ASSETCO PLC — Earnings Release 2019

Feb 27, 2020

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RNS Number : 2640E

AssetCo PLC

27 February 2020

Thursday, 27 February 2020	Immediate Release

AssetCo plc

Providers of management and resources to the fire and emergency services in the Middle East

("AssetCo" or the "company")

Preliminary results for the year ended 30 September 2019

Statement by the Chairman, Tudor Davies

Trading results

The results for the year to 30 September 2019 reflect the loss, as previously announced in the final quarter of 2018, of the Abu Dhabi contract and consequently show sharply reduced revenues of £5.3m (2018:£22.9m) and a loss after taxation of £0.8m (2018: profit £1.4m).

The net assets at 30 September 2019 were £29.9m (2018: £30.0m), with a strong liquidity position represented by cash balances of £17.1m (2018: £16.8m), and cash held in respect of bonds of £3.5m (2018: £2.1m).

Since the year end the receipt of the outstanding trade receivables of £11.1m has significantly improved the company's cash balances and we expect the cash position to improve further during the course of this year as we recover additional bonds.  

During the year the headcount was reduced from 229 to 5.  The remaining staff are senior Fire Service and administration staff who have been dealing with the receivables, bonds, and tendering for new business.  There are a number of opportunities we are pursuing which may take several months to realise and we shall keep shareholders informed of any material developments as and when they come to fruition.

Claim against Grant Thornton

The claim for negligence against AssetCo Plc's former auditors, Grant Thornton, culminated in a trial in June 2018, for which a judgment in AssetCo's favour was handed down.  The damages awarded were £22.4m plus interest of approximately £6.5m plus £5m on account of costs.  On 29 March 2019 Grant Thornton paid £34.3m into Court on which interest is accruing at the rate of 8% per annum.  An appeal by Grant Thornton was lodged and later heard by the Court of Appeal at the end of January 2020 and the Court of Appeal's decision is expected to be handed down before the summer of 2020.

Outlook

We shall keep shareholders informed on any material developments regarding future business and the litigation against Grant Thornton.

Enquiries: AssetCo plc Tudor Davies, Chairman Tel: +44 (0) 7785 703523         +44 (0) 20 7614 5900	Arden Partners plc Nominated adviser and broker John Llewellyn-Lloyd/ Ciaran Walsh Tel: +44 (0) 20 7614 5900	TooleyStreet Communications Fiona Tooley Email: fiona@tooleystreet.com Mobile: +44 (0) 7785 703523
AssetCo is principally involved in the provision of management and resources to the fire and emergency services in the Middle East.  For further details, visit the website, www.assetco.com Ticker: AIM: ASTO.L Market cap: £44.4m

AssetCo plc

Income Statement

for the year ended 30 September 2019

		Year ended	Year ended
		30 September	30 September
		2019	2018
	Notes	£000	£000
Revenue		5,345	22,888
Cost of sales		(4,237)	(16,645)
		----	----
Gross profit		1,108	6,243
Administrative expenses		(1,810)	(4,746)
		----	----
Operating (loss)/profit		(702)	1,497
Finance income		9	5
Finance costs		(70)	(83)
		----	----
(Loss)/Profit before tax		(763)	1,419
Income tax expense		-	-
		----	----
(Loss)/Profit for the year		(763)	1,419
		▬▬▬▬	▬▬▬▬
(Loss)/Earnings per share
Basic - pence	4	(6.25)	11.62
Diluted - pence	4	(6.25)	11.62

AssetCo plc

Statement of Comprehensive Income

for the year ended 30 September 2019

		Year ended	Year ended
		30 September	30 September
		2019	2018
		£000	£000
(Loss)/Profit for the year		(763)	1,419
Other comprehensive income
Exchange differences on translating foreign operations		648	760
		----	----
Other comprehensive income, net of tax		648	760
		----	----
Total comprehensive (loss)/income for the year		(115)	2,179
		▬▬▬▬	▬▬▬▬

AssetCo plc Statement of Financial Position As at 30 September 2019
			At		At
			30 September		30 September
			2019		2018
	Notes		£000		£000
Assets
Non-current assets
Property, plant and equipment		-		26
Cash held in respect of bonds		-		1,199
		----		----
Total non-current assets		-		1,225
		----		----
Current assets
Trade and other receivables		11,222		15,997
Cash and cash equivalents	5	17,101		16,800
Cash held in respect of bonds		3,487		941
		----		----
Total current assets		31,810		33,738
		----		----
Total assets		31,810		34,963
		▬▬▬▬		▬▬▬▬
Liabilities
Current liabilities
Trade and other payables		1,955		4,993
		----		----
Total current liabilities		1,955		4,993
		----		----
Total liabilities		1,955		4,993
		----		----
Shareholders' equity
Share capital		25,474		25,474
Share premium		64,941		64,941
Profit and loss account		(60,560)		(60,445)
		----		----
Total equity		29,855		29,970
		----		----
Total equity and liabilities		31,810		34,963
		▬▬▬▬		▬▬▬▬

AssetCo plc

Statement of Changes in Equity

for the year ended 30 September 2019

			Profit
	Share	Share	and loss	Total
	capital	premium	account	Equity
	£000	£000	£000	£000
Balance at 1 October 2017	25,474	64,941	(62,624)	27,791
Profit for the year	-	-	1,419	1,419
Other comprehensive income:
Exchange differences on translation	-	-	760	760
	----	----	----	----
Total comprehensive income for the year	-	-	2,179	2,179
	----	----	----	----
Balance at 30 September 2018	25,474	64,941	(60,445)	29,970
Loss for the year	-	-	(763)	(763)
Other comprehensive income:
Exchange differences on translation	-	-	648	648
	----	----	----	----
Total comprehensive loss for the year	-	-	(115)	(115)
	----	----	----	----
Balance at 30 September 2019	25,474	64,941	(60,560)	29,855
	▬▬▬▬	▬▬▬▬	▬▬▬▬	▬▬▬▬

AssetCo plc Statement of Cash Flows for the year ended 30 September 2019
		Year ended	Year ended
		30 September	30 September
		2019	2018
	Notes	£000	£000
Cash flows from operating activities
Cash inflow/(outflow) from operations	6	1,709	(3,453)
Cash deposited in respect of bonds		(2,470)	(3,631)
Cash released in respect of bonds		1,123	2,028
Finance costs		(70)	(83)
		----	----
Net cash inflow/(outflow) from operating activities		292	(5,139)
		----	----
Cash flows from investing activities
Finance income		9	5
Purchases of property, plant and equipment		-	(26)
		----	----
Net cash inflow/(outflow) from investing activities		9	(21)
		----	----
Net change in cash and cash equivalents		301	(5,160)
Cash and cash equivalents at beginning of year		16,800	21,530
Exchange differences on translation		-	430
		----	----
Cash and cash equivalents at end of year		17,101	16,800
		▬▬▬▬	▬▬▬▬

AssetCo plc

Notes to the Financial Statements

for the year ended 30 September 2019

1.	Legal status and activities
	AssetCo plc ("AssetCo or the "company") is a public limited liability company incorporated and domiciled in England and Wales.  The address of its registered office is Singleton Court Business Park, Wonastow Road, Monmouth, Monmouthshire NP25 5JA.  As at period end, the company has no subsidiaries.  AssetCo plc shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange. AssetCo 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 the United Arab Emirates ("UAE") and its strategy is to continue the development of this business into new markets in the Middle East following the end of the contract with the Abu Dhabi government on 17 December 2018. This preliminary announcement has been presented in sterling to the nearest thousand pounds (£'000) except where otherwise indicated, as are the financial statements, which were authorised for issue by the board of directors on 26 February 2020.

2.	Basis of preparation
	The financial information for the years ended 30 September 2019 and 2018 contained in this document does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.  The financial information for the years ended 30 September 2019 and 2018 has been extracted from the consolidated financial statements of AssetCo plc for the year ended 30 September 2019 which have been approved by the directors on 26 February 2020 and will be delivered to the Registrar of Companies in due course.  The auditor's report on those financial statements was unqualified and did not contain a statement under section 498 of the Companies Act 2006. The Group's financial statements have been prepared in accordance with IFRS as adopted by the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS, under the historical cost convention. The same accounting policies, presentation and methods of computation are followed in the preliminary financial statements as were applied in the Group's financial statements for the year ended 30 September 2019.

3.

Segmental reporting

The core principle of IFRS 8 'Operating Segments' is to require an entity to disclose information that enables users of the financial statements to evaluate the nature and financial effects of the business activities in which the entity engages and the economic environments in which it operates.  Segmental information is therefore presented in respect of the company's geographical settlement.  No secondary segmental information has been provided as, in the view of the directors, the company operates in only one segment, being the provision of management and resources to fire and emergency services.  The directors consider the chief operating decision maker is the board.

The amounts provided to the board with respect to net assets are measured in a manner consistent with that of the financial statements.  The company is domiciled in the UK and operates a branch in the UAE.  Revenue by destination is not materially different from revenue by origin shown above.  All revenue relates to services.  Unallocated comprises the head office.

Analysis of revenue and results by geographical settlement Year ended 30 September 2019
	UAE £000	Unallocated £000	Continuing Operations £000
Revenue
Revenue to external customers	5,345	-	5,345
	----	----	----
Total revenue	5,345	-	5,345
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Segment result
Operating profit/(loss)	296	(998)	(702)
Finance income	-	9	9
Finance costs	(70)	-	(70)
	----	----	----
Loss before tax	226	(989)	(763)
Income tax	-	-	-
	----	----	----
Loss for the year	226	(989)	(763)
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Segment assets and liabilities
Total assets	15,572	16,238	31,810
Total liabilities	(1,665)	(290)	(1,955)
	----	----	----
Total net assets	13,907	15,948	29,855
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Other segment information
Total capital expenditure	-	-	-
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Year ended 30 September 2018
	UAE £000	Unallocated £000	Continuing Operations £000
Revenue
Revenue to external customers	22,888	-	22,888
	----	----	----
Total revenue	22,888	-	22,888
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Segment result
Operating profit/(loss)	5,624	(4,127)	1,497
Finance income	-	5	5
Finance costs	(83)	-	(83)
	----	----	----
Profit before tax	5,541	(4,122)	1,419
Income tax	-	-	-
	----	----	----
Profit for the year	5,541	(4,122)	1,419
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Segment assets and liabilities
Total assets	27,597	7,366	34,963
Total liabilities	(3,995)	(998)	(4,993)
	----	----	----
Total net assets	23,602	6,368	29,970
	▬▬▬▬	▬▬▬▬	▬▬▬▬
Other segment information
Total capital expenditure	26	-	26
	▬▬▬▬	▬▬▬▬	▬▬▬▬

4.	Earnings per share
	Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.  There was no dilutive impact in either period therefore diluted earnings per share is equal to basic (loss)/earnings per share.
		2019	2018
		£000	£000
	(Loss)/Profit for the year	(763)	1,419
		----	----
	Weighted average number of ordinary shares in issue	12,211,163	12,211,163
	Basic and diluted (loss)/earnings per share - pence	(6.25)	11.62

5.	Analysis of net cash
		2019	2018
	£000	£000
Cash at bank and in hand	17,101	16,800
	----	----
Cash and cash equivalents	17,101	16,800
		▬▬▬▬	▬▬▬▬

In addition to the above UAE dirhams amounting to £3,487,000 (2018: £2,140,000) were held on deposit as security in respect of outstanding performance and warranty bonds.

6.	Reconciliation of (loss)/profit before tax to net cash inflow/(outflow)from operations
		2019	2018
	£000	£000
(Loss)/Profit for the year before taxation	(763)	1,419
Depreciation and amortisation	26	-
Finance costs	70	83
Finance income	(9)	(5)
Decrease /(increase) in receivables	5,670	(5,085)
(Decrease)/increase in payables	(3,285)	135
	----	----
Cash inflow/(outflow) from operations	1,709	(3,453)
	▬▬▬▬	▬▬▬▬

7.

Contingent liabilities

	Approximate maximum liability at 30 September
	2019	2018
	£000	£000
Warranty bond related to a UAE based contract, expected to be released in full in 2020	1,270	1,200
	▬▬▬▬	▬▬▬▬
Performance bond related to a UAE based contract,  released in full in 2019	-	1,050
	▬▬▬▬	▬▬▬▬
Performance bond related to a UAE based contract, expected to be released in full in 2020	1,100	-
	▬▬▬▬	▬▬▬▬
Performance bond related to a UAE based contract, expected to be released in full in 2020	1,100	-
	▬▬▬▬	▬▬▬▬

8.	Post balance sheet events
	Grant Thornton's appeal against the judgement handed down against them on 31 January 2018 was heard at the Court of Appeal on 20 to 22 January 2020.  The outcome of this hearing is expected before the summer of 2020.  There are no other post balance sheet events.

9.	Annual general meeting
	A notice convening the annual general meeting will be posted to shareholders in due course.

10.	Electronic communications
	This Preliminary Announcement is available on the company's website www.assetco.com .  News updates, regulatory news and financial statements can be viewed and downloaded from the company's website, www.assetco.com .  Copies can also be requested, in writing, from The Company Secretary, AssetCo plc, Singleton Court Business Park, Wonastow Road, Monmouth, Monmouthshire NP25 5JA.  The company is not proposing to bulk print and distribute hard copies of the Annual Report and Financial Statements for the year ended 30 September 2019 unless specifically requested by individual shareholders; it can be downloaded from the company's website.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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