TIDMFSS
RNS Number : 7034Z
Forest Support Services PLC
28 September 2009
28 September 2009
Forest Support Services Plc ("the Group" or the "Company")
Preliminary results for the year ended 31 March 2009
I am pleased to report that the Group achieved an increased profit before tax of
GBP215,166. This was achieved on a similar turnover of GBP6.8 million. Margins
were improved as a result of better utilisation of resources and effective cost
control.
These results reflect the efforts undertaken in previous periods to position the
Group in more resilient market segments.
Our Newport depot has maintained its strong position within the Welsh market and
I am particularly pleased to report that efforts to develop Bristol and
Winchester have achieved some success, bringing greater regional diversity to
the business.
Results
The Group has recorded a profit of GBP215,166 (2008: GBP131,788) before taxation
and goodwill impairment. The earnings per share, on the weighted average number
of shares in issue during the year, was 0.80p (2008: (2.17p)).
Turnover for the period decreased by 0.9% to GBP6,752,949. The Group increased
cash at the period end to GBP580,961 (2008: GBP546,037) having reduced its level
of borrowing by GBP221,000 to GBP553,000.
Your Board is recommending a maintained cash dividend of 0.38p. The dividend
will be paid on the 12th January 2010 to shareholders on the register at close
of business on the 18th December 2009. The shares are expected to go ex dividend
on the 16th December 2009.
Current Trading and Future Prospects
The Group serves the infrastructure market through a broad range of customers.
Requirements for its services are ultimately derived from expenditure by Central
Government, Utility Companies and Local Authorities for the maintenance of roads
and utility services. Demand has been resilient notwithstanding the economic
downturn. However, the Board remains vigilant to future changes in levels of
spending on its services.
Trading has remained strong at all depots during the initial period of the new
financial year. The Group's business has continued to develop with investment in
the traffic light fleet and the relocation of the Bristol depot.
Conclusion
The Board continues to believe in a policy of organic growth. The Group is
focused upon serving market segments that are resilient and stable and the
actions taken in the current year will position the company to take advantage of
future opportunities.
Lastly I thank my board colleagues and staff for their hard work and commitment
during the year.
C C Powell
Chairman
Date: 25 September 2009
Consolidated Income Statement
For the period ended 31 March 2009
+------------------------------------------------+------+-------------+-------+-------+
| | Note | 2009 | 2008 |
| | | GBP | GBP |
+------------------------------------------------+------+-------------+---------------+
| Revenue | | 6,752,949 | 6,811,353 |
+------------------------------------------------+------+-------------+---------------+
| Cost of sales | | (4,626,808) | (4,803,699) |
+------------------------------------------------+------+-------------+---------------+
| |
+-----------------------------------------------------------------------------+
| | | | |
+------------------------------------------------+------+-------------+---------------+
| Gross profit | | 2,126,141 | 2,007,654 |
+------------------------------------------------+------+-------------+---------------+
| Administrative expenses | | (1,875,686) | (1,841,673) |
+------------------------------------------------+------+-------------+---------------+
| Goodwill impairment charge | | - | (497,492) |
+------------------------------------------------+------+-------------+---------------+
| |
+-----------------------------------------------------------------------------+
| | | | |
+------------------------------------------------+------+-------------+---------------+
| Operating profit/(loss) | | 250,455 | (331,511) |
+------------------------------------------------+------+-------------+---------------+
| Finance costs | | (43,342) | (48,894) |
+------------------------------------------------+------+-------------+---------------+
| Finance income | | 8,053 | 14,701 |
+------------------------------------------------+------+-------------+---------------+
| |
+-----------------------------------------------------------------------------+
| | | | |
+------------------------------------------------+------+-------------+---------------+
| Profit/(loss) before taxation | | 215,166 | (365,704) |
+------------------------------------------------+------+-------------+---------------+
| Taxation | | (65,070) | (39,792) |
+------------------------------------------------+------+-------------+---------------+
| |
+-----------------------------------------------------------------------------+
| | | | |
+------------------------------------------------+------+-------------+---------------+
| Profit/(loss) for the year attributable to | | 150,096 | (405,496) |
| equity holders of the parent | | | |
+------------------------------------------------+------+-------------+---------------+
| |
+-----------------------------------------------------------------------------+
| | | | |
+------------------------------------------------+------+-------------+---------------+
| Earnings/(loss) per share: | 4 | | |
+------------------------------------------------+------+-------------+---------------+
| Basic and diluted | | 0.80p | (2.17)p |
+------------------------------------------------+------+-------------+---------------+
| |
+-----------------------------------------------------------------------------+
| | | | |
+------------------------------------------------+------+-------------+---------------+
| | | | |
+------------------------------------------------+------+-------------+-------+-------+
There are no gains or losses other than those shown in the income statement and
therefore all recognised income and expense is included therein.
All activities are classed as continuing.
Consolidated balance sheet
As at 31 March 2009
+----------------------+----------------------+--+------+---+------------+------------+
| | | Note | | 2009 | 2008 |
| | | | | GBP | GBP |
+---------------------------------------------+--+------+---+------------+------------+
| Non-current assets | | | | 544,291 | 544,291 |
| Goodwill | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Property, plant and equipment | | | | 871,953 | 1,168,663 |
+---------------------------------------------+--+------+---+------------+------------+
| Deferred tax asset | | | | 86,516 | 81,815 |
+---------------------------------------------+--+------+---+------------+------------+
| |
+------------------------------------------------------------------------+
| | | | | 1,502,760 | 1,794,769 |
+---------------------------------------------+--+------+---+------------+------------+
| Current assets | | | | 1,773,505 | 1,695,165 |
| Trade and other receivables | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Cash and cash equivalents | | | | 580,961 | 546,037 |
+---------------------------------------------+--+------+---+------------+------------+
| |
+------------------------------------------------------------------------+
| | | | | 2,354,466 | 2,241,202 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Total assets | | | | 3,857,226 | 4,035,971 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Current liabilities | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Trade and other payables | | | | 917,060 | 1,023,454 |
+---------------------------------------------+--+------+---+------------+------------+
| Current tax liabilities | | | | 69,771 | - |
+---------------------------------------------+--+------+---+------------+------------+
| Bank loan | | | | 89,212 | 136,090 |
+---------------------------------------------+--+------+---+------------+------------+
| Obligations under finance leases | | | | 110,180 | 76,915 |
+---------------------------------------------+--+------+---+------------+------------+
| |
+------------------------------------------------------------------------+
| | | | | 1,186,223 | 1,236,459 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Non-current liabilities | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Bank loan | | | | 234,395 | 295,228 |
+---------------------------------------------+--+------+---+------------+------------+
| Obligations under finance leases | | | | 119,684 | 266,370 |
+---------------------------------------------+--+------+---+------------+------------+
| |
+------------------------------------------------------------------------+
| | | | | 354,079 | 561,598 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Total liabilities | | | | 1,540,302 | 1,798,057 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Net assets | | | | 2,316,924 | 2,237,914 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Equity | | | | 935,350 | 935,350 |
| Share capital | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Share Premium | | | | 1,513,530 | 1,513,530 |
+---------------------------------------------+--+------+---+------------+------------+
| Retained earnings | | | | (131,956) | (210,966) |
+---------------------------------------------+--+------+---+------------+------------+
| |
+------------------------------------------------------------------------+
| | | | | | |
+---------------------------------------------+--+------+---+------------+------------+
| Total Equity | | | | 2,316,924 | 2,237,914 |
+---------------------------------------------+--+------+---+------------+------------+
| | | | | | |
+----------------------+----------------------+--+------+---+------------+------------+
These financial statements were approved by the board and authorised for issue
on 23 September 2009 and signed on its behalf by:
C C Powell
Chairman
Consolidated cash flow statement
For the period ended 31 March 2009
+-----------------------------------------------+------+------------+--------+--------+
| | Note | 2009 | 2008 |
| | | GBP | GBP |
+-----------------------------------------------+------+------------+-----------------+
| Net cash generated from operating activities | 24 | 494,393 | 527,892 |
+-----------------------------------------------+------+------------+-----------------+
| Investing activities | | 8,053 | 14,701 |
| Interest received | | | |
+-----------------------------------------------+------+------------+-----------------+
| Purchase of property, plant and equipment | | (175,304) | (366,050) |
+-----------------------------------------------+------+------------+-----------------+
| |
+----------------------------------------------------------------------------+
| Net cash used in investing activities | | (167,251) | (351,349) |
+-----------------------------------------------+------+------------+-----------------+
| Financing activities | | (71,086) | (67,345) |
| Dividends paid | | | |
+-----------------------------------------------+------+------------+-----------------+
| Repayment of borrowings | | (107,711) | (137,680) |
+-----------------------------------------------+------+------------+-----------------+
| New bank loans raised | | - | 350,000 |
+-----------------------------------------------+------+------------+-----------------+
| Repayment of obligations under hire purchase | | (113,421) | (94,711) |
| contracts | | | |
+-----------------------------------------------+------+------------+-----------------+
| |
+----------------------------------------------------------------------------+
| Net cash (used in)/generated from financing | | (292,218) | 50,264 |
| activities | | | |
+-----------------------------------------------+------+------------+-----------------+
| | | | |
+-----------------------------------------------+------+------------+-----------------+
| Net increase in cash and cash equivalents | | 34,924 | 226,807 |
+-----------------------------------------------+------+------------+-----------------+
| |
+----------------------------------------------------------------------------+
| Cash and cash equivalents at beginning of | | 546,037 | 319,230 |
| year | | | |
+-----------------------------------------------+------+------------+-----------------+
| |
+----------------------------------------------------------------------------+
| Cash and cash equivalents at end of year | | 580,961 | 546,037 |
+-----------------------------------------------+------+------------+-----------------+
| |
+-----------------------------------------------+------+------------+--------+--------+
Notes
1. General Information
Forest Support Services plc ("the company") is a company domiciled in England
and Wales whose registered office address is Forest House, Broad Quay Road,
Felnex Industrial Estate, Newport, NP19 4PN. The consolidated financial
statements of the group for the year ended 31 March 2009 comprise the company
and its subsidiaries (together referred to as "the group").
These consolidated financial statements are presented in Pounds Sterling because
that is the currency of the primary economic environment in which the group
operates.
At the date of authorisation of these financial statements, the following
Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective (and in some cases had not been
adopted by the EU).
IFRS1 and IAS27 Amendment Cost of an investment on first time
adoption - effective 1 January
2009
Amendment to IFRS 2 "Share based payments"- vesting conditions
and cancellations -
effective 1 January 2009
Amendment to IFRS 3 and IAS 27"Business Combinations" and "Consolidated and
Separate
Financial Statements" - effective 1 July 2009
IFRS 8" Operating Segments"- effective 1 January 2009
Amendment to IAS 1 "Presentation of financial statements"- effective 1 January
2009
Amendment to IAS 23 "Borrowing Costs"- effective 1 January 2009
Amendment to IAS 32 "Financial Instruments Presentation" - effective 1 January
2009
Amendment to IAS 39 "Financial Instruments" - effective 1 July 2009
IFRIC 13"Customer loyalty programmes"- effective 1 July 2008
IFRIC 15 "Agreements for the construction of real estate" - effective 1
January 2009
IFRIC 16"Hedges of a net investment in a foreign operation" - effective 1
October 2008
IFRIC 17 "Distributions of non-cash
assets to owners" - effective 1 July
2009
IFRIC 18 "Transfers of assets to
customers" - effective 1 July 2009
The directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material effect on the financial
statements of the group. In each case the effective date refers to accounting
periods commencing on or after that date, except IFRIC 18 which applies to
transactions after the effective date.
2. Critical Accounting Judgements and Areas of Estimation Uncertainty
In applying the company's accounting policies in note 3, management has made
accounting judgements in the determination of the carrying value of deferred tax
assets, the impairment of goodwill and share-based payments. Due to inherent
uncertainty involved in making assumptions and estimates, actual outcomes will
differ from those assumptions and estimates. An analysis of the key sources of
estimation uncertainty is provided below.
Deferred tax assets
The carrying value of certain deferred tax assets is dependent on sufficient
taxable profits being generated in future periods.
Impairment of goodwill
The group tests annually for impairment or more frequently if there are
indications that goodwill might be impaired.
The recoverable amount of the goodwill is determined from value in use
calculations. The key assumptions and estimates for the value in use
calculations are those regarding the discount rates, growth rates and expected
changes to sales during the period. Management estimates discount rates using
pre-tax rates that reflect current market assessments of the time value of money
and the risks specific to the cash-generating units. A post tax discount rate of
13.5 % was assumed for the purpose of the calculation.
The group prepares cash flow forecasts derived from the most recent financial
budgets approved by management for the next year and extrapolates cash flows to
perpetuity assuming growth in both revenues and profits of 2.5 % from that date.
This rate does not exceed the average long-term growth rate for the relevant
market.
An increase of 40.7% in the post tax discount rate or a decrease of 32.5% in the
forecast profits would have resulted in an impairment in the value recognised
for goodwill.
Share Based Payments
The group has made awards of options on its un-issued share capital to certain
directors and employees as part of their remuneration package.
The valuation of these options involved making a number of critical estimates
relating to price volatility, future dividend yields, expected life of the
options and interest rates.
3. Significant Accounting Policies
Basis of accounting
The financial statements of Forest Support Services plc have been prepared in
accordance with International Financial Reporting Standards (IFRS) as adopted
for use in the EU applied in accordance with the provisions of the Companies Act
1985. These financial statements have been prepared on the historical cost
basis. The principal accounting policies set out below have been consistently
applied to all periods presented.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
Forest Support Services plc and all entities controlled by the company (its
subsidiaries). Control is achieved where the company has the power to govern the
financial and operating policies of an investee entity so as to obtain benefits
from its activities. All intra-group transactions, balances, income and expenses
are eliminated on consolidation.
Revenue Recognition
Revenue represents the amounts, excluding VAT, receivable by the company for
goods and services supplied to outside customers in the ordinary course of
business. Revenue is recognised when persuasive evidence of an arrangement with
a customer exists, products have been delivered or services have been rendered
and collectability is reasonably assured.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the group's interest in the fair value of the identifiable
assets and liabilities of a subsidiary, at the date of acquisition. Goodwill is
initially recognised as an asset at cost and is subsequently measured at cost
less any accumulated impairment losses. Goodwill which is recognised as an asset
is reviewed for an impairment at least annually. Any impairment is recognised
immediately in the income statement.
Goodwill arising on acquisitions before the transition to IFRS has been retained
at its previous UK GAAP amount subject to being tested for impairment at date of
transition.
For the purpose of impairment testing, goodwill is allocated to each of the
group's cash generating units expected to benefit from the synergies of the
combination. Cash generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash generating
unit is less than the carrying amount, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the
other assets of the unit pro-rata on the basis of the carrying amount of each
asset in the unit. An impairment loss recognised for goodwill is not reversed in
a subsequent period.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation.
Depreciation is provided on all property, plant and equipment at rates
calculated to write off the cost of tangible fixed assets over their expected
useful lives at the following rates:-
Property - Over the term of the lease
Plant and equipment - Two to eight years
Share based payments
The group issues equity-settled share based payments to certain employees.
Equity-settled share based payments are measured at fair value (excluding the
effect of non market-based vesting conditions) at the date of grant. The fair
value determined at the date of grant is expensed on a straight-line basis over
the vesting period, based on the group's estimate of shares that will eventually
vest and adjusted for the effect of non market-based vesting conditions.
Fair value is measured by use of the binomial model. The expected life used in
the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and behavioural
conditions.
Operating lease agreements
Rentals applicable to operating leases where substantially all of the benefits
and risks of ownership remain with the lessor are charged against profits on a
straight line basis over the period of the lease.
Retirement benefit costs
The Group operates a defined contribution scheme for the benefit of certain of
its employees. Contributions payable are charged as an expense as they fall due.
Trade receivables
Trade receivables are measured at initial recognition at cost. Appropriate
allowances for estimated irrecoverable amounts are recognised in the income
statement when there is objective evidence that the asset is impaired. The
allowance recognised is measured as the difference between the asset's carrying
amount and the present value of estimated future cash flows discounted at the
effective interest rate computed at initial recognition.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the group are recorded at the proceeds received,
net of direct issue costs.
Financial Instruments
Qualitative and quantitative information about exposure to risks arising from
financial instruments are set out in the disclosure notes in accordance with
IFRS 7, including specified minimum disclosures about credit risk, liquidity
risk and market risk, including sensitivity analysis to market risk.
Taxation
The tax expense represents the sum of tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
group's liability for current tax is calculated using tax rates that have been
enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. Timing
differences between the group's taxable profits and its results as stated in the
financial statements that arise from the inclusion of gains and losses in tax
assessments in periods different from those in which they are recognised in the
financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in
the periods in which timing differences are expected to reverse, based on tax
rates and laws that have been enacted or substantially enacted by the balance
sheet date. Deferred tax is measured on a non-discounted basis.
A deferred tax asset is recognised where recovery is more likely than not.
4. Earnings per share
+-----------------------------------------------------+------------+--------+--------+
| | 2009 | 2008 |
| | GBP | GBP |
+-----------------------------------------------------+------------+-----------------+
| | | |
+-----------------------------------------------------+------------+-----------------+
| Earnings | 150,096 | (405,496) |
+-----------------------------------------------------+------------+-----------------+
| |
+-----------------------------------------------------+------------+--------+--------+
Basic earnings per share is based on the profit for the year attributable to
shareholders and on the weighted average number of shares in issue during the
year. The number of shares used for calculating basic earnings per share was
18,706,961 (2008: 18,706,961). As the exercise price of the share options
granted by the company exceeded the average market price of the shares during
the current and prior periods, there is no dilutive impact on earnings per share
in either period. There are 3,350,000 shares that could be issued under the
terms of options as described in note 18, which could potentially reduce future
earnings per share if exercised.
5. Note to the cash flow statement
+--------------------------------------------------------------------------------------+------------+--------+--------+
| Cash generated from operations | 2009 | 2008 |
| | GBP | GBP |
+--------------------------------------------------------------------------------------+------------+-----------------+
| Operating profit/(loss) for the year | 250,455 | (331,511) |
+--------------------------------------------------------------------------------------+------------+-----------------+
| Goodwill | - | 497,492 |
| impairment | | |
| charge | | |
+--------------------------------------------------------------------------------------+------------+-----------------+
| Share | - | 7,985 |
| based | | |
| payment | | |
| expense | | |
+--------------------------------------------------------------------------------------+------------+-----------------+
| Depreciation | 472,014 | 458,227 |
| on property, | | |
| plant and | | |
| equipment | | |
+--------------------------------------------------------------------------------------+------------+-----------------+
| | | |
+--------------------------------------------------------------------------------------+------------+-----------------+
| |
+------------------------------------------------------------------------------------------------------------+
| Operating | 722,469 | 632,193 |
| cash | | |
| flows | | |
| before | | |
| movements | | |
| in | | |
| working | | |
| capital | | |
+--------------------------------------------------------------------------------------+------------+--------+--------+
+---------------------------------------------------------------------------------------------+------------+--------+--------+
| (Increase)/decrease | (78,340) | 63,501 |
| in receivables | | |
+---------------------------------------------------------------------------------------------+------------+-----------------+
| Decrease in | (106,394) | (103,943) |
| payables | | |
+---------------------------------------------------------------------------------------------+------------+-----------------+
| |
+-------------------------------------------------------------------------------------------------------------------+
| Cash | 537,735 | 591,751 |
| generated | | |
| from | | |
| operations | | |
+---------------------------------------------------------------------------------------------+------------+--------+--------+
+------------------------------------------------------------------------------------+------------+--------+--------+
| Interest | (43,342) | (48,894) |
| paid | | |
+------------------------------------------------------------------------------------+------------+-----------------+
| Tax | - | (14,965) |
| paid | | |
+------------------------------------------------------------------------------------+------------+-----------------+
| |
+----------------------------------------------------------------------------------------------------------+
| Net | 494,393 | 527,892 |
| cash | | |
| generated | | |
| from | | |
| operations | | |
+------------------------------------------------------------------------------------+------------+--------+--------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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