FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF FEBRUARY, 2002
CENARGO INTERNATIONAL PLC
(Translation of registrant's name into English)
Puttenham Priory
Puttenham
Surrey GU3 1AR
United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.
Yes No X
--- ---
INFORMATION CONTAINED IN THIS FORM 6-K REPORT
Set forth herein is Cenargo International Plc's quarterly report for
the period ended December 28, 2001 containing a Management's Discussion and
Analysis of Financial Condition and Results of Operation and Unaudited
Consolidated Financial Statements.
CENARGO INTERNATIONAL PLC
QUARTERLY REPORT
DECEMBER 28, 2001
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Cenargo, an English company, is a diversified international transportation
group specializing in European freight and passenger ferry services,
international ship owning and chartering, the movement of surface and
airfreight and the management of freight logistics.
RESULTS OF OPERATIONS
Three months ended December 28, 2001 compared to three months ended
December 31, 2000.
OPERATING REVENUES
Operating revenues increased in the first quarter ended December 28, 2001
(the `2001 quarter') by 0.9 million pounds sterling to 30.9 million pounds
sterling compared to 30.0 million pounds sterling in the first quarter
ended December 31, 2000 (the `2000 quarter'). This increase was comprised
of a 0.5 million pounds sterling increase in ferry service revenues and a
0.4 million pounds sterling increase in logistics and other revenues. The
increase in ferry service revenues was mainly due to improved volumes and
rates particularly in the Ferrimaroc service. The increase in logistics and
other revenue was mainly due to the increased volume following the increase
in the Company's warehousing capability.
OPERATING EXPENSES
Vessel and other operating costs decreased in the 2001 quarter by 1.6
million pounds sterling to 23.5 million pounds sterling compared to 25.1
million pounds sterling in the 2000 quarter. This mainly resulted from the
purchase of Lagan and Mersey Viking in March 2001 and the resultant
reduction in charter hire costs which more than compensated for the actual
operating costs of the vessels now owned.
Depreciation for the 2001 quarter has increased by 0.2 million pounds
sterling to 2.1 million pounds sterling compared to 1.9 million pounds
sterling in the 2000 quarter. This is principally due to the acquisition of
the Lagan and Mersey Viking in March 2001.
Amortization of drydocking for the 2001 quarter decreased by 0.2 million
pounds sterling to 0.3 million pounds sterling from 0.5 million pounds
sterling in the 2000 quarter mainly due to the incidence of drydockings and
the lower cost of drydocking the Company's fleet because of the inclusion
of several new vessels.
General administrative expenses for the 2001 quarter increased by 0.3
million pounds sterling to 2.2 million pounds sterling compared to 1.9
million pounds sterling in the 2000 quarter primarily due to increased
staffing levels in the logistics business and ferry operations.
Foreign exchange gain for the 2001 quarter has increased by 0.2 million
pounds sterling gain mainly as a result of more favourable exchange rates.
Primarily as a result of these developments the total operating expenses
decreased by 1.5 million pounds sterling to 28.3 million pounds sterling
for the 2001 quarter compared to $29.8 million for the 2000 quarter.
NET OPERATING INCOME
As a result of the foregoing factors, net operating income increased by 2.4
million pounds sterling to 2.6 million pounds sterling for the 2001 quarter
compared to 0.2 million pounds sterling for the 2000 quarter.
OTHER INCOME/EXPENSES
Interest income decreased by 0.1 million pounds sterling in the 2001
quarter to 0.1 million pounds sterling compared to 0.2 million pounds
sterling in the 2000 quarter mainly as a result of lower interest rates.
Interest expense increased by 0.5 million pounds sterling in the 2001
quarter to 3.6 million pounds sterling compared to 3.1 million pounds
sterling in the 2000 quarter. This mainly resulted from the financing of
the Lagan and Mersey Viking acquired in March 2001.
NET INCOME (LOSS) BEFORE INCOME TAXES
As a result of the foregoing, net income increased by 1.7 million pounds
sterling to a net loss of 0.9 million pounds sterling for the 2001 quarter
compared to a net loss of 2.7 million pounds sterling for the 2000 quarter.
EBITDA generated was 5.3 million pounds sterling for the 2001 quarter
compared to 3.0 million pounds sterling for the 2000 quarter.
LIQUIDITY AND CAPITAL RESOURCES
Total shareholders equity at December 28, 2001 was 23.0 million pounds
sterling compared to 23.6 million pounds sterling at December 31, 2000. The
decrease of 0.6 million pounds sterling is mainly attributable to a net
income for the twelve months of 0.6 million pounds sterling less an
accumulated other comprehensive income adjustment of 1.2 million pounds
sterling mainly relating to currency translation and fair value of
derivative adjustments.
Long term debt at December 28, 2001 consisted of $172.7 million of 9 3/4%
First Priority Ship Mortgage Notes. Sterling equivalent 116.4 million
pounds sterling.
At December 28, 2001 the Company had cash and cash equivalents of 9.2
million pounds sterling compared with 8.5 million pounds sterling at
December 31, 2000. Of the 9.2 million pounds sterling at December 31, 2001
3.1 million pounds sterling is held in escrow mainly as collateral in
connection with the operating lease for RoPax 4 ("Midnight Merchant").
After taking into account the semi-annual interest payment on the Notes of
$8.5 million in December 2001, the Company's free cash at December 31, 2001
was 6.1 million pounds sterling.
SEGMENT ANALYSIS
IRISH SEA
All of the Company's four services on the Irish Sea performed strongly
during October and November 2001 with the normal fall off in volumes in
December for Christmas and New Year. The Heysham Belfast service operated
with three vessels compared to the same quarter in the previous year.
The ETU's (equivalent trailer units) carried during the quarter were as
follows:
LIVERPOOL - BELFAST 30,918
LIVERPOOL - DUBLIN 29,235
HEYSHAM - BELFAST 27,266
HEYSHAM - DUBLIN 15,789
Work is progressing well on the Liverpool river berth and we expect the
first of the two heads to be operational in May 2002 and the second head in
August 2002.
The Company increased rates for all of its customers. Generally speaking
these have been accepted without too much loss of business. Despite
significant competition we expect the overall increase to be approximately
3% which should improve results from March 2002 onwards.
LOGISTICS
The logistics' division results for October were adversely affected by the
start up costs associated with new warehouses leased in the Midlands
(Milton) and Heathrow (Heston).
FERRIMAROC
Ferrimaroc, the passenger, car and freight service operated by the Company
between Southern Spain and Eastern Morocco, has had a better quarter than
last year since the summer. An agreement has been reached with the
competitor pool to operate a joint sailing program during the winter
season. As a result, the Company's losses have been significantly less than
budgeted. Market share in January 2002 was over 52% Southbound and over 59%
Northbound.
SHIPOWNING AND CHARTERING
EBITDA of 0.8 million pounds sterling includes 1.3 million pounds sterling
from the chartering out of vessels, less Head Office costs of 0.5 million
pounds sterling.
EUROPEAN MONETARY UNION - EURO
On January 1, 1999, eleven member countries of the European Union
established fixed conversion rates between their existing sovereign
currencies, and adopted the Euro as their new common currency. The Euro is
currently trading on currency exchanges and the legacy currencies will
remain legal tender in participating countries for a transition period
between January 1, 1999 and January 1, 2002. During the transition period,
non-cash payments can be made in the Euro and parties can elect to pay for
goods and services and transact business using either Euro or a legacy
currency. Between January 1, 2002 and July 1, 2002 the participating
countries will introduce Euro notes and coins and will withdraw all legacy
currencies so that they will no longer be available.
Although the United Kingdom is currently not participating in the Euro, the
Company's businesses trade extensively within the Euro Zone. The Company
will continue to evaluate all pricing, currency risk, accounting, tax,
governmental, legal and regulatory issues as guidance becomes available.
Based on current information the Company does not expect that Euro
conversion will have a material adverse affect on its business or financial
condition.
FORWARD LOOKING STATEMENTS
This release contains forward looking statements (as defined in Section 21E
of the Securities Act 1934, as amended) which reflect management's current
views with respect to certain future events and performance, including
statements relating to multi-purpose vessel charters and Irish sea freight
ferry volumes and rates, logistics and cash. The following factors are
among those that could cause actual results to differ materially from the
forward looking statements, which involve risks and uncertainties, and that
should be considered in evaluating any such statements: changes in the
political environment in Northern Ireland and Eire, Spain and Morocco,
changes in the level of competition in the Irish Sea and Mediterranean,
changes in the ability to provide a regular scheduled service on the Irish
sea and the company's Mediterranean service.
Unaudited Consolidated Statements of Income
Three Months Ended December 28, 2001, 2000
(Expressed in pounds sterling 000)
2001 2000
OPERATING REVENUES
Charterhire income 3,939 3,867
Ferry service income 20,664 20,243
Logistics and other income 6,297 5,901
--------------------
30,900 30,011
OPERATING EXPENSES
Vessel and other operating costs 23,513 25,124
Depreciation 2,087 1,927
Amortization of drydocking 325 563
Goodwill amortization 296 303
General and administrative exps 2,290 1,929
Foreign exchange (gain) loss (171) (35)
--------------------
28,340 29,811
OPERATING INCOME 2,560 200
OTHER INCOME (EXPENSE)
Interest income 78 190
Interest expense (3,585) (3,088)
Gain on disposal of assets - 2
--------------------
(3,507) 2,896
INCOME (LOSS) BEFORE INCOME TAXES (947) (2,696)
Income taxes 284 950
Minority Interests - -
NET INCOME (LOSS) (663) (1,746)
--------------------
ADDITIONAL FINANCIAL INFORMATION
EBITDA 5,268 2,995
EBITDA to interest expense, net 1.5x 1.0x
Unaudited Consolidated Balance Sheets
As of December 28, 2001, 2000
(Expressed in pounds sterling 000)
2001 2000
ASSETS
CURRENT ASSETS
Cash and cash equivalents 6,096 5,397
Cash held in escrow and blocked deposits 3,124 3,124
Trade accounts receivable 21,460 20,560
Other receivables 1,378 2,145
Due from joint ventures - 7
Inventories 636 1,090
Prepaid expenses and accrued income 3,780 3,445
---------- ----------
36,474 35,768
Land and buildings 11,539 11,891
Vessels and equipment 131,654 91,281
Loans to joint ventures 2,728 2,487
Other investments 1 352
Goodwill, net 19,286 20,403
Deferred charges, net 5,444 6,991
Pension fund debtor 3,659 3,467
---------- ----------
Total assets 210,785 172,640
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt 4,317 836
Capital lease obligations 882 257
Trade accounts payable 6,644 11,370
Accrued expenses 5,767 4,277
Accrued interest - ship mortgage notes 619 507
Other creditors 4,413 2,063
---------- ----------
22,642 19,310
LONG-TERM LIABILITIES
Long-term debt 37,601 2,867
Ship mortgage notes 116,411 115,645
Capital lease obligations 595 1,292
Other creditors 329 204
Deferred taxation 10,230 9,749
---------- ----------
Total liabilities 165,166 149,067
---------- ----------
SHAREHOLDERS' EQUITY
Share capital 12 12
Accumulated other comprehensive income:
cumulative translation adjustment (391) 859
Retained earnings 23,356 22,702
---------- ----------
Total shareholders' equity 22,977 23,573
---------- ----------
Total liabilities and shareholders' equity 210,785 172,640
---------- ----------
Unaudited Consolidated Statements of Cash Flows
Three Months Ended December 28, 2001, 2000
(Expressed in pounds sterling 000)
2001 2000
OPERATING ACTIVITIES
NET INCOME (LOSS) (663) (1,746)
Amortization of drydocking 325 563
Accumulated other income (including foreign
exchange gain) (2,695) (401)
Depreciation & fixed assets and deferred charges 2,087 1,927
(Gain) loss on disposition of fixed assets - (2)
Goodwill amortization 296 303
(Increase) decrease in trade debtors (1,201) (988)
(Increase) decrease in other debtors 2,045 (4,165)
(Increase) decrease in stock 204 (63)
(Increase) decrease in prepayments and accrued
income 4,476 3,561
Increase (decrease) in trade creditors (4,160) 5,204
Increase (decrease) in other creditors 1,097 (2,886)
Increase (decrease) in accrued expenses (4,856) (1,778)
Increase (decrease) in deferred tax liability (284) (950)
Increase in deferred charges (414) -
---------- ----------
Net cash (used) in operating activities (5,041) (1,421)
---------- ----------
INVESTING ACTIVITIES
Additions to vessels and equipment (557) -
Additions to vessels under construction - -
Additions to land and buildings - -
Purchase of subsidiary companies, net of
cash acquired - -
Proceeds from sale of capital assets - 2
---------- ----------
(557) 2
---------- ----------
FINANCING ACTIVITIES
Proceeds from long-term debt - -
Repayment of long-term debt (945) -
Due to joint ventures (84) 372
Repayments of capital leases (13) (469)
---------- ----------
(1,022) (97)
Net increase (decrease) in cash and
cash equivalents (5,592) (1,516)
Cash and cash equivalents at beginning of period 14,812 10,037
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 9,220 8,521
---------- ----------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 2001, 2000
1. INTERIM ACCOUNTING POLICY
In the opinion of management of Cenargo International Plc (the
"Company") the accompanying unaudited consolidated financial
statements include all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly in accordance with
accounting principles generally accepted in the U.S. the financial
position of the Company and the results of operations and cash flows
for the three months ended December 28, 2001 and December 31 2000.
Although the Company believes that the disclosure in these financial
statements is adequate to make the information presented not
misleading, certain information and footnote information normally
included in interim financial statements prepared in accordance with
generally accepted accounting principles has been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for the three months ended December
28, 2001 and December 31, 2000 are not necessarily indicative of what
operating results may be for the full year.
2. CHANGES IN SHAREHOLDER'S EQUITY
Accumulated other Ordinary
comprehensive share Retained
income capital earnings
---------- ---------- ----------
(amounts in pounds sterling 000)
Balance at September 30, 2001 (391) 12 24,019
Net income (loss) - - (663)
---------- ---------- ----------
Balance at December 28, 2001 (391) 12 23,356
========== ========== ==========
b)
Balance at September 30, 2000 1,041 12 24,448
Net income (loss) (182) - (1,746)
---------- ---------- ----------
Balance at December 28, 2000 859 12 22,702
========== ========== ==========
3. CONTINGENT LIABILITIES AND ASSETS
(a) The company insures the legal liability risks for its shipping
activities with the Steamship Mutual, UK Mutual and North of
England mutual protection and indemnity associations. As a member
of mutual associations, the company is subject to calls payable
to the associations based on the company's claims record in
addition to the claims record of all other members of the
associations. A contingent liability exists to the extent that
the claims records of the members of the associations in the
aggregate show significant deterioration which result in
additional calls on the members.
(b) The Company has entered a claim for damages in the amount of
Spanish Pesetas 3,800,000 against Ministeria de Comunicaciones,
Transportes y Medio Ambiente now Ministreria De Fomento relating
to the company being prevented from operating a ferry service
between Spain and Morocco. The Company continues to pursue the
case. The Company under an agreement with the Spanish Government
has received two billion pesetas on delivery of RoPax three and
four as partial settlement of the claim.
4. SEGMENT INFORMATION
The Company has adopted FASB Statement No. 131, "Disclosures about
Segments of Business Enterprise and Related Information". The Company
is managed in four operating segments: Ship owning and Operating,
Irish Sea Ferries, Ferrimaroc and Logistics and Other Activities. The
Shipowning and Operating segment includes certain central overhead
costs, central financing costs and other general corporate income and
expenditure.
The Company utilises EBITDA as a measure of segmental performance. The
Company defines EBITDA as net income (loss) before taxes, interest
expense, interest income, depreciation, provision for impairment in
value of vessels, amortization of dry-docking and special survey
costs, amortization of goodwill, gain or loss from joint ventures and
minority interest.
Certain financial information is presented below: amounts are in
thousands of pounds Sterling
Shipowning
and Irish Sea Logistics
Chartering Ferries Ferrimaroc and Other Total
---------- ---------- ---------- ---------- ----------
Three Months to December 28, 2001
Revenue 3,939 18,463 2,200 6,298 30,900
EBITDA 855 4,296 89 28 5,268
Tangible assets 8,552 119,529 9,769 5,343 143,193
Capital expenditures - 254 - 303 557
Three months to December 31, 2000
Revenue 3,867 18,639 1,604 5,901 30,011
EBITDA 707 2,262 (343) 369 2,995
Tangible assets 4,059 82,349 10,833 5,931 103,772
Capital expenditures - - - - -
EBITDA for all reportable segments differs from consolidated income
(loss) before income taxes reported in the consolidated statements of
income as follows: amounts are in thousands of US Dollars:
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 28, 2001, 2000
4. SEGMENT INFORMATION (CONTINUED)
Three months Ended December 28
2001 2000
---------- ----------
EBITDA 5,268 2,995
Reconciling items:
Depreciation (2,087) (1,927)
Amortization of goodwill (296) (303)
Amortization of drydocking (325) (563)
Net interest expense (3,507) (2,898)
---------- ----------
(Loss) income before taxes (947) (2,696)
---------- ----------
FLEET LIST AT DECEMBER 28, 2001
Year
Vessel Name (FN) Vessel Type Capacity Built Flag
- ------------------ ---- --------------- ------------------- ----- ----------------------
MERCHANT BRAVERY C RoRo 40 cars 1978 Bahamas
100 trailer units
MERCHANT BRILLIANT C RoRo 40 cars 1979 Bahamas
100 trailer units
MERCHANT VENTURE C RoRo 55 trailer units 1979 British (Isle of Man)
RIVER LUNE C RoRo 49 cars 1983 Bahamas
93 trailer units
SAGA MOON C RoRo 50 cars 1984 British (Gibraltar)
72 trailer units
MISTRAL C Passenger/Car 2,386 passengers 1981 Bahamas
Ferry 700 cars
SCIROCCO C Passenger/Car 1,315 passengers 1974 Bahamas
Ferry 296 cars
30 trailer units
DAWN MERCHANT C RoPax 250 passengers 1998 British (Isle of Man)
136 trailer units
BRAVE MERCHANT C RoPax 250 passengers 1999 British (Isle of Man)
136 trailer units
NORTHERN MERCHANT * RoPax 250 passengers 2000 British
136 trailer units
MIDNIGHT MERCHANT * RoPax 250 passengers 2000 Bahamas
136 trailer units
LAGAN VIKING RoPax 330 passengers 1997 Italian
180 trailer units
MERSEY VIKING RoPax 330 passengers 1997 Italian
180 trailer units
<FN>
C Collateral vessel securing 9 3/4% Ship Mortgage Notes
* Operated under an operating lease.
</FN>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CENARGO INTERNATIONAL PLC
(registrant)
Dated: February 26, 2002 By: /s/ Michael Hendry
------------------------
Michael Hendry
Chairman