TDG sets out asset-light route to logistics growth

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TDG is targeting asset-light contract logistics activities, such as 4PL transport management and freight forwarding for future growth, according to Alex Paiusco, chief executive of owner DouglasBay Capital.

TDG produced an underlying operating profit of £12.1m in the first half of 2010, up 39 per cent on last year, while sales were up four per cent at £340m. Underlying EBITDA (before DouglasBay management charges) was £18.9m. The comparable figure for 2009 was £13.9m.

TDG is the first major investment by DouglasBay and Paiusco said: “During the period TDG management, led by Mike Branigan, secured further cost reduction and efficiency savings, while retaining a rigorous focus on customer service and operations excellence. The leaner, more streamlined operating model put in place last year has delivered a step change reduction in non-essential overheads, while simultaneously creating a nimbler and more effective business with a new sense of purpose and clear strategic priorities.

“Attention is now directed on accelerating business growth in specialised contract logistics activities such as 4PL transport management and in freight forwarding, where there is demand from clients for innovative supply chain solutions that deliver substantial cost and service efficiencies. In this context it is pleasing to report another encouraging period for business development, with new business wins above levels achieved at this stage last year and a healthy and developing bid pipeline to underpin the second half and beyond.

“As planned, in the first half TDG’s capital structure was again strengthened through selective property disposals, raising £40.8m to repay Group debt. This more active management of the real estate portfolio remains a key element of our investment case, while also moving TDG further towards a more asset-light business model, in line with standard industry practice.”

Some 80 per cent of bank debt taken on at the time of the acquisition of TDG by DouglasBay  has now been repaid. An additional disposal has been completed in July, for expected net proceeds of £1.4m.

The DouglasBay Property Group, which was set up last year has been tasked with maximising value from TDG’s real estate portfolio, working with TDG to reduce occupancy costs and playing a central role in facilitating and transacting selective disposals. During the period a further four properties previously held by TDG were transferred to DBPG, which now owns and manages 172 acres of logistics real estate.

DouglasBay chairman David Panter said: “Our focus on generating cash is ongoing, as is our pursuit of new investment opportunities. In continuing challenging market conditions, we are confident that our active value investment model positions us well for the future.”

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