Half Yearly Report to 31 March 2012

RNS Number : 4361G

AssetCo PLC

29 June 2012

 

Issued on behalf of AssetCo plc

Date:  Friday 29 June 2012

                                                                                                                                                                                Immediate Release

AssetCo plc

("AssetCo" or the "Company")

Results for the six-month period ended 31 March 2012

Statement by the Chairman, Tudor Davies

Introduction

This six-month financial period being reported upon follows on from the successful restructuring programme completed on 29 September 2011; this provided the basis for the Parent company AssetCo plc to be 'ring-fenced' from the rest of the Group. This has allowed the new team to focus on the successful outsourced Fire and Rescue operations in Middle East, thus moving away from the historic UK vehicle leasing and maintenance contracts which have consumed tens of millions of shareholder funds in recent years and been the principal reason for the significant decline in shareholder value.

Results

The results of the Parent company, AssetCo plc reflect the trading performance of the Company's contract for outsourced Fire and Rescue services in the United Arab Emirates ('UAE'), and for the six months ended 31 March 2012 Revenues were £5.52m; Operating profits £0.50m and profits after interest and taxation of £0.47m. The completion of the receipt of funds from shareholders as part of the financial restructuring increased net cash at Bank and in hand from £1.69m at 30 September 2011 to £5.2m at 31 March 2012, and net assets are £5.6m.

The Consolidated results which in the six -month period under review includes the trading of the UK businesses, shows Revenues of £18.17m; an Operating profit of £1.04m, before financing costs of £1.03m. As a consequence of a non cash one off gain of £5.2m resulting from the liquidation of various subsidiaries (as disclosed in note 4), the profit after tax for the period was £5.22m.

The change in accounting reference date to 30 September has resulted in the comparative six months results being those produced for the first half ended 30 September 2010 by previous management.  These comparative interim results were prepared on bases different from the final audited numbers for the eighteen month period ended 30 September 2011 produced by new management.

Trading

The trading in the UAE has been satisfactory and in line with the contract and management expectations; the funds as part of the restructuring programme last September have been deployed in the UAE to replace capital that had previously been withdrawn.

As we explained a few months ago, the UK vehicle leasing and maintenance contracts appeared to be based on a flawed business model and finance structure, sustained by successive injections of shareholder funds raised without any reasonable prospect of shareholder value.  On this basis, and because the contracts involve public services, the strategy was to continue to hold these businesses for the benefit of the customers and the Banks without any further allocation of capital, with a view in due course, to either refinancing or a disposal.  Since then, Lincolnshire County Council decided to take the contract in-house, and currently, we are continuing to work with the Banks and London Fire Brigade on the remaining vehicle leasing and maintenance contract to arrive at a mutually satisfactory outcome. 

Outlook

The restructuring implemented last year has provided the platform to focus on renewing the existing and successful contract in the UAE, whilst also pursuing other opportunities with our partners in the region.

We will keep shareholders updated as appropriate throughout the year.

29 June 2012

Company Profit and Loss Account for the

six month period ended 31 March 2012

	six months to 31 March 2012			18 months to 30 September 2011
			Total	Pre-exceptional	Exceptional items	Total
			£'000	£'000	£'000	£'000
Turnover			5,520	12,796	-	12,796
Cost of sales			( 4,026)	( 8,372)	-	(8,372)
Gross profit			1,494	4,424	-	4,424
Administrative expenses			( 992)	( 4,837)	(23,672)	(28,509)
Operating profit /( loss)			502	( 413)	(23,672)	(24,085)
Exceptional items			-	-	106,628	106,628
Profit / (loss) on ordinary activities before interest and taxation			502	(413)	82,956	82,543
Interest receivable and similar income			4	57	-	57
Interest payable and similar charges			(38)	(245)	-	(245)
Profit / (loss) on ordinary activities before taxation			468	(601)	82,956	82,355
Tax on  profit / (loss)  on ordinary activities			-	-	-	-
Profit / (loss) for the period			468	(601)	82,956	82,355

All activities relate to continuing operations.

There is no difference between the profit on ordinary activities before taxation and the profits for the financial period stated above, and their historical cost equivalent.

There are no gains or losses other than the profit of £468,000, with the exception of the foreign exchange differences on translation of £15,000, attributable to the shareholders for the period ended 31 March 2012 (2011:  profit of £82,355,000) and therefore no separate statement of total recognised gains and losses has been presented.

Company Balance Sheet
As at 31 March 2012

					31 March 2012				30 September 2011
					£'000		£'000		£'000		£'000
NET ASSETS EMPLOYED
Fixed assets
Tangible fixed assets							88				103
Current assets
Debtors					3,622				11,841
Cash held in respect of the Scheme of Arrangement					-				5,000
Cash held in respect of a bond					4,136				4,226
Cash at bank and in hand					5,246				1,688
					13,004				22,755
Current liabilities
Creditors - Amounts falling due within one year					( 7,476)				( 12,695)
Amount owed to the Scheme of Arrangement					-				(5,000)
					( 7,476)				( 17,695)
Net current assets							5,528				5,060
Total assets less current liabilities and net assets							5,616				5,163
REPRESENTED BY
Called up share capital							25,353				25,353
Share premium account							62,645				62,645
Merger reserve							68,293				68,293
Profit and loss reserve							( 150,675)				( 151,128)
Shareholders' funds							5,616				5,163

1              Legal status and activities

AssetCo plc ("the Company") is principally involved in the provision of management and resources to the fire and rescue emergency services in international markets.  It currently trades through a branch in UAE and its strategy is to develop this business. 

On the 29 September 2011 a share placing totalling £14,000,000 and a creditor scheme of arrangement were approved, whereby effectively all known and unknown liabilities were settled for a total consideration of £5,000,000 and the Company became ring fenced from all UK subsidiaries.

It is also the ultimate holding company for various UK domiciled subsidiaries, including AssetCo London Limited and AssetCo Engineering Limited who operate under a PFI contract to provide and maintain fire and rescue equipment for the London Fire Brigade.

2.             Basis of preparation

The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared on a going concern basis, under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards and law.

On the 9 September 2011, the Company announced a change in its accounting reference date from 31 March to 30 September.

3.             Subsequent events

Post balance sheet events are disclosed in note 7 to the consolidated financial statements.

Consolidated Income Statement

for the six month period ended 31 March 2012

						six months to 31 March 2012		six months to 30 September 2010	18 months to 30 September 2011
						£'000		£'000	£'000
					Note
Revenue						18,166		17,125	49,005
Cost of sales						( 11,892)		( 5,768)	(26,853)
Gross profit						6,274		11,357	22,152
Administrative  expenses						( 5,238)		( 5,048)	(34,203)
Operating profit / (loss)						1,036		6,309	( 12,051)
Analysed as:
Operating profit / (loss) before exceptional items						1,036		6,373	(2,490)
Exceptional items						-		( 64)	( 9,561)
Profit from disposal of businesses Finance income Finance costs					4	5,215 10 ( 1,621)		- - ( 2,229)	- 159 ( 8,306)
Gain / (loss) on fair value of financial instruments						577		(713)	(1,390)
Profit / (loss) before tax						5,217		3,367	( 21,588)
Income tax expense						-		(754)	-
Profit / (loss) for the period from continuing operations						5,217		2,613	(21,588)
Discontinued operations
Loss for the period from discontinued operations						-		(5,302)	(610)
Profit / (loss) for the period						5,217		( 2,689)	( 22,198)
Earnings per share (EPS)
Basic and diluted - pence
Continuing operations						47.42		2.90	(14.71)
Discontinued operations						0.00		(3.00)	(0.42)

Consolidated Statement of Comprehensive Income

for the six month period ended 31 March 2012

					six months to 31 March 2012		six months to 30 Sept  2010	18 months to 30 Sept  2011
					£'000		£'000	£'000
Recognised profit / (loss) for the period					5,217		(2,689)	(22,198)
Other comprehensive income
Exchange differences on translating foreign operations					(9)		2	165
Actuarial losses on defined benefit pensions plan					-		-	(1,846)
Other comprehensive income, net of tax					(9)		2	(1,681)
Total comprehensive income for the period					5,208		(2,687)	(23,879)

Consolidated Statement of Financial Position

As at 31 March 2012

						31 March		30 September		30 September
						2012		2010		2011
						£'000		£'000		£'000
Assets
Non-current assets
Property, plant and equipment						21,065		80,776		24,332
Goodwill						-		47,905		-
Other intangible assets						-		12,739		100
Investment in associate						-		414		-
Deferred tax asset						-		4,377		-
Retirement benefit surplus Cash held in respect of a bond						-   4,136		429 -		-   4,226
Total non-current assets						25,201		146,640		28,658
Current assets
Inventories						278		400		291
Trade and other receivables						5,517		28,421		13,326
Cash and cash equivalents (excluding bank overdrafts)						6,846		5,857		4,395
Cash held in respect of scheme of arrangement						-		-		5,000
Total current assets						12,641		34,678		23,012
Assets held for sale						-		10,070		-
Total assets						37,842		191,388		51,670
Shareholders' equity
Share capital						25,353		22,678		25,353
Equity component of compound financial instruments						-		7,917		-
Share premium						62,645		29,288		62,645
Reverse acquisition reserve						( 12,644)		( 11,701)		( 12,644)
Foreign currency translation reserve						98		( 56)		107
Other reserves						-		710		-
Profit and loss account						( 145,506)		9,325		( 150,723)
Total equity						( 70,054)		58,161		( 75,262)
Liabilities
Current liabilities
Trade and other payables						15,960		18,708		21,546
Amount held in respect of scheme of arrangement						-		-		5,000
Short-term provisions						1,389		-		3,638
Tax liabilities						-		2,511		-
Bank loans and short term borrowings						77,401		15,280		78,166
Derivative financial instruments						6,634		6,534		7,211
Total current liabilities						101,384		43,033		115,561
Non-current liabilities
Long-term borrowings						-		67,692		-
Liability component of compound financial instruments						-		8,650		-
Deferred tax liabilities						-		9,060		-
Retirement benefit liabilities						1,112		-		1,112
Long-term provisions						5,400		-		10,259
Total non-current liabilities						6,512		85,402		11,371
Liabilities associated with assets held for sale						-		4,792		-
Total liabilities						107,896		133,227		126,932
Total equity and liabilities						37,842		191,338		51,670

Consolidated Statement of Changes in Equity

for the six  month period ended 31 March 2012

	Share capital	Reverse acquisition reserve	Foreign currency translation reserve	Other reserves	Profit and loss reserve	Equity component of compound financial instruments	Share premium	Total equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 March 2010 (Restated)	22,678	(12,644)	(58)	680	(133,236)	7,917	29,288	(85,375)
Transactions with owners:
Dividends	-	-	-	-	(1,360)	-	-	(1,360)
Preference share expense	-	-	-	-	7,917	(7,917)	-	-
Share based payments	-	-	-	(680)	-	-	-	(680)
Issue of shares	2,675	-	-	-	-	-	33,357	36,032
Transactions with owners	2,675	-	-	(680)	6,557	(7,917)	33,357	33,992
Loss for the period	-	-	-	-	(22,198)	-	-	(22,198)
Other comprehensive income:
Exchange differences on translation	-	-	165	-	-	-	-	165
Actuarial losses on defined benefit pensions plan	-	-	-	-	(1,846)	-	-	(1,846)
Total comprehensive income for the period	-	-	165	-	(24,044)	-	-	(23,879)
Balance at 30 September 2011	25,353	(12,644)	107	-	(150,723)	-	62,645	(75,262)
Transactions with owners	-	-	-	-	-	-	-	-
Profit for the period	-	-	-	-	5,217	-	-	5,217
Other comprehensive income:
Exchange differences on translation	-	-	(9)	-	-	-	-	(9)
Total comprehensive income for the period	-	-	(9)	-	5,217	-	-	5,208
Balance at 31 March 2012	25,353	(12,644)	98	-	(145,506)	-	62,645	(70,054)

Consolidated Statement of Cash Flows

for the six  month period ended 31 March 2012

			six months to 31 March 2012	six months to 30 September 2010			18 months to 30 September 2011
			£'000			£'000	£'000
Cash flows from operating activities	Note
Cash generated from operations	6		(3,399)			8,447	4,554
Interest paid			(1,621)			(2,229)	(7,038)
Income taxes paid			-			-	(1,096)
Contributions to defined benefit pension schemes			-			(117)	-
Net cash (out) / inflows from operating activities			( 5,020)			6,101	( 3,580)
Cash flows from investing activities
Finance income			10			-	57
Disposal of businesses			-			-	2,515
Purchase of intangible assets			-			(4,964)	-
Purchase of property, plant, and equipment			(94)			(9,314)	( 2,589)
Sale of property, plant, and equipment			-			-	566
Cash deposited in respect of scheme of arrangement and a bond			-			-	(9,226)
Net cash used in investing activities			( 84)			( 14,278)	( 8,677)
Cash flows from financing activities
Issue of shares (net of costs)			8,041			-	20,491
Dividends paid			-			-	( 847)
Dividends management charges			-			-	(450)
Repayments of amounts borrowed			-			( 1,704)	( 3,001)
Increase in borrowings			-			-	1,296
Finance lease additions			339			6,515	10,523
Finance lease repayments			(847)			( 5,383)	( 12,765)
Net cash generated /(used) in financing activities			7,533			(572)	15,247
Net cash and cash equivalents			2,429			(8,749)	2,990
Cashflow from discontinued operations			-			(454)	-
Net change in cash and cash equivalents			2,429			(9,203)	2,990
Cash, cash equivalents and bank overdrafts at beginning of period			4,377			12,487	1,387
Cash disposed of with businesses			(11)			-	-
Cash, cash equivalents and bank overdrafts at end of period			6,795			3,284	4,377

1.                   Legal status and activities

AssetCo plc and its subsidiaries (together "the Group") are principally involved with the provision of management services, the provision of asset management services and the supply of specialist equipment to the emergency services market.

AssetCo plc is a public limited liability 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 Group operates from two sites throughout the United Kingdom, one in the Republic of Ireland, and one in UAE.

AssetCo plc shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange.

On 9 September 2011 the Group announced a change in its accounting reference date from 31 March to 30 September.

2.                   Basis of preparation

The financial information in the half-yearly report has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the half-year report are those the Group expects to apply in its financial statements for the year ending 30 September 2012 and are unchanged from those disclosed in the Annual report and consolidated financial statements for the year ended 30 September 2011.

The financial information for the six months ended 31 March 2012 and the six months ended 30 September 2010 is unaudited and does not constitute the Group's statutory financial statements for those periods. In addition, since the publication of the half-yearly results for the six months ended 30 September 2010 the Group has undertaken a substantial restatement of its financial statements for the twelve months ended 31 March 2010; further details are contained within the Annual report and consolidated financial statements for the year ended 30 September 2011.  The comparative financial information for the full year ended 30 September 2011 has, however, been derived from the audited statutory financial statements for that period. A copy of those statutory financial statements has been delivered to the Registrar of Companies.

While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

3.             Restatement note

During 2011, AssetCo identified omissions from, and misstatements in, the entity's financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that:

a)     was available when financial statements for those periods were authorised for issue; and

b)    could reasonably be expected to have been obtained and taken into account in the preparation of those financial statements.

Accounting standards define such errors include the effects of mathematical mistakes, mistakes in applying accounting policies, oversights or misinterpretations of facts, and fraud.

The Group therefore restated the 2009 and 2010 Balance Sheets, 2010 Income Statement and 2010 Cash Flow Statement to reflect the relevant adjustments as explained in the 2011 Annual Report and Accounts which have been filed with Companies House.

4.             Planned Restructuring - Profit on Disposal of Businesses

On 1 March 2012, AssetCo Fire & Rescue Limited, a non trading Holding Company, entered Liquidation.  Accordingly, as of this date, AssetCo Fire & Rescue Limited and its remaining subsidiaries, a number of dormant and legacy companies, have been excluded from the Consolidated financial statements for the AssetCo Group. The exclusion of associated liabilities with no recourse to the remaining AssetCo Group companies has resulted in a Profit on Disposal of Subsidiaries of £5,215,000. 

5.              Property, plant and equipment

	Leasehold land and buildings	Leasehold improvements	Fixtures and fittings	Equipment plant and machinery	Assets under long term arrangements	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Cost
At 31 March 2010 (Restated)	-	2,244	324	5,336	81,584	89,488
Additions	-	-	143	61	2,385	2,589
Disposals	-	(19)	(235)	(58)	(2,302)	(2,614)
Assets held for sale	1,050	346	187	815	-	2,398
Exchange differences	-	(10)	(6)	(7)	-	(23)
At 30 September 2011	1,050	2,561	413	6,147	81,667	91,838
Additions	-	-	-	-	94	94
Disposals	-	-	-	(550)	(1,350)	(1,900)
Disposal of subsidiaries	-	(1,780)	(252)	(4,089)	(454)	(6,575)
Exchange differences	-	(30)	(16)	(25)	-	(71)
At 31 March 2012	1,050	751	145	1,483	79,957	83,386
Accumulated depreciation
At 31 March 2010 (Restated)	-	1,483	219	4,863	54,783	61,348
Charge for the year	1,032	401	90	273	4,186	5,982
Disposals	-	(3)	(116)	(30)	(575)	(724)
Assets held for sale	18	37	134	741	(17)	913
Exchange differences	-	(2)	(4)	(7)	-	(13)
At 30 September 2011	1,050	1,916	323	5,840	58,377	67,506
Charge for the year	-	28	14	66	1,748	1,856
Impairment	-	-	-	(4)	1,093	1,089
Disposal of subsidiaries	-	(1,437)	(252)	(4,036)	(454)	(6,179)
Disposals	-	-	-	(550)	(1,350)	(1,900)
Exchange differences	-	(12)	(14)	(25)	-	(51)
At 31 March 2012	1,050	495	71	1,291	59,414	62,321
Net book amount
At 31 March 2012	-	256	74	192	20,543	21,065
At 30 September 2011	-	645	90	307	23,290	24,332
At 31 March 2010	-	761	105	473	26,801	28,140

The net book value of assets held under finance leases amounts to £20,543,000 (2011 :£23,290,000, 2010: restated £26,801,000).

Assets under long-term arrangements

Assets under long-term arrangements comprise principally of items of operational equipment and motor vehicles that have been provided to customers under the Group's Private Finance Initiative and Public Private Partnership long-term contracts.

Depreciation

Depreciation and impairment expense of £2,856,000 (2011: £11,760,000, 2010: restated £7,617,000) has been charged in cost of sales and £89,000 (2011: £351,000 2010: restated £700,000) in administrative expenses.

Security

Leasehold land and buildings with a carrying amount of £nil (2011: £nil, 2010: £1,041,000) have been pledged to secure borrowings of the Group under a mortgage.  The Group is not permitted to pledge these assets as security for other borrowings or to sell them to another entity.

In addition, the Group's obligations under finance leases are secured by the lessors' title to the leased assets, which have a carrying amount of £nil (2011: £nil, 2010: £2,047,000).

Assets under long-term arrangements include a net book value of £20,543,000 (2011: £23,290,000, 2010: restated £26,801,000) in respect of assets secured by the lessor. 

6.             Reconciliation of profit / (loss) before tax to net cash generated from operations

								31 Mar	30 Sep	30 Sep
								2012	2010	2011
								£'000	£'000	£'000
Profit / (loss) for the year before taxation								5,217	3,367	(22,198)
Depreciation and impairment								2,945	3,252	5,982
Amortisation and impairment								66	164	184
Loss on sale of property, plant, and equipment								-	-	347
(Profit) / loss on disposal of businesses								(5,215)	-	610
Share-based payments								-	30	(680)
Interest Rate Swaps								(577)	713	1,390
Other finance income								-	-	(102)
Interest expense								1,621	2,229	7,826
Interest received								(10)	-	(57)
Other non-cash movements								-	-	3,737
Increase in inventories								13	180	374
Increase in debtors								(243)	(199)	(1,013)
(Increase)/decrease in creditors								(5,619)	(1,289)	9,169
Increase in provisions								(1,597)	-	(1,108)
Loss on pension settlement								-	-	30
Service cost in excess of contributions to the DB pension scheme								-	-	63
Cash (used) / generated from operations								(3,399)	8,447	4,554

Analysis of net debt

									2012	2011
									£'000	£'000
Bank borrowings									16,323	16,116
Finance lease liabilities									61,026	62,032
Bank overdrafts									52	18
Cash at bank and in hand									(10,982)	(13,621)
									66,419	64,545
Interest rate swaps									6,634	7,211
									73,053	71,756

Net debt of £73,053,000 (2011: £71,756,000) includes the fair value of the interest rate swaps taken out with HBOS and Co-Op and cash held in a bond £4,136,000 (2011: £4,226,000) and cash held in the scheme of arrangement of £nil, (2011: £5,000,000).

7.                   Post Balance Sheet Events

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

Accordingly, the contract terminated and the employees of the AssetCo subsidiary which operates the contract were transferred to Lincoln County Council.

During the 18 month financial period reported upon, the Lincoln County Council contract accounted for £4.4 million of the Group's total revenue of £49 million. The contract was operated through a subsidiary, AssetCo Lincoln Limited, and in the financial period referred, it had net liabilities of £8.4 million after bank debt of £10.01 million; revenues of £4.4 million; profit before tax and exceptional items of £0.11 million; and a loss before tax and after exceptional items of £1.0 million.  The bank debt referred to is secured upon the assets of AssetCo Lincoln Limited and there is no further recourse to the AssetCo Group.  Although the contract provides for payments from Lincoln County Council in the event of termination, it is unlikely that the AssetCo Group will recover any sums over and above that pledged by AssetCo Lincoln Limited to its bank.

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

 

END

 

 

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