| Monday, 18 March 2019 | 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 2018
Statement by the Chairman, Tudor Davies
Introduction
We are pleased to report the results for the year ended 30 September 2018 and the encouraging progress with our claim for professional negligence against our former auditors Grant Thornton. The case was decided in our favour; however, it is now subject to an application by Grant Thornton for permission to appeal to the Court of Appeal.
Trading results
Profit after taxation for the year ended 30 September 2018 was £1.4m (2017: £2.2m) on revenue of £22.9m (2017; £24.9m) with profitability being adversely impacted by the reduced revenues and an increase in the litigation costs incurred in our claim for negligence against Grant Thornton, which was heard in the High Court during June 2018.
The cash position remains strong with free cash balances of £16.8m (2017; £21.5m).
Our business in Abu Dhabi which, since commencement in April 2010, has been based on the provision of an outsourced fire services for the Presidential Special Guard; this ended on 17 December 2018 when our services were combined with the existing outsourced arrangements controlled by the Fire Battalion on behalf of the whole of the Abu Dhabi Military.
We are currently in discussions with the Presidential Special Guard and with other potential clients in UAE to provide training and other fire related services.
Claim against Grant Thornton
The claim for negligence against AssetCo's former auditors, Grant Thornton, culminated in a trial in June 2018, for which a Judgment in AssetCo's favour was handed down awarding the company damages of £22.4m plus an associated interest payment of approximately £6m and £5m on account of costs incurred.
On 21 February 2019 Grant Thornton's applications to the Trial Judge Mr Justice Bryan for permission to appeal, and their counterclaim and application for relief under Section 1157 of the Companies Act 2006 were all dismissed. Grant Thornton was ordered to pay the amounts due to AssetCo into Court, and these monies shall be released to AssetCo either upon the refusal of an application to the Court of Appeal or upon the dismissal of the appeal by the Court of Appeal.
On 15 March 2019, Grant Thornton served notice that they will apply to the Court of Appeal for permission to appeal against the judgement. AssetCo will oppose the application, but there is no fixed deadline for determination of the application.
Outlook
We shall keep shareholders informed of any developments regarding Grant Thornton's appeal and on the further development of the business in UAE.
| 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: [email protected] 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: £45.3m | ||
| AssetCo plc Income Statement for the year ended 30 September 2018
|
| | | Year ended | Year ended |
| | | 30 September | 30 September |
| | | 2018 | 2017 |
| | Notes | £000 | £000 |
| | | | |
| Revenue | | 22,888 | 24,881 |
| Cost of sales | | (16,645) | (17,738) |
| | | ---- | ---- |
| Gross profit | | 6,243 | 7,143 |
| Administrative expenses | | (4,746) | (4,891) |
| | | ---- | ---- |
| Operating profit | | 1,497 | 2,252 |
| Finance income | | 5 | 8 |
| Finance costs | | (83) | (87) |
| | | ---- | ---- |
| Profit before tax | | 1,419 | 2,173 |
| Income tax expense | | - | - |
| | | ---- | ---- |
| Profit for the year | | 1,419 | 2,173 |
| | | ▬▬▬▬ | ▬▬▬▬ |
| | | | |
| Earnings per share | | | |
| Basic - pence | 4 | 11.62 | 17.80 |
| Diluted - pence | 4 | 11.62 | 17.80 |
| AssetCo plc Statement of Comprehensive Income for the year ended 30 September 2018
|
| | | Year ended | Year ended |
| | | 30 September | 30 September |
| | | 2018 | 2017 |
| | | £000 | £000 |
| | | | |
| Recognised profit for the year | | 1,419 | 2,173 |
| | | | |
| Other comprehensive income/(expense) | | | |
| Exchange differences on translating foreign operations | | 760 | (438) |
| | | ---- | ---- |
| Other comprehensive income/(expense), net of tax | | 760 | (438) |
| | | ---- | ---- |
| Total comprehensive income for the year | | 2,179 | 1,735 |
| | | ▬▬▬▬ | ▬▬▬▬ |
| | | | |
| AssetCo plc Statement of Financial Position As at 30 September 2018
|
| |||||
| | | At | At | |||
| | | 30 September | 30 September | |||
| | | 2018 | 2017 | |||
| | Notes | £000 | £000 | |||
| Assets | | | | |||
| Non-current assets | | | | |||
| Property, plant and equipment | | 26 | - | |||
| Cash held in respect of bonds | | 1,199 | 233 | |||
| | | ---- | ---- | |||
| Total non-current assets | | 1,225 | 233 | |||
| | | ---- | ---- | |||
| Current assets | | | | |||
| Inventories | | - | - | |||
| Trade and other receivables | | 15,997 | 10,685 | |||
| Cash and cash equivalents | 5 | 16,800 | 21,530 | |||
| Cash held in respect of bonds | | 941 | 102 | |||
| | | ---- | ---- | |||
| Total current assets | | 33,738 | 32,317 | |||
| | | ---- | ---- | |||
| Total assets | | 34,963 | 32,550 | |||
| | | ▬▬▬▬ | ▬▬▬▬ | |||
| | | | | |||
| Liabilities | | | | |||
| Current liabilities | | | | |||
| Trade and other payables | | 4,993 | 4,759 | |||
| | | ---- | ---- | |||
| Total current liabilities | | 4,993 | 4,759 | |||
| | | ---- | ---- | |||
| Total liabilities | | 4,993 | 4,759 | |||
| | | ---- | ---- | |||
| | | | | |||
| Shareholders' equity | | | | |||
| Share capital | | 25,474 | 25,474 | |||
| Share premium | | 64,941 | 64,941 | |||
| Profit and loss account | | (60,445) | (62,624) | |||
| | | ---- | ---- | |||
| Total equity | | 29,970 | 27,791 | |||
| | | ---- | ---- | |||
| Total equity and liabilities | | 34,963 | 32,550 | |||
| | | ▬▬▬▬ | ▬▬▬▬ | |||
The financial statements were authorised for issue by the board of directors on 16 March 2019 and were signed on its behalf by the chairman, Tudor Davies.
| AssetCo plc Statement of Changes in Equity for the year ended 30 September 2018
|
| | | | Profit | |
| | Share | Share | and loss | Total |
| | capital | premium | account | Equity |
| | £000 | £000 | £000 | £000 |
| | | | | |
| Balance at 30 September 2016 | 25,474 | 64,941 | (64,359) | 26,056 |
| Profit for the year | - | - | 2,173 | 2,173 |
| Other comprehensive income: | | | | |
| Exchange differences on translation | - | - | (438) | (438) |
| | ---- | ---- | ---- | ---- |
| Total comprehensive income for the year | - | - | 1,735 | 1,735 |
| | ---- | ---- | ---- | ---- |
| Balance at 30 September 2017 | 25,474 | 64,941 | (62,624) | 27,791 |
| Profit for the year | - | - | 1,419 | 1,419 |
| Other comprehensive expense: | | | | |
| 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 |
| | ▬▬▬▬ | ▬▬▬▬ | ▬▬▬▬ | ▬▬▬▬ |
| AssetCo plc Statement of Cash Flows for the year ended 30 September 2018
| |||
| | | Year ended | Year ended |
| | | 30 September | 30 September |
| | | 2018 | 2017 |
| | Notes | £000 | £000 |
| | | | |
| Cash flows from operating activities | | | |
| Cash (outflow)/inflow from operations | 6 | (3,453) | 3,094 |
| Cash deposited in respect of bonds | | (3,631) | (104) |
| Cash released in respect of bonds | | 2,028 | 3,246 |
| Finance costs | | (83) | (87) |
| | | ---- | ---- |
| Net cash (outflow)/inflow from operating activities | | (5,139) | 6,149 |
| | | ---- | ---- |
| Cash flows from investing activities | | | |
| Finance income | | 5 | 8 |
| Purchases of property, plant and equipment | | (26) | - |
| | | ---- | ---- |
| Net cash (outflow)/inflow from investing activities | | (21) | 8 |
| | | ---- | ---- |
| Net change in cash and cash equivalents | | (5,160) | 6,157 |
| Cash and cash equivalents at beginning of year | | 21,530 | 15,470 |
| Exchange differences on translation | | 430 | (97) |
| | | ---- | ---- |
| Cash and cash equivalents at end of year | | 16,800 | 21,530 |
| | | ▬▬▬▬ | ▬▬▬▬ |
| AssetCo plc Notes to the Financial Statements for the year ended 30 September 2018 |
| 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 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 16 March 2019. |
| 2. | Basis of preparation |
| | The financial information included in the preliminary announcement for year to 30 September 2018 has been audited and an unqualified audit report has been issued. The preliminary financial statements represent extracts from those audited accounts but do not constitute statutory accounts within the meaning of Section 434 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 2018. |
| 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.
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| 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. | ||
| | | 2018 | 2017 |
| | | £000 | £000 |
| | | | |
| | Profit for the year | 1,419 | 2,173 |
| | | ---- | ---- |
| | Weighted average number of ordinary shares in issue | 12,211,163 | 12,211,163 |
| | Basic and diluted earnings per share - pence | 11.62 | 17.80 |
| | | ||
| 5. | Analysis of net cash | | |
| | | 2018 | 2017 |
| | £000 | £000 | |
| | | | |
| Cash at bank and in hand | 16,800 | 21,530 | |
| | ---- | ---- | |
| Cash and cash equivalents | 16,800 | 21,530 | |
| | ▬▬▬▬ | ▬▬▬▬ | |
In addition to the above £2,140,000 (2016: £335,000) was held on deposit as security in respect of outstanding performance bonds.
| 6. | Reconciliation of profit before tax to cash (outflow)/inflow from operations | ||
| | | 2018 | 2017 |
| | £000 | £000 | |
| | | | |
| Profit for the year before taxation | 1,419 | 2,173 | |
| Finance costs | 83 | 87 | |
| Finance income | (5) | (8) | |
| (Increase)/decrease in receivables | (5,085) | 1,191 | |
| Increase/(decrease) in payables | 135 | (349) | |
| | ---- | ---- | |
| Cash (outflow)/inflow from operations | (3,453) | 3,094 | |
| | ▬▬▬▬ | ▬▬▬▬ | |
| 7. | Contingent liabilities | ||||||||||||||||||||||||||||||
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| 8. | Post balance sheet events |
| | As announced on 16 October 2018, the company received, on 15 October 2018, notice of termination of its contract in the UAE. The contract terminated on 17 December 2018.
On 31 January 2019, the company also announced that, in a judgment which was handed down that morning in AssetCo's case against Grant Thornton LLP ("GT"), AssetCo was awarded damages of approximately £21 million before an additional amount for interest on the damages and costs of the litigation.
At a further hearing on 21 February 2019, GT's application for permission to appeal were dismissed, as was their counterclaim and application for relief under Section 1157 of the Companies Act 2006. Grant Thornton was ordered to pay into Court a sum of £22.4 million, plus interest of approximately £6 million plus £5 million on account of AssetCo's costs, on which interest will accrue at the judgment rate of 8% per annum. AssetCo was also awarded its costs of the action to be assessed by the Court if not agreed. The amounts paid into Court shall be released to AssetCo upon the refusal of Grant Thornton's application for permission to appeal by the Court of Appeal, or if permission is granted, upon the dismissal of the appeal by the Court of Appeal.
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 2018 unless specifically requested by individual shareholders; it can be downloaded from the company's website. |