Final Results
Asfare Group plc
23 June 2004
Press Release 23 June 2004
Asfare Group plc
Preliminary Results for the year ended 31 March 2004
Asfare Group plc, the UK's leading manufacturer of ladders for the rescue
services, reports its maiden Preliminary Results for the year ended 31 March
2004.
Highlights:
• Asfare acquired Speed and its principal trading company, AS Fire, in
December 2003 for £3.8 million before expenses
• £2.92 million, net of expenses, institutional placing and admission to
the AIM market in December 2003
• Proforma turnover for 12 months period 4.7 per cent higher at £4.4
million (2003: £4.2 million)
• Proforma operating profits 4.7 per cent higher at £933,000 (2003:
£891,000), if costs of AIM presence and related additional staff are
added back
• Proforma operating loss in the 12 month period totalled £360,000
(2003: £833,000 operating profit)
• After exceptional costs of over £1 million, the loss before tax since
incorporation in December 2003 amounted to £936,000
• Proforma adjusted earnings per share were 11.3 pence. (2003: 14.0
pence). On a like for like basis 2003 earnings per share would have
been 10.4 pence
• Trading expected to grow steadily with the finalisation of fire and
rescue authorities procurement policies
• Michael Adrian Jones A.C.A. 42, appointed to the Board today as
Finance Director with immediate effect
Commenting on the Preliminary Results, David Chisnall, Chief Executive, said:
'It has been an exciting year for Asfare and these results are testament to
that. The acquisition of Speed and its principal trading company AS Fire in
December coupled with our successful flotation on the AIM market has put the
Company in a strong position. We are confident about growing the business both
organically and through acquisition in this positive operating environment.'
For further information, please contact:
Enquiries:
Asfare Group plc
Adrian Jones, Finance Director Tel: +44 (0) 2380 861 966
Seymour Pierce
Mark Percy Tel: +44 (0) 20 7107 8000
Stella Panu
Media enquiries:
Bankside
Ariane Vacher/Julian Bosdet Tel: +44 (0) 20 7444 4143
ariane.vacher@bankside.com www.bankside.com
- Ends -
Chairman's Statement
I am pleased to report on this the first trading period for the Company since
its incorporation and flotation on AIM in December 2003. The results for the
current period derive from the operations of AS Fire and Rescue Equipment Ltd ('
AS Fire') which the Company acquired on 12th December 2003, together with the
results of the Company itself. Accordingly the current results are for a
trading period of 3 months and 20 days. In order to give a better understanding
of the underlying trading of the combined group of companies we have provided
proforma unaudited results for the twelve months ended 31st March 2004 along
with comparatives for the previous financial year for AS Fire. It is on these
figures that I comment below.
Financial Results
Profit & Loss Account
Turnover for the twelve month period amounted to £4,389,000, a rise of 4.7%
compared with the previous twelve months. Underlying proforma operating profit
was also 4.7% ahead of the previous twelve month period.
Operating profit before goodwill amortisation and exceptional costs for the
twelve month period was £781,000, a reduction of £110,000 compared with the
prior year. However, since 12th December 2003 the Company has incurred
additional ongoing costs amounting to £152,000 which were not incurred in the
previous year as a result of the AIM flotation and in respect of additional
staff to help build the Company in the future. If these costs were added back,
operating profit before goodwill and exceptional costs would have amounted to
£933,000, representing 4.7% growth over the previous period.
Goodwill amortisation of £77,000 relates to the goodwill which arose upon the
acquisition of AS Fire. Exceptional costs of £1,015,000 represent accounting
charges for shares issued at a discount to their market value as set out in the
AIM prospectus. Of this amount, £900,000 does not represent a cash outflow and
is added back in arriving at the profit and loss reserve. Additional exceptional
costs of £49,000 related to costs associated with the AIM listing and the
relocation of AS Fire's factory and offices in the summer of 2003.
After allowing for these costs, there was an operating loss in the twelve month
period of £360,000, compared with an operating profit in the previous year of
£833,000.
The loss before tax for the period since incorporation in December 2003 was
£936,000, including exceptional costs of £1,015,000. Proforma adjusted earnings
per share were 11.3 pence (2003: 14.0 pence). On a like for like basis 2003
earnings per share would have been 10.4 pence.
Balance Sheet and Cash Flow
At 31st March 2004, shareholders' funds amounted to £2,885,000. Net borrowings
were £1,033,000. On its admission to the AIM market, the Company raised
£2,922,000 (net of expenses) from an issue of new shares. At the same time a new
five year term loan was secured with HSBC and an existing term loan with HSBC of
£550,000 was repaid, providing a net increase of £606,000 (after expenses).
These proceeds were used to facilitate the purchase of Speed for £3,800,000. The
proforma net cash flow from operations in the twelve month period was £530,000
(2003: £1,068,000).
Dividends
The directors are not proposing to pay a dividend for the period as stated in
the prospectus.
Current Trading
Major events in the year
The twelve months ending March 2004 included two significant events for AS Fire.
In June 2003 it consolidated its manufacturing on one site in Southampton.
Whilst inevitably there was some disruption, the move is leading to greater
flexibility, improved manufacturing efficiency and reduced costs. The listing
on the AIM market took up a considerable amount of executive time, but the flow
of new products and the development of the business were largely unaffected.
Customers, suppliers and staff have welcomed the move because of the financial
stability it provides for the Company.
New products
A new generation of lighter weight 12 metre and 13.5 metre triple extension
ladders has been added to the AS Fire range and these have met with an
enthusiastic reception from many brigades. The first of three powered Boat Beam
Gantries is now in service with South Yorkshire Fire & Rescue Service and we
expect further orders to follow. Considerable interest was generated at the
recent Brigade Engineers' conference in the powered Beam Gantry which was on
display on a demonstration vehicle. For many, this was the first opportunity to
see the powered beam working in its finished form on a vehicle. In export
markets, Beam Gantry sales have been growing in Europe and Quickstow sales have
been growing in Australia, with a large order from Air Service Australia.
The proposed National Fire Services Procurement Strategy
Although proforma profits in 2004 were ahead of those for 2003, sales in the
normally strong last financial quarter were quieter than usual. The last
quarter slowdown resulted from uncertainties connected with a review of national
fire service procurement initiated by the Office of the Deputy Prime Minister ('
ODPM ').
It is generally accepted in the fire and emergency equipment industry that there
is a need for a National Procurement Strategy. Work on this was delayed by the
2002/2003 pay dispute and the final report has still not been published,
although most of its expected major recommendations are circulating in the
industry. We welcome the expected proposals as a sensible and constructive
approach to strengthen current procurement practise with the proviso that the
costs of setting up and running a National Procurement Strategy must be
justified against the savings and efficiencies that can be made. It should be
borne in mind that much of fire equipment procurement (including ladders) is
already undertaken in consortia, where the majority of benefits from standard
products are already achieved.
The uncertainty in the industry has been the result of directives from the ODPM
to the fire authorities for them only to enter into new contracts for
operational equipment where the need is for urgent operational reasons. This
advice was to be followed until such time as the national strategy is published.
This uncertainty had unintended adverse commercial consequences for some
suppliers, but although AS Fire saw a downturn in normal demand over the last
quarter, this was not severe. We understand that the original directive is
about to be reversed and we do not expect any permanent loss of business.
As the established and leading ladder manufacturer in the UK, AS Fire already
works closely with fire authorities, consortia and fire truck manufacturers to
ensure that its products are constantly developed to meet changing end-users'
needs. The new proposals are likely to streamline our efforts and costs as well
as those of the procurement bodies.
Acquisitions
We are in various stages of discussion with several companies which could lead
to their acquisition. Our initial belief that Asfare could become a vehicle for
the consolidation and growth of other businesses in the fire and rescue
equipment supply industry seems to be supported by these discussions and the
Board is optimistic that the first steps in its acquisition strategy will be
successfully accomplished this year.
The Board
We welcome Adrian Jones who joined the Board earlier this month as Group Finance
Director. After graduating from Southampton University with a degree in
Accounting and Economics, Adrian trained as a Chartered Accountant with Coopers
& Lybrand and qualified in 1986. Following two years at Meggitt plc he joined
British Bus plc becoming group finance firector in March 1994. After the sale
of British Bus plc to Cowie plc for £300 million in 1995 he joined Capital Radio
plc becoming a regional managing director.
He has replaced Andrew Collins who was Group Finance Director designate, but who
for personal reasons was unable to take up the appointment permanently. Andrew
Collins did not exercise the warrants granted to him at the time of the AIM
listing which have since lapsed.
Staff
I welcome the opportunity in this my first report to shareholders to acknowledge
the tremendous support and enthusiasm shown by the staff of AS Fire. They take
seriously their role as part of a team with the fire fighters who use our
equipment. Safety, quality and service are paramount in what they do.
Future prospects
Trading in the first three months of the current financial year is in line with
expectations. We expect the trading in our established products to increase
steadily this year as procurement policies in the fire and rescue authorities
are finalised and this together with acquisition opportunities leads the Board
to be optimistic about the future for the Group.
Tim Wightman
Chairman
22 June 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
Note 2004 2004 2003
£000 £000 £000
Turnover 1 1,334 4,389 4,191
Cost of sales (629) (2,012) (1,899)
Gross profit 705 2,377 2,292
Administration and establishment expenses (1,620) (2,737) (1,459)
Operating profit before goodwill amortisation
and exceptional costs included in administration 136 781 891
and establishment expenses
Goodwill amortisation 5 (36) (77) (58)
Exceptional costs 2 (1,015) (1,064) -
Operating (loss) / profit (915) (360) 833
Interest receivable 1 5 4
Interest payable (22) (46) (62)
(Loss) / profit on ordinary activities before (936) (401) 775
taxation
Tax on ordinary activities 3 (1) (165) (245)
(Loss) / profit on ordinary activities after (937) (566) 530
taxation
Dividends - - -
Retained (loss) / profit for the financial (937) (566) 530
period
(Loss) / earnings per share
Basic (loss) / earnings per share 4 (22.3p) (13.5p) 12.6p
Loss per share on goodwill and exceptional items
after taxation 4 22.9p 24.8p 1.4p
Adjusted earnings per share 4 0.6p 11.3p 14.0p
Diluted basic earnings per share 4 - - 10.7p
The results for the current period derive from the operations of AS Fire which
were acquired on 12 December 2003, together with the results of the newly formed
holding company Asfare Group plc. Accordingly the current period results
represent the period from incorporation to 31 March 2004.
All operations are classed as continuing.
The Company has no recognised gains or losses other than the results for the
year as set out above.
CONSOLIDATED BALANCE SHEET
At 31 March
Proforma
Note 2004 2003
£000 £000
FIXED ASSETS
Intangible assets 5 2,910 718
Tangible assets 156 103
3,066 821
CURRENT ASSETS
Stock and work in progress 635 655
Debtors 6 830 645
Cash at bank and in hand 67 526
1,532 1,826
CREDITORS: amounts falling due within one year 7 (845) (956)
NET CURRENT ASSETS 687 870
TOTAL ASSETS LESS CURRENT LIABILITIES 3,753 1,691
CREDITORS: amounts falling due after more than
one year 8 (868) (451)
NET ASSETS 2,885 1,240
CAPITAL AND RESERVES
Called up share capital 1,050 76
Share premium account 9 1,872 425
Capital redemption reserve - 69
Profit and loss account 9 (37) 670
SHAREHOLDERS' FUNDS 10 2,885 1,240
CONSOLIDATED CASH FLOW STATEMENT
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31March 31 March 31 March
Note 2004 2004 2003
£000 £000 £000
Net cash inflow from operating activities 11 133 530 1,068
Returns on investment and servicing of finance
Interest received 1 5 4
Interest paid (22) (47) (62)
New loans issue costs (44) (44) -
(65) (86) (58)
Taxation
Corporation tax paid (76) (319) (178)
Capital expenditure and financial investment
Purchase of tangible fixed assets (4) (113) (32)
Sale of tangible fixed assets - 3 3
(4) (110) (29)
Acquistions and disposals
Purchase of subsidiary undertakings (3,873) (3,873) -
Net cash acquired with subsidiaries 439 - -
(3,434) (3,873) -
Net cash (outflow) / inflow before
management of liquid resources and financing (3,446) (3,858) 803
Financing
Share Issue 3,300 3,300 -
Issue Costs (378) (378) -
New long term loan 1,200 1,200 -
Repayment of old long-term loan (550) (664) -
Repayment of new long-term loan (60) (60) -
Repayment of series A & B loans - - (243)
Repayment of secured loan - - (93)
Net cash inflow / (outflow) from financing 3,512 3,398 (336)
Increase / ( Decrease ) in cash for the period 66 (460) 467
NOTES TO ACCOUNTS
BASIS OF PREPARATION
The accounts have been prepared in accordance with applicable accounting
standards and under the historical cost accounting rules. The accounts cover the
period from incorporation of 17 November 2003 to 31 March 2004.
In order to enable useful comparison of the Group's performance proforma
information has been included on this Annual Report. The proforma results for
the twelve months ended 31 March 2004 represent the actual consolidated results
of the Group from the date of incorporation of the Company plus the results of
Speed 5019 Ltd and its subsidiaries from 1 April 2003 until its acquisition by
the Company on 12 December 2003. The proforma information for the year ended 31
March 2003 represents the actual audited consolidated profit and loss, balance
sheet and cashflow statement of Speed 5019 Ltd for that period.
1 ANALYSIS OF TURNOVER
Proforma
Period (unaudited) Proforma
By Geographical Market from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
2004 2004 2003
£000 % £000 % £000 %
UK 1,127 84% 3,742 85% 3,391 81%
Rest of World 207 16% 647 15% 800 19%
1,334 100% 4,389 100% 4,191 100%
2 EXCEPTIONAL COSTS
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
2004 2004 2003
£000 £000 £000
UITF 17 charge for shares issued at a discount (900) (900) -
Employers National insurance on discounted shares (115) (115) -
Cost of relocating factory and offices and AIM listing - (49) -
(1,015) (1,064) -
The UITF 17 charge relates to 1,499,998 ordinary 25p shares allotted at 40p per
share on 2 December 2003 to DP Chisnall ( as to 498,750 ), TR Wightman* and
family ( as to 498,749 ) and AE Bradshaw** ( as to 502,499).
Note:
* T R Wightman is interested in 125,000 of the Ordinary Shares set out against
his name by reason of his wife's beneficial ownership of those shares.
** A E Bradshaw is interested in one half of the Ordinary Shares set out against
his name, all of which are held by Bradmount acting as nominee for Adrian
Bradshaw and Peter Mountford in equal shares.
3 TAX ON (LOSS) / PROFIT ON ORDINARY ACTIVITIES
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
2004 2004 2003
Current tax £000 £000 £000
Tax on (loss) / profits for the period - 154 256
Adjustment in respect of previous periods - - (1)
- 154 255
Deferred tax
Origination and reversal of timing differences - - (5)
Adjustment in respect of previous periods 1 11 (5)
1 11 (10)
Taxation on (loss) / profits on ordinary activities 1 165 245
The tax assessed for the period is higher than the standard rate of corporation
tax in the UK ( 30 per cent ). The differences are explained as follows :
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
2004 2004 2003
£ £ £
(Loss) / profits on ordinary activities before tax (936) (401) 775
(Loss) / profit on ordinary activities multiplied by the
standard
rate of corporation tax in the UK of 30% (281) (121) 233
Effect of :
Expenses not deductible for tax purposes 13 25 25
Utilisation of tax losses (90) (101) -
Capital allowances for the period in excess of depreciation 2 (5) 3
Expenses treated as management expenses 356 356 -
Research and development credit - - (5)
Adjustments to tax charge in respect of prior periods - - (1)
Current tax charge for the period - 154 255
4 (LOSS) / EARNINGS PER SHARE
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
2004 2004 2003
£000 £000 £000
(Loss)/profit after taxation (937) (566) 530
Adjustments :
Goodwill amortisation 36 77 58
Exceptional items 1,015 1,064 -
Taxation on exceptional items (90) (101) -
Adjusted profit 24 474 588
Number Number Number
Basic weighted average number of shares 4,200,000 4,200,000 4,200,000
Dilutive potential ordinary shares:
Share options 355,000 355,000 355,000
Warrants 420,000 420,000 420,000
4,975,000 4,975,000 4,975,000
Basic (loss) / earnings per share
(based on (loss) / profit after taxation) (22.3p) (13.5p) 12.6p
Loss per share on goodwill and exceptional items
after taxation 22.9p 24.8p 1.4p
Adjusted earnings per share 0.6p 11.3p 14.0p
Diluted basic earnings per share - - 10.7p
The adjusted earning per share has been calculated by removing goodwill
amortisation and exceptional items to give a meaningful comparison with the
previous year's results.
5 INTANGIBLE FIXED ASSETS
GROUP Goodwill
£000
Cost
On Acquisitions of Speed 5019 Ltd 2,946
At 31 March 2004 2,946
Provision for amortisation
Charged for the period (36)
At 31 March 2004 (36)
Net book value
At 31 March 2004 2,910
The directors believe the benefits to be derived from having acquired Speed 5019
Ltd will continue for a period of not less than 20 years and accordingly the
directors are amortising goodwill over a period of 20 years.
6 DEBTORS
GROUP COMPANY
2004 2003 2004 2003
£000 £000 £000 £000
Trade debtors 768 597 - -
Amount owed by subsidiary undertakings - - 4,424 -
Other debtors 1 18 13 -
Prepayments and accrued income 61 30 6 -
830 645 4,443 -
7 CREDITORS: AMOUNT FALLING DUE WITHIN ONE YEAR
GROUP COMPANY
2004 2003 2004 2003
£000 £000 £000 £000
Overdraft 1 - 1 -
Bank loans 231 213 231 -
Trade creditors 317 304 52 -
Amount due to subsidiary undertakings - - 608 -
Social security and other taxes 159 117 - -
Other creditors 19 25 - -
Accruals 103 131 50 -
Corporation tax 15 166 - -
845 956 942 -
The overdraft and bank loan are secured by a fixed charge over all of the
Company's assets.
8 CREDITORS: AMOUNT FALLING DUE AFTER MORE THAN ONE YEAR
GROUP COMPANY
2004 2003 2004 2003
£000 £000 £000 £000
Bank loan 868 451 868 -
9 SHARE PREMIUM ACCOUNT AND RESERVES
GROUP Share Profit and
Premium Loss
Account Account
£000 £000
At the start of the period - -
Retained loss - (937)
Issue of shares 2,250 -
Share issue costs (378) -
Write back of charge for shares issued at a discount - 900
At 31 March 2004 1,872 (37)
COMPANY Share Profit and
Premium Loss
Account Account
£000 £000
At the start of the period - -
Retained loss - (1,189)
Issue of shares 2,250 -
Write back of charge for shares issued at a discount - 900
Share issue costs (378) -
At 31 March 2004 1,872 (289)
The share issue costs include £33,490 charged by the auditors.
10 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group Company
2004 2004
£000 £000
Loss for the financial period (937) (1,189)
Write back UITF 17 charge for shares issued at a discount 900 900
(37) (289)
New share capital subscribed (net of issue costs) 2,922 2,922
Net addition to shareholders' funds 2,885 2,633
Opening shareholders' funds - -
Closing shareholders' funds 2,885 2,633
11 NET CASHFLOW FROM OPERATING ACTIVITIES
Proforma
Period (unaudited) Proforma
from 12 months 12 months
incorporation ended ended
to 31 March 31 March 31 March
2004 2004 2003
£000 £000 £000
Operating (loss) / profit (915) (360) 833
Depreciation 14 57 57
Goodwill amortisation 36 77 58
Loan cost amortisation 3 3 -
Non cash adjustment to exceptional costs 900 900 -
Profit on sale of tangible fixed assets - (3) -
Decrease / (increase) in stock 79 20 (53)
Increase in debtors (237) (185) (66)
Increase in creditors 253 21 240
Exchange rate differences - - (1)
Net cash inflow from operating activities 133 530 1,068
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