
  comprehensive 
  loss for the 
  year                  -         -         (0.1)     (19.7)   (19.8)             -   (19.8) 
                 --------  --------  ------------  ---------  -------  ------------  ------- 
 
 Profit for the 
  period                                                14.8     14.8           0.3     15.1 
 Purchase of 
  own shares        (2.4)     (3.4)             -          -    (5.8)             -    (5.8) 
 Equity 
  dividends             -         -             -          -        -         (0.2)    (0.2) 
 
 Balance at 31 
  December 
  2010               64.5      63.5           0.2      (6.1)    122.1           0.7    122.8 
                 --------  --------  ------------  ---------  -------  ------------  ------- 
 
 
 
                            Attributable to equity holders 
                                     of the parent 
 
                                          Hedging 
                   Issued                     and                              Non- 
                    share     Share   translation   Retained            controlling    Total 
                  capital   premium       reserve   earnings    Total      interest   Equity 
                     GBPm      GBPm          GBPm       GBPm     GBPm          GBPm     GBPm 
 
 Balance at 1 
  January 2009       66.9      66.9         (0.1)     (32.8)    100.9           0.5    101.4 
                 --------  --------  ------------  ---------  -------  ------------  ------- 
 
 Currency 
  translation 
  differences           -         -           0.4          -      0.4             -      0.4 
 
 Actuarial 
  gains on 
  defined 
  benefit 
  scheme                -         -             -       28.6     28.6             -     28.6 
 
 Tax on items 
  recognised in 
  other 
  comprehensive 
  income                -         -             -      (8.9)    (8.9)             -    (8.9) 
 
 Other 
  comprehensive 
  profit for 
  the year              -         -           0.4       19.7     20.1             -     20.1 
                 --------  --------  ------------  ---------  -------  ------------  ------- 
 
 Profit for the 
  period                -         -             -       11.9     11.9           0.3     12.2 
 Equity 
  dividends             -         -             -          -        -         (0.2)    (0.2) 
 
 Balance at 31 
  December 
  2009               66.9      66.9           0.3      (1.2)    132.9           0.6    133.5 
                 --------  --------  ------------  ---------  -------  ------------  ------- 
 

Consolidated Statement of Financial Position

As at 31 December 2010

 
                                                  2010      2009 
                                       Notes      GBPm      GBPm 
 
 Assets 
 Non current assets 
 Property, plant and equipment          10         5.3     129.0 
 Investments                                       2.4       4.7 
 Goodwill                                            -      26.8 
 Intangible assets                                   -      38.4 
 Retirement benefit asset                            -      41.8 
                                              --------  -------- 
                                                   7.7     240.7 
 Current assets 
 Inventories                                         -       2.2 
 Held-for-sale assets                   13       321.7      30.6 
 Trade and other receivables                       3.2      91.5 
 Prepayments                                         -      20.2 
 Cash and cash equivalents              12         1.6      17.0 
 
                                                 326.5     161.5 
                                              --------  -------- 
 
 Total assets                                    334.2     402.2 
 
 Non current liabilities 
 Preference shares                      11           -       0.3 
 Interest bearing borrowings            11        14.3      69.6 
 Deferred income                                     -       0.5 
 Provisions                                          -       5.0 
 Post employment retirement benefit 
  liability                                          -       2.8 
 Deferred tax liabilities                            -      20.5 
                                              --------  -------- 
                                                (14.3)    (98.7) 
 Current liabilities 
 Interest bearing borrowings            11         2.1      28.6 
 Provisions                                          -       9.6 
 Tax payables                                        -       1.5 
 Trade and other payables                          3.0     130.3 
 Held-for-sale liabilities              13       192.0         - 
 
                                               (197.1)   (170.0) 
 
 Total liabilities                             (211.4)   (268.7) 
 
 Net assets                                      122.8     133.5 
                                              --------  -------- 
 
 Equity 
 Issued capital and reserves 
 Issued share capital                             64.5      66.9 
 Share premium                                    63.5      66.9 
 Hedging & translation reserve                     0.2       0.3 
 Retained loss                                   (6.1)     (1.2) 
                                              --------  -------- 
 
 Equity attributable to owners of 
  the Company                                    122.1     132.9 
 Non-controlling interests                         0.7       0.6 
 
 Total equity                                    122.8     133.5 
                                              --------  -------- 
 

Consolidated Statement of Cash Flows

For the Year ended 31 December 2010

 
                                                         2010      2009 
                                               Notes     GBPm      GBPm 
 
 Cash flows from operating activities 
  (page 14)                                              22.4       9.1 
 
 Cash flows used in other operating 
  activities 
 Interest paid                                          (8.5)     (8.6) 
 Income taxes (paid)/received                           (1.8)       2.8 
 
 Cash flows used in other operating 
  activities                                           (10.3)     (5.8) 
                                                      -------  -------- 
 
 Cash flows from investing activities 
 Payments to acquire property, plant 
  and equipment                                         (6.4)     (7.7) 
 Payments to acquire subsidiaries 
  (including deferred consideration)                    (0.1)     (2.4) 
 Receipts from sale of property, plant 
  and equipment                                          47.7      45.8 
 Receipts from sale of investments                        2.5         - 
 Payments to acquire investments                        (0.4)         - 
 Interest received                                        0.4       0.6 
 
 Cash flows from investing activities                    43.7      36.3 
                                                      -------  -------- 
 
 Cash flows from financing activities 
 Payments to purchase own shares                        (5.7)         - 
 Drawdown of secured borrowings                             -       6.7 
 Repayment of secured borrowings                       (35.7)    (55.3) 
 Repayment of obligations under finance 
  leases                                                    -     (0.7) 
 Drawdown of loan from ultimate controlling 
  party                                                     -       7.2 
 Repayment of loan to ultimate controlling 
  party                                                 (5.1)     (2.0) 
 Repayment of term unsecured borrowings                 (5.2)         - 
 Repayment of loan from associate 
  company                                                 0.1         - 
 Dividends paid to minority interests                   (0.2)         - 
 
 Cash flows used in financing activities               (51.8)    (44.1) 
                                                      -------  -------- 
 
 Net increase/(decrease) in cash and 
  cash equivalents                                        4.0     (4.5) 
 Cash and cash equivalents as at 1 
  January                                                16.4      21.3 
 Effect of exchange rate changes                        (0.2)     (0.4) 
 
 Cash and cash equivalents as at 31 
  December                                      12       20.2      16.4 
                                                      -------  -------- 
 
 Reconciliation of net debt 
 Net increase/(decrease) in cash and 
  cash equivalents                                        4.0     (4.5) 
 Decrease in debt                                        45.6      44.1 
                                                      -------  -------- 
 
 Change in net debt from cash flows                      49.6      39.6 
 
 Effect of exchange rate changes                          0.6       3.3 
                                                      -------  -------- 
 
 Decrease in net debt during the period                  50.2      42.9 
 
 Net debt at start as at 1 January                     (86.7)   (129.6) 
 
 Net debt as at 31 December                     11     (36.5)    (86.7) 
                                                      -------  -------- 
 

Consolidated Statement of Cash Flows (continued)

For the Year ended 31 December 2010

Reconciliation of net profit from operations to net cash from operating activities

 
                                                      2010     2009 
                                                      GBPm     GBPm 
 
 Cash flows from operating activities 
 Net profit                                           15.1     12.2 
 
 Adjustments to reconcile to profit from 
  operations 
 Net interest expense                                  6.8      8.8 
 Income tax income                                   (3.5)    (8.1) 
 Share of loss from investments in associates            -      0.1 
 
 Adjustments to reconcile profit from operations       3.3      0.8 
                                                   -------  ------- 
 
 Non-cash adjustments 
 Depreciation of property, plant and equipment        10.7     13.7 
 Amortisation of acquisition & other intangible 
  assets                                               5.5      5.8 
 Impairment of property                                2.3      1.1 
 Impairment of plant and equipment                     0.5      0.4 
 Impairment of other current and non current 
  assets                                               0.2        - 
 Loss on the sale of investments                       0.7        - 
 Gain/(loss) arising on the revaluation 
  of TLIT investments                                (0.6)      0.4 
 Unrealised losses on foreign currency 
  exchange                                             0.1      1.2 
 Gain on sale of properties, plant and 
  equipment                                          (3.1)    (7.7) 
 Pension IAS 19 charge                               (5.8)    (2.3) 
 Release of investment grants                        (0.5)    (0.2) 
 
 Non-cash adjustments                                 10.0     12.4 
                                                   -------  ------- 
 
 
 Decrease in working capital 
 (Increase)/Decrease in inventories                  (0.1)      0.6 
 (Increase)/Decrease in trade and other 
  receivables                                       (11.2)    (0.4) 
 Decrease/(Increase) in trade and other 
  payables                                             9.0   (12.6) 
 
 Decrease in working capital                         (2.3)   (12.4) 
                                                   -------  ------- 
 
 Pension deficit funding additional employer 
  contributions                                      (3.7)    (3.9) 
 
 Cash flows from operating activities (page 
  13)                                                 22.4      9.1 
                                                   -------  ------- 
 

Notes

1. Basis of preparation

The preliminary announcement for the full year ended 31 December 2010 has been prepared on the going concern basis and in accordance with International Financial Reporting Standards (IFRS and IAS) as adopted by the European Union (EU) and IFRIC interpretations issued and effective, or issued and early adopted.

The following new and amended standards became effective in the period which had an impact on these full year financial statements: IFRS 2 Group Cash-settled Share-based Payment Transactions and IFRS 3 (revised) Business Combinations. In addition, in April 2009, the International Accounting Standards Board issued its second omnibus of amendments to its standards, primarily with a view to removing inconsistencies and clarifying wording. The adoption of these amendments, which are effective from 1 January 2010, did not have any impact on the reporting of the financial position or performance of the Group.

The information set out in this preliminary statement does not constitute statutory accounts within the meaning of Section 80 of the Isle of Man Companies Act 2006. The auditors' reports on the statutory accounts for both the period ended 31 December 2009 and the year ended 31 December 2010 were unqualified. The information presented in this preliminary announcement for the year ended 31 December 2010 is extracted from, and is consistent with, that in the Group's audited financial statements for the year ended 31 December 2010.

The financial information in this announcement has been prepared on the basis of the accounting policies set out in the last published set of annual financial statements. There have been no material changes to the accounting policies since the prior period.

These consolidated financial statements have been prepared under historical cost convention, except for the revaluation of land and buildings to fair value at the date of transition (which is treated as deemed cost under IFRS) and the measurement of certain balances at fair value.

The Directors consider the underlying profit and underlying earnings per share provide additional meaningful information on underlying performance to shareholders. The terms "underlying profit" and "exceptional item" are not defined terms under IFRS and may not be comparable with similarly titled profit measures reported by other companies. Underlying operating profit is not intended to be a substitute for, or superior to, GAAP measurements of profit. The term "underlying" refers to the relevant measure being reported excluding exceptional items, and amortisation of acquisition intangibles. Exceptional items are items which are both material and non-recurring and are presented as exceptional items within their relevant consolidated income statement category. The separate reporting of exceptional items helps provide a better indication of the Group's underlying business performance. Events which may give rise to the classification of items as exceptional include the restructuring of the business, the integration of new businesses, gains or losses on the disposal of businesses and asset impairments and corporate costs.

This announcement was approved by the Board of Directors on 7 April 2011.

2. Currency translation

All amounts denominated in overseas currencies for the consolidated income statement have been translated into sterling at the appropriate average rates for the period. Period end rates have been used to translate all overseas amounts included in the consolidated statement of financial position.

3. Segmental analysis

Primary segments - business activities

Year ended 31 December 2010

 
                              Continuing operations                          Discontinued operations 
 
                                              Eliminat-                                        Eliminat- 
                                                   ions                                             ions 
                                    Central           &                              Central           & 
                         Property   manage-     adjust-                   Property   manage-     adjust- 
                  TLIT      Group      ment      ments*   Total     TDG      Group      ment      ments*   Total   TOTAL 
                  GBPm       GBPm      GBPm        GBPm    GBPm    GBPm       GBPm      GBPm        GBPm    GBPm    GBPm 
 Revenue 
 Gross sales       0.1        0.7       3.9       (4.6)     0.1   678.2        1.9         -       (1.9)   678.2   678.3 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 Results 
 Underlying 
  operating 
 profit/(loss)       -        0.2       1.0       (3.7)   (2.5)    24.2        1.3     (0.1)         2.8    28.2    25.7 
 Net 
 exceptional 
 income/ 
 (expense)           -          -     (2.0)         0.1   (1.9)     2.7        1.2         -       (9.3)   (5.4)   (7.3) 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 
 Operating 
  profit/(loss)      -        0.2     (1.0)       (3.6)   (4.4)    26.9        2.5     (0.1)       (6.5)    22.8    18.4 
 Net finance 
  income/(cost)    0.2      (0.1)      22.4      (22.3)     0.2   (0.6)      (0.9)    (27.8)        22.3   (7.0)   (6.8) 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
                   0.2        0.1      21.4      (25.9)   (4.2)    26.3        1.6    (27.9)        15.8    15.8    11.6 
 
 Income tax 
  income/ 
 (expense)           -          -         -           -       -     3.7          -     (0.2)           -     3.5     3.5 
 
 Profit/(loss) 
  for year         0.2        0.1      21.4      (25.9)   (4.2)    30.0        1.6    (28.1)        15.8    19.3    15.1 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 
 Assets & 
 liabilities 
 Segment assets    6.4        9.5     167.3     (174.8)     8.4   392.6       20.2     219.8     (306.8)   325.8   334.2 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 Segment 
  liabilities        -       28.1         -      (23.9)     4.2   192.0          -     282.8     (267.6)   207.2   211.4 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 
 Other Segment 
 information 
 Depreciation 
  and 
 amortisation        -          -         -         0.2     0.2    13.0          -       3.1           -    16.1    16.3 
                 -----  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 

* Eliminations include all the adjustments arising on consolidation of the four individual segments TDG, TLIT, Property Group and Central management for statutory reporting.

3. Segmental analysis (continued)

Primary segments - business activities

Year ended 31 December 2009

 
                              Continuing operations                           Discontinued operations 
 
                                               Eliminat-                                        Eliminat- 
                                                    ions                                             ions 
                                     Central           &                              Central           & 
                          Property   manage-     adjust-                   Property   manage-     adjust- 
                   TLIT      Group      ment      ments*   Total     TDG      Group      ment      ments*   Total   TOTAL 
                   GBPm       GBPm      GBPm        GBPm    GBPm    GBPm       GBPm      GBPm        GBPm    GBPm    GBPm 
 Revenue 
 Gross sales        0.1          -       1.0       (1.0)     0.1   662.0          -       0.2       (0.2)   662.0   662.1 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 Results 
 Underlying 
  operating 
 profit/(loss)        -      (0.1)     (0.7)       (1.1)   (1.9)    24.8          -     (1.0)         0.6    24.4    22.5 
 Net 
 exceptional 
 income/ 
 (expense)        (0.4)          -     (0.3)         0.3   (0.4)   (7.9)          -         -       (1.2)   (9.1)   (9.5) 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 
 Operating 
  profit/(loss)   (0.4)      (0.1)     (1.0)       (0.8)   (2.3)    16.9          -     (1.0)       (0.6)    15.3    13.0 
 Share of loss 
  of associates       -          -         -           -       -   (0.1)          -         -           -   (0.1)   (0.1) 
 Net finance 
  income/(cost)     0.1          -      18.9      (18.7)     0.3   (3.7)          -    (24.1)        18.7   (9.1)   (8.8) 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
                  (0.3)      (0.1)      17.9      (19.5)   (2.0)    13.1          -    (25.1)        18.1     6.1     4.1 
 
 Income tax 
  income              -          -         -           -       -     8.1          -         -           -     8.1     8.1 
 
 Profit/(loss) 
  for year        (0.3)      (0.1)      17.9      (19.5)   (2.0)    21.2          -    (25.1)        18.1    14.2    12.2 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 
 Assets & 
 liabilities 
 Segment assets     6.3        5.5     151.8     (154.2)     9.4   444.7       17.5     220.2     (289.6)   392.8   402.2 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 Segment 
  liabilities       0.1       23.1       0.5      (20.9)     2.8   253.6          -     255.0     (242.7)   265.9   268.7 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 
 Other Segment 
 information 
 Depreciation 
  and 
 amortisation         -          -         -         0.2     0.2    16.5          -         -         3.0    19.5    19.7 
                 ------  ---------  --------  ----------  ------  ------  ---------  --------  ----------  ------  ------ 
 

* Eliminations include all the adjustments arising on consolidation of the four individual segments TDG, TLIT, Property Group and Central management for statutory reporting.

Secondary segments - geographical analysis

The group's operations are located in United Kingdom, Spain, Netherlands, Ireland, Belgium and Other Europe (Germany and Poland). The following table provides an analysis of the Group's sales by geographic market, irrespective of the origin of the (goods/services).

 
                                     2010    2009 
 Revenue from external customers     GBPm    GBPm 
 
 United Kingdom                     505.8   475.8 
 Spain                               59.5    58.9 
 Netherlands                         47.7    49.2 
 Ireland                             27.7    40.6 
 Belgium                             29.6    28.5 
 Other Europe                         7.9     9.0 
                                   ------  ------ 
 Discontinued operations            678.2   662.0 
                                   ------  ------ 
 
 United Kingdom                       0.1     0.1 
                                   ------  ------ 
 Continuing operations                0.1     0.1 
                                   ------  ------ 
 
 Total revenue for the period       678.3   662.1 
                                   ------  ------ 
 

4. Underlying operating profit

Underlying operating profit is stated after charging/(crediting) the following:

 
                                                       2010    2009 
                                                       GBPm    GBPm 
 
 Employee benefits expense                            194.5   206.2 
                                                     ------  ------ 
 
 Loss on disposal of investments                        0.7       - 
 Loss/(profit) on disposal of plant and equipment       0.1   (0.5) 
                                                     ------  ------ 
 
 Depreciation of property, plant and equipment         10.7    13.7 
 Amortisation of intangible assets (software)           2.5     2.8 
                                                     ------  ------ 
 
 Amortisation of government grants                    (0.5)   (0.2) 
                                                     ------  ------ 
 
 Operating leases: 
 Present value of minimum lease payments               45.5    40.7 
 Sublease payments                                    (2.6)   (1.8) 
                                                     ------  ------ 
 
 Auditor's remuneration - audit of parent company 
 and consolidated financial statements                  0.1     0.1 
                                                     ------  ------ 
 
 Auditor's remuneration - other fees: 
 Other services pursuant to legislation - audit 
  of the Company's subsidiaries                         0.5     0.4 
 Services relating to taxation                          0.2       - 
 Other services                                         0.1       - 
                                                        0.8     0.4 
                                                     ------  ------ 
 

5. Exceptional operating (costs)/profits

 
                                                  2010    2009 
                                                  GBPm    GBPm 
 
 Amortisation of acquisition intangibles         (3.0)   (3.0) 
 Rationalisation costs                           (2.1)   (8.2) 
 Corporate activity and associated costs         (2.3)       - 
 Recycling of exchange gains                         -   (1.1) 
 Impairment of properties                        (2.3)       - 
 Impairment of plant and equipment               (0.2)       - 
 Impairment of other current and non current 
 assets                                          (0.2)   (1.0) 
 Gain on sale of properties                        3.2     7.2 
 Costs of sales of subsidiaries                  (0.1)       - 
 Site exit costs                                 (1.5)   (2.6) 
 Dilapidations & onerous leases                    1.2   (0.8) 
 
                                                 (7.3)   (9.5) 
                                                ------  ------ 
 

The impairment of properties in the year relates to the GBP1.3m impairment, to their net realisable value, of two UK properties that are due to be sold in 2011 and a GBP1.0m impairment to two French properties following the exit of the French business. Impairments to plant and equipment and other current and non-current assets relates to the GBP0.4m write-down of assets held in Belgium and the UK.

In 2009 the impairment of other current and non current assets related to the impairment of a single trade receivable of GBP0.6m and a GBP0.4m impairment to the carrying value of TLIT investments to their market value.

The profit on sale of properties, GBP3.2m (2009: GBP7.2m), arose on the sale of properties held in the UK, Netherlands and Belgium.

Recycling of exchange losses of GBP1.1m originally charged to reserves arose in 2009 as a result of the disposal of a net investment in the year.

In 2010 dilapidation provision releases of GBP0.8m and onerous lease provision releases of GBP0.4m relate to prior period exceptional dilapidation and onerous lease provisions no longer required. In 2009 dilapidation provisions were created in relation to two UK properties. The Directors consider this cost to be exceptional due the size of the provision required.

Due to the continued reorganisation of the business during the year, rationalisation costs of GBP2.1m (2009: GBP8.2m) were incurred. Of the rationalisation costs of GBP2.1m (2009: GBP8.2m), GBP0.6m (2009: GBP5.5m) was incurred in the UK, GBP0.1m (2009: GBP2.0m) Ireland, GBP1.0m (2009: GBP0.5m) Netherlands, GBP0.1m (2009: GBPnil) in Belgium and GBP0.3m (2009: GBP0.2m) in Spain.

The site exit costs of GBP1.5m (2009: GBP2.6m) relate to the exit of unprofitable operations, totalling GBP0.9m (2009: GBPnil) in the UK, GBP0.5m (2009: GBPnil) in Ireland, GBPnil (2009: GBP1.1m) in France and GBP0.1m (2009: GBP1.5m) in Spain.

Corporate activity costs relate to the sale of the Laxey Logistics Group.

6. Finance costs

 
                                                       2010   2009 
                                                       GBPm   GBPm 
 
 Interest payable on loan from ultimate controlling 
  party                                                 0.6    1.7 
 Interest payable on finance lease rental payments      0.1    0.2 
 Interest expense: secured loans                        4.8    6.8 
 Other finance costs                                    1.6    0.7 
 
                                                        7.1    9.4 
                                                      -----  ----- 
 

7. Finance income

 
                                                        2010   2009 
                                                        GBPm   GBPm 
 
 Interest receivable on short-term deposits                -    0.4 
 Foreign exchange                                          -    0.2 
 Interest receivable on loan to ultimate controlling 
  party                                                  0.3      - 
 
                                                         0.3    0.6 
                                                       -----  ----- 
 

8. Tax

Components of income tax (income)/expense

 
                                                      2010    2009 
                                                      GBPm    GBPm 
 
 Current income tax expense/(income) 
 Isle of Man income tax                                  -       - 
 Overseas tax                                          2.3   (2.2) 
 Overseas tax - adjustments to current tax 
  of prior period                                      0.2   (0.2) 
                                                    ------  ------ 
 Current income tax expense/(income)                   2.5   (2.4) 
 
 Deferred income tax (income)/expense 
 Isle of Man                                             -       - 
 Overseas deferred tax                               (2.1)   (4.9) 
 Overseas deferred tax - adjustments to deferred 
 tax of prior period                                 (3.9)   (0.8) 
                                                    ------  ------ 
 Deferred income tax income                          (6.0)   (5.7) 
                                                    ------  ------ 
 
 Income tax income                                   (3.5)   (8.1) 
                                                    ------  ------ 
 

Components of income tax recognised in other comprehensive income

 
                                                        2010   2009 
                                                        GBPm   GBPm 
 
 Deferred income tax (income)/expense 
 Deferred income tax (income)/expense on actuarial 
 loss/(gain)                                           (7.7)    8.9 
                                                      ------  ----- 
 

Reconciliation of income tax charge

The tax for the period is higher than the standard rate of income tax in the Isle of Man of 0%. The differences are explained below.

 
                                                     2010    2009 
                                                     GBPm    GBPm 
 
 Profit on ordinary activities before tax            11.6     4.1 
                                                   ------  ------ 
 
 Profit on ordinary activities multiplied by 
  rate of corporation tax in the Isle of Man 
  of 0%                                                 -       - 
 Effects of: 
 Tax effect of rates in other jurisdictions         (0.5)   (1.3) 
 Permanent differences                                0.3     0.2 
 Differences between depreciation and capital 
  allowances and other timing differences           (0.4)   (6.3) 
 Utilisation of losses                              (0.3)   (3.4) 
 Unrelieved losses                                    6.6     8.3 
 No tax relief on impairments                         0.2     1.1 
 No tax relief on the recycling of exchange 
  losses                                                -     0.5 
 Relief claimed on profit on sale of properties 
 and release of deferred tax                        (5.0)   (4.5) 
 Change in tax rates                                (0.7)       - 
 Over provision in prior years                      (3.7)   (2.7) 
 
                                                    (3.5)   (8.1) 
                                                   ------  ------ 
 

9. Earnings per share

The calculation of basic earnings per share as at 31 December 2010 is based on the profit attributable to ordinary shareholders of GBP14.8m (2009: GBP11.9m) and a weighted average number of ordinary shares outstanding of 1,333,058,372 (2009: 1,337,815,633) reflecting the period over which earnings per share has been calculated (1 January 2010 until 31 December 2010 (2009: 1 January 2009 until 31 December 2009). An alternative underlying earnings per share number is also set out below, being before any exceptional (profits)/costs plus related tax, since the Directors consider that this is more representative of the underlying performance of the Group. Share options outstanding have no dilutive impact on the basic earnings or underlying earnings per share as at 31 December 2010. There was no dilution effect in the period ended 31 December 2009.

 
                                                    2010            2009 
 Weighted average number of shares for 
  the purposes of basic and 
 underlying earnings per share             1,333,058,372   1,337,815,633 
                                          --------------  -------------- 
 
 
                                            2010                              2009 
                                    GBPm   pence                      GBPm   pence 
 Profit attributable to 
  equity holders of the 
 parent (Basic 
  earnings per 
  share)                            14.8   1.11p                      11.9   0.89p 
 
 
                          Related                           Related 
                 Expense/     Tax                  Expense/     Tax 
                 (income)   @ 28%                  (income)   @ 28% 
 
                     GBPm    GBPm                      GBPm    GBPm 
 Add back 
  exceptional 
  items net 
 of related tax 
 Amortisation of 
  acquisition 
  intangibles         3.0       -                       3.0       - 
 Rationalisation 
  costs               2.1   (0.6)                       8.2   (2.3) 
 Corporate 
  activity and 
  associated 
  costs               2.3   (0.6)                         -       - 
 Recycling of 
  exchange gains        -       -                       1.1       - 
 Impairment of 
  properties          2.3   (0.6)                         -       - 
 Impairment of 
  plant and 
  equipment           0.2   (0.1)                         -       - 
 Impairment of 
  other current 
 and non current 
  assets              0.2   (0.1)                       1.0   (0.3) 
 Gain on sale of 
  properties        (3.2)       -                     (7.2)       - 
 Costs of sales 
  of 
  subsidiaries        0.1       -                         -       - 
 Site exit costs      1.5   (0.4)                       2.6   (0.7) 
 Dilapidations & 
  onerous leases    (1.2)     0.3                       0.8   (0.2) 
                      7.3   (2.1)    5.2   0.39p        9.5   (3.5)    6.0   0.45p 
                   ------  ------  -----  ------  ---------  ------  -----  ------ 
 
 Underlying 
  earnings 
  (underlying 
 earnings pence 
  per share)                        20.0   1.50p                      17.9   1.34p 
                                   -----  ------                     -----  ------ 
 

10. Property, plant and equipment

 
                          Net book     Net book 
                          value at     value at 
                            31 Dec   1 Jan 2010 
                         2010 GBPm         GBPm 
 
 Land and buildings            5.3         92.7 
 Plant and equipment             -         30.2 
 Vehicles                        -          6.1 
 Total                         5.3        129.0 
                       -----------  ----------- 
 

Properties disposed of post-year end are classified as assets held-for-sale as at the date of the consolidated statement of financial position.

11. Financial liabilities

 
                                               Notes     2010     2009 
                                                         GBPm     GBPm 
 Non-current 
 Property finance leases                                  1.1      1.1 
 Secured bank loans                                      48.8     68.5 
 Non redeemable preference shares                         0.3      0.3 
 Transfers to held-for-sale liabilities         13     (35.9)        - 
                                                      -------  ------- 
                                                         14.3     69.9 
                                                      -------  ------- 
 
 Current 
 Bank overdrafts                                          0.3      0.6 
 Property finance leases                                    -        - 
 Secured bank loans                                       5.0     21.3 
 Short term loan facility                                 1.5      6.7 
 Transfers to held-for-sale liabilities         13      (4.7)        - 
                                                      -------  ------- 
                                                          2.1     28.6 
                                                      -------  ------- 
 
 Reconciliation to Net debt 
 Borrowings (excluding loan payable to ultimate 
  controlling party and 
 before transfer of assets and liabilities 
  to held-for-sale                                       57.0     98.5 
 Deduct: 
 Cash at bank                                   12      (5.4)    (3.8) 
 Short term deposits and cash in restricted 
  accounts                                      12     (15.1)   (13.2) 
                                                      -------  ------- 
 External net debt                                       36.5     81.5 
 
 Loan payable to ultimate controlling 
  party                                                     -      5.2 
 
 Net debt                                                36.5     86.7 
                                                      -------  ------- 
 

Finance leases

The property finance leases of GBP1.1m (2009: GBP1.1m) are secured over the properties of the subsidiary undertakings concerned. Fixed interest is payable on the property finance leases.

Non redeemable preference shares

The non redeemable preference shares carry an interest rate of 4.75%.

Bank loans and other borrowings

 
                                       2010     2009 
                                       GBPm     GBPm 
 
 Secured bank loan                     53.8     89.8 
 Short term loan facility               1.5      6.7 
                                     ------  ------- 
                                       55.3     96.5 
 
 Less: current installments due on 
  loans and borrowings                (6.5)   (28.0) 
                                     ------  ------- 
 Non-current                           48.8     68.5 
                                     ------  ------- 
 

On 28 March 2011, following the sale of TDG the principle source of financing held with Burdale Financial Limited was repaid in full.

Secured bank loan

The secured borrowings of GBP53.8m (2009: GBP89.8m) are secured over the tangible fixed assets and receivables of the subsidiary undertakings concerned.

Short term loan facility

The short term loan facility does not require the specific backing of Eligible Receivables, but must not be drawn for at least five consecutive Business Days in any month.

12. Cash and cash equivalents

 
                                      Notes     2010   2009 
                                                GBPm   GBPm 
 
 Cash at bank and in hand                        5.4    3.8 
 Short-term deposits                             2.3    4.0 
 Cash in restricted accounts                    12.8    9.2 
 Transfers to held-for-sale assets     13     (18.9)      - 
 
                                                 1.6   17.0 
                                             -------  ----- 
 

For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise the following at 31 December 2010.

 
                                 2010    2009 
                                 GBPm    GBPm 
 
 Cash at bank and in hand         5.4     3.8 
 Short-term deposits              2.3     4.0 
 Cash in restricted accounts     12.8     9.2 
 Bank overdrafts                (0.3)   (0.6) 
 
                                 20.2    16.4 
                               ------  ------ 
 

13. Discontinued operations (Held-for-sale financial assets & liabilities)

2010 - On 29 November 2010, the Company announced it had reached agreement to dispose of its largest investment, the logistics business TDG Limited, to Norbert Dentressangle SA. On 28 March 2011, the Company disposed of TDG's holding company, Laxey Logistics Limited for cash proceeds of GBP208m. As a result of the commitment at 31 December 2010 of the Group's management to sell the Laxey Logistics Group the assets and liabilities of the group have been shown within the consolidated statement of financial position as held-for-sale. The other discontinued items relate to three properties held by the Property Group which the Directors intend to sell early in 2011. Subsequent to the year end, the Property Group has sold two properties, sites at West Hallam and Batley, for a net consideration of GBP19.2m, realising a profit of GBP7.2m.

 
                                                   Laxey 
                                               Logistics   Property 
                                       Notes       Group      Group   Total 
                                                    GBPm       GBPm    GBPm 
 
 Assets classified as held-for-sale 
 Property, plant and equipment                      87.2       12.8   100.0 
 Investments                                         0.1          -     0.1 
 Goodwill                                           27.0          -    27.0 
 Acquisition and other intangible 
  assets                                            34.0          -    34.0 
 Retirement benefit asset                           23.6          -    23.6 
 Inventories                                         2.4          -     2.4 
 Trade and other receivables                        94.4          -    94.4 
 Prepayments                                        21.3          -    21.3 
 Cash and cash equivalents              12          18.9          -    18.9 
 
 Total assets                                      308.9       12.8   321.7 
                                              ----------  ---------  ------ 
 
 Liabilities classified as 
  held-for-sale 
 Property finance leases                11           1.1          -     1.1 
 Interest bearing borrowings            11          38.9          -    38.9 
 Preference shares                      11           0.3          -     0.3 
 Bank overdrafts                        11           0.3          -     0.3 
 Provisions                                         10.9          -    10.9 
 Post employment retirement 
  benefit liability                                  2.5          -     2.5 
 Deferred tax liabilities                            6.7          -     6.7 
 Tax payables                                        2.1          -     2.1 
 Trade and other payables                          129.2          -   129.2 
 
 Total liabilities                                 192.0          -   192.0 
                                              ----------  ---------  ------ 
 

The main elements of the cash flow of the discontinued operations are as follows:

Cash flow from discontinued operations

 
                                               2010     2009 
                                               GBPm     GBPm 
 
 Operating cash flow                           13.9      1.2 
 Cash flow from investing activities           41.4     54.1 
 Cash flow from financing activities         (52.2)   (61.2) 
 
 Net cash inflows/(outflows) for the year       3.1    (5.9) 
                                            -------  ------- 
 

14. Subsequent events

Since the year end four separate events have occurred that require disclosure:

- On 28 March 2011 the Company disposed of its largest investment, the logistics specialist TDG Limited, to Norbert Dentressangle SA. The Company has agreed to sell TDG's holding company, Laxey Logistics Limited, for cash proceeds of GBP208m.

- The Property Group has sold two properties, sites at West Hallam and Batley, for a net consideration of GBP19.2m. These transactions resulted in a book profit to the Group of GBP7.1m. TDG sold one property for a net consideration of GBP0.5m which resulted in a nil gain/loss in 2011.

- On 28 March 2011, following the sale of TDG the principle debt facility held with Burdale Financial Limited was repaid in full.

- Following the sale of TDG, the Board is proposing an invitation to shareholders to participate in a return of funds by way of a Tender Offer to buy back ordinary shares at a price of 16.35p per share, subject to certain conditions and limited to 89% of the shares in issue.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR URURRAKASAUR

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