Interbulk : Final Results

·      Profit before tax (before intangible amortisation and exceptional items) increased 23% from £2.6m to £3.2m.

·      Revenue was 6% lower than last year mainly due to closures of manufacturing units in the European polymer industry which impacted the Dry Bulk business. The year saw underlying activity growth in the Liquid Bulk business.

·      Underlying margins improved in the tankcontainer based Liquid Bulk business as a result of a focus on business selection and fleet management. Unfavourable foreign exchange translation from a weaker dollar and euro reduced the gain in the headline numbers, but operating profit (before exceptional items) still increased for the year slightly to £7.9m. 

·      Cost efficiency actions were taken during the year to reduce both the overheads and the procured costs in the Dry Bulk business, but a fall in revenue of 11% year on year to £101.9 m was a challenging backdrop. Operating profit (before exceptional items) was flat at £1.7m.

·      Combined impact was Group operating profit (before intangible amortisation and exceptional items) increased by 6% from £8.3m to £8.8m.

·      The main exceptional item within the £34.3m charge was a non-cash goodwill impairment provision of £32.3m set against the Dry Bulk division. This arose from a reappraisal of revenue growth projections due to the combination of increasing pressure on European polymer production due to imports from regions with advantaged feedstocks, and the difficulty to win new business from diversification of the products we carry.

·      Tax charge for the year included £1.1m relating to finalisation of prior period assessments, including deferred taxation items.

·      Net debt was further reduced in the year by £9.2m to £60.2m, the fifth consecutive year of reduction. Existing bank facilities require renewal in 2016 and the Board, working with our bankers, is actively examining options to achieve a long-term financial structure for the Group which we anticipate will be effected during 2015. 

Operational Key Points

·      Continued reinforcement of the emphasis on health & safety with a reduction in the number of significant events and improved near miss reporting.

·      Growth in Liquid Bulk transportation moves, both intra-European and global, supported an increase in the Group's tankcontainer fleet to 10,900.

·      Dry Bulk European restructuring initiatives delivered with significant savings during the second half of the year thereby boosting our competitiveness.

Loek Kullberg, InterBulk CEO, commented:

"We achieved a 6% improvement in operating profit (before intangible amortisation and exceptional items) for the year of £8.8 million. The second half of the year was stronger than the first despite the continued challenge from the closures of manufacturing capacity in the European polymer industry which impacted the Dry Bulk business.  

Our strategic review confirmed that we have a strong business model and that intermodal logistics will continue to play an ever more important role in global supply chains.  Our short-term priority is to address the European Dry Bulk business performance; only once recovery is achieved will we seek to expand this business model to other areas of the world. This is in contrast to the Liquid Bulk (tankcontainer) business which has a well-established global network to support the expansion of the chemical sector in areas outside Europe.

With the internal cost saving measures implemented over the last six months, including reductions in fixed costs, operational efficiency measures and specific procurement initiatives, we are in a stronger position to achieve profitable growth. The chemical sector is expected to grow during the next year and we are well represented in this customer base in most regions.  However, supply chain volatility remains high, reflecting continued uncertainties in the global economy."

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About InterBulk

InterBulk is a leading supplier of global intermodal logistics solutions for the movement of liquid and dry bulk materials. It provides environmentally friendly and cost effective door-to-door supply chain solutions that include intermodal transportation, temporary storage and material handling services. InterBulk is one of the world's largest operators of tankcontainers for the movement of liquids and Europe's leading provider of intermodal 'bag-in-box' containers for the movement of dry bulk products.

Chairman's Statement
I today report the audited results of InterBulk Group plc for the year ended 30 September 2014.  After a stronger performance in the second half of the year and despite a 6% year on year revenue decline to £256.3 million we achieved an operating profit (before amortisation and exceptional items) 6% ahead of last year at £8.8 million.  With the interest expense remaining at a similar level the profit before amortisation, exceptional items and tax increased 23% from £2.6 million to £3.2 million. We were able to continue our five year performance record of reducing net debt, ending the year with the debt level substantially reduced by £9.2 million at £60.2 million.

The performance of the Liquid Bulk tank container division was encouraging with an improvement delivered in margin quality from a focus on business selection and tank container fleet balance. The Liquid Bulk division saw very low activity levels in the first quarter followed by a recovery in the second quarter as the chemical sector picked up in the USA, Middle East and China. During the second half, activity levels overall were stable, although we saw a slow-down in activity in the last 2 months of the financial year linked to weakening business confidence and short term de-stocking triggered by the sharp drop in oil price.  Transportation moves were 1% up on last year, but revenues at £153.6 million were 2% lower year on year due to less favorable currency translation. Operating profit (before exceptional items) increased 2% to £7.9 million.

During the year, we announced that our Dry Bulk business continued to be heavily impacted by specific market dynamics in the polymer sector in Europe, including both temporary and permanent chemical plant shutdowns, which affected both our volume and equipment balances. The European polymer market is still adjusting to the pressures on global flows and pricing from substantial capacity additions using cheap feedstock in the Middle East, and the wave of new plastics capacity being constructed in the US Gulf based on ethane from shale gas will simply heighten this pressure on the European producers in the coming years. Our strategy to develop new business for example in the food market, and also to bring the bag-in-box concept to other regions, such as Asia, has not achieved the desired results and, indeed after a number of years of sustained growth, we have seen a drop in food revenue in the second half. Activity linked to European polymers still accounts for a significant share of our business with 82% of our Dry Bulk division revenue. We have therefore moved to reduce sharply the overheads in the Dry Bulk division, and to achieve cost reductions in procurement and through operational efficiency measures, since the drop in revenue of 11% year on year to £101.9 million presents us with a challenging situation. Operating profit (before exceptional items) in the Dry Bulk division remained stable at £1.7 million. In light of this, we have reduced our forecasts which has resulted in an exceptional impairment of the carrying value of the Dry Bulk division of £32.3 million. This along with £2.0 million of other exceptional items (see note 3) results in a total exceptional charge of £34.3 million in the year.

Our Strategy

InterBulk's vision is to be a leading global supplier of intermodal logistics solutions to customers in the chemical, polymer and food industries, spanning both dry and liquid bulk supply chains, using our established network in Europe, the Americas and Asia Pacific, and employing the best people in the industry. We will continue to strengthen partnerships with our customers and logistics service partners around the world.

Organisational effectiveness and efficiency has come under the spotlight and we have used two core elements of customer service and cost as the focus for our efforts.  We have completed a comprehensive reorganisation of the European Dry Bulk division during the year and continued to push for greater efficiency from the centralisation of our internal operations. The global tankcontainer organisation has also been subject to an in depth review to ensure that we can profitably develop this growth area for the Group. Investment in chemical production lies outside Europe and we believe that our network and strategy are well positioned to capitalise on this especially in Asia with the Sinotrans InterBulk Alliance. We plan to expand our co-operation with Sinotrans to North East Asia during the next year.  

Our operational strategy reflects the following elements:

·      Continue to deliver excellent Health & Safety performance following the principles of Responsible Care ™

·      Invest in a high performance global team committed to the business strategy with high levels of divisional collaboration and business innovation to produce superior results.

·      Lead the market in terms of operational cost competitiveness by continuously driving procurement savings initiatives and improve operational performance by efficiencies to optimise traffic flow balance and reduce empty positioning.

·      Grow our liquid bulk business in China through a strong development of the Sinotrans InterBulk Alliance (SIA).

·      Recover the performance of our dry bulk business in Europe.

·      Expand our liquid bulk European operations especially in higher margin specialised product/tankcontainer business.

·      Develop liquid bulk deep-sea operations in the growth regions of China, the Middle East, Russia and Asia.

·      Integrate with customers by offering innovative supply chain and 3rd party fleet management solutions using high performance IT tools. 

Only once recovery has been achieved in our European Dry Bulk business, will we seek to further expand this business model to other areas of the world. 

Funding

The impact on our markets of the financial crisis and the global economic downturn of recent years has been substantial and has prompted industry-wide strategic change. Our business model has enabled us to maintain profitability and to reduce bank debt throughout that difficult period but it is vital that we position the Group for success in the future, recognising the new dynamics in our sector. In addition to the operational strategy described above, we are also examining the options available to place the financial structure of the Group onto a long-term basis.

Net debt was reduced by a further £9.2 million in the year. We have now reduced Group indebtedness for each of the past five financial years. The Group had net debt (defined as bank loans, overdrafts and obligations under finance leases less cash and cash equivalents) at 30 September 2014 of £60.2 million comprising:

Our principal facilities expire on 30 September 2016, and while the Group continues to demonstrate its ability to manage cash flow well and to achieve sustained reductions in debt, the Board is seeking to develop a group and financial structure which will support the refinance of our existing bank facilities and create a financial platform to optimise shareholder value. Our strategic options continue to be assessed, including identifying ways to continue to reduce our levels of debt, and this process has included open dialogue with our existing bankers. We have agreed with our bankers adjustments to our covenant framework which will regulate our debt levels with adequate headroom.To align our facilities to the strategic needs of the business, and to ensure that we have new lasting facilities in place by the time of approval of  next year's Group annual accounts , the Group will be seeking to refinance existing borrowings by 31 December 2015.  Given the continued debt reduction achieved over the last five years and the future strategy of the Group, we believe that such a refinancing can be delivered by that date. Our current bankers are aware of, and support, this timetable.  We have also assessed the Group's medium-term facility requirements and have agreed with our bankers that the current revolving credit facilities of £10m will now expire at 31 March 2016. The principal risks and uncertainties, including access to capital, which could potentially impact the Group are included in note 9. 

Board Composition

On 28 August 2013 it was announced that Koert van Wissen had decided to retire and step down as Chief Executive Officer and become a non-executive director with effect from 1 October 2013. I was delighted to announce simultaneously that Loek Kullberg joined us as Chief Executive Officer. Koert van Wissen relinquished his non-executive position on 30 June 2014. Again we thank Koert for his enormous contribution to the development of the Group over many years.

Outlook

The global chemical industry remains on a path of long term growth due to the wide range of benefits it brings to consumers with logistics playing an important part in supporting this growth. Intermodal solutions are aligned with the supply chains becoming longer, more complex and demanding greater environmental considerations.   

The review and update of our strategy has confirmed that we have a strong business model and that intermodal logistics will continue to play an ever more important role in global supply chains.  Our short-term priority in Dry Bulk is to continue the recovery of the European business performance.

The chemical sector is expected to demonstrate some modest growth in the next year and we are well represented throughout this customer base in most regions. Supply chain volatility remains high, reflecting continued uncertainties in the global economy including crude oil prices but with the full impact of the measures implemented over the last six months, including reductions in fixed costs, operational efficiency actions and specific procurement initiatives, the Group is in a stronger position to achieve profitable growth. Coupled with the anticipated refinancing of our bank facilities in 2015, the coming year will be challenging but we have the right team in place to deliver sound results for all of our stakeholders. The Board wishes to record its appreciation for the dedication of all Interbulk Group employees who have worked tirelessly and tackled the challenges of a tough external environment.

Chief Executive's Review

Market Overview

The global chemical industry, which is our main customer base, has grown during the year to 30 September 2014. European production recovered slightly, but remains below pre-2008 levels. This modest recovery is forecast to continue next year, but there remain several risks, such as the conflict in the Ukraine, and the threat of deflation and high unemployment levels in several countries, which could potentially limit chemical demand. However, it is still believed that a number of developments including technical innovation, will ensure that demand growth for chemicals will exceed GDP expectations. Regions with advantaged feedstock positions will continue to be locations of substantial chemical industry investment. The Middle East is being joined by North America as the exploitation of shale gas has dramatically reduced the price of ethane, a key feedstock, which has sparked a high level of plant investments with the first wave due to come on stream in 2015-2017. Asia (principally China and India) is the other main location of investment in chemical production due to the scale and rapid growth of domestic consumption. The changes in the global chemical manufacturing footprint have a tangible impact on both our own customer base and our business mix and we continue to follow these developments carefully in order to respond accordingly. Looking forward, logistics will remain a critical aspect in this dynamic market.

Intermodal logistics solutions continue to gain market share from other transport modes driven by superior performance, flexibility offered in the supply chain and reduced environmental impact. The rapid expansion of the global tankcontainer fleet continues both through operators such as ourselves and through specialist lease companies. This can cause short-term over-capacity from time to time, but it also demonstrates that tankcontainers have a strong investment case. In intra-European transportation, the intermodal operators continue to be challenged by "traditional" road transportation. Despite the environmental agenda and the desire to see less freight on the roads, this direct competition remains strong, even for longer distances (over 400 km) which should be less attractive to a direct trucking option. In servicing the changing chemical market, it is important to provide sustainable and flexible logistics solutions by expanding and adapting our network and developing new partnerships.  Examples include our strategic alliance with Sinotrans in Asia which we will continue to expand in 2015.

InterBulk has an outsourced business model in which all transportation and support services are performed through partners. This creates a global and flexible business model with a minimum of fixed costs and increasingly important advantages in the volatile market in which we operate. While deep-sea container shipping still faces overcapacity and rates have remained reasonably steady, there is some volatility on specific trade lanes. Across most areas of the transportation services there has been some form of rationalisation with adjustments to capacities and frequency, which on occasion resulted in constraints at peak times. In Europe, driver shortages remain a dilemma for the industry including an additional training burden in the UK. Additional costs associated with compliance with European low sulphur regulation on shipping to come into force on 1 January 2015.  We have been proactive in communicating to our customers about the impact on freight rates from these additional imposed industry wide charges.

Operational Performance

Liquid Bulk

Liquid Bulk division (tankcontainers) activity, as measured by moves performed, increased year on year by 1% with the increase in both the intra-European and global businesses. There was however a slowdown during August and September linked to weakening business confidence and short term de-stocking triggered by the sharply dropping oil price. During the first quarter of the financial year, storage income dropped, and while some of this was subsequently recovered, the full year was below last year's level. Our global activity is generally US dollar denominated and the appreciation of sterling therefore created an unfavourable currency impact on revenue and margin. During the year our fleet increased by 3% to 10,900 tanks. Our fleet size remains in the top 5 of tankcontainer operators worldwide.

Overcapacity owing to the considerable expansion of the global fleet of tankcontainers in recent years, and increased competition from regional European competitors extending their services to include deep-sea activity, remain threats.  Despite this backdrop and the foreign exchange losses, our concerted focus on profitable growth and cost efficiency has improved the divisional operating profit margin (before exceptional items) to above 5%.

After recent years of declining activity, the number of intra-European moves increased by 2% year on year.  This consisted of some higher activity in the mainland, offsetting some small reductions in the UK and Scandinavia.  Growth in European export deep-sea moves was achieved with a 1% increase in the number of deep-sea moves year on year.  This higher element of the growth was in the first six months of the financial year, with the third quarter seeing lower activity levels.

In the Americas the number of moves fell overall by 2% representing a mix of higher activity in North America and reductions in South American exports. Volatility in the market remains a challenge for fleet management and positioning of empty equipment. Most recently a slowdown in export activity in the region resulted in a larger stock of tankcontainers in the market and competitors repositioning more empty tankcontainers or accepting lower rates to keep the equipment moving.  There are now signs of export opportunities increasing.

Asia has seen a steady activity after the 8% activity growth achieved in the prior year, however our growth was limited by a lack of equipment in the region and heavy pressure on rates, especially for exports from China. The majority of new tankcontainers are manufactured in China and this results in low rates being quoted by competitors to put their new equipment into circulation.  Our organisation in Asia is being restructured and, after the success of taking our China activity in house instead of via local agents, we now plan to change our North East Asia agency structure to utilise the support of the Sinotrans network.

The tankcontainer liquid bulk business is established globally and the regions of Europe, Asia and the Americas are performance-wise strongly inter-dependent. Our goal is to ensure efficient utilisation of the total fleet at attractive margins and, while our business is controlled and reported by regions, our objective is to reach the best global result.

Dry Bulk

The Dry Bulk division, which is predominantly European based, continued to be heavily impacted by weakness and volatility in our core polymer market. This included the closure of production plants by our customers, on both a temporary and permanent basis, which affected our volumes and equipment balances. The transportation activity, as measured by moves performed, was down 11% year on year, and the revenue from temporary storage declined by 18%. The major factor was plant closures in the UK.  Export opportunities as a result reduced leading to higher empty repositioning back to the continent.  It will take some time to mitigate these plant closures given the continued pressure on European polymer producers from regions with access to cheap feedstock and energy.

Diversification into the movement of foodstuff has been a focus with steady growth achieved over the last few years.  This growth continued in the first half but was reversed in the second half with several smaller accounts lost to alternative modes of transport or competition. For the year as a whole, food moves were down 10%. The bag-in-box can provide a cost effective and quality solution for foodstuff and we have a strong reference point from existing customers.  Commercial efforts on this front will be refocused to ensure that we maximise on the opportunity from the large market in Europe utilising our existing infrastructure and equipment base. Dry Bulk activities outside Europe, mainly in Asia, amount to approximately £3.2 million of revenue. Only once recovery has been achieved in our European Dry Bulk business, will we seek to further expand this business model to other areas of the world.

The performance of our on-site terminal services has been positive in the current year. This includes a positive full year contribution from our first site in Russia and a second site operational since August 2014.  However, we have received notice that at the end of an 11 year terminal service agreement in Austria, the contract has been awarded to a competitor who offered extremely low rates, and we will therefore transfer the site from 1 January 2015.  

For 2015, there will be some expansion of European production in the PET sector, where we have a large market share.  However, this market also continues to be challenged by increased imports from outside Europe coinciding with sluggish demand growth from the wider economic issues in Europe. As a result, the revenue outlook remains both uncertain and volatile depending on the success in highly competitive export markets.

During the year we have completed a comprehensive reorganisation of the European Dry Bulk division and continue to push for greater efficiency from the centralisation of our internal operations. This has resulted in approximately a £1.5 million reduction in our Dry Bulk overheads. We have reduced our fleet size to match demand levels with the 30 foot container fleet at approximately 7,600 units at 30 September 2014, down 14% in the year.

Our ISO-Veyor technology, which provides a solution for materials with difficult flow characteristics, has established a presence in the movement of cement and associated construction products and also in other specialised markets.  The business unit ran at a small operating loss in the year, but as we enter the new financial year we have secured some new contracts which will ensure a much improved utilisation of our ISO-Veyor fleet.  This included a three year rental agreement in the UK for the entire fleet of 30 foot aluminium units where we have experienced low utilisation for the last 2-3 years. Our 20 foot fleet is now mainly focused on the provision of solutions to the oilfield services market and has seen an increase in enquiry levels.  As a result, we are confident that this niche business unit should be profitable in the coming year.

People

Our people are the core resource of the Group and critical to our future success.  Excellent customer service and the ability to deliver cost effective solutions to our customers are driven by the efforts of our team and while our information systems provide the data to manage the business, it is our people who make the difference.

The tough market conditions during the past year have unfortunately meant we have had to make redundancies. This is a challenging exercise but the remaining staff have supported these changes and reacted well to the new organisation.  We continue to have a well-motivated team who are deeply committed with vast experience in intermodal logistics. 

There will be no change to our desire to ensure that our employees work within a fair and transparent structure, their expertise is put to good use and they develop in a group that puts health, safety, quality and environmental considerations at the forefront of everything we do.

Corporate Social Responsibility

The InterBulk Group aims for 100% safe operations and protection of people and the environment. We are fully committed to sustainability and are a partner to the chemical industry Responsible Care™ charter. We take a lead, and commit resources together with the logistics and chemical industry associations on health and safety improvement initiatives that impact on business developments. A core value of the InterBulk Group is to act according to uncompromising levels of responsible care, hygiene and environmental standards to protect people and the environment. Quality, health, safety, security, hygiene and environmental performance are considered using metrics reviewed at each Board meeting. The Responsible Care principles are cascaded throughout the Company and promulgated along the logistics chain. This year has seen a continued reinforcement to the mission critical area of Health and Safety and the whole organisation is actively engaged in driving improvement. There has been a reduction in the number of significant events and a focus on capturing the learning from near misses.

We have a set of core values and policies in a number of areas.  These values apply to every director and employee in all of our companies across our global operations. The Board of Directors remains committed to ensuring that the correct processes, governance and cultures exist to support the maintenance of these values and behaviours.

Summary

The 2014 financial year was challenging and despite good work across a number of areas, we are disappointed that only a small profit improvement has been achieved in the year.  While we made step changes in our cost base, these efforts were negated by external factors especially within the European polymer market.  While foreign exchange movements year on year were favourable on our net debt, the impact on trading results was unfavourable through the translation impact on Group revenue and EBITDA, and also by increasing volatility in the supply chain through the impact on inter-regional competitiveness and trade flows.

The Liquid Bulk division has shown a stable level of performance after a weak first quarter with modest underlying activity growth in the current year and some good progress on internal margin improvement initiatives especially in intra-European activity.  Despite significant attention, the Dry Bulk division has suffered from the depressed conditions in the European polymer market and specific plant closures, and no material improvement in the operating profit has been secured.

We continue to work hard to achieve high customer service levels and quality standards and this provides the foundation for future success. In the current year we have continued to reinforce the importance of line-management responsibility for health and safety awareness and controls and have seen improvement in this area. We will continue to scrutinise our own internal operational efficiency and cost base so that we continue to provide a cost effective solution to our customers. Large steps have been made in the current year and these efforts will continue given our marketplace continues to see challenges driven by uncertainty and volatility in the external economy.  

After just over one year in the business I remain convinced that our global market position, operating model, focus on intermodal solutions and above all our people provide a sound platform for the future with the work that has been completed this year positioning us well to benefit from improvements in market conditions.

Group Income Statement

For the year ended 30 September 2014

Group Statement of Comprehensive Income

For the year ended 30 September 2014

Group Balance Sheets

At 30 September 2014

Group Statement of Cashflows

For the year ended 30 September 2014

1. Notes to the preliminary results

The financial information set out in the preliminary announcement does not constitute the Group's statutory accounts within the meaning of the Companies Act 2006 and has been extracted from the full accounts for the years ended 30 September 2014 and 30 September 2013 respectively.  A copy of the statutory accounts for the year ended 30 September 2013 has been delivered to the Registrar of Companies.  The auditors' report on the financial statements was unqualified and did not include a statement under section 498(2) and 498(3) of the Companies Act 2006.  The statutory financial statements for the year ended 30 September 2014 have been approved by the Directors on 22 December 2014 and will be delivered to the Registrar of Companies in due course.

These financial statements have been prepared in accordance with the accounting policies based on International Financial Reporting Standards ("IFRS") and IFRIC interpretations endorsed by the European Union (EU) and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.  The financial statements have been prepared under the historical cost convention as modified by the revaluation of derivative financial instruments.

2.   Segment information

For management purposes the Group is reported in three operating units; Liquid Bulk, Dry Bulk and ISO-Veyor. This follows also the intermodal technology which we utilise in the provision of our intermodal logistics solutions to customers. These three divisions are treated as operating segments and reportable segments in accordance with IFRS 8. The operating and reportable segments were determined based on reports reviewed by the Group Executive Directors who are considered to be the Chief Operating Decision Makers.

The Liquid Bulk segment provides intermodal logistics and storage solutions for the movement of liquid bulk materials utilising the fleet of tankcontainers. The Dry Bulk segment provides intermodal logistics and storage solutions for the movement of dry bulk materials utilising "bag in box" container technology. The ISO-Veyor segment provides intermodal logistics and storage solutions for movement of dry bulk materials using our own patented container technology. In this segment we also offer opportunities for customers to purchase or rent this container technology. The ISO-Veyor segment is less than 10% of Group revenue, operating profit and assets, so is included in "others".

Inter-segment transfers or transactions are entered into under the normal commercial terms and conditions that would also be available to unrelated third parties.

Unallocated expenses relate to expenditure on the entity as a whole and are controlled by head office through their strategic decision making process.

3.   Exceptional items

The current year includes the following exceptional items:

Exceptional charges of £34,341,000 (2013: £15,146,000) have been recorded in the year. £32,300,000 of these charges relate to the impairment of goodwill in Dry Bulk.

The exceptional administration charge of £2,041,000 in the year ended 30 September 2014 reflects accruals for liabilities identified in respect of certain historic commercial transactions (£946,000) and also a redundancy and reorganisation programme, primarily in the Dry Bulk European workforce (£1,095,000).  This phase of reorganisation is in light of the current trading environment in Europe which has seen lower activity levels. These charges are exceptional in scale and nature and accordingly are shown as exceptional on the face of the Income Statement.

In the year ended 30 September 2013, exceptional charges of £15,146,000 were recorded. £14,600,000 of these charges relate to the impairment of goodwill in Dry Bulk (£10,700,000) and Iso-veyor (£3,900,000). The remaining balance related to re-organisation costs (£652,000), property write-down (£173,000) net of a gain on sale of CleanCat Technologies business (£279,000 gain).

4.   Finance expenses

5.   Taxation

Taxation

The tax charge for the year was £2.1m (2013: £0.7m).  Our European businesses are subject to corporation tax rates of 23% to 30%, Americas 39% and Asia 17% to 25%.  The blend of profit before tax, with no significant differences in tax treatment, means that 25% (2013: 27%) is considered a reasonable recurring effective tax rate on underlying profits. The actual tax charge in the year is higher than this estimated annual effective rate of tax due to the finalisation of tax filing positions from the prior years and reassessment of deferred tax assets which in combination amount to £1.1m (2013: £0.2m). There is no current or deferred tax effect from the goodwill impairment provision of £32.3m.

6.   Earnings per ordinary share

The basic earnings per share is calculated by dividing the profit/loss for the financial year attributable to shareholders by the weighted average number of shares in issue. In calculating the diluted profit/loss per share, warrants outstanding were taken into account in the year to 30 September 2013. These warrants expired in the year to 30 September 2014, therefore the dilution calculation is no longer applicable.

InterBulk Group plc assesses the performance of the Group by adjusting earnings per share, calculated in accordance with IAS 33, to exclude exceptional items and intangible asset amortisation and believes that the exclusion of such items provides a better comparison of business performance. The calculation of earnings per ordinary share on a basis which excluded exceptional items and amortisation of intangible assets is based on the following adjusted earnings:

7.   Cash flow from operations

8.   Analysis of Group net debt

9.   Principal risks and uncertainties

The management of the business and execution of the Group's strategy is subject to a number of risks. The most important risks are set out below and are reviewed regularly by the Board with appropriate processes put in place to monitor and mitigate the risks. A risk register is maintained and is reviewed and discussed at each Board meeting. Our internal controls and audit activities are targeted at the management of these risks.

Major Environmental or Safety Incident

InterBulk is responsible for arranging the storage and movement of hazardous chemicals. Apart from the immediate consequences of a major incident where we may be found to be at least in part responsible, there could be reputational impact. InterBulk is committed to operate at high safety and environmental standards worldwide. Health, Safety and the Environment is a critical part of the Board agenda with a comprehensive report being tabled at each Board meeting. Rigorous procedures are cascaded throughout the Company and to our partner organisations. Our fleet has appropriate engineering standards in place including statutory testing and is well maintained. Our third party logistics trucking service providers for the movement of hazardous cargo are assessed according to CEFIC's SQAS (safety and quality assessment system). We are appropriately certified for all of our activities and members of the chemical industry Responsible Care™ program plus have a 24/7 emergency response capability.

Loss of major customer

InterBulk operates in a competitive and fluid marketplace. Given the current tough economic environment, our customers are focused on their cost base including their footprint of sites and manufacturing plants and their logistics expense. In response to this, we maintain a broad customer base, with currently no single customer with more than 7% of our annual revenue. We also mitigate the risk by establishing strong relationships with our customers, developing tailor-made and value-creating solutions and delivering excellent service performance while being cost competitive in the day to day business. We carefully monitor the financial condition of, and our exposure to, high risk accounts.

Dry Bulk Business Evolution

By far the largest part of our dry bulk business serves European polymer producers. They have faced rising imports from regions with feedstock advantages (principally the Middle East) and tough competition in their export markets. As a result a number of European production plants where we have supplied logistics services have closed resulting in lost business. We have taken strong action during the year to reduce overheads, lower the cost of procured services and identify efficiency improvements. We have also reduced the size of the fleet.

Our efforts to grow the use of "bag-in-box" dry bulk solutions for the storage and movement of other products (such as food) and in other geographies have not achieved the expected results and further investment in these initiatives will be limited until a profit recovery has been achieved in the core European activity base.

Legislation and regulatory risk

Our business is regulated regarding safety procedures, equipment specifications, transportation protocols, employment requirements, environmental procedures and other operating issues and considerations. These laws and regulations are constantly subject to change. The costs, including the risk of equipment obsolescence, associated with the impact of changes could adversely impact the results of our operations. To help mitigate the risk of adverse impact from legislative or regulatory changes the Group participates with and lobbies the relevant organisations and bodies. We are active members in trade associations such as ECTA (European Chemical Transportation Association).

In addition, Antitrust and Bribery legislation carry major penalties and reputational damage for transgressors. We already have in place policies, communication and training to ensure each of our employees in all of our operating locations understand and comply with such regulations. We regularly refresh this process to keep abreast of changes and best practice.

Loss of staff in key positions

Many organisations, and InterBulk is no exception, are exposed to the risk of losing key staff because of the importance of relevant operational experience and the value of customer relationships. We seek to mitigate this risk through strong and effective leadership and dialogue with a clear communication of strategy and the importance of each individual role. The Board reviews human resource matters at each Board meeting and has an annual review of the HR strategy and its implementation, and the succession plan for the executive board members and their key staff. We provide a wide range of opportunities for training and development and have open communication with management and employees.  We are introducing an electronic appraisal system to enhance the feedback and objective setting for all staff. This electronic basis will also allow global employee opinion surveys to be completed in an efficient manner.

IT systems failure

InterBulk uses IT systems extensively for business execution, control and reporting, and also for connections with our customers and suppliers and therefore a system failure risk exists. The Group has appropriate business continuity procedures in place in the event of interruption arising from an IT systems failure. We are currently in the final stages of a roll out of a common ERP platform which is developed in-house and tailor-made, and based on that used successfully in the Dry Bulk business for a long period.  This will give all of the fGroup access to an industry leading set of tools to operate the business. The importance of this project and the specific risks of such an implementation mean that progress is reviewed at each Board meeting. Given our reliance on the in-house software post implementation we have commissioned an independent audit of the software architecture and coding.

Access to capital

The bank facility which is provided on a 50/50 basis between Bank of Scotland and Rabobank expires on 30 September 2016. The Group is forecasting that it will be able to continue to operate within the funding available under these facilities and meet all interest and capital repayments as they fall due through to that date. The Group's banking facilities are subject to a number of financial covenants which the Group monitors closely and has complied with throughout the year to 30 September 2014. These covenants include interest cover, cash cover and leverage ratios on a last twelve month basis at each quarter end.

The debt values used in the covenants are revalued at each quarter end based on pre-agreed fixed exchange rates, whilst the majority of our interest expense is fixed via interest rate SWAP agreements.  This means the Group's most variable metric is the last twelve months' EBITDA. The Directors believe that the financial covenants for the remaining term of the facilities, which have been adjusted to take into account current and forecast trading results, provide an adequate level of headroom under sensible downside scenarios for the foreseeable future and expect, therefore, to be able to continue to meet these covenants.

To align our facilities to the strategic needs of the business, and to ensure that we have new lasting facilities in place by the time of approval of  next year's Group annual accounts , the Group will be seeking to refinance existing borrowings by 31 December 2015. A successful outcome to the refinance in 2015 is not without challenges and can be influenced by the economic and credit market conditions at that time plus both historic and forecast financial performance. The Group's indebtedness and availability of finance remains an area which the Board monitors closely and the Group will focus on operational and financial strategies in 2015 which will aim to achieve a sound outcome for all stakeholders.   

Financial risk management

In relation to foreign exchange, a large proportion of our transactions (sales and purchases) are made in currencies other than sterling (principally Euro and USD) and our own cost base is also multi-currency. In addition, our customers' businesses are also affected by changes in inter-regional competitiveness driven by exchange rate fluctuation. We seek to match currency inflows and outflows, so far as is possible, to mitigate the transactional risk.  We have a strategy of using short-term forward contracts to help mitigate residual foreign exchange risk post our natural hedging. This would involve Euro and USD forward contracts being used for no longer than 6 months and for less than 75% of our expected currency surplus. A substantial proportion of our net assets are also denominated in non-sterling currencies and the Board has approved that we denominate a significant part of our bank debt in EUR and USD to provide a mitigation of this translational risk.

Despite LIBOR rates being low the Board still considers it to be prudent to hedge the interest rate risk on a significant part of our debt. Interest rate SWAP agreements exist which fix the interest rates on our Term B bank loans until 30 September 2015.

10. Availability of Accounts

Copies of this announcement will be available from 1 Redwood Crescent, East Kilbride, Glasgow, G74 5PA and on the Company's website, . Copies of the full Report and Accounts for the year ended 30 September 2014 are being sent to shareholders.  Further copies will be available from 1 Redwood Crescent, East Kilbride, Glasgow, G74 5PA and on the Company's website