3rd Oct 2005 07:00
Speedy Hire PLC03 October 2005 3 October 2005 Speedy Hire Plc ("Speedy Hire" or "the Group") Restatement of Financial Information Under International Financial Reporting Standards Speedy Hire Plc has historically prepared its consolidated statements under UKGenerally Accepted Accounting Practice (UK GAAP). As a listed company in theEuropean Union, the Group is now required to report under InternationalFinancial Reporting Standards (IFRS) with effect from 01 April 2005.Accordingly the Group will prepare its 2005/06 interim and annual financialstatements under IFRS. The Group has completed its assessment of the adjustments required to restatethe financial statements from UK GAAP to IFRS. The impact of these adjustmentson the two years ended 31 March 2005 is summarised in the table below. Year ending 31 March 2005 Year ending 31 March 2004 UK GAAP IFRS UK GAAP IFRS PBT £m 23.8 24.5 21.2 21.1Dividend cover times 3.3 3.9 4.0 4.3ROC % 17.8 17.6 17.8 17.6Gearing % 78.1 76.6 65.3 64.7 EPS: Basic pps 41.15 42.78 42.34 40.20 Adjusted pps 44.57 44.63 38.66 38.99 Diluted pps 39.36 42.55 41.50 39.40 Key Impact Analysis The most significant elements contributing to the changes in financialinformation are: • non-amortisation of goodwill • dividends recognised only if they are approved before the balance sheet date • no discounting of deferred taxation is permitted • changes in the valuation basis of share based payments • the fair value of financial instruments being recognised on the balance sheet Non-amortisation of goodwill Under UK GAAP, goodwill on acquisitions was capitalised and amortised. UnderIFRS 3, "Business combinations", intangible assets identified on acquisitionmust be capitalised and amortised annually, and goodwill is not systematicallyamortised. Goodwill must be reviewed annually for impairment and intangibles ona trigger event. The Group has decided to apply the exception granted by IFRS 1 to goodwill onbusiness combinations acquired before the transition date of 01 April 2004.This has the following impact: • the value of goodwill relating to acquisitions prior to the transition date is £4,988k and is frozen at that date; • the acquisitions made in the financial year to 31 March 2005 have been reviewed and restated for intangibles in accordance with IFRS 3. An intangible asset of £116k has been identified only in relation to the four year supply contract with Simons Construction, the goodwill has been restated accordingly and will be amortised over the life of the contract. The goodwill arising from other acquisitions is frozen on the balance sheet; • the amortisation previously reported under UK GAAP for the year ended 31 March 2005 of £1,241k is reversed for the IFRS restatement; • goodwill as at 31 March 2005 and 31 March 2004 has been reviewed for impairment. The goodwill attached to the acquisitions of Chichester Plant and St. Vincent Plant relates principally to supply contracts established as part of those acquisitions which are now part way through; as such a goodwill impairment charge of £621k in 2005 and £151k in 2004 has been booked; • there is no indication of impairment of any of the remaining goodwill; • to date in 2005/06 significant intangibles have been identified on the acquisitions of The Cabin Company and the internal hire division of MJ Gleeson in the current year. In each case the intangible identified relates to the sole supply contract established. Dividends IAS 10, "Events after the Balance Sheet Date" requires that dividends declaredafter the balance sheet date should not be recognised as a liability at thatbalance sheet date because the liability does not represent an obligation asdefined by IAS 37, "Provisions, Contingent Liabilities and Contingent Assets". The final dividend declared in June 2004 for the year ended 31 March 2004 of£2,832k has been reversed in the opening balance sheet and charged to equity inthe year ended 31 March 2005. The final dividend accrued for the year ended 31March 2005 of £3,401k has been reversed in the IFRS balance sheet and will becharged in the year ending 31 March 2006. Taxation IAS 12, "Income Taxes" requires that deferred tax assets and liabilities shallnot be discounted. The discount of £1,839k applied to the deferred tax provision included in theopening balance sheet has been reversed and charged to equity for the year ended31 March 2004. The reduction in the discount of £266k for the year ended 31March 2005 has been credited to the income statement in the period. In addition the tax effect of each of the adjustments listed has beenincorporated into the restatement. Share Based Payments IFRS 2, "Share-based Payments" requires that a charge for equity instrumentsgranted is recognised in the financial statements based upon their fair value atthe date of grant. The charge made is recognised evenly over the performanceperiod. IFRS 1 allows measurement of this expense to be applied only to options grantedafter 07 November 2002. As such the Group is required to make a charge for theLong Term Incentive Plan (LTIP) options granted in September 2004 and the allemployee SAYE Scheme introduced in December 2004. Under UK GAAP a charge wasmade for the value of the LTIP options only. The pre-tax credit arising from adoption of IFRS 2 on the Group's incomestatement is £55k for the year ended 31 March 2005. This reflects the newcharge made for the SAYE scheme and a change in the valuation basis of the LTIPoptions. Financial Instruments IAS 39, "Financial Instruments: Recognition and Measurement" requires that allderivative financial instruments are accounted for at fair market value and thatchanges to the fair value are charged to the income statement. The net fair value of financial instruments at the opening balance sheet datewas £37k, this was credited to equity in the year ended 31 March 2004. Thedecrease in the fair value of £21k for the year ended 31 March 2005 was chargedto the income statement in the period. Presentation of Financial Statements The format of the primary statements contained in the appendices to thisstatement has been presented in accordance with IAS 1, "Presentation ofFinancial Statements", which is different to the UK GAAP equivalents. Thisformat and presentation may require modification as practice develops and in theevent that further guidance is issued. These presentation changes have no effect on the result for the financial periodor on the net assets. A full set of primary statements for each of 2004 and 2005 are included inAppendices 2 and 3. Segmental Reporting IAS 14, "Segmental Reporting" requires that results for individual business andgeographical segments are reported separately. The primary segments reported by Speedy are the business segments; these areTool Hire, Equipment Hire and Central. This reflects the internal managementstructure and reporting. The secondary segments reported by Speedy are the geographical segments. At themoment Speedy operates solely within the United Kingdom and therefore noadditional disclosure is required. Selected segmental results for the year ended 31 March 2005 and comparatives for31 March 2004 are included within Appendix 5. Enquiries: Speedy Hire Plc Hudson Sandler Steve Corcoran, Chief Executive Nick Lyon Neil O'Brien, Finance Director James Benjamin Tel: 01942 720000 Tel: 020 7796 4133 Notes to editors: Speedy Hire is a leading provider of tool and equipment hire services to UKcontractors and builders, industry, utilities and the public sector, operatingfrom over 300 depots throughout the country. Appendix 1 IFRS Accounting Policies This section provides a summary of the Group's new accounting policies that havechanged under IFRS for the year ended 31 March 2005. Basis of Accounting This restated financial information has been prepared on the basis of all IFRSand Standing Interpretations Committee (SIC) and International FinancialReporting Interpretations Committee (IFRIC) interpretations issued by theInternational Accounting Standards Board (IASB) that are either, endorsed by theEU and effective (or available for early adoption) as at 31 March 2006 or, areexpected to be endorsed and effective (or available for early adoption) as at 31March 2006. Based on these adopted and unadopted IFRS, the directors have madeassumptions about the accounting policies expected to be applied when the firstannual IFRS accounts are prepared for the year ending 31 March 2006 (the firstannual IFRS accounts). In addition, the adopted IFRS that will be effective (or available for earlyadoption) in the first annual IFRS accounts are still subject to additionalinterpretations and therefore cannot be determined with certainty.Consequently, the restated financial information as presented may be subject tochange. Accordingly, the accounting policies will be finally determined only when theaccounts are prepared for the year ending 31 March 2006. Long Term Incentive Plan And Employee Share Scheme In accordance with IFRS 2, a charge is recognised in respect of all share basedpayments made to employees. The charge for the Long Term Incentive Plan is based upon the fair value ofawards made and upon the expectation of the number of shares that will vest. The charge for the Group's Inland Revenue approved share savings scheme is basedupon the fair value of the awards made at the date on which the options weregranted and upon managements best estimate of the vesting expectations. Thecharge has been spread evenly over the performance period starting January 2005. Taxation Taxation is fully recognised in accordance with IAS 12. The tax charge or credit included in the Income Statement comprises both currentand deferred tax. Current tax reflects the expected tax payable on the taxableincome for the year, using tax rates prevailing at the balance sheet date.Deferred tax reflects the movement in temporary differences between the carryingamounts of assets and liabilities for financial reporting purposes and theamounts used for tax purposes, and is provided at the tax rates that areexpected to apply when the liability is settled or the asset is realised. Deferred tax is provided using the balance sheet liability method, recognisingdeferred tax liabilities in respect of all taxable temporary differences anddeferred tax assets to the extent that it is probable that taxable profits willbe available against which deductible temporary differences can be utilised. Deferred tax assets and liabilities are offset against each other when theyrelate to income taxes levied by the same tax jurisdiction. Goodwill The excess of the fair value of purchase consideration and associated costs overthe fair value of net assets including identifiable intangible assets (asdefined by IAS 38) at the date of acquisition of subsidiary undertakings andbusinesses acquired after 31 March 2004 is capitalised in the year ofacquisition. Goodwill is assumed to have an indefinite useful economic life and is notamortised. The carrying amount of the Group's goodwill is reviewed annually to determinewhether there is any indication of impairment. If any such indication exists,the assets value is estimated and any impairment is charged in the year. Intangible Assets Intangible fixed assets are stated at cost or valuation less accumulatedamortisation. Amortisation is provided so as to write off the cost or valuation of the assetsover their expected useful economic lives, after taking account of estimatedresidual values. The useful economic lives are assessed on an asset by asset basis. Assets held for sale Assets that meet the criteria to be classified as held for resale are measuredat the lower of carrying amount and fair value less costs to sell. Such assetsare not depreciated. Derivatives and Other Financial Instruments The principle derivative instruments used by the Group are interest rate swapsand caps. Amounts payable or receivable in respect of interest rate swap or captransactions are recognised on an accruals basis until settlement date and aretreated as an adjustment to the interest expense over the period of thecontract. All derivates are only held for hedging purposes. The fair value of the Group's derivative financial instruments is recognised inthe balance sheet and changes in the fair value are included in the incomestatement each period in accordance with IAS39. Appendix 2 Consolidated income statementYear ended 31 March 2005 UK GAAP in IFRS IFRS IAS IAS IAS IFRS IFRS format 2 3 10 12 39 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Revenue 206,476 206,476Cost of Sales (58,232) (58,232) Gross Profit 148,244 - - - - - 148,244 Other operating income 171 171Distribution costs (21,974) (21,974)Administrative expenses (97,112) 55 606 (96,451) Profit from operations 29,329 55 606 - - - 29,990 Loss on disposal of operation (655) (655)Financing costs (4,825) (21) (4,846) Income from associates - - Profit before taxation 23,849 55 606 - - (21) 24,489 Income tax expense (6,354) (170) (51) 266 6 (6,303) Profit after tax 17,495 (115) 555 - 266 (15) 18,186 Minority interest - - Net profit attributable to equity holders 17,495 (115) 555 - 266 (15) 18,186of the parent Dividends attributable to equity holders (5,229) - - 569 - - (4,660)during the period Consolidated balance sheetAs at 31 March 2005 UK GAAP in IFRS format IFRS 2 IFRS 3 IAS 10 IAS 12 IAS 39 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Assets Property, Plant and Equipment 187,806 187,806 Intangible Assets 10,211 455 10,666 Investment Property 123 123Total non-current assets 198,140 - 455 - - - 198,595 Inventories 4,762 4,762 Trade and other receivables 55,056 55,056 Financial assets - 65 65 Cash and cash equivalents 5,894 5,894Total Current assets 65,712 - - - - 65 65,777 Non-current assets classified as held 1,664 1,664for saleTotal assets 265,516 - 455 - - 65 266,036 LiabilitiesInterest-bearing loans and borrowings (88,660) (88,660)Deferred tax liabilities (16,929) (72) (1,573) (18,574)Total non-current liabilities (105,589) - (72) - (1,573) - (107,234) Interest bearing loans and borrowings (287) (287)Trade and other payables (50,777) (13) 3,401 (47,389)Current income tax (2,479) (170) 66 (5) (2,588)Financial Liabilities - (49) (49)Total current liabilities (53,543) (183) 66 3,401 - (54) (50,313)Total liabilities (159,132) (183) (6) 3,401 (1,573) (54) (157,547) Net assets 106,384 (183) 449 3,401 (1,573) 11 108,489 EquityIssued capital 2,132 2,132Share premium 32,692 32,692Merger reserve 3,660 3,660Revaluation reserve 50 50Capital redemption reserve 26 26Retained earnings 67,824 (183) 449 3,401 (1,573) 11 69,929Total equity 106,384 (183) 449 3,401 (1,573) 11 108,489 Cash flow statement Year ending 31 March 2005 Cash flows from operating activities: £'000 £'000 Profit before taxation 24,489Depreciation 31,192Profit on the sale of property, plant and equipment (3,842)Loss on disposal of business 655Amortisation 635Share based payment expenses 571Finance expenses 4,846Movement in inventory (834)Movement in debtors (8,816)Movement in creditors 7,750Interest paid (4,758)Income tax paid (2,694)Net cash inflow from operating activities 49,194 Cash flows from investing activities: Acquisition of businesses (18,746)Purchase of property plant and equipment (60,512)Proceeds from sale of equipment 12,223Proceeds form sale of business 500Net cash outflow from investing activities (66,535) Cash flows from financing activities: New Bank loans 21,660Capital element of HP payments (686)Dividends paid (4,660)Net cash inflow from financing activities 16,314 Net decrease in cash and cash equivalents (1,027) Cash and cash equivalents at the start of the year 6,921 Cash and cash equivalents at the end of the year 5,894 Appendix 3 Consolidated income statement As at 31 March 2004 UK GAAP in IFRS format IFRS 3 IAS 12 IAS 10 IAS 39 IFRS £'000 £'000 £'000 £'000 £'000 £'000 Revenue 170,231 170,231Cost of Sales (48,182) (48,182) Gross Profit 122,049 - - - - 122,049 Other operating income 615 615Distribution costs (18,494) (18,494)Administrative expenses (79,488) (151) (79,639) Profit from operations 24,682 (151) - - - 24,531 Financing costs (3,471) 37 (3,434) Income from associates Profit before taxation 21,211 (151) - - 37 21,097 Income tax expense (3,601) 45 (810) (11) (4,377) Profit after tax 17,610 (106) (810) - 26 16,720 Minority interest - - Net profit attributable to equity holders 17,610 (106) (810) - 26 16,720of the parent Dividends attributable to equity holders (4,371) - - 461 - (3,910)during the period Consolidated balance sheetAs at 31 March 2004 UK GAAP in IFRS format IFRS 3 IAS 10 IAS 12 IAS 39 IFRS £'000 £'000 £'000 £'000 £'000 £'000 AssetsProperty, Plant and Equipment 156,394 156,394Intangible Assets 4,988 (151) 4,837Investment Property 291 291Total non-current assets 161,673 (151) - - - 161,522 Inventories 3,637 3,637Trade and other receivables 45,627 45,627Financial assets - 113 113Cash and cash equivalents 6,921 6,921Total Current assets 56,185 - - - 113 56,298 Non-current assets classified as held 1,664 1,664for sale Total assets 219,522 (151) - - 113 219,484 LiabilitiesInterest-bearing loans and borrowings (67,295) (67,295)Deferred tax liabilities (13,313) (1,839) (15,152)Total non-current liabilities (80,608) - - (1,839) - (82,447) Interest bearing loans and borrowings (678) (678)Trade and other payables (42,309) 2,832 (39,477)Current income tax (2,435) 45 (11) (2,401)Financial liabilities - (76) (76)Total current liabilities (45,422) 45 2,832 - (87) (42,632)Total liabilities (126,030) 45 2,832 (1,839) (87) (125,079) Net assets 93,492 (106) 2,832 (1,839) 26 94,405 EquityIssued capital 2,132 2,132Share premium 32,692 32,692Merger reserve 3,660 3,660Revaluation property reserve 50 50Capital redemption reserve 26 26Retained earnings 54,932 (106) 2,832 (1,839) 26 55,845Total equity 93,492 (106) 2,832 (1,839) 26 94,405 Cash flow statement Year ending 31 March 2004 Cash flows from operating activities: £'000 £'000 Profit before taxation 21,097Depreciation 24,540Profit on the sale of property plant and equipment (4,200)Amortisation 969Share based payment expenses 701Finance expenses 3,434Increase in inventory (173)Increase in debtors (1,536)Increase in creditors 5,041Interest paid (3,384)Income tax paid (824)Net cash inflow from operating activities 45,665 Cash flows from investing activities: Acquisition of businesses (8,964)Purchase of property plant and equipment (51,999)Proceeds from sale of plant 15,408Net cash outflow from investing activities (45,555) Cash flows from financing activities: New Bank loans 67,000Proceeds from issue of share capital 157Capital element of HP payments (52,396)Dividends paid (3,910)Net cash inflow from financing activities 10,851 Net increase in cash and cash equivalents 10,961 Cash and cash equivalents at the start of the year (4,040) Cash and cash equivalents at the end of the year 6,921 Appendix 4 Consolidated statement of recognised gains and losses 2005 2004 £'000 £'000 Credit in respect of share based awards 558 702Net income recognised directly in equity 558 702 Profit for the period 18,186 16,720 Total recognised income and expense for the period 18,744 17,422 Appendix 5 Segmental Disclosure 2005 Tools Equipment Central Elimination Consolidation £000 £000 £000 £000 £000 Revenue External sales 128,666 77,802 8 - - Inter-segment sales 412 2,946 - (3,358) - Total revenue 129,078 80,748 8 (3,358) 206,476 Operating profit on ordinary activities 20,457 14,765 (4,597) 30,625before goodwill amortisationGoodwill amortisation (621) (14) - (635)Operating profit 19,836 14,751 (4,597) 29,990Loss on disposal of operation (655)Profit before interest 29,335Net interest payable (4,846)Profit before taxation 24,489 2004 Tools Equipment Central Elimination Consolidation £000 £000 £000 £000 £000 Revenue External sales 111,049 58,997 185 - - Inter-segment sales 347 2,404 - (2,751) - Total revenue 111,396 61,401 185 (2,751) 170,231 Operating profit on ordinary activities 17,274 11,273 (3,047) 25,500before goodwill amortisationGoodwill amortisation (914) (55) - (969)Operating profit 16,360 11,218 (3,047) 24,531Loss on disposal of operation -Profit before interest 24,531Net interest payable (3,434)Profit before taxation 21,097 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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