Interim Results 2009
Interim results for the six months ended 30 September 2009
Further strengthening of the integrated support services offering
• Profit before tax from continuing operations £5.4m (2008: £6.6m)
• Profits from our core Integrated Support Services up 25% to £3.9m (2008: £3.1m)
• Fully diluted EPS from continuing operations 5.9p (2008: 7.4p)
• Recourse debt reduced by 23% to £27.8m (2008: £34.3m)
• 70% of total debt relates to non-recourse asset finance on our long-term contracts (2008: 64%)
• Award of 7 year contract with London Fire and Emergency Planning Authority for the provision of an Emergency Fire Crew Capability Service to the London Fire Brigade
• 10 year Joint venture formed with Abu Dhabi Government for construction and operation of Rabdan Academy Disaster City
• Exit from low margin Vehicle Assembly business
John Shannon, Chief Executive Officer, commented:
"We continue to develop AssetCo into a fully integrated support services company, as demonstrated by the award of the London contingency solution and Rabdan Academy Disaster City contracts. We are well placed to build on our position further and look forward to future developments with confidence."
AssetCo plc +44 (0) 20 8515 3999
John Shannon, Chief Executive Officer
Frank Flynn, Chief Financial Officer
James Collins, Investor Relations
Arden Partners plc +44 (0)20 7614 5932
Pelham +44 (0) 20 7337 1500
Report of the Chief Executive Officer
During this period we have made significant progress in the development of our Integrated Support Services offering, particularly in our strategy to prioritise our efforts on those services which are accountable for the highest proportions of our clients‟ cost base. This has included the development of solutions that give our clients access to alternative delivery models for operational training and front-line operational services.
In July, the London Fire and Emergency Planning Authority (LFEPA), after a competitive tender process, awarded us the UK's first Reserve Fire Crew contract to provide an Emergency Fire Crew Capability Service to the London Fire Brigade of up to 700 staff, trained to provide a contingency fire fighting service. The award of this seven year contract will assist LFEPA in meeting its statutory duty to provide crew resilience if existing services require support in extreme situations such as pandemic illness or flooding.
In November, we formed a 10-year joint venture agreement with the Abu Dhabi Government‟s Critical National Infrastructure Authority (CNIA) to develop and manage a 100-acre multi-agency emergency services training centre, Rabdan Disaster City. Rabdan Disaster City will be an integral part, and is the first project, of the "Rabdan Academy", a programme to establish accredited education and training qualifications to personnel from multi-agency services in the Emirates, the Gulf Co-operation Council and Internationally.
As a result of the changing focus of our business in the UK and overseas, we continue to review and challenge the shape of the current business and are taking active steps to adapt it in order to focus on the changing needs of our clients. As part of this and following completion of a strategic review earlier in the year we have embarked upon an exit from our Vehicle Assembly business, and expect this to be completed by Spring 2010.
Financial Results for the six months ended 30 September 2009
The performance for the six months ended 30 September 2009 has resulted in a profit before taxation of £5.4m (six months ended 30 September 2008 £6.5m).
The financial results for the comparable period include approximately £1.8m of „one off‟ project activity which has not been repeated, hence our underlying half year performance is significantly ahead of the comparable period.
Our performance reflects our strategy to focus on better quality sustainable revenue and to reduce our activity in high volume/low margin operations, where trading conditions are more difficult as a result of the current economic situation, and to be less reliant on "one-off" project activity.
Our core Integrated Support Services business delivered a 25% increase in profit to £3.9m (six months ended 30 September 2008 £3.1m). This improvement is as a result of both an expansion of our services and increased operating efficiency.
We have continued to reduce our recourse debt exposure to de-risk the business to current financial sector liquidity constraints. Recourse debt has reduced by 23% to £27.8m (£34.3m as at 30 September 2008).
Non recourse debt (long term contract asset finance) has increased by 5% to £63.6m (six months ended 30 September 2008 £60.9m) which reflects our continued investment in assets designed to deliver a best in class service to our partners.
70% of our total debt as at 30 September 2009 related to non-recourse debt compared to 64% as at 30 September 2008.
Net operating cash flow was £11.4m (six months ended 30 September 2008: £12.4m).
Despite the adverse stock market conditions, our defined benefit pension scheme continues to operate a healthy surplus.
We continue to adapt our business proposition to deliver measurable and significant long-term sustainable benefit to our clients and prospective clients
Integrated Support Services
The 2009 Government Budget Report highlighted the fact that the UK is entering a period of unprecedented Public Sector fiscal pressure. The requirement for all UK Fire and Rescue Authorities to deliver efficiency savings from continued modernisation will now be much greater and more pressing than initially anticipated. Our experience and track record and the increased breadth of our integrated support services offering mean that we are well positioned to deliver sustainable long-term growth in this environment.
London Fire Brigade is recognised internationally as the world‟s leading fire and rescue service and our partnership model provides an operating template against which we can measure other services and deliver change and improvement. The establishment of our joint venture with the Abu Dhabi Government, positions us well to work with the various agencies that deliver a fire and rescue service to the UAE, to allow them to consider alternative delivery models for all their operational service requirements.
Following our strategic review of our Specialist Equipment business, we have re-branded all the previously independent operations, (AS Fire and Rescue, Fire Safety Equipment, Collins Youldon, Blue Amber Red and Todd Research) as Supply999.
Supply999 now offers an integrated equipment solution to UK Fire and Rescue. It holds the UK Government Procurement Framework agreements for our complete equipment portfolio, and has successfully begun to open up new international markets, both with and independent of the AssetCo Integrated Services business. We continue to review each of the product lines within the portfolio to ensure we have “best in class” assets and the requisite OEM support.
The group has continued to trade in line with the board‟s expectations in the six weeks since the half year end.
As our understanding of the long-term requirements of our clients and prospective clients has developed, we have evolved our business model and increased the intellectual and operational capabilities of the group. That we are recognised as the partner of choice for “pathfinder” contracts in the UK and Government joint ventures in the UAE, demonstrates the progress made in establishing our Integrated Support Services business as a compelling proposition both at home and overseas and leaves us well positioned for the future.
Chief Executive Officer