Trading Statement

DouglasBay Capital plc (AIM: DBAY)

Pre-Close Trading Update

DouglasBay Capital plc ("DBAY" or "the Group"), the investment holding company with a focus on active value investments, is pleased to provide the following trading update. The full year results for 2009 will be announced by the end of April 2010.

TDG

TDG ("the Company”), DBAY’s first major investment, is performing well in a very difficult economic environment for the logistics sector in particular. The Company's management team, led by CEO Mike Branigan, addressed the difficult environment early on by implementing rigorous cost controls and repositioning the company as a European leader in specialised logistics and freight forwarding. As a result of these measures, TDG maintained its underlying operating profits on an absolute like-for-like basis (i.e. before restructuring costs and sale & leasebacks) despite a 10% decline in turnover caused by the recession. This is an outstanding achievement and compares favourably with the Company's peers.

The Company is now reorganised by capabilities into four main business units: Freight Forwarding, Contract Logistics, Transport and Bulk Liquid Storage. The diversified nature of TDG’s operations, its integrated business model from Freight Forwarding & 4PL to Contract Logistics, together with the balanced business mix of open/closed-book contracts and the broad customer base, has reinforced the resilience of the business model. With a flatter management structure the business is now able to be more responsive to customer needs whilst still maintaining high quality service and health & safety standards. This approach enabled TDG to secure in 2009 new contracts with customers including Weetabix, Henkel, The Entertainer and UPC. A consistent focus on deepening existing customer relationships has led to a strong development pipeline with attractive growth opportunities. As a consequence, the business is now well positioned as a European market leader in specialised logistics and freight forwarding and good progress continues to be made in expanding operationally into Eastern Europe.

The Group's investments each have their own management team and their own separate financial structure as stand-alone businesses. During 2009, TDG’s financial position has strengthened substantially with half of the bank debt taken on by the Company at the time of the acquisition repaid on the back of strong operational cash flows and property disposals.

DouglasBay Property Group

DouglasBay Property Group (“DBPG”) was established during 2009 to create value through the active management of the Group’s property portfolio. DBPG currently owns and manages two development properties – a 125 acre site in West Hallam and an 11 acre site in Carnforth (both assets were previously held within TDG). DBPG is also working closely with TDG to manage the 130 sites occupied by the business in order to add value to the TDG operating company and create value for shareholders from the realisation of its real estate assets (over £40m was raised from disposals during 2009 which was used to repay Group debt).

Minority investments and new investments

Further disposals of DBAY’s listed minority investments were made, which although immaterial in terms of value for the Group, are in line with the plan to liquidate the legacy portfolio.

Financial position

The Group consolidated financial position is robust with a considerable proportion of debt repaid during the year. Further deleveraging is planned in 2010 from property disposals and operating cash flow from TDG.

Outlook

Management firmly believes that following its repositioning TDG is now well placed to take advantage of improving economic conditions and slowly recovering trading volumes.

The DBAY management team continues to examine new investment opportunities; however in 2009 the key focus has been on the current investment portfolio. As new investment opportunities arise, these will be financed through a combination of existing resources, debt and new equity.

Alex Paiusco, CEO of DBAY, said: “2009 has been a very challenging period for the Group, but the management teams of our investee companies did a terrific job in adapting to the turbulent market conditions and repositioning their operations accordingly. The results speak for themselves. The outlook for DBAY’s investments in 2010 is strong. Our priorities for 2010 are to continue to grow TDG, further deleverage the Company to create value for shareholders and raise funds to apply our experience and expertise to new investments.”

Geoff Bicknell, CFO of DBAY, said: "We are very pleased with the cash generation profile of the group which underpins the deleveraging strategy. Further cash is being raised from property disposals. This will allow the Group to further deleverage, pursue an accelerated investment programme for TDG, as well as consider new investment opportunities and capital return policies to shareholders.”

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

DouglasBay Capital plc  Alex Paiusco, Chief Executive Tel: 01624 690900
Geoff Bicknell, Chief Financial Officer  Tel: 01624 690900

Tavistock Communications
Simon Compton

Simon Hudson
Tel: 01624 690900 Tel: 020 7920 3150 
 shudson@tavistock.co.uk 
 scompton@tavistock.co.uk
 

KBC Peel Hunt
(Nominated Adviser & Broker)  
Guy Wiehahn
Oliver Stratton
Matthew Tyler (Corporate Broking)
Tel: 020 7418 8900