Bibby Line Group Reports Improved Trading Performance in Challenging Year

Liverpool-based Bibby Line Group (BLG) has today reported an improved trading performance after one of the most challenging periods in its 200-plus year history.

Accounts to be filed shortly at Companies House show that in the year to 31 December 2017, the diversified group’s continuing businesses returned to profit on an underlying basis. The Group posted an operating profit (before exceptional items) of £0.2m (2016: £6.1m loss) on turnover 11% down at £922.9m (2016: £1,038.3m) from its continuing businesses.

Bibby Financial Services delivered operating profits 28% up, year-on-year. Market conditions in the Marine businesses remained difficult, with low oil prices, low charter rates and reduced investment in the energy sector leading to reduced turnover.

The sale of a number of businesses, principally Bibby Ship Management, GreenAcres and Direct Workforce, in 2016 and early 2017 contributed to reduced Group turnover, while two significant one-off factors had a material impact on the Group’s overall result.

There was an exceptional £114.6m non-cash accounting gain relating to the disposal of the Bibby Offshore division, which continued to report significant trading losses and was transferred to BLG’s bondholders in November 2017. This gain was partially offset by a £47m exceptional charge, including a £36m non-cash accounting write-down, relating mainly to the impact on Costcutter Supermarkets Group (CSG) of groceries wholesaler Palmer & Harvey’s collapse in the same month.

As a result, pre-tax losses in both continuing and discontinued businesses narrowed from £65.6m to £20.0m, while overall net losses at BLG were £15.0m (2016: £59.7m loss).

The Group has continued to invest for the future with targeted investment in Financial Services, Distribution, Costcutter and Garic. In addition, BLG’s Marine business launched Bibby WaveMaster 1 in 2017 (a purpose-built vessel for the deployment of offshore engineers) and has now ordered a second vessel, Bibby WaveMaster Horizon.

Commenting on the results, BLG chairman Paul Drechsler said: “As expected, 2017 was another challenging year for Bibby Line Group and market conditions remain volatile. However, the actions we have taken during the past year have stabilised the Group’s position and the new commercial arrangements we have entered will help us to develop a solid platform for the future.

“Our strategic focus remains on improving financial performance across our portfolio, investing in our businesses, people, and our products to deliver exceptional customer service, and we will take advantage of market opportunities as they arise.”

Since the year-end, there has been a number of significant developments within the Group that have helped stabilise the business. These include:

• The launch of a new strategic supply agreement with the Co-op, providing Costcutter with access to Co-op’s product range, including own-label goods.
• Securing a settlement with the administrators of Palmer & Harvey, including a one-off write-down of £6m owed by P&H and taken in the 2017 accounts.
• Profitable disposal of logistics pooling subsidiary PLS.
• Sale of the ship the MV Shropshire in September 2018.

John Cresswell, who was appointed as CEO of BLG in June 2018 to lead the Group through its next phase of growth and investment, said: “Having succeeded Sir Michael, I’d like to thank him for his support and advice during the transition. I look forward to working with him in his new role on the board as non-executive director.

“With the Group now in an improved position, my priority is to work with the talented teams at Bibby Line Group to build upon the opportunities we are seeing across the portfolio. We have a market leading international business in Bibby Financial Services, great opportunities to grow our Marine businesses, Garic is well placed to significantly increase its market share and we are focusing on developing our transport business, investing in new technology and colleague engagement in a fast-changing market.”

Commenting on the recent settlement with P&H administrators PwC, John Cresswell added:

“We are pleased to report that CSG has now closed the chapter on ’Palmer & Harvey’ with all outstanding matters relating to the collapse of P&H resolved. We have continued to support the business throughout and are optimistic about the benefits of the new supply deal with the Co-op.

“The business is now focussed on growing sales by delivering the best retail offer in the convenience sector. The benefits of the Co-op supply deal are already being seen with excellent levels of availability and retailers reporting positive shopper response to the new range, especially as the Co-op Own Brand products come into CSG stores.”

John Cresswell concluded: “With no debt at Group level and the transfer of the Offshore business completed, BLG is in a good position to focus on our existing portfolio and improve our performance across all subsidiaries.”

Below is a more detailed breakdown of the results in the continued operations:

• Financial Services – Bibby Financial Services, which provides invoice, trade and asset finance to 10,000 small and medium sized businesses globally, enjoyed another year of continued growth and investment. Revenues rose by 7% to £168m (2016: £157m) and operating profits were 28% higher at £23m (2016: £18m).
• Distribution – Bibby Distribution, the logistics and warehousing services business – which operates from 70 locations with over 1,800 staff and 2,100 trucks and trailers – reversed a recent sales decline, delivering flat turnover of £191m and an operating profit of £0.5m (2016: £2.1m).
• Retail (CSG) – Costcutter posted sales of £512m (2016: £628m) and a lower operating loss before exceptional items of £7m (2016: £11m loss). The business was significantly impacted by supply issues resulting from the collapse of P&H, its main wholesale partner, resulting in exceptional charges of £42m including a non-cash goodwill impairment charge of £35.9m.
• Marine – BLG’s Marine services business was affected by low market rates and utilisation levels. Turnover was £21m (2016: £32m) while the operating loss before exceptional items was £11m (£4m). Bibby WaveMaster 1 was delivered on time and on budget in September and now supports gas field maintenance. Bibby WaveMaster Horizon is now in production for 2019 delivery following her sister vessel’s success.
• Garic – Garic, the Group’s specialist plant and site equipment business, had a strong year, driven by an increased share of its core road, rail and infrastructure contractor markets. A refinancing has also reduced annual debt servicing costs and improved liquidity.