Pan European Terminals wholly-owned oil storage terminals are all trading strongly.
Pan European Terminals operates four fuel oil terminals used for short-term storage. They are sited in Kalingrad (including one joint venture), Rotterdam and Denmark and there are plans to widen the network of terminals.
The company is seeking to add capacity in Rotterdam and the Danish operation is being reorganised in order to improve margins.
The wholly-owned Kalingrad terminal has increased capacity by 10% and plans a further 10% increase once the weather improves. Cash generated by the terminal is funding this expansion. There are also plans to install a pipeline to the waterside jetties.
There have been problems with the Russian joint venture but management believes that the ownership problems could be sorted out later this year. The partner has offered to sell its 50% stake to Pan European Terminals. The asset remains frozen under a legal order. If the company did buy the stake then it would sell it on to another local party.
Charges for the company’s terminals are based on volumes, handling fees, heating costs, etc. Active clients are preferred because it is more profitable than medium-term storage. The company wins business through flexibility and better service. A new IT system will help the business to be more efficient by providing more real-time information.
Net debt was £7.44m at the end of June 2013. A premium payment of £550,000 was subsequently made to Belphar, which contemplated a 22p a share bid last year, as a consequence of the terms of the convertible it owns.
New legislation in the UK means that strategic fuel reserves will have to be kept in the UK – previously it could be held in Europe. This will provide additional opportunities for Pan European.
Management is seeking other opportunities in Europe and is in advanced discussions on one project.
At 17.6p a share, Pan European Terminals is valued at £18.7m.
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