PD Ports plc: Announcement of admission to AIM and commencement of dealing

PD Ports PLC
12 July 2004

12th July 2004

PD PORTS PLC

ANNOUNCEMENT OF ADMISSION TO AIM AND COMMENCEMENT OF DEALING

PD Ports plc ('PD Ports'), a leading UK port and port services business, today
announces the admission of its ordinary shares and convertible bonds to the
Alternative Investment Market (AIM) and the commencement of dealing in its
shares.

•Placing of 122.6 million shares at 100p per share

•Placing of £35.9 million nominal value of 6 per cent. Convertible Bonds
at 100 per cent. of their principal amount

•PD Ports will have a market capitalisation of £175 million (at a placing
price of 100p)

Graham Roberts, Group Chief Executive of PD Ports, commented:

'This is an extremely exciting moment for PD Ports plc. We are coming to the
market at a time when we expect our recent investments in container facilities
and property development, particularly at Hartlepool, to start to deliver
growth.

Our core business continues to generate stable profits and strong cashflow.

Nikko has been an excellent supportive owner of the business since 2000, and we
now look forward to driving PD Ports' next stage of development and to
delivering value to our new shareholders.'

For further information, please contact:

PD Ports plc 01642 877200
Graham Roberts, Group Chief Executive
Paul Daffern, Group Finance Director
Martyn Pellew, Group Development Director

Hawkpoint Partners 020 7665 4500
Adrian Williams
David James

Collins Stewart 020 7523 8350
Kripa Radhakrishnan
Simon Atkinson

Hogarth Partnership 020 7357 9477
John Olsen
Vanessa Orr

NOTES TO EDITORS

1. Introduction

PD Ports plc was incorporated on 24 March 2004 and has acquired the entire
issued ordinary share capital of PD Ports Group Limited, a leading UK port and
port services business, which derives its revenues from Port Operations,
Property and its other businesses.

PD Ports Group owns the Ports of Tees and Hartlepool and acts as its statutory
harbour authority. In addition, the Group operates a series of smaller ports in
the United Kingdom and provides stevedoring and other maritime services.

The Group also manages a substantial property portfolio comprising both
operational property, used for the Group's own docks activities or leased to
third parties, and non-operational property, which Management believe will
continue to provide sale and development opportunities. The most significant
future property development opportunity is the Victoria Harbour Project.

In addition, the Group's other businesses include a logistics division, which
offers a range of warehousing, distribution and freight forwarding services from
its operations in Teeside, Scunthorpe, Felixstowe and elsewhere in the UK, and a
truck and van business, which is a leading approved Mercedes-Benz truck and van
dealership in the UK.

2. Overview of the Group

The Group owns and operates Teesport on the North East coast of England, the
second largest port in the UK by tonnage, and also owns and/or operates ports on
the Rivers Humber, Trent and Ouse and at wharves on the south coast of England.

The principal business operation of the Group is its Port Operations. In
addition, the Group derives a significant proportion of its profits from the
management of operational property owned within the Group and the sale of
residual non-operational property. The Group also operates a series of other
businesses, which include PD Logistics and PD Truck and Van.

Port Operations
Port Operations are the largest single operation within the Group, contributing
approximately 70 per cent. of the Group's EBITDA before central costs for the
financial year ended 31 March 2004. Port Operations consist principally of PD
Teesport and PD Port Services but exclude property rental activities.

PD Teesport
PD Teesport is the statutory harbour authority for Teesport, which is positioned
on the North East coast of England at the heart of the industrial Tees Valley.
Teesport was the UK's second largest port by tonnage with a throughput of 53.8
million tonnes in the year ended December 2003.

Tees Dock is a deep-water facility situated on the south bank of the River Tees
offering lock-free access to four general cargo berths, three Ro-Ro berths and
two Lo-Lo terminals. Hartlepool Docks consists of three general cargo quays and
a Ro-Ro ramp. Teesport has direct links to the UK's motorway network and rail
system. PD Teesport also manages a wide range of docks and pilotage services and
related activities at Tees Dock.

PD Teesport's principal dock activities are:

• general, project and bulk cargo handling and storage at Teesport; bulk
commodities handled include coal, grain, scrap, fertilisers, ores and
minerals and forest products;

• the operation of two Lo-Lo container terminals at Tees Dock, together
with related container storage facilities, handling short-sea and feeder
services to and from the Continent and Baltic region;

• the operation of a major steel export terminal at Tees Dock;

• Ro-Ro ferry facilities at Teesport, which are used for regular ferry
services operated by P&O and by major car manufacturers, Renault and General
Motors; and

• the handling and storage of cars at Teesport, principally for Renault
and General Motors.

As the statutory harbour authority for Teesport, PD Teesport is responsible for
the safe navigation of the 11 nautical miles of the River Tees between Tees Bay
and the Tees Barrage, marking the river channel, dredging of the river and for
vessel traffic control and pilotage (the use of authorised pilots to navigate
vessels along the river). In the performance of these functions it operates
within a regulatory framework principally embodied in the Tees and Hartlepools
Port Authority Act 1966.

In return for carrying out these duties, PD Teesport is entitled to levy
'conservancy' dues on all vessels using the River Tees (including those that do
not use PD Teesport facilities at Teesport) and on the goods they carry. The
dues are published in a tariff and vary based on vessel size and the type of
cargo carried. In practice most major customers pay dues based on negotiated
contracts which are based on volume of goods carried and which may involve a
guaranteed throughput into the port. Pilotage is compulsory for certain
categories of vessel. PD Teesport charges river users for this service and
generates a margin after paying the pilots for their services. The levies and
charges are enforceable under the Harbours Act 1964 and PD Teesport has
statutory powers with regard to their collection.

PD Teesport underpins the growing, defensive nature of the Group's revenue base.
Conservancy and pilotage income, when combined with the Group's Property rental
income, generated approximately 67 per cent. of the Group's EBITDA for the year
ended 31 March 2004.

PD Port Services
PD Port Services provides a wide range of customers with services including
stevedoring, warehousing, road haulage, container handling and shipping and
inspection services.

PD Port Services has three main locations:

• on the River Humber, where it operates Lo-Lo container terminals at Hull
(until December 2004) and Grimsby (until 2011) both under licence from
Associated British Ports Holdings PLC. PD Port Services also provides
general stevedoring, warehousing, distribution and agency services at
Immingham, and operates the small ports of Howden (on the River Ouse) and
Keadby (on the River Trent);

• on the south coast, where it operates two small facilities at Dibles
Wharf (Southampton) and at Cowes on the Isle of Wight; and

• on the River Thames at Erith, where it provides broking, cargo
inspection and chartering services.

Property
The Group has an extensive property portfolio of approximately 943 hectares.
This can be broadly divided into operational property, used predominantly in
Port Operations, and other residual property assets, which are largely occupied
by third party tenants on a long term basis. Of the Group's property portfolio,
a significant majority by area is freehold land.

Operational property
The majority of the Group's operational property is situated at Teesport (where
it owns approximately 283 hectares of land). In total the Group has
approximately three million square feet of warehousing as well as extensive open
space for the storage of cars, steel, bulk products and general cargo.

Other Property assets
The Group's property portfolio includes an estates business generating rental
income from leasing land and buildings to third party tenants at Teesport and at
the Group's other sites on the Tees estuary. Additional rental income is also
derived from property owned by PD Port Services and PD Logistics.

Property related income is also generated from the sale of non-operational
sites. Sale opportunities have previously arisen, and management believe that
opportunities will continue to arise, providing a source of sites which can
either be sold or prepared for future development.

Over the last three years, the Group's management has operated a policy of
identifying and selling surplus properties, mostly for industrial purposes but
with some residential usage. In addition, management has identified a number of
further disposal opportunities both for the near and medium term.

Management believe that the operation of the Group's property portfolio,
including the development and/or sale of non-operational sites, is, and will in
the future be, of increasing significance to the Group and its financial
performance.

Major property development project
A key development project of the Group is the Victoria Harbour Project, the
potential development of a 131 hectare site of the North Docks in Hartlepool
surrounding Victoria Harbour in Hartlepool. The site occupies a prominent
position between the headland area of Hartlepool and West Hartlepool and is
immediately to the north of the town's marina. The proposed development includes
a large proportion of land within the Hartlepool Docks site. In recent years,
Hartlepool Docks have become significantly underutilised to the extent that port
operations carried out there represent a small percentage of overall Teesport
volumes, and could substantially be relocated within a smaller area at the site
or transferred to Tees Dock.

A strategy has been agreed, with the full involvement of the local authorities,
to complete a comprehensive proposal for the development of Hartlepool Docks
into a mixed-use urban scheme and to secure the appropriate planning and other
third party approvals and consents required for the development. The plan for
the site includes the development of approximately 3,000 residential units and
would represent an expansion of the already existing residential development at
the marina. The proportion and timing of the gross value which could accrue to
PD Ports is uncertain and subject to the structure and financing of the
development.

Management believe a gross end value of the Victoria Harbour development could
be in the region of £500m. This gross value represents the final sale value of
completed buildings and developments. The costs of site remediation,
infrastructure, building costs and the like need to be financed out of the gross
value. The financing of the development will be determined by the role which the
Company takes, and the extent to which it acts as developer, or enters into
joint ventures, or sells portions of the development to parties who will perform
development themselves. The net amount which could accrue to the Company will
therefore depend on the amount of those costs and the structure and financing of
the development.

The proposed development plan has been supported by Hartlepool Borough Council,
the Tees Valley Partnership (a strategic body comprising five local authorities
which is engaged in the strategic development of the Tees Valley) and the Tees
Valley Regeneration Company. With the support of these bodies, the Group's
management is proposing to seek public sector funding for civic aspects of the
project from a number of sources, including One North East (which drives
regional economic strategy for the North East region), English Partnerships and
the English Regional Development Fund. Developments of this type can be
structured in a number of different ways with funding provided by a number of
different parties. Management intends that the Group will, in working with
housebuilders and developers, retain a high degree of flexibility with regard to
its business model for the project.

The outline planning application was submitted in June 2004. Subject to full
planning approval and the timely receipt of other third party approvals and
consents, management anticipates that work on the Victoria Harbour project may
commence in 2005.

Other businesses
In addition to its core Port Operations and Property activities, the Group also
operates PD Logistics and PD Truck and Van.

PD Logistics
PD Logistics offers a wide range of supply chain services to customers, some of
whom are connected with Port Operations. PD Logistics provides warehousing,
distribution and freight forwarding services, related to products such as
speciality chemicals, electronics, building materials and household waste for
recycling. The business operates using a fleet of owned and leased vehicles and
approximately one million square feet of warehouse space at Felixstowe,
Billingham, Morpeth, South Shields and Ipswich.

PD Logistics is increasingly moving away from its traditional markets in the
chemical, automotive and steel sectors and is focusing on supply chain
management as well as forging closer links with the Group's ports business.
Recently, a number of contracts in relation to the transportation of household
waste for recycling have been won.

PD Truck and Van
Operating under the name of H&L Garages Limited and having its headquarters at
South Killingholme in North Lincolnshire, PD Truck and Van is one of the leading
Mercedes-Benz truck and van dealerships in the UK, operating through five sales
and service centres located in Boston, Hull, Lincoln, Scunthorpe and South
Killingholme. A new site at York is expected to open in late 2004. PD Truck and
Van sells an extensive range of Mercedes-Benz trucks and vans, from small
commercial vehicles to large heavy trucks, as well as used vehicles. PD Truck &
Van supplies vehicles and provides in-house maintenance services to PD
Logistics.

3. The Group's market and competitive position

PD Ports Group's main asset is Teesport. The Group's key focus for marketing is
to grow business through the port by targeting the companies which ship products
to and from the North East region. PD Teesport already dominates the North East
regional market, as measured by tonnage, with a market share of approximately 90
per cent. The large chemical complex in Teeside generates 36 million tonnes of
exports per annum, mainly from the processing of oil and petrochemicals. In
addition, the Corus TCP plant imports approximately 7.5 million tonnes of iron
ore and coal, which is handled at the Redcar Ore Terminal near the mouth of the
River Tees.

In order to complement the Group's position in the local market, management are
seeking additional growth from other areas. Recent marketing efforts have been
concentrated on growing container volumes and utilising the underutilised areas
of land around Teesport. Management believe that PD Teesport will continue to
grow its revenues as it provides the following key benefits to customers:

• a deep water port, close to the open sea and with no locks;

• excellent direct road and rail connections;

• its location in one of the main industrial centres of the UK, which
includes the main chemical production centre of the UK, resulting in a high
proportion of export volumes;

• the Lo-Lo container terminals which offer an average vehicle waiting
time of less than 30 minutes and which are the only facilities in the North
East of England able to handle Panamax-class ships; and

• ample existing and development land, with limited port-related planning
constraints.

Whilst currently representing only a small percentage of total Teesport volumes,
the major source of growth in the UK ports and shipping industry has for many
years been container handling and carriage, where total volumes have increased
almost fivefold in the last 30 years from approximately 1.5 million teu to
approximately 7.7 million teu in 2003. PD Teesport itself grew container volumes
handled from 34,000 teu in 1999/2000 to 138,000 teu in 2003/2004.

Growth in world container volumes has averaged 1.7 times global GDP growth since
1985, reflecting the effects of globalisation and technological development, and
the increased benefits of standardisation. An increasing amount of products
previously transported in bulk are being containerised. Third party analysts
expect significant further growth in demand for container shipments, for example
Drewry Shipping (in its Annual Container Market Review 2003/04) suggest that
growth in container traffic could be in the order of six per cent. to nine per
cent. per annum over the next ten years.

The advantages of sea versus land transportation for the owners of cargo, for
governments and for environmental lobbies, will lead, management believe, to
increasing tonnages switching to those ports which are closer to their place of
origin or destination. PD Port Group's container volumes have increased by over
300 per cent. over the FY period 2000 to 2004. Furthermore, in the short term at
least, an additional impetus towards Teesport's growth in container volumes can
be expected to result from the difficulties experienced at southern deep sea
ports, where hauliers are experiencing long delays on collection, road and rail
connections at inland terminals are congested and port storage is expensive.

Management believe that there is a potential 1.2 million teu of deep sea traffic
bound to or from the area north of the M62 motorway, which is currently routed
through ports in the South of England but which could switch to Northern ports
which are much nearer the final inland destination. Management is aware that
certain major container lines are considering shifting their strategy in favour
of regional ports due to congestion in the South East of England.

New port developments in the South of England may eventually relieve congestion
at the ports themselves but these projects are subject to long lead times and
environmental and planning constraints; shippers will face significant
disruption and delay for the next few years at least. If new capacity comes on
stream at existing major container ports in the South of England, road and rail
congestion in and around those locations is likely to increase in the absence of
significant enhancements of local infrastructure. The recent Government decision
to deny planning permission for Associated British Ports' Dibden Bay development
illustrates the complex planning, construction and financing issues associated
with major expansion projects in the South of England.

In the longer term, in order to eliminate the customer's transhipment costs, a
deep sea container terminal at Teesport could be built, as Teesport has the
required depth of water and land is available for development. This project
would only proceed subject to reaching agreement with shipping lines/shippers
over contractual terms.

4. The Group's strategy and recent developments

The management team has implemented the following strategy:

• promoting Teesport as a 'Northern Gateway' for deep sea container
movements into and out of the North of England, offering reduced transit
times and more direct access to customers;

• seeking to exploit the unutilised riverside land at Teesport to attract
large new customers; and

• widening the Group's customer base.

The delivery of this strategy has involved:

• investing in improved facilities and infrastructure to attract new
customers;

• strengthening the divisional management teams;

• selling the benefits and the strengths of Teesport to end-customers and
shipping lines;

• seeking to exploit PD Ports Group's substantial land and property bank
through property sales and the development of surplus sites;

• strengthening relationships with local businesses and the community and
generating wider support for new initiatives, such as the Victoria Harbour
Project; and

• re-branding the Group's businesses to give them a common identity and
increased focus on divisional cross-selling.

Specifically, in order to capture the current and expected future growth in
container traffic, PD Teesport has recently invested in doubling total Lo-Lo
container capacity at Teesport to 270,000 teu per annum. Phase 1 of a second
container terminal (TCT2), contributing an additional 135,000 teu of capacity
opened in October 2003. Phase 2 of this new terminal would add a further 130,000
teu of additional capacity.

Management believe that the initial results of the above strategy and
developments are encouraging and are creating considerable interest in the
industry. The arrival of the global carrier CMA-CGM to Teesport in 2003 has
underpinned this view and management expect more carriers to follow.

5. Directors and key management

Brief biographies of the Directors and key managerial staff are set out below:

David Harding, Non-executive Chairman (aged 56)
David Harding has been Finance Director of a number of companies during the
course of his career, including Railtrack plc, Rugby Group plc and T&N plc. He
was appointed Chief Executive of Railtrack Group plc following the decision of
HM Government to place its main subsidiary into Railway Administration. He is
currently Deputy Chairman of Coventry Building Society and a non-executive
Director of Enterprise Inns plc. He is a member of the Institute of Chartered
Management Accountants.

Graham Roberts, Chief Executive (aged 54)
Graham Roberts joined PD Ports Group at the start of 2002. Graham has previous
experience in many forms of logistics and transport. He spent over 25 years at
NFC plc, now known as Exel plc, eight years of which he served on the main
board. More recently, he spent two years as Chief Executive of airports ground
handler Servisair.

Graham subsequently joined MTL as Chief Executive, and was responsible for its
sale to Arriva plc. In 2000 he was appointed as Chief Executive of London Luton
Airport. He joined PD Ports Group as Chief Executive in early 2002. In 2003 he
was Tees Valley Business Executive of the year for his work at PD Ports Group.

Paul Daffern, Group Finance Director (aged 51)
Paul Daffern has been Group Finance Director since July 2002. He was previously
Finance Director at London Luton Airport where he was part of the management
team brought in to restructure the company.

Paul's previous experience is mainly in the automotive and logistics sectors,
having held Finance Director posts within NFC plc, now known as Exel plc, and
Autoglass. His NFC experience from 1980 to 1988 included the role of Group
Finance Director for the distribution group which operated contracts with major
UK retailers and manufacturers.

Paul was employed by Autoglass on two separate occasions, the first as their
European Finance Director (from 1988 to 1991) and then as their UK Finance
Director (from 1998 to 2000). From 1991 to 1995, Paul carried out the role of
Finance Director for the UK Atomic Energy Authority. He was appointed to the
main board on his arrival in 1991 as part of the process of preparing the
commercial activities of the organisation for sale.

Alan Kelsey, Non-executive Director (aged 55)
Alan Kelsey has spent much of his career specialising in the transport sector.
He was a transport equity analyst for a number of years at RBC Dominion
Securities (formerly Kitcat & Aitken), and was subsequently an investment banker
with Smith New Court, Merrill Lynch and, most recently, WestLB Panmure, where he
was a Managing Director responsible for the transport industry group and co-head
of corporate finance. He was group corporate development director of National
Express Group plc from 1996 to 1998. He is currently a non-executive director of
Nord Anglia Education plc and chairman of Kier Baker Holdings Limited.

James Sutcliffe, Non-executive Director (aged 51)
James Sutcliffe has spent his entire working career in the ports and shipping
sector. He is Chairman of John Sutcliffe & Son (Grimsby) Ltd, a shipping agency,
freight forwarding, logistics and stevedoring business. In 1989 he led the
buyout of the Port of Boston as Managing Director, retaining this position until
2000. He additionally became Joint Managing Director of Cleveland Trust plc
following its acquisition of the Port of Boston in 1996. Since 2001 he has been
Chief Executive of DCT Gdansk plc which has signed a 60 year lease contract with
the Polish Government to build and operate a $200 million deep sea container
terminal at Gdansk, Poland.

James Wilding, Non-executive Director (aged 44)
James Wilding joined PD Ports Group in 2000 following the financing of the
acquisition of Powell Duffryn plc by Nikko Principal Investments Limited. He is
a qualified chartered accountant and joined Nikko Principal Investments Limited
in 2000.

He was previously a partner at PricewaterhouseCoopers from 1994 to 2000 where he
had held various audit and corporate recovery positions since 1983.

Key Management

Bob Clarke, Managing Director, PD Logistics (aged 48)
Bob Clarke, Managing Director of PD Logistics, has been with PD Ports Group for
nine years and has extensive experience working within the general industrial,
chemicals and metals sectors.

Bob began his career in logistics with Christian Salvesen plc and subsequently
spent a period in corporate planning with the office equipment manufacturer
Gestetner. He has held Managing Director positions at International Express, a
freight forwarder, and Eleco Distribution Services, a subsidiary of Eleco
Holdings plc, a warehouse specialist.

Bob joined Powell Duffryn plc in 1995 as Managing Director of its logistics
services subsidiary operating for the steel industry. He later took
responsibility for Powell Duffryn plc's distribution division and in 2002 was
appointed to the main board of PD Ports Group as Managing Director of PD
Logistics.

David Easson, Group Property Director (aged 52)
David Easson joined PD Ports Group in November 2002 in the new position of Group
Property Director. David's role is to develop and implement a property strategy
for the Group. In particular, he is involved in the securing of appropriate
consents for the Victoria Harbour Project.

David has extensive property experience. From 1994 to 1999 he was Managing
Director of Rouse Kent Limited, owned by US REIT Liberty Property Trust,
developing a 250 hectare mixed scheme of approximately two million square feet
of business space and 3,000 homes at Kings Hill on a disused military airfield
near West Malling in Kent. He has also had experience of urban mixed use
developments in his role as Managing Director of Dutch-owned MAB Limited, where
he was involved in town centre retail schemes in Bournemouth and High Wycombe.
David also worked for a number of years in South Africa for Old Mutual in
acquisition, disposal, development and property management roles.

Jerry Hopkinson, Managing Director, PD Port Services (aged 48)
Jerry Hopkinson has been employed by PD Ports Group and its predecessors since
1976. His early career involved the setting up of operations to provide port
logistics to the offshore energy industry in both the Irish and North Seas.

As Group Operations Director for Humberside Sea & Land Services Limited (now PD
Port Services) he and his colleagues developed various short sea ports on the
Rivers Ouse and Trent and the main stevedoring operator in the deepwater ports
of Immingham and Grimsby. He led the privatisation of port operations in the
Humber following the repeal of the National Dock Labour Scheme. He joined the
board of PD Ports Group in 2002.

Russ McCallion, Group HR Director (aged 47)
Russ McCallion is Group Human Resources Director. Appointed in September 2002,
Russ has significant senior level experience in both HR and general management.

Before joining the group, Russ was HR Director at London Luton Airport, where he
helped deliver major cost reductions and restructuring programmes, prior to the
sale of the business to TBI plc. He joined London Luton from Unipart Group,
where he was HR Manager, responsible for managing the HR aspects of the
disengagement of the Unipart DCM from the long standing contractual relationship
with Rover Cars, then owned by BMW Group.

Previous roles include HR Manager and Supply Chain Manager for Allied Bakeries,
part of Associated British Foods, and HR Manager of Cartransport Limited, part
of BRS/NFC, now Exel plc. He was for two years General Manager of BRS Car
Delivery.

Martyn Pellew, Group Development Director (aged 54)
Martyn Pellew is Group Development Director. Martyn previously held several
senior positions within the Unipart Group, including Director and General
Manager of Unipart Rail Logistics, Customer Services Director at Railpart (UK)
Limited (a leading supplier to the rail industry), and Development Director at
NRS Limited (a major supplier to the UK rail infrastructure market).

Martyn has considerable experience of the logistics world. With NFC plc, now
known as Exel plc, from 1987-1995, he held a variety of progressively more
senior positions including Divisional Sales & Marketing Director, and
International Marketing and IT Director for Exel Logistics. He moved on to
become Director of Marketing and Communications for NFC plc. He was also
responsible for the successful creation and launch of the worldwide Exel
Logistics brand.

David Robinson, Managing Director, PD Teesport (aged 40)
David Robinson is Managing Director of PD Teesport with responsibility for all
commercial and operational activities. David is a leading specialist in
container terminal operations.

He started his port career at the Port of Felixstowe and held a variety of
operational management positions before becoming Divisional Head of Trinity
Container Terminal at Felixstowe. In 1994 he went to Hong Kong to manage the
Hutchison Port Holdings container operations in that territory. During this
period he led a major expansion programme and helped create what is now the
world's largest container terminal (handling over six million teu per year).

Brett Whittingham, Managing Director, PD Truck and Van (aged 45)
Brett Whittingham is Managing Director of PD Truck and Van and has 25 years
experience in the dealer business, 10 years of that specifically involved with
heavy commercial vehicles.

Prior to Brett's appointment at PD Truck and Van in September 2003, he performed
a similar role as Managing Director of Crossroads Truck & Bus, the Volvo
commercial vehicle distributor for Yorkshire and Lincolnshire.

This information is provided by RNS
The company news service from the London Stock Exchange