Half Yearly Report

RNS Number : 7938X

AssetCo PLC

13 December 2010

 

AssetCo plc

Interim results

Six months ended 30 September 2010

AssetCo plc, the International Fire and Rescue Services business reports a strong performance consolidating the business in the UK and abroad during the six months ended 30 September 2010.

Highlights

·     Revenue of £17.1m (six months to Sept '09: £16.5m) representing a 4% year on year growth.

·     Underlying Revenue (excluding one off events) grew 13% year on year.

·     Operating Profit of £6.3m (six months to Sept '09: £5.5m) represents an improvement in margin from 33% to 37%.

·     Underlying Operating Profit margin (excluding one off events) increased by 9%.

·     Adjusted EPS from continuing activities remaining constant at 3.6p after adjusting for the unrealized loss of derivative instruments of £791k.

·     EPS on continuing activities declined by 0.7p

Subsequent to the period end, we have made significant progress with regard to the previously announced strategy of selling non-core activities. This has resulted in closing the sale of the Treka Bus Limited business and reaching an advanced point of negotiations on the sale of the remainder of the assets. As a result a write down of £4.8m has been booked to the profit and loss for the period to reflect these negotiations.

In addition, advanced discussions with a syndicate of banks are proceeding to release additional liquidity contained within the non-recourse asset financing to enable the Group to restructure its balance sheet further.

Enquiries:

AssetCo plc	[phone]
John Shannon, Chief Executive Officer
Scott Brown, Chief Financial Officer
Arden Partners plc	[phone]
Richard Day
Adrian Trimmings
Cadogan PR	[phone]
Alex Walters
Emma Wigan

Report of the Chief Executive Officer

Introduction

Our continued evolution as an International Fire and Rescue Services business passed a key milestone during the six months with the start of our initial contract with the UAE Armed Forces. This together with the significant investment we have made in our business development activities has strengthening our international Fire and Rescue team and we are now well placed to meet future opportunities.

Internally we have continued to correct the inefficiencies within our balance sheet, whilst the disposing of discontinued operations as planned. The sale of Treka Bus Limited business was completed on 29 October 2009 for net proceeds of £0.75m. The sale of the remaining assets held for sale is at an advanced stage and expected to conclude soon. By year end the Board expects all material balances to be cleared.

The Board is currently engaged in advanced discussions with a syndicate of banks to achieve a significant refinancing of the non-recourse debt the Company maintains. Once these discussions are completed we are confident that the resultant structure will release further liquidity from the balance sheet.

We were pleased to announce the appointment of Scott Brown as the new Chief Financial Officer with effect from 4 October 2010, replacing Frank Flynn.  Frank was one of the original 2005 Management Buy-In/Buy-Out Team and leaves the Board as part of the business's long-term succession planning.

Scott, a Chartered Accountant, was formerly Corporate Vice President of US headquartered Parexel Inc, and Chief Financial Officer of ClinPhone plc, a supplier of clinical trial services to the pharmaceutical industry, prior to its acquisition by Parexel in 2008.

The Board would like to thank Frank for his significant contribution to AssetCo Fire and Rescue since 2005, and wish him well in his future endeavours.

Strategy

International

We have made excellent progress in developing a strong reputation in the UAE as the preferred partner for fire and rescue services. We now have over 80% local Emirati employees, an international senior management team, and a "best in class" UK operating model.

Our initial contract includes the provision of a military, civil, airside and oil and gas firefighting capability which has opened up large international opportunities for us.

UK

Our efforts have focused around the development of our Emergency Fire Crew Capability, and continuing to partner London Fire and Emergency Planning Authority and Lincolnshire Fire and Rescue to identify operational efficiency savings ahead of potential budget cuts.

Outlook

We are pleased with the progress made during the first half of FY11, and having completed large scale operational changes, we are now recognised as a fully outsourced fire and rescue services provider.

Trading continues to be in line with the Board's expectations and with the UAE contract coming fully on stream in the second half, we remain confident of a good overall performance for the full year.

As we reshape our balance sheet, the Board has prudently deferred any further recommendation of dividends until after the year end results are announced.

John Shannon

Chief Executive Officer

13 December 2010

INTERIM CONSOLIDATED INCOME STATEMENT (UNAUDITED)

		Six months ended
		30.9.10	30.9.09
		£’000	£’000

Revenue		17,125	16,524
Cost of sales		(5,768)	(5,238)
		-------------------------------------	-------------------------------------
Gross profit		11,357	11,286
		-------------------------------------	-------------------------------------

Administrative expenses				(4,984)		(5,645)
				-------------------------------------		-----------------------------------
Restructuring costs				(64)	(132)
				-------------------------------------		-----------------------------------
Operating profit				6,309		5,509
				-------------------------------------		-------------------------------------
Finance income				-		425
Finance costs				(2,229)		(2,512)
Realised gain on fair value of financial instrument				78		150
Unrealised loss on fair value of financial instrument				(791)		-
				-------------------------------------		-------------------------------------
Profit before taxation				3,367		3,572
				-------------------------------------		-------------------------------------
Taxation				(754)		(730)
				-------------------------------------		-------------------------------------
Profit for the period from continuing operations				2,613		2,842
				-------------------------------------		-------------------------------------
Discontinued operations
(Loss)/profit for the period from discontinued operations				(454)		424
Loss from write down of goodwill on assets held for sale				(4,848)		-
				-------------------------------------		-------------------------------------
(Loss)/profit for the period				(2,689)		3,266
				=======================		=======================

Earnings per share (pence)

From continuing operations
Basic			2.9p		3.6p
			-------------------------------------		------------------------------------
Diluted			2.9p	3.6p
			-------------------------------------		-------------------------------------

From continuing and discontinued operations
Basic			(3.0)p		4.1p
			-------------------------------------		-------------------------------------
Diluted			(3.0)p	4.1p
			-------------------------------------		-------------------------------------

INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

			Six months ended
				30.9.10          £’000	30.9.09           £’000
	(Loss)/profit for the period			(2,689)	3,266
	Other comprehensive income
	Exchange differences on translating of foreign operations			2	-
	Income tax relating to components of other comprehensive income			-	-
				-------------------------------------	-------------------------------------
				2	-
				-------------------------------------	-------------------------------------
	Total comprehensive income			(2,687)	3,266
				=======================	=======================

CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED)

				30.9.10 £’000		31.3.10 £’000					30.9.09 £’000
	Notes
ASSETS
Non-current assets
Property, plant and equipment				80,776		74,714					78,211
Goodwill				47,905		47,905					57,081
Other intangible assets				12,739		7,939					6,288
Investment in associate				414		414					414
Deferred tax asset				4,377		4,377					3,770
Retirement benefit surplus				429		429					429
				------------------------------------		-----------------------------					-----------------------------
				146,640		135,778					146,193
				------------------------------------		-----------------------------					-----------------------------
Current assets
Inventories					400			201		7,285
Trade and other receivables					28,421		28,014			17,118
Cash					5,857		13,697			17,136
					------------------------			-----------------------------		-----------------------------
					34,678			41,912		41,539
					------------------------			-----------------------------		-----------------------------
Assets held for sale					10,070			16,956		-
					------------------------			-----------------------------		-----------------------------
Total assets					191,388				194,646	187,732
					=======================			=======================		=======================
EQUITY
Issued share capital					22,678			22,678		22,678
Equity component of compound financial instruments					7,917			7,917		7,917
Share premium account					29,288			29,288		29,288
Reverse acquisition reserve					(11,701)			(11,701)		(11,701)
Translation reserve					(56)			(58)		(304)
Other reserve					710			680		580
Retained earnings					9,325			12,014		12,734
					------------------------			-----------------------------		-----------------------------
Total equity					58,161			60,818		61,193
					------------------------			-----------------------------		-----------------------------

CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION (UNAUDITED)

				30.9.10 £’000	31.3.10 £’000		30.9.09 £’000
			Notes
LIABILITIES
Non-current liabilities
Borrowings				67,692	67,267		76,381
Liability component of compound financial instruments				8,650	8,200		7,045
Deferred tax liabilities				9,060	9,959		6,684
				-------------------------------------	-------------------------------------		-------------------------------------
				85,402	85,426		90,110
				-------------------------------------	-------------------------------------		-------------------------------------
Current liabilities
Trade and other payables				18,708	20,118		14,478
Current income tax liabilities				2,511	858		-
Borrowings				15,280	14,912		14,976
Derivative financial instruments				6,534	5,821		6,975
				-------------------------------------	-------------------------------------		-------------------------------------
				43,033	41,709		36,429
				-------------------------------------	-------------------------------------		-------------------------------------
Liabilities associated with assets classified as held for sale				4,792	6,693		-
				-------------------------------------	-------------------------------------		-------------------------------------
Total liabilities				133,227		133,828	126,539
				-------------------------------------	-------------------------------------		-------------------------------------
Total equity and liabilities				191,388		194,646	187,732
				=======================	=======================		=======================

CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (UNAUDITED) 
 

						Six months ended
						30.9.10 £’000	30.9.09 £’000
					Note
Cash flows from operating activities
Cash generated from operations					4	8,447	8,554
Contribution to defined benefit pension schemes						(117)	(115)
						--------------------------------	--------------------------------
Net cash flow from operating activities						8,330	8,439
						--------------------------------	-----------------------------------
Cash flows from investing activities
Finance income						-	431
Purchase of intangible assets						(4,964)	(845)
Purchases of property, plant and equipment						(9,314)	(4,807)
						--------------------------------	--------------------------------
Cash flow from investing activities						(14,278)	(5,221)
						--------------------------------	--------------------------------
Cash flows from financing activities
Issue of shares (net of costs)						-	7,506
Dividends paid						-	(1,140)
Finance costs						(2,229)	(2,752)
Repayments of borrowings						(1,704)	(6,905)
Increase in borrowings						-	-
Finance lease additions						6,515	2,031
Finance lease repayments						(5,383)	(5,107)
						--------------------------------	--------------------------------
Net cashflow from financing						(2,801)	(6,367)
						--------------------------------	-----------------------------------
Net cash and cash equivalents from continuing operations						(8,749)	(3,149)
Cashflow from discontinued operations						(454)	(347)
						-----------------------------------	-----------------------------------
Net change in cash and cash equivalents						(9,203)	(3,496)
Cash, cash equivalents and bank overdrafts at beginning of period						12,487	18,805
						--------------------------------	-----------------------------------
Cash, cash equivalents and bank overdrafts at end of period						3,284	15,309
						=====================	=====================

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

	Ordinary and preference share capital	Share premium account	Reverse acquisition reserve	Translation reserve	Other Reserve	Retained earnings	Total Equity
	£’000	£’000	£’000	£’000	£’000	£’000	£’000
At 1 April 2009	26,262	26,115	(11,701)	(304)	580	10,608	51,560
Profit for the period	-	-	-	-	-	3,266	3,266
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Total recognised income and expense for the period	-	-	-	-	-	3,266	3,266
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Dividends paid in the year	-	-	-	-	-	(1,140)	(1,140)
Net proceeds from issue of shares	4,333	3,173	-	-	-	-	7,506
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
At 30 September 2009	30,595	29,288	(11,701)	(304)	580	12,734	61,192
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Exchange differences on translation of overseas operations	-	-	-	246	-	-	246
Profit for the year	-	-	-	-	-	(720)	(720)
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Total recognised income and expense for the period	-	-	-	246	-	(720)	(474)
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Movement relating to share-based payments	-	-	-	-	100	-	100
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
At 31 March 2010	30,595	29,288	(11,701)	(58)	680	12,014	60,818
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Exchange differences on translation of overseas operations	-	-	-	2	-	-	2
Loss for the year	-	-	-	-	-	(2,689)	(2,689)
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Total recognised income and expense for the period	-	-	-	2	-	(2,689)	(2,687)
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
Movement relating to share-based payments	-	-	-	-	30	-	30
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------
At 30 September 2010	30,595	29,288	(11,701)	(56)	710	9,325	58,161
	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------	-----------------------------

NOTES TO THE INTERIM FINANCIAL STATEMENTS (UNAUDITED) 

1. Legal status and activities

AssetCo plc ("the Company") and its subsidiaries (together "the Group") are principally involved in the provision of Fire and Rescue Services to domestic and international markets..

The Company is a public limited company incorporated and domiciled in England and Wales.  The address of its registered office is 800 Field End Road, South Ruislip, Middlesex HA4 0QH.

The Company is listed on the Alternative Investment Market ("AIM") of the London Stock Exchange.

The Company's accounts for the year ended 31 March 2010 have been delivered to the Registrar of Companies.  Those accounts received an unqualified audit report which did not contain statements under Section 237 (2) and (3) of the Companies Act 1985.

These financial statements are not statutory accounts within the meaning of Section 240 of the Companies Act 1985.

These Group consolidated interim financial statements were authorised for issue by the Board of Directors on 13 December 2010.

2   Basis of preparation of the interim report

The accounts comply with the AIM Rules and have been prepared on a basis consistent with the revenue and recognition principles of International Financial Reporting Standards ("IFRS").  The interim financial information has been prepared on a basis which is consistent with the accounting policies adopted by the Group for the last financial statements and should be read in conjunction with these financial statements.  The Group has chosen not to adopt IAS 34, "Interim Financial Reporting".

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.  It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

The comparative profit and loss for the 6 months ended 30 September 2010 has been restated to report results consistent with the Annual Report for the year ended 31 March 2010 in two respects. Firstly, the classification and separate disclosure of businesses being held for sale. The revenue and associated costs for these businesses are contained within the discontinued operations result for the periods ending 30 September 2009 and 30 September 2010. Secondly, the profit and loss for the period ended 30 September 2009 have also been restated to account for the hedge arrangement deemed as an ineffective hedge.  This resulted in gains and losses on the movement of the fair value of the financial instrument being transferred from the statement of changes in equity to the income statement. The overall impact on the consolidated income statement has been a gain of £0.15m. 

3. Primary segment information

For management purposes, the Group is organised into one main business segment as follows:

Fire and Rescue Services- provision of management services to the fire and rescue market

Period ended 30 September 2010

		Fire and Rescue	Held for sale	Consolidation adjustments	Total
		£'000	£'000	£'000	£'000
Segment revenue		17,125	5,328	-	22,453
		=====================	=====================	=====================	=====================
Segment operating profit/(loss)		6,339	(189)	(30)	6,120
Net segment finance costs		(2,229)	(265)	(713)	(3,207)
		=====================	=====================	=====================	=====================
Segment profit/(loss) before tax		4,110	(454)	(6,091)	(2,435)
		=====================	=====================	=====================	=====================
Depreciation and amortisation		3,416	155	-	3,571
		=====================	=====================	=====================	=====================

Period ended 30 September 2009

		Fire and Rescue	Held for sale	Discontinued operations	Consolidation adjustments	Total
		£'000	£'000	£'000	£'000	£'000
Segment revenue		16,524	5,888	5,450	-	27,862
		=====================	=====================	=====================	=====================	=====================
Segment operating profit/(loss)		5,509	2,054	(1,344)	-	12,241
Net segment finance costs		(2,057)	72	(244)	150	6,152
		=====================	=====================	=====================	=====================	=====================
Segment profit/(loss) before tax		3,452	1,982	(1,588)	150	3,996
		=====================	=====================	=====================	=====================	=====================
Depreciation and amortisation		3,684	26	31	-	6,546
		=====================	=====================	=====================	=====================	=====================

4. Reconciliation of profit before tax to net cash generated from operations

			Six months ended	Six months ended
			30.9.10	30.9.09
			£'000	£'000
Profit for the year before taxation			3,367	3,572
Adjustments for:
- Depreciation			3,252	3,461
- Amortisation			164	223
- Share-based payments			30	50
- Fair value gains on financial instruments recognized in profit and loss			(78)	(150)
- Unrealised loss on fair value of financial instruments recognized in profit and loss			791	-
- Finance income			-	(431)
- Finance costs			2,229	2,752
- Exchange differences			7	106
Changes in working capital (excluding the effects of acquisitions)
- Inventories			(199)	125
- Trade and other receivables			173	(597)
- Trade and other payables			(1,289)	(567)
			-----------------------------------	-----------------------------------
Cash generated from operations			8,447	8,544
			====================	=========================================

5. Post balance sheet event

On 29 October 2010 TREKA Bus Limited was sold for net proceeds of £0.75m.

As at the date of this report, the Company is in advanced discussions with an acquirer of the remaining businesses held by the Company for sale.  The net asset value of these operations has been written down to reflect these negotiations. Accordingly, a write down charge of £4.8m has been recorded for the period.

6. Dividend paid

A dividend relating to the year ended 31 March 2010 of 1.5 pence per share was paid on 5 November 2010.  This amounted to £1,361,000.

 

END

 

 

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