Exceptional charges push losses at Tiphook to pounds 331m

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The Independent Online
TIPHOOK, the debt-burdened transport leasing group, yesterday announced pre-tax losses of pounds 331.1m in the year to 30 April.

Operating profits of pounds 40.5m were swallowed up by exceptional charges of pounds 295.7m - including pounds 147.4m of goodwill written back from reserves - and net financing charges of pounds 75.9m.

Net debt has halved since the company sold its container operations to Transamerica but is still pounds 512.5m. Shareholders' funds stand at pounds 33.3m.

The company's survival depends on the continued support of its bankers. It said: 'Our heavy debt burden means that we are likely to continue to make losses in the immediate future and it will be vital to stem these losses to secure the group's future.'

The five principal banks have provided facilities until May 1998.

Ian Clubb, finance director of BOC, will succeed Rupert Hambro as chairman next month. He said he would seek to raise margins, reduce costs and improve cash flow.

The company's remaining businesses - trailer and rail wagon rental - made operating profits last year of pounds 19.1m, down from pounds 53m the previous year.

Cost reductions this year will come from the restructuring of the board, ending the lease of a small aircraft and relocation to smaller and cheaper offices.

In February five directors left and the founder, Robert Montague, took a large pay cut when he stepped down as chairman to be chief executive.

Tiphook, which is changing its name to Central Transport Rental Group, is pinning its hopes on recovery in the European economy. It says the fundamental business is of good quality and there are strong growth opportunities.

However, the company has outlined a number of financial risks that could jeopardise its chances of recovery. It is in breach of certain financial agreements with lenders other than the banks.

It said: 'There can be no assurance that any or all of those lenders will grant waivers in respect of actual or prospective breaches, with the result that all or substantially all of the group's borrowings could become repayable on demand.'

Tiphook also has a substantial unhedged exposure to the dollar, mainly in respect of US public bonds, and is defending a class action litigation suit in the US.

The shares closed 4p up at 38p.