Interim Results

RNS Number : 0394J

AssetCo PLC

27 November 2008

 



27 November 2008

AssetCo plc

Interim results for the six months ended 30 September 2008

AssetCo plc, (AIM : ASTO), the integrated support services business, announces its interim results for the six months to 30 September 2008 

Highlights

Current contracted order book at record high of £594m

Income from the core long-term contract with London Fire Brigade for the six months ended 30 September 2008 increased by 32% to £12.3m (Six months ended 30 September 2007: £9.3m)

Profit before tax increased by 36% to £6.0m (Six months ended 30 September 2007: £4.4million)

Underlying profit increased by 64% to £7.7m (Six months ended 30 September 2007: £4.4m)

Fully diluted earnings per share up by 27% to 6.5p (Six months ended 30 September 2007: 5.1p)

Net operating cash flow of £12.4m (Six months ended 30 September 2007: £11.0m)

Short-term debt exposure restructured, debt potentially repayable within 12 months, excluding asset-finance, reduced from £19m (31 March 2008) to £4m (30 September 2008)

64% of the total debt as at 30 September 2008 related to non-recourse asset finance on our long-term contracts

Commenting, John Shannon, Chief Executive Officer, said:

'We have delivered a strong set of results for the six month period ended 30 September 2008. Our long-term contract activity continues to broaden in scope and our current order book is at its highest level ever. Despite the current economic climate we remain resilient and are in a good position to deliver robust, stable profits.' 

Enquiries: 

AssetCo		Tel: [phone]
Frank Flynn, Financial Director
RBS Hoare Govett Limited		Tel: [phone]
Stephen Bowler
John MacGowan
Richard Crichton
Pelham Public Relations		Tel: [phone]
Alex Walters
Francesca Tuckett

REPORT OF THE CHIEF EXECUTIVE OFFICER

Introduction

The half year to 30 September 2008 has been a period of organisational integration and re-alignment, as we continue to position the business as the long-term integrated support services partner for the emergency services. 

In line with the majority of publicly quoted businesses, we have experienced a significant reduction in our market valuation during the half year. Notwithstanding this, the underlying visibility and stability in our earnings remain strong, with our current contracted forward order book at a new high of £594m. Our long-term contract activity continues to broaden in scope and to deliver robust, stable profits, and remains resilient to the current economic climate. 

Financial results for the six months ended 30 September 2008

I am pleased with the performance for the six months ended 30 September 2008 with profit before tax increasing by 36% to £6.0m (Six months ended 30 September 2007: £4.4m). Fully diluted earnings per share rose by 27% to 6.5p from 5.1p in 2007.

These results have been achieved despite non-recurring losses incurred at UVM and TVAC, reorganisation costs, and investment in our business development activities in the Middle East. After adjusting for these items, underlying profit for the half year was £7.7m.

Income from our core long-term contract with London Fire Brigade for the six months ended 30 September 2008 increased by 32% to £12.3m (Six months ended 30 September 2007: £9.3m).

Net assets at 30 September 2008 were £49.8m (£32.7m as at 30 September 2007).

Net operating cash flow was £12.4m (Six months ended 30 September 2007: £11.0m)). After adjusting for the non-recurring items above the underlying net operating cash flow was £14.1m (Six months ended 30 September 2007: £11.0m)). 

We have restructured our short-term debt exposures in the half year. Excluding non-recourse asset finance repayments on our long-term contracts, we have reduced the debt potentially repayable within 12 months from £19m at 31 March 2008 to £4m as at 30 September 2008. 

64% of our total debt as at 30 September 2008 related to non-recourse asset finance on our long-term contracts.

Despite the adverse stock market conditions, our defined benefit pension scheme continues to operate a healthy surplus.

Current Trading

Significant and continued development work in collaboration with our key clients has extended the nature of our contract profile to embrace new areas of service provision, in line with our integrated service offering, and has resulted in new business opportunities to the value of £100m, which include Integrated Logistics and ICT projects. Our current contracted forward order book is at its highest level ever of £594m.

We have also begun to deliver elements of our integrated service offering to London's other two emergency services. 

UVM has successfully tendered for and won every UK Accident and Emergency Vehicle contract available during the half year, including new clients such as London Ambulance Service. The business now has a record order book and revenue visibility through to 2012.

Since the half-year end, TVAC has continued to make losses and absorb cash. The Board has instigated a strategic review of the business, which will be concluded shortly. 

Other acquisitions continue to perform in line with the Board's expectations, and will be fully integrated by the end of the current financial year.

We continue to support business development activity outside the UK, particularly in the Middle East, where we are increasing our investment with the intention of securing long term contracts. 

Dividend

The Board will review the dividend for the current financial year when considering the full year results.

Strategy

The emergency services market in the UK continues to seek the most economic yet resilient supply of leading edge equipment, technology, personnel and operational support available. 

Our strategy is to focus solely on those essential support services responsible for high proportions of our client's cost base and where, as supply innovators and integrators, we can offer benefit, either directly through economies of scale, or indirectly through long-term gain-share partnerships. 

Overseas we continue to respond to interest from a number of developed and emerging nations keen to equip and resource their emergency operations with skills, tools and support at the level enjoyed by our UK partners.

Organisation

We aim to provide emergency service clients with the optimum blend of support products and services to enable them to benefit from improved operational or financial performance. Niche acquisitions and investments during the previous year have expanded and extended our capability in this field, to the extent we are now at the forefront of supply to a sector that procures a complex mix of:- 

• People and skills

• Training 

• Vehicles

• Equipment

• Information and communications technology 

We now have a new senior operational management team structure which has made great strides in completing the integration of these commercial assets and pools of expertise to provide streamlined processes and communication internally, and seamless service with clearer and more direct points of entry for clients, externally. We have also improved the integration of our services and products during the last six months. 

London Fire Brigade and Lincoln Fire and Rescue Service clearly benefit from having one comprehensive suite of integrated support services. We have established a new Partnership Management Board with our key client, London Fire Brigade, to open up new joint working projects, which will deliver operational and financial benefit to both organisations over the medium term.

Other client feedback has encouraged us to offer a menu of support service options under a single AssetCo brand, thus allowing our clients to select whatever they need at any particular point in time.

Our ability to now offer our products and services in discreet bundles reduces the need for our clients to enter into long, complex, and expensive tendering processes. Now, leveraging off our existing contract supply arrangements, we are able to offer comparable service and cost benefits to organisations throughout the Fire and Rescue, and other emergency services, on similar terms, helping with a range of support options to address both capital and revenue budget challenges. 

Outlook

Our long-term contract activity continues to broaden in scope and to deliver robust, stable profits, and remains resilient to the current economic climate. 

While we understand the effects of global economic pressures on public spending, we also recognise the opportunities it presents across the sector for suppliers capable of delivering the highest levels of economic value. 

The UK emergency services have an outstanding reputation overseas. Our role as an integrated support services partner for all three of London's emergency services has attracted great interest from a number of overseas agencies trying to emulate the London operational model.

The Board believes the company is well placed to take advantage of new market opportunities at home and overseas.

John Shannon

Chief Executive Officer

27 November 2008

CONSOLIDATED INTERIM INCOME STATEMENT (UNAUDITED)

		Six months ended
		30.9.08	30.9.07
		£’000	£’000

 

Revenue			45,251	25,973
Cost of sales			(25,747)	(12,105)
			-------------------------------------	-------------------------------------
Gross profit			19,504	13,868
			-------------------------------------	----------------------------------
Administrative expenses			(10,243)	(6,822)
Administrative expenses – share-based payments			200	(281)
			-------------------------------------	-----------------------------------
			(10,043)	(7,103)
Other gains			200	-
Restructuring costs			(554)	-
			-------------------------------------	-----------------------------------
Operating profit			9,107	6,765
			-------------------------------------	-------------------------------------
Finance income			440	96
Finance costs			(3,534)	(2,453)
			-------------------------------------	-------------------------------------
Profit before taxation			6,013	4,408
			-------------------------------------	-------------------------------------
Taxation			(1,142)	(883)
			-------------------------------------	-------------------------------------
Profit for the period from continuing operations			4,871	3,525
			-------------------------------------	-------------------------------------
Discontinued operations
Profit for the period from discontinued operations			-	260
			-------------------------------------	-------------------------------------
Profit for the period			4,871	3,785
			=======================	=======================

 

Earnings per share (pence)

 

From continuing operations
Basic			6.5p		5.2p
			-------------------------------------		-------------------------------------
Diluted			6.5p	5.1p
			-------------------------------------		-------------------------------------

 

 

From continuing and discontinued operations
Basic			6.5p		5.6p
			-------------------------------------		-------------------------------------
Diluted			6.5p	5.5p
			-------------------------------------		-------------------------------------

 

 

CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)

		30.9.08	30.9.07
	Note	£’000	£’000

 

ASSETS

Non-current assets
Property, plant and equipment		80,204	74,497
Goodwill	5	54,060	38,738
Other intangible assets		1,610	144
Investment in associates		414	-
Deferred tax asset		1,817	-
Retirement benefit surplus		429	329
		-------------------------------------	-------------------------------------
		138,534	113,708
		-------------------------------------	-------------------------------------

Current assets

Inventories			8,160		3,043
Trade and other receivables			15,678	12,232
Cash and cash equivalents			10,880	11,854
Derivative financial instruments			2,190	-
			-------------------------------------		-----------------------------------
			36,908		27,129
			-------------------------------------		-------------------------------------
Total assets			175,442			140,837
			=======================		=======================
EQUITY
Attributable to equity holders of the Company
Issued share capital			18,104		16,800
Share premium account			25,584		17,890
Reverse acquisition reserve			(11,701)		(11,701)
Hedge reserve			1,577		-
Translation reserve			356		-
Other reserve			184		281
Retained earnings			15,659		9,411
			------------------------------------		------------------------------------
Total equity			49,763		32,681
			------------------------------------		------------------------------------
LIABILITIES
Non-current liabilities
Borrowings			81,714		75,012
Deferred income tax liabilities			7,082		3,958
Retirement benefit obligations			-		42
			------------------------------------		------------------------------------
			88,796		79,012
			------------------------------------		------------------------------------
Current liabilities
Trade and other payables			23,191		16,416
Current income tax liabilities			237		285
Borrowings			13,455		12,443
			------------------------------------		------------------------------------
			36,883		29,144
			------------------------------------		------------------------------------
Total liabilities			125,679			108,156
			------------------------------------		------------------------------------
Total equity and liabilities			175,442			140,837
			=======================		=======================

 

 

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

		Share      capital	Share     premium     account	Reverse acquisition reserve	Hedging reserve	Translation reserve	Other  reserve	Retained earnings	Total  equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 April 2007		16,800	17,890	(11,701)	-	-	-	5,626	28,615
Profit for the period		-	-	-			-	4,066	4,066
Movement relating to share based payments							281	(281)	-
		------------------------------------	------------------------------------	-------------------------------------	-------------------------------------	-------------------------------------	-------------------------------------	----------------------------------	-------------------------------------
At 30 September 2007		16,800	17,890	(11,701)	-	-	281	9,411	32,681
		------------------------------------	------------------------------------	-------------------------------------	-------------------------------------	-------------------------------------	-------------------------------------	----------------------------------	-------------------------------------
At 1 April 2008		17,958	25,197	(11,701)	1,577	356	384	11,506	45,277
Profit for the period		-	-	-	-	-	-	4,671	4,671
Shares issued in the period		146	387	-	-	-	-	-	533
Movement relating to share-based payments		-	-	-	-	-	(200)	200	-
Dividends paid		-	-	-	-	-	-	(718)	(718)
		------------------------------------	------------------------------------	-------------------------------------	-------------------------------------	-------------------------------------	-------------------------------------	----------------------------------	------------------------------------
At 30 September 2008		18,104	25,584	(11,701)	1,577	356	184	15,659	49,763
		=====================	=====================	=====================	=====================	=====================	=====================	=====================	=====================

CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED)

						Six months ended
						30.9.08	30.9.07
				Note		£’000	£’000
Cash flows from operating activities
Cash generated from operations			4			5,931	9,969
Finance costs						(3,534)	(2,529)
						------------------------------------	------------------------------------
Net cash generated from operating activities						2,397	7,440
						-------------------------------------	-------------------------------------
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired						-	(1,879)
Purchase of intangible assets						(34)	(100)
Purchases of property, plant and equipment						(7,039)	(28,041)
Proceeds from sale of property, plant and equipment						3,846	180
						------------------------------------	------------------------------------
Net cash used in investing activities						(3,227)	(29,840)
						------------------------------------	------------------------------------
Cash flows from financing activities
Net increase in borrowings						8,084	27,335
Net increase in/(repayments of) finance leases						1,975	(3,408)
Finance income						440	96
						------------------------------------	------------------------------------
Net cash gained in financing activities						10,499	24,023
						------------------------------------	------------------------------------
Net increase in cash, cash equivalents and bank overdrafts						9,669	1,623
Cash, cash equivalents and bank overdrafts at beginning of period						394	5,232
						------------------------------------	------------------------------------
Cash, cash equivalents and bank overdrafts at end of period						10,063	6,855
						=====================	=====================

 

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 with the provision of integrated support services to the emergency services market. 

The Company 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 Company has its primary listing on the Alternative Investment Market ('AIM') of the London Stock Exchange.

The Company's accounts for the year ended 31 March 2008 have been delivered to the Registrar of Companies. Those accounts have 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 27 November 2008.

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.  

NOTES TO THE INTERIM FINANCIAL STATEMENTS (UNAUDITED)

3. Primary segment information

The Group is organised into one integrated business unit, Emergency.  The legacy non-core business of fleet management is separately disclosed as Non Emergency.

All assets and liabilities of the Group are allocated to individual segments.

Six months ended 30 September 2008

		Emergency	Non Emergency	Consolidation adjustment	Group
		£'000	£'000	£'000	£'000
Continuing operations
Segment revenue		42,667	2,584	-	45,251
		=====================	=====================	=====================	=====================
Segment result		5,713	100	200	6,013
		=====================	=====================	=====================	=====================

The consolidation adjustment relates to a credit in respect of share-based payments (£200,000).

Six months ended 30 September 2007

		Emergency	Non Emergency	Consolidation adjustment	Group
		£'000	£'000	£'000	£'000
Continuing operations
Segment revenue		21,279	4,694	-	25,973
		=====================	=====================	=====================	=====================
Segment result		4,896	(207)	(281)	4,408
		=====================	=====================	=====================	=====================

The consolidation adjustment relates to a charge for share-based payments (£281,000).

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

			Six months ended	Six months ended
			30.9.08	30.9.07
			£'000	£'000
Profit before taxation			6,013	4,668
Adjustments for:
- Depreciation			3,286	4,199
- Profit on disposal of property, plant and equipment			(200)	-
- Increase in share-based payments			(200)	281
- Movement in provisions			(428)	-
- Finance income			(440)	(96)
- Finance costs			3,534	2,529
Changes in working capital
- Inventories			(5,117)	1,192
- Trade and other receivables			(3,446)	1,820
- Trade and other payables			2,929	(4,624)
			---------------------------	---------------------------
Cash generated from operations			5,931	9,969
			=====================	=====================

5. Goodwill

Goodwill has increased by £2.138m since 31 March 2008.  This reflects the finalisation of acquisition accounting adjustments relating to certain acquisitions in the past 12 months.

6. Dividend paid during the period

A dividend relating to the year ended 31 March 2008 of 1.0 pence per share was paid on 26 September 2008.  This amounted to £718,000.

 

END

 

 

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