Contract Development

RNS Number : 3760B

AssetCo PLC

16 April 2012

 



16 April 2012

Assetco Plc

("Assetco" or the "Company")

In the Company's Preliminary Results announcement issued on 10 April 2012, Assetco referred to the business' future and primary focus being built around the further development of the Company's successful outsourcing contracts in the Middle-East; at the same time it would be working with the its customers and banks so as to provide a solution for the more difficult UK long-term vehicle & asset leasing and maintenance businesses where the outcomes are uncertain.

The Financial Statements within the Company's Accounts for the 18-month period ended 30 September 2011 (published on 12 April 2012), referred under 'Post Balance sheet events' to a termination notice ("Notice") that had been received claiming an irredeemable breach in relation to a smaller vehicle and asset leasing contract the Company operates on behalf of Lincoln County Council. 

Since the Notice was received by the Assetco subsidiary which operates the contract, the Directors have been seeking clarification with regard to its validity, and it has since become evident to the Company that Lincoln County Council has, without valid reason or discussion, unilaterally taken the vehicle & asset maintenance contract in-house and purported to have terminated the existing contract between themselves and Assetco.

During the 18-month financial period reported upon, the Lincoln County Council contract accounted for £4.4 million of the Company's total revenue of £49 million. This contract is operated through a subsidiary, Assetco Lincoln Ltd, and in the financial period referred, it had net liabilities of £8.4 million after bank debt of £10.01 million; revenues of £4.2 million; profit before tax and exceptional items of £0.11 million; and a loss before tax and after exceptional items of £8.9 million.

The Lincoln contract also provides for payments from Lincoln County Council in the event of termination, which should result in the banks receiving payment for the relevant leased assets. However, as there does not appear to be a valid contractual basis for the termination, the Company considers the action to be a repudiatory breach of contract and following legal advice it is reserving its position.

As indicated in the Chairman's statement contained within the Published Accounts, the Plc has already restructured and ring-fenced itself from the UK operations to enable management to concentrate on renewing their successful outsourcing contract in the UAE, and also pursuing further opportunities with their partners in the Middle-East region.

Shareholders will be updated on progress as appropriate.

Enquiries:
Tudor Davies, Executive Director	Richard Day	Fiona Tooley
	Jamie Cameron
Assetco Plc	Arden Partners plc	TooleyStreet Communications
Tel: [phone]	Tel:[phone]	Mobile: [phone]
www.assetco.com Ticker AIM: ASTO.L

 

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