ASSETCO PLC — Interim / Quarterly Report 2021

Jun 28, 2021

National Storage Mechanism | Additional information

RNS Number : 2179D

AssetCo PLC

28 June 2021

The information contained within this announcement is deemed by the Company to constitute inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014.  Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.

28 June 2021	Immediate Release

AssetCo plc

("AssetCo" or the "Company")

2021 Half-year Report

for the six months ended 31 March 2021

Key highlights:

·      A successful conclusion of the Grant Thornton litigation and a return of approximately £26.9 million to shareholders

·      Strategic acquisition of 29.8% of the Company by Martin Gilbert, Peter McKellar and various associates

·      Readmission to AIM and approval of new business strategy by shareholders

·      Acquisition of a strategic interest in River and Mercantile Group

·      Conditional acquisition announced, post period end, of Saracen Fund Managers

Martin Gilbert, Chairman of AssetCo plc, commented:

"Our new business strategy, approved by shareholders in April, is to invest in, build and operate asset and wealth management businesses. The financial services sector is facing numerous challenges, but the importance of the industry in enabling clients and customers to achieve their financial goals is even greater. We believe AssetCo can play a key role by investing in, supporting and developing businesses to meet the needs of investors. Our investment in River and Mercantile Group and our conditional acquisition of Saracen Fund Managers are part of this thinking. Over the coming months we hope to announce further activity as we roll out AssetCo's strategy and build the business."

For further information, please contact:

AssetCo plc

Peter McKellar, Deputy Chairman and CEO

James Thorneley, Head of Communications

Tel: +44 (0) 7958 005 141

Arden Partners plc

Nominated adviser and broker

John Llewellyn-Lloyd / Akhil Shah

Tel: +44 (0) 20 7614 5900

Maitland/AMO

Neil Bennett

Alasdair Lennon

Tel: +44 (0) 20 7379 5151 and +44 (0) 7342 704229

For further details, visit the website, www.assetco.com

Ticker: AIM: ASTO.L

Chairman's Statement

I am pleased to report significant progress in the development of the Company. The six months ended 31 March 2021 started with the successful conclusion of the Grant Thornton litigation and the receipt of the remaining litigation award and costs. This resulted in AssetCo having accumulated cash balances of approximately £57.8 million. This formed the basis for returning £26.9 million to shareholders, by way of a tender offer, and for the balance of £30.9 million to provide the initial resources for the Company's new asset and wealth management strategy.

Financial results

The Income Statement for the six months ended 31 March 2021 shows revenue of nil (2020: nil), but a profit before taxation of £22.3 million (2020: loss £0.7 million), which principally arose from the final payment received from the successful negligence claim against Grant Thornton.

The net assets as at 31 March 2021 were £31.1 million (2020: £28.4 million). This primarily comprised the recent investment in River and Mercantile Group PLC shares of £10.8 million, where the Company holds 5.85% of the issued equity share capital, and cash balances, less net current liabilities, of £20.3 million.

Events during the six month period

On 2 October 2020, Grant Thornton informed the Company of its decision not to appeal to the Supreme Court, thereby crystallising the award from the Court of Appeal ruling on 31 January 2019, amounting to £30.5 million, including costs. The final payment was received on 1 February 2021.

On 2 December 2020, the Company announced a tender offer to return capital to shareholders through the purchase of 6.53 million shares, equivalent to 50% of the Company's then issued share capital, at £4.11 per share. The tender offer was subscribed for in full, at a total cost of £26.9 million.

On 8 January 2021, the Company welcomed an investor group consisting of funds managed by Toscafund Asset Management, Peter McKellar, various associates and me, who, in aggregate, acquired a 29.8% shareholding from existing shareholders at £4.75 per share. Peter and I have significant expertise in asset and wealth management and we joined the Board as non-executive directors on 25 January 2021.

In January and February 2021, the Company acquired 5 million shares in River and Mercantile Group PLC, an asset management business, at a total cost of £10.4 million. The Board believes that this investment is attractive and that this company's activities and prospects are undervalued.

On 8 February 2021, the Board announced its intention to change the business strategy of the Company to the development of an asset and wealth business. As the proposed change to an asset and wealth management strategy was a fundamental change to AssetCo's business, a circular was sent to shareholders on 26 March 2021 explaining the changes. The appropriate resolution to approve the new strategy and effect a readmission of the Company's shares under the AIM Rules was approved by shareholders at a General Meeting held on 15 April 2021. As part of the new strategy, the Company entered into an appointed representative agreement with Toscafund Asset Management LLP to allow it to undertake certain specified regulated activities (as regulated by the FCA) as an appointed representative of Toscafund Asset Management LLP.

Acquisition of Saracen Fund Managers

On 14 May 2021, the Company announced the conditional acquisition of the entire issued share capital of Saracen Fund Managers ("Saracen"), for an effective total consideration at that date of £2.75 million. The consideration will be satisfied by the issue of 166,904 new ordinary shares of 10p each in the Company, credited as fully paid, and £664,774 in cash, in each case to be paid on completion. The acquisition is conditional on, inter alia, approval by the FCA to a change in controller and the admission of the consideration shares to trading on AIM, which is expected to occur by the end of September 2021.

Saracen is an independent, FCA regulated, fund management business based in Edinburgh that was founded in the late 1990s. Saracen has three funds, operating on the T Bailey Fund Services platform, called Global Income and Growth Fund (with approximately £103 million of assets under management ("AuM")), UK Alpha Fund (approximately £14 million of AuM), and UK Income Fund (approximately £2 million of AuM). Saracen generated turnover of £985,364 and a loss after taxation of £15,146 for the financial year ended 31 March 2020 and had net assets of £400,661 as at 31 March 2020.

The Board believes that there exist significant opportunities to enhance the distribution and appeal of Saracen's existing funds and to widen the funds offered by Saracen to include immediate adjacencies. Finally, Saracen offers the Company the opportunity to acquire a FCA regulated entity and the associated authorisations, subject to FCA change in controller approval.

Board

Following approval of the Company's new strategy at the General Meeting on 15 April I became Chairman of the Company and Peter McKellar became Deputy Chairman and Chief Executive Officer. Tudor Davies, who was appointed to the Board in March 2011 and had been Chairman since then, stepped down to become a non-executive director. On behalf of the Board, I would like to thank Tudor for the significant time and effort he has spent ensuring the Company was able to continue trading post the restating of its accounts and its cashflow difficulties in 2011. In particular, Tudor has played an instrumental part in the successful litigation against Grant Thornton and he continues to oversee the Company's historic activities in Abu Dhabi.

Outlook

Following the change in the Company's strategy to "acquiring, managing and operating asset and wealth management activities and interests, together with other related services", the management team has been examining a number of organic and inorganic proposals and is at various stages of discussion and negotiation. The focus of this work is on areas of the asset and wealth management sector where the Board believes that, due to the structural changes impacting the sector, attractive opportunities for investment exist. The Board is hopeful of being able to announce further activity in the short term.

Martin Gilbert

Chairman

28 June 2021

AssetCo plc

Income statement

for the six months ended 31 March 2021

		Six months ended		Year ended
	Note	31 March 2021	31 March 2020	30 September 2020
		£'000	£'000	£'000
Revenue		-	-	-
Cost of sales		-	-	-
Gross profit		-	-	-
Other income	3	22,388	-	4,597
Administrative expenses		(766)	(714)	(1,192)
Operating profit/(loss)		21,622	(714)	3,405
Investment income	4	645	11	18
Finance costs		(8)	(39)	(62)
Profit/(loss) before taxation		22,259	(742)	3,361
Income tax expense		-	-	-
Profit/(loss) for the period		22,259	(742)	3,361
Earnings/(loss) per share (EPS):	5
Basic - pence		284.72	(6.08)	27.52
Diluted - pence		284.72	(6.08)	27.52

AssetCo plc

Statement of comprehensive income

for the six months ended 31 March 2021

		Six months ended		Year ended
		31 March 2021	31 March 2020	30 September 2020
		£'000	£'000	£'000
Recognised profit/(loss) for the period		22,259	(742)	3,361
Other comprehensive (expense) / income:
Exchange differences on translating foreign operations		(10)	(743)	(871)
Other comprehensive (expense) / income net of tax		(10)	(743)	(871)
Total comprehensive income/(expense) for the period		22,249	(1,485)	2,490

AssetCo plc

Statement of financial position

as at 31 March 2021

		At 31 March		At 30 September
		2021	2020	2020
	Note	£'000	£'000	£'000
Assets
Non-current assets
Property, plant and equipment		-	-	-
Investments		10,800	-	-
Total non-current assets		10,800	-	-
Current assets
Trade and other receivables	6	230	116	4,683
Cash and cash equivalents	7	21,324	26,075	27,860
Cash held in respect of bonds		-	3,464	1,058
Total current assets		21,554	29,655	33,601
Total assets		32,354	29,655	33,601
Share capital		653	25,474	1,221
Share premium		3,274	64,941	-
Capital redemption reserve		653	-	-
Profit and loss account		26,523	(62,045)	31,124
Total equity		31,103	28,370	32,345
Liabilities
Current liabilities
Trade and other payables	8	1,251	1,285	1,256
Total current liabilities		1,251	1,285	1,256
Total liabilities		1,251	1,285	1,256
Total equity and liabilities		32,354	29,655	33,601

AssetCo plc

Statement of changes in equity

for the six months ended 31 March 2021

	Share Capital	Share premium	Capital redemption reserve	Profit and loss reserve	Total equity
	£'000	£'000	£'000	£'000	£'000
Balance at 1 October 2019	25,474	64,941	-	(60,560)	29,855
(Loss) for the period	-	-	-	(742)	(742)
Other comprehensive income:
Exchange differences on translation	-	-	-	(743)	(743)
Total comprehensive expense for the period	-	-	-	(1,485)	(1,485)
Balance at 31 March 2020	25,474	64,941	-	(62,045)	28,370
Profit for the period	-	-	-	4,103	4,103
Other comprehensive expense:
Exchange differences on translation	-	-	-	(128)	(128)
Total comprehensive income for the period	-	-	-	3,975	3,975
Capital reduction	(24,253)	(64,941)	-	89,194	-
Balance at 30 September 2020	1,221	-	-	31,124	32,345
Profit for the period	-	-	-	22,259	22,259
Other comprehensive income: Exchange differences on translation	-	-	-	(10)	(10)
Total comprehensive income for the period	-	-	-	22,249	22,249
Share issue	85	3,445	-	-	3,530
Share buy-back	(653)	(171)	653	(26,850)	(27,021)
Balance as at 31 March 2021	653	3,274	653	26,523	31,103

AssetCo plc

Statement of cash flows

for the six months ended 31 March 2021

		Six months ended		Year ended
		31 March 2021	31 March 2020	30 September 2020
	Note	£'000	£'000	£'000
Cash flows from operating activities
Cash generated from operations	9	19,381	9,653	8,807
Cash released in respect of performance bonds		1,126	-	2,270
Finance costs		(8)	(39)	(62)
Net cash generated from operating activities		20,499	9,614	11,015
Cash flows from investing activities
Finance income		-	11	18
Net cash generated from investing activities		-	11	18
Cash flows from financing activities
Payments for shares bought back		(26,850)	-	-
Buy-back transaction costs		(171)	-	-
Net cash used in financing activities		(27,021)	-	-
Net change in cash and cash equivalents		(6,522)	9,625	11,033
Cash and cash equivalents at the beginning of the period		27,860	17,101	17,101
Exchange differences on translation		(14)	(651)	(274)
Cash and cash equivalents at the end of the period		21,324	26,075	27,860

AssetCo plc

Notes to the Financial Statements

for the six months ended 31 March 2021

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. The Company operates from an administrative office in the UK as well as a site in UAE.  As at the period end, the Company had no subsidiaries. AssetCo plc shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange. AssetCo has been principally involved in the provision of management and resources to the fire and rescue emergency services in international markets, however, the Board has decided to change strategy to develop an asset and wealth management business, while continuing to seek new contracts for its UAE-based business.
	2.	Basis of preparation
		The financial information in the Half-year Report has been prepared using the recognition and measurement principles of the international accounting standards in conformity with the requirements of the Companies Act 2006 ("IFRS").  The principal accounting policies used in preparing the Half-year Report are those the Company expects to apply in its financial statements for the year ending 30 September 2021 and are unchanged from those disclosed in the Annual Report and Financial Statements for the year ended 30 September 2020. The financial information for the six months ended 31 March 2021 and the six months ended 31 March 2020 is unaudited and does not constitute the Company's statutory financial statements for those periods.  The comparative financial information for the full year ended 30 September 2020 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-year Report have been computed in accordance with IFRSs applicable to interim periods, this Half-year Report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34. The financial statements have been presented in sterling to the nearest thousand pounds (£'000) except where otherwise indicated.
	3.	Other income
			31 March 2021	31 March 2020	30 September 2020
		£'000	£'000	£'000
	Grant Thornton litigation	25,918	-	4,597
	Success fee	(3,530)	-	-
		22,388	-	4,597

As referred to in the Chairman's statement the case against Grant Thornton was concluded successfully on 2 October 2020. The total award came to £30.515 million of which £4.597 million was reflected in the 2020 full year accounts, as it had been awarded by the Courts irrespective of the outcome of any appeal. Other income shown in these interim accounts represents the balance of the Court's award, less the success fee of 15% of claim proceeds excluding costs.

4.	Investment income
		31 March 2021	31 March 2020	30 September 2020
	£'000	£'000	£'000
Fair value gains on financial instruments classified as fair value through profit and loss	450	-	-
Dividend income	195	-	-
Interest receivable	-	11	18
	645	11	18

5.	Earnings/(loss) per share
	Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.
		Six months ended		Year ended
		31 March 2021	31 March 2020	30 September 2020
		£'000	£'000	£'000
	Profit/(loss) for the period	22,259	(742)	3,361
	Weighted average number of ordinary shares in issue	7,817,964	12,211,163	12,211,163
	Basic earnings/(loss) per share (EPS) - pence	284.72	(6.08)	27.52
	There are no dilutive potential ordinary shares and, therefore, the calculation of diluted earnings/(loss) per share is the same as for basic earnings/(loss) per share.

6.	Trade and other receivables
		31 March 2021	31 March 2020	30 September 2020
	£'000	£'000	£'000
Other receivables	214	68	4,640
Prepayments and accrued income	16	48	43
	230	116	4,683

7.	Cash and cash equivalents
		31 March 2021	31 March 2020	30 September 2020
	£'000	£'000	£'000
Cash at bank and in hand	21,324	26,075	27,860
Cash and cash equivalents	21,324	26,075	27,860
UK sterling	20,528	25,375	26,441
UAE Dirhams	796	700	1,419
	21,324	26,075	27,860

In addition to the above, UAE Dirhams amounting to £nil (31 March 2020: £3,464,000 and 30 September 2020: £1,058,000) were held on deposit as security in respect of outstanding performance bonds - see note 10 Contingent liabilities.

8.	Trade and other payables
	31 March 2021	31 March 2020	30 September 2020
	£'000	£'000	£'000
Trade payables	15	34	102
	Other payables	1	34	2
Other taxation and social security	3	3	3
Accruals and deferred income	1,232	1,214	1,149
	1,251	1,285	1,256

9.	Reconciliation of profit before taxation to net cash generated from operations
		Six months ended		Year ended
		31 March		30 September
		2021	2020	2020
	£'000	£'000	£'000
Profit/(loss) for the period before taxation	22,259	(742)	3,361
Success fee	3,530	-	-
Increase in investments	(10,800)	-	-
Finance costs	8	39	62
Finance income	-	(11)	(18)
Decrease in receivables	4,458	11,031	6,024
(Decrease) in payables	(74)	(664)	(622)
Cash generated from operations	19,381	9,653	8,807

10.	Contingent liabilities
		Approximate maximum potential liability
		31 March		30 September
		2021 £'000	2020 £'000	2020 £'000
	Warranty bond related to a UAE based contract, released in full in 2020 (31 March 2020: Performance bond related to the same UAE based contract)	-	1,270	-
	Performance bond related to a UAE based contract, released in full during 2020	-	1,100	-
	Performance bond related to a UAE based contract, released in full in January 2021	-	1,100	1,058

11.	Electronic communications
	The Company is not proposing to bulk print and distribute hard copies of this Half-year Report unless specifically requested by individual shareholders; it can be downloaded from the Company's website at www.assetco.com . News updates, regulatory news, & financial statements can be viewed and downloaded from the Company's website, www.assetco.com.  Copies can also be requested, in writing to, The Company Secretary, AssetCo plc, Singleton Court Business Park, Wonastow Road, Monmouth, Monmouthshire NP25 5JA.

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