Tiphook turns in 21m pounds loss: Company lifts dividend but market sends shares down by 35p

TIPHOOK'S volatile share price took another battering yesterday as the container and trailer rental group revealed annual pre-tax losses of pounds 21.8m, attributed largely to a change in accounting policy.

Despite an 11.6 per cent dividend rise to 19.3p the shares dropped 35p to 251p before recovering to close almost 10 per cent lower at 259p. Standard & Poor's, the credit rating agency, downgraded Tiphook's rating to BB- from BBB and said the trend was negative.

The agency also warned that the group's financial flexibility could be hindered further if a profits recovery did not materialise. Tiphook's total debt stands at more than pounds 1bn against shareholders' funds of pounds 215m.

It also emerged yesterday that Tiphook's head of treasury, Mark Mandleson, was leaving the company. But Roger Braidwood, finance director, said his departure was planned and had nothing to do with large provisions for losses on foreign exchange contained in the accounts.

The company said it made pounds 55.5m before tax under its old UK accounting standards in the year to 30 April. But a move to US reporting led to one-off charges of pounds 77.3m, plunging the group into losses. Last year Tiphook made pounds 86.4m.

Mr Braidwood said the company felt it was time to move towards US reporting because most of its revenues and debts were dollar-denominated. Almost 40 per cent of Tiphook's shares are owned by US investors.

Mr Braidwood said the stricter US accounting rules explained the exceptional charges. There was a pounds 30.6m provision for potential losses on foreign exchange contracts, while a further pounds 36.3m was eaten up by costs associated with Tiphook's redemption of its preference shares and losses on interest rate swaps.

The company took another pounds 8.4m hit on property and office equipment write-downs. It bought its former head office for pounds 13m but then wrote its valuation down by pounds 3.5m to reflect open-market values.

There was a further pounds 2m provision against a pounds 29m debt incurred by the company's employee share ownership scheme, which Tiphook has guaranteed.

Mr Braidwood said the items taken as a result of the accounting changes did not affect the business's underlying cash flow. 'Operating cash flow has fallen 13 per cent to pounds 163.9m but is resilient considering the dreadful economic circumstances,' he added.

Both trailer and container rental continued to be hit by recession. Container utilisation reached a low of 79 per cent in February but is now recovering slowly.

The average figure for the year was 6 percentage points lower at 82 per cent, while average rental rates were 2 per cent down.

Bottom Line, page 31