RNS Number:1164N
Forest Support Services PLC
04 December 2006
Forest Support Services Plc
Unaudited Interim Results
for the six months ended 30 September 2006
Chairman's Statement
The Group achieved a profit of #39,879 before tax and goodwill amortisation for
the six months ending 30 September 2006. This compares with a loss of #120,034
in the corresponding period last year.
The outcome of the first half is encouraging and gives the Group a firm
foundation to achieve a satisfactory outcome to the full year. Underpinning
this result has been a strong performance at Forest Traffic Signals and a much
improved first half at Forest Highways.
Results
I am pleased to report that turnover for the period was #2.94m (2005: #1.95m)
representing an increase of 50.7% over the equivalent period last year. The
Group profit was #39,879 (before goodwill amortisation of #41,550) for the six
months ending 30 September 2006. This compares with a loss of #120,034 (before
goodwill amortisation of #41,550) for the equivalent period last year.
As in previous years, the Group will not pay an interim dividend but expects to
continue its progressive dividend policy reflecting the performance of the Group
for the full year.
Current Trading and Future Prospects
This period has seen the continuation of efforts to re-position, strengthen and
grow the business and the outcome of the first six months provides tangible
evidence of progress.
A key point of focus is the development of Forest Traffic Signals. In July 2006
we relocated our Newport depot to larger premises within the city. The move was
required to facilitate future growth and will allow the business to progress
into new, related services. Newport continues to perform strongly and the
Bristol depot has also sustained high activity levels. Whilst the visibility of
forward workload has traditionally been limited, Newport has been successful in
winning several extended duration contracts which should underpin future
workload.
Regrettably, tender levels at the Winchester depot have been depressed and
trading has been below expectations, although this has been somewhat offset by
the positive contribution from the newly introduced range of temporary traffic
signals. Tender levels have now increased and this should result in improved
second half trading. Notwithstanding the short term negative factors,
Winchester is a well established part of the Group and confirms the Board's
commitment to open further depots, to improve geographical coverage.
Trading at Forest Highways continues to improve. Work to re-position the
business, away from spot tenders and towards extended duration, large scale
contracts, is on-going. This should improve the visibility of workload, reduce
volatility and improve the quality of the operation. Further progress was made
in July of this year when an additional Framework contract was secured.
The Group will launch a new range of services this year, aimed at leveraging our
strong regional presence and established customer base. The new range will
include site fencing and temporary traffic barrier as well as other traffic
management products. This is part of a broader strategy to develop the Forest
brand. To this end, in October of this year the name of the Group was changed
to Forest Support Services Plc.
The intention is to open further Forest Traffic depots, following the formula
developed at Bristol and Winchester. Consideration is being given to further
expand the range of services offered through our existing depot network. These
actions should improve the quality and resilience of earnings and will provide
opportunities for future growth.
Conclusion
While the outcome of the first six months is positive, much remains to be done.
At the present level of workload and orders, the Board remains confident of a
satisfactory outcome to the year. It is clear that shareholder value will be
enhanced as the business continues to grow in size and deepen in resilience and
it remains the belief of the Board that organic growth, despite its detrimental
affect on short term earnings, offers a highly effective method of achieving
these goals.
Finally, I thank the Group's employees and my boardroom colleagues for their
hard work and effort.
Christopher Powell
Chairman
4 December 2006
Consolidated Profit and Loss Account
for the six months ended 30 September 2006
Six months to Six months to Year to
30 September 30 September 31 March
2006 2005 2006
# # #
TURNOVER 2,941,859 1,952,289 4,758,284
Cost of sales (2,070,878) (1,462,566) (3,407,302)
GROSS PROFIT 870,981 489,723 1,350,982
Administrative expenses (41,550) (41,550) (83,100)
- amortisation of goodwill
- other (827,176) (605,038) (1,296,393)
OPERATING PROFIT/(LOSS) 2,255 (156,865) (28,511)
Interest receivable 4,912 5,717 9,143
Interest payable and similar charges (8,838) (10,436) (19,012)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (1,671) (161,584) (38,380)
Taxation on profit on ordinary activities 3 (770) - (1,611)
LOSS FOR THE PERIOD AFTER TAXATION (2,441) (161,584) (39,991)
(LOSS)/EARNINGS PER SHARE 4
Basic (0.01p) (0.9p) (0.2p)
Basic excluding goodwill amortisation 0.2p (0.6p) 0.2p
Fully diluted (0.01p) (0.9p) (0.2p)
Consolidated Balance Sheet
as at 30 September 2006
30 September 2006 30 September 2005 31 March 2006
# # #
FIXED ASSETS
Intangible assets 1,000,233 1,083,333 1,041,783
Tangible assets 744,205 577,543 728,561
1,744,438 1,660,876 1,770,344
CURRENT ASSETS
Stock 224,544 105,410 187,145
Debtors 1,384,976 791,296 1,154,402
Cash at bank and in hand 233,715 428,009 511,711
1,843,235 1,324,715 1,853,258
CREDITORS: amounts falling due within one year (1,029,420) (604,544) (1,120,971)
NET CURRENT ASSETS 813,815 720,171 732,287
TOTAL ASSETS LESS CURRENT LIABILITIES 2,558,253 2,381,047 2,502,631
CREDITORS: amounts falling due after more than one
year (183,150) (125,096) (125,087)
2,375,103 2,255,951 2,377,544
CAPITAL AND RESERVES
Called up share capital 935,350 935,350 935,350
Share premium account 1,513,530 1,513,530 1,513,530
Profit and loss account (73,777) (192,929) (71,336)
2,375,103 2,255,951 2,377,544
Consolidated Cash Flow Statement
for the six months ended 30 September 2006
Six months to Six months to Year to
30 September 30 September 31 March
2006 2005 2006
# # #
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (153,781) 115,134 518,904
RETURNS ON INVESTMENT AND SERVICING OF FINANCE
CAPITAL EXPENDITURE (3,926) (4,719) (9,869)
Purchase of tangible fixed assets (60,836) (88,568) (274,813)
Sale of tangible fixed assets 2,600 - 9,646
Net cash outflow from capital expenditure (58,236) (88,568) (265,167)
EQUITY DIVIDENDS PAID - - (46,768)
MANAGEMENT OF LIQUID RESOURCES 330,000 (125,000) (185,000)
Net cash inflow/(outflow) before financing 114,057 (103,153) 12,100
FINANCING
Bank loans repaid during period (23,553) (27,110) (55,408)
VAT refund in relation to share issue costs previously - 17,377 17,377
written off to share premium account
Capital element of finance lease payments (38,500) (36,840) (100,093)
Net cash outflow from financing (62,053) (46,573) (138,124)
INCREASE/(DECREASE) IN CASH 52,004 (149,726) (126,024)
RECONCILIATION OF OPERATING PROFIT/(LOSS) TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
Six months to Six months to Year to
30 September 30 September 31 March
2006 2005 2006
# # #
Operating profit/(loss) 2,255 (156,865) (28,511)
Profit on sale of fixed assets (163) - (4,823)
Depreciation 185,285 173,272 328,158
Amortisation of goodwill 41,550 41,550 83,100
Increase in stocks (37,399) (13,191) (94,926)
Decrease/(increase) in debtors (228,923) 255,995 (108,722)
(Decrease)/increase in creditors (116,386) (185,627) 344,628
Net cash (OUTFLOW)/INFLOW fRom operating activities (153,781) 115,134 518,904
Notes
for the six months ended 30 September 2006
1. The interim results have been prepared on a consistent basis and using
the accounting policies set out in the accounts for the year ended 31 March
2006.
The interim results are unaudited and do not constitute statutory accounts
within the meaning of Section 240 of the Companies Act 1985. Statutory
financial statements for the Group for the year to 31 March 2006, prepared
on the basis of the accounting policies set out in those accounts, were
reported on by the auditors without qualification or statement under
section 237(2) or (3) of the Companies Act 1985 and have been delivered to
the Registrar of Companies. Comparative information for the year ended
31 March 2006 shown in this report has been extracted from those accounts.
2. The Group had no recognised gains or losses other than those shown in
the consolidated profit and loss account.
3. The effective rate of tax is based on the estimated tax charge for the
full year at a rate of 1.93% (2005 - 0%).
4. The basic (loss)/earnings per share is calculated on the weighted
average number of shares in issue during each period. Fully diluted
(loss)/ earnings per share takes account of the dilutive effect of
outstanding share options. Where the diluted earnings/(loss) per share
calculation is based on a loss after taxation, share options in issue have
been excluded from the weighted average number of ordinary shares used in
the calculation of the basic loss per share. This is because the exercise
of share options would have the effect of reducing the loss per ordinary
share and is therefore not dilutive under the terms of FRS 22.
5. The interim report will be sent to all shareholders and the AIM team and
will also be available from the Company's Registered Office: c/o Forest
Traffic Signals Ltd, Forest House, Broad Quay Road, Newport, NP19 4PN.
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