RNS Number : 4664V
AssetCo PLC
29 May 2008
For Immediate Release 29 May 2008
("AssetCo" and or the "Company")
Results for the year ended 31 March 2008
AssetCo plc, (AIM : ASTO) a leading support services group to the UK Fire and Rescue Authorities, is pleased to announce its results for
the year ended 31 March 2008.
KEY POINTS
Financial
* Revenue reduced to �68.8m reflecting exit from non core activities * Profit before taxation increased by 118% to �9.4m (2007:
�4.3m) * Basic EPS increased by 152% to 11.1p (2007 : 4.4p) * Maiden dividend declared - 1p per share
Business
* Focus on * * long-term contracts in both UK and Middle East; and
* increasing core business emergency services revenues
* Establishment of Emergency Resource Team * Successful integration and consolidation of supply chain by acquisition * Operational
and Group level changes to support development
Tim Wightman, Chairman, commented:
"AssetCo has developed a reputation for operational excellence, long-term capability and sustainable managed service solutions. With the
creation of our Emergency Resources team we have sought to establish a leading presence in a sector of the emergency services market where
the majority of expenditure takes place. I am confident that our strategy of creating a more stable and secure supply chain for our core
market will bring benefits to both our customers and shareholders alike."
For more information please contact:
AssetCo plc Tel: +44 (0) 20 8515 3999
John Shannon
Frank Flynn
Buchanan Communications Tel: +44 (0) 20 7466 5000
Tim Anderson
Isabel Podda
Hoare Govett Limited - Nomad Tel: +44 (0) 20 7678 8000
Stephen Bowler
John MacGowan
Richard Crichton
Kaupthing Singer & Friedlander Capital Markets Ltd Tel: +44 (0) 20 3205 5000
Nicholas How
Marc Young
Chairman's Statement
Introduction
This is my second Chairman's statement of AssetCo plc and I am delighted with the strong operational performance during the year which
has seen profit before tax growth of over 80%.
The principal focus for the year has been to increase profitability through growth of existing contracts and by broadening our
capabilities via niche growth orientated acquisitions. The current financial year culminated with a series of these acquisitions and I would
like to take this opportunity to welcome all members of staff of the acquired businesses to the enlarged Group.
International Financial Reporting Standards
This is our first set of results that have been prepared in accordance with International Financial Reporting Standards ("IFRSs"). The
takeover on 30 March 2007 has been accounted for as a reverse takeover with AssetCo Group Limited being deemed to have acquired Asfare Group
plc. This accounting treatment differs to that adopted in our previous preliminary announcement, which were prepared in accordance with
United Kingdom Generally Accepted Accounting Practice, and has resulted in comparative information for the year ended 31 March 2007 being
restated.
A more detailed explanation of our transition to IFRSs can be found in Note 7 to the preliminary announcement.
Results
I am pleased to report that profit from continuing and discontinued operations before tax and share-based payments has almost doubled to
�10.3 million (2007: �5.4 million).
Basic earnings per share, from continuing and discontinued operations, have increased to 11.8 pence (2007: 6.7 pence).
Dividend
In recognition of the 80% growth in profitability, it is the Board's intention to declare a dividend of one pence per share.
Disposals
Turnover has fallen as we continue to exit our non-core high volume but low margin fleet management contracts. In February 2008, we
disposed of a small niche part of our Northern Ireland spot hire business generating a profit on disposal of �1 million. A further disposal
of the Northern Ireland Electricity contract hire and fleet management business occurred in April 2008.
Organisation
Emergency Services Team
Our Emergency Services Team continues to provide support services to the London Fire and Emergency Planning Authority and Lincolnshire
Fire and Rescue Service, under our two twenty-year core contracts.
In order to enhance our product offering to new and existing clients, we have acquired Auto Electrical Systems which designs, builds and
installs integrated electrical and communications systems for vehicles operated by the emergency services. The company has recently
developed the M-Flow telemetry product, which enables the capture of real time data from vehicles and the transmission of that information
to the relevant users.
We have also made a strategic investment in Miquest Limited, a company that provides integrated software solutions to assist with the
management of assets, principally in the emergency services market.
The New Dimensions contract, to provide a total managed solution for specialist vehicles and equipment in case of terrorist attack, is
expected to be awarded by summer 2008. Informal collaboration between the Fire and Rescue Authorities ("FRAs") continues and we are
confident that further long-term contracts will come to market during the forthcoming year.
Vehicle and Emergency Equipment Services Team
In December 2007, we acquired two vehicle assembly companies and they will form part of our Vehicle and Emergency Equipment Services
team. The vehicles business is now the largest provider of both fire appliances and ambulances to the UK market.
The vehicles and equipment businesses are now primarily located at Papworth in Cambridgeshire where we are endeavouring to create a
unique centre of excellence for the supply of vehicles and equipment to the fire market. This state of the art facility now houses on one
site a number of key manufacturing and assembly businesses and also a large engineering, design and research and development department
seeking to create the most advanced solutions for the future needs of the fire and emergency services.
Emergency Resource Team
During the year we established a new Emergency Resource team. Human resource related expenditure accounts for over 80% of the annual
budgets of FRAs. The Emergency Resource team will be exploring recruitment, training and staffing opportunities both domestically and
overseas.
The tender for the Fireguard contract, to provide an outsourced business continuity solution for emergency fire crew, was submitted in
May 2008 and is anticipated to be awarded by the end of summer 2008.
Board change
I would like to take this opportunity to thank David Chisnall OBE for his contribution to AssetCo, as a non-executive director, and
previously the Asfare Group. David is a well-known figure in the fire industry and is currently chairman of FIRESA, the trade body
representing the major equipment suppliers to the FRAs. David's work in the fire industry was recognised with the award of an OBE in 2006 in
the Queen's Birthday Honours. David announced his retirement from the Board on 31 January 2008.
Current trading
Trading in the first two months of the new financial year is in line with the Board's expectations with the emphasis on securing new
long term contracts both in the UK and in the Middle East, integrating the acquired businesses, identifying synergies, leveraging off the
enhanced buying power of the enlarged Group as well as the ongoing implementation of our continuous improvement programmes.
Outlook
AssetCo has developed a reputation for operational excellence, long-term capability and sustainable managed service solutions. With the
creation of our Emergency Resources team we have sought to establish a leading presence in a sector of the emergency services market where
the majority of expenditure takes place. I am confident that our strategy of creating a more stable and secure supply chain for our core
market will bring benefits to both our customers and shareholders alike.
I look forward to another successful year.
Tim Wightman
Chairman
Chief Executive Officer's Statement
Introduction
As we continue to shape and equip our business to be the "best in class" support services provider to the UK Fire and Rescue Services
("FRS"), I am satisfied with our progress to date which has seen operating profit grow by over 130%.
Our strong performance is directly attributable to our strategy of broadening our capabilities via highly specialist acquisitions in
growth areas of the emergency services market, and the expansion of our contracts with existing clients. The second part of the financial
year culminated with a series of successful acquisitions related to this goal as well as the establishment of our Emergency Resource
operation.
Results
I can report that profit before tax and share-based payments has almost doubled to �10.3 million (2007: �5.4 million).
Earnings per share have increased to 11.8p (2007: 6.7p).
In line with our stated strategy, we continue to exit non-core legacy fleet management activities. As at 31 March 2008, non emergency
related revenue represented less than 9% of Group activity.
Strategy
The emergency services market continues to move towards outsourcing and managed services as the economic and operational solution to
tackle costly and complex change issues in a hardening "best value" environment.
During the year we conducted two independent surveys on the progress of the UK Fire and Rescue Service in response to the Government's
change agenda. The results of the surveys were launched to an invited audience of Chief Fire Officers ("CFOs"), Local Government officials
and to representatives of central government's Communities and Local Government department with responsibility for UK FRS. The findings were
published publicly in March as "The AssetCo Fire and Rescue Report 2008: and they put out fires too".
The first research of its type ever conducted, the surveys achieved a high level of participation with over 80% of the UK's CFOs
interviewed. The findings indicate quite clearly that, despite having made great progress to date, FRS senior management is uniformly
concerned about its ability to maintain and progress the mix and scale of operational changes needed in the current funding environment and
that there is now more than ever before, a heightened interest in exploring alternative funding and capacity models with the private sector.
I am confident that we are in a growth market and the evolution of our business, its areas of specialist focus, and the robust spread of
our expertise are optimally aligned to capitalise on the opportunities ahead.
Organisation
With the growth of our business and expansion of our supply chain, we have introduced a number of operational and Group corporate level
changes during the year to ensure we maintain the correct alignment of teams, processes and resources appropriate to our market. One of the
most visible was the introduction of a new corporate identity to better reflect and communicate our service offerings and the collaborative
relationships of all subsidiary businesses within the AssetCo plc organisation to our clients, targets and key stakeholders. The new design
seeks to clearly position our three core business areas of emergency support services, emergency resources and vehicle and equipment
services to the core markets they serve. The operational changes affecting each of these three businesses are covered in greater detail, by
business area, in the following sections.
We remain confident that we are in a growth market and the evolution of our business, its areas of specialist focus, and the robust
spread of our expertise are optimally aligned to capitalise on the opportunities ahead. My statement below outlines in greater detail the
progress and opportunities pertaining to each of our specific business areas and the investment and organisational steps we are taking to
best position for success.
Emergency Services Team
Our Emergency Services team has been involved in the 12 month competitive dialogue process and final bidding for the Government's
16-year New Dimensions contract, to provide a resilient total managed solution for specialist vehicles and equipment in case of terrorist
attack. The contract is expected to be awarded by summer 2008. Our participation as one of the very few suppliers able to tender for this
highly sensitive contract further signifies the respect our Emergency Services team has achieved in such a specialist field as a direct
result of our performance delivery for the London Fire Brigade ("LFB") and Lincolnshire Fire and Rescue Service ("LFRS") - a unique
credential in the UK fire market.
At the same time, we have progressed individual discussions with local and regional FRS groups and are confident that further long-term
contracts will come to market during the forthcoming year.
During the year, we supplied LFB with 102 new fire appliances, the largest ever UK FRS fleet replacement programme undertaken. We also
completed the refurbishment of 23 ex-LFB fire appliances and the assembly of 33 new fire appliances for LFRS. As a result, LFB and LFRS have
the most modern operational vehicles and equipment available and now represent benchmark fleets in the UK FRS arena.
The team continues to provide an ever expanding range of support services to LFB and to LFRS under our two twenty-year core contracts.
Vehicle and Emergency Equipment Services Team
Our Vehicle and Emergency Equipment Services operation has evolved through acquisition and growth to provide the Emergency Services with
a comprehensive range of product supply and support services. Our approach has brought together a number of leading manufacturers and
distributors to establish an integrated and robust product supply chain which supplies into to all of the UK's Fire and Rescue Authorities;
items range from consumables through to the most sophisticated fully stowed pumping appliances available today.
Primarily located at Papworth, where we are aiming to create a centre of excellence for the supply of vehicles and equipment to the fire
market, our vehicles business is now the largest provider of both fire appliances and ambulances in the UK. This centralised state of the
art facility at Papworth is home to a number of key manufacturing and assembly businesses that supply the fire market and it also houses a
large engineering, design and research and development function to provide the most advanced solutions for the future needs of the fire and
wider emergency services.
Much effort has been made during this financial year to integrate the various subsidiary vehicle and equipment businesses to optimise
their capability and capacity to serve the emergency markets. We are delighted to see early evidence of the value of this approach resulting
in the award of FRS framework agreement status to supply in the highly specialised areas of "Fluid Movement", "Road Traffic Collision
Equipment", "Working at Height", "Generation Equipment" and "Positive Pressure Ventilation" for our AS Fire and Rescue Equipment, Collins
Youldon, and FSE subsidiary businesses respectively.
In addition, the strength of our reputation in these areas is increasingly attracting overseas interest and the strength and robustness
of our supply chain has recently secured us orders of around �1m from South East Asia with news of larger orders in the pipeline.
Emergency Resource Team
During the year we established a new Emergency Resource operation. Human resource related expenditure accounts for over 80% of the
annual budgets of FRAs. Our Emergency Resource team will be exploring recruitment, training and staffing issues both domestically and
overseas, such as the Middle East where we have already received significant interest.
In March we completed the acquisition of RIG Systems, a specialist technical safety and rescue training consultancy to the UK FRS and other
emergency agencies. RIG has become the UK market leader in the development of integrated water, development of integrated water, height and
confined space rescue risk control systems. As the incumbent Water Rescue trainer to the London Fire Brigade, this transaction has allowed
us to develop new services for our key client, whilst recent flooding events have provided greatly accelerated growth opportunities.
The tender for the UK FRS Fireguard contract, to provide an outsourced business continuity solution for emergency fire crew, was
submitted in May and is anticipated to be awarded by the end of summer 2008.
Risks and uncertainties
We continue to monitor the risks and uncertainties facing the Group. Although it is not possible to remove all risks, all reasonable
steps are taken to ensure that any adverse consequences associated with these risks are mitigated and minimised.
We continue to develop a detailed risk register which identifies key strategic, financial and operating risks affecting, or potentially
affecting, the Group and provides risk management plans against each..
Current trading
Trading in the first two months of the new financial year is in line with the Board's expectations and reflects our emphasis on the
on-going delivery of our continuous improvement programmes, securing new long term contracts both in the UK and in the Middle East;
integrating the newly acquired businesses, identifying commercial synergies and leveraging the enhanced buying power of the enlarged Group.
Outlook
We have had a very industrious and successful year and have met our own exacting operational and financial targets. We have captured a
wealth of additional talent and innovative ventures during the year in which I believe reside the skills to harness even greater
opportunities in the future. This year we have made great investment in long term business development and in creating robust organisational
and operational structures.
We are now in a growth market in both the UK and overseas and I believe we are superbly placed to capitalise on new opportunities with
new clients and in new markets.
John Shannon
Chief Executive Officer
Chief Financial Officer's Statement
Introduction
This is my second report as Chief Financial Officer of AssetCo plc and I am pleased to report an excellent set of results for the year
ended 31 March 2008.
International Financial Reporting Standards
As noted by our Chairman in his report, this is the first set of results that has been prepared in accordance with International
Financial Reporting Standards as adopted by the European Union and international accounting standards ("IFRSs").
As part of the transition we have had to re-state our comparative results for the year ended 31 March 2007 and have re-visited our
balance sheet at 1 April 2006, the date of transition to IFRSs. Unlike United Kingdom standards, international accounting standards contain
more detailed guidance on the treatment of reverse acquisitions. Specific criteria in IFRS 3, "Business Combinations", have been met which
requires the AssetCo-Asfare transaction on 30 March 2007 to be treated as a reverse acquisition.
The adoption of reverse acquisition accounting has changed our net assets position at 31 March 2007 from �103.9 million, as reported
under United Kingdom Generally Accepted Accounting Practice ("UK GAAP"), to �26.4 million under IFRSs. However, the only significant change
has been to reduce goodwill by �76.2 million, with a corresponding adjustment to reserves, as AssetCo Group Limited was deemed to have
acquired Asfare Group Plc for consideration of �8.2 million, rather than the latter acquiring AssetCo Group Limited for consideration of
�92.5 million as previously reported under UK GAAP.
The directors consider this change of treatment to be an accounting technicality which, although confusing, does not affect the
financial standing or underlying performance of the Group. These changes are more fully explained in Note 7 to the preliminary
announcement.
During the current financial year, our net assets have increased by 71% to �45.2 million as a result of impressive profit growth and
following the successful implementation of our acquisition strategy which is outlined later in my report.
Review of business
Key performance indicators
The Board continues to monitor the performance of the Group against certain Key Performance Indicators ("KPIs"), both financial and
non-financial. These include profit before tax and share-based payments, EBITDA, earnings per share, net debt and staff turnover.
The following table summarises these measures for 2007 and 2008.
2008 2007 Variance Variance
%
Profit before tax 9.4m 4.3m 5.1m 119
Profit - discontinued operations 0.5m 1.1m
Share-based payments 0.4m -
Profit before tax and share-based 10.3m 5.4m 4.9m 91
payments
EBITDA 23.1m 18.6m 4.5m 24
Basic earnings per share 11.8p 6.7p 5.1p 76
Net debt 83.9m 53.3m 30.6m 57
Staff turnover 9.1% 9.8% (0.7)% (7)
Profit before tax
Profit before tax and share-based payments of �10.3 million, has increased by 91% from �5.4 million.
Underlying profit
The underlying profit before tax for the year was �10.8 million after taking into account the following two substantial non recurring
items and share-based payments:
2008
�'000
Profit before tax 9,441
Profit from discontinued operations 456
Share-based payments 440
Profit on disposal of Star Rentals (1,000)
Restructuring and redundancy costs 1,549
Underlying profit 10,886
The improvement in profit reflects the growth of our existing core contracts, the development of new product lines and the ongoing
implementation of our continuous improvement programmes across the Group.
The directors have made a provision in the preliminary announcement of �1.5 million which covers redundancy costs, early lease
termination penalties and other costs associated with the reorganisation.
The provision also covers redundancy payments associated with our decision to close our site in Hampshire and relocate the manufacture
of specialist ladders to Papworth.
EBITDA
EBITDA, before share-based payments, has increased from �18.6 million for the year ended 31 March 2007 to �23.1 million in 2008.
Earnings per share (continuing and discontinued operations)
Basic earnings per share increased by 76% from 6.7 pence in 2007 to 11.8 pence in 2008. On a fully diluted basis the increase was 80%
from 6.4 pence in 2007 to 11.5 pence in the current year.
Net debt
An analysis of net debt is provided in the following table.
2008 2007 Variance Variance
� million � million � million %
Asset finance - emergency 55.3 24.2 31.1 129
Acquisition loan 18.9 21.0 (2.1) (10)
Asset finance - non-emergency 2.8 9.4 (6.6) (70)
Other loans 6.7 0.8 5.9 738
Short-term loans and overdraft 13.1 8.1 5.3 65
Less: cash and cash equivalents (12.9) (10.2) (2.7) 26
Net debt 83.9 53.3 30.6 57
Net debt, defined as cash and cash equivalents less borrowings, has increased during the year from �53.3 million to �83.9 million, as a
result of the completion of our build programmes for both the London Fire and Emergency Planning Authority ("LFEPA") and Lincolnshire Fire
and Rescue Service ("LFRS").
Since the start of the programme in 2006, we have supplied LFEPA with 102 new fire appliances, over 40 other specialist vehicles and
numerous pieces of sophisticated technical operational equipment. The majority of this investment of �34 million was incurred during the
year and has been financed through borrowings designed to match the long-term life of these assets.
During 2008, we also completed the refurbishment of 23 fire appliances and the assembly of 33 new fire appliances for LFRS at a cost of
�8 million. This investment has also been financed over the life of the assets and has increased our net debt position at 31 March 2008.
As a result of our build programmes, both LFEPA and LFRS have the most modern operational equipment available.
As part of our ongoing efforts to minimise the impact of changes in interest rates, we have recently concluded discussions with our
principal lenders which will result in approximately 80% of our debt carrying interest at a fixed rate.
Staff turnover
In a support services business like AssetCo, it is the attitude, skill and motivation of our staff which differentiates us from our
competitors. The directors consider staff retention to be a reasonable measure of our employees' attitude towards the Group. We measure
staff turnover as the number of employees who left the Group, other than through redundancy, during the period as a proportion of total
average employees.
Staff turnover fell from 9.8% in 2007 to 9.1% in 2008.
SAYE Scheme
As part of our commitment to our staff, we have implemented a Save As You Earn ("SAYE") Scheme which is open to all employees throughout
the Group. Savings commenced in April 2008 and the directors continue to actively encourage all employees to join the Scheme.
Pension scheme
I am pleased to report that the surplus on the AssetCo Pension Scheme has increased by over 500% from �329,000 to �2.048 million. We
will reflect this surplus over the remaining working lives of the members of the scheme and this has resulted in a credit to our income
statement of �100,000 (2007: �101,000) during the year.
Acquisitions
During the latter part of the year, much of our attention was focused on completing the acquisitions of a number of key suppliers in the
emergency services market. I am pleased to report that during the year under review, we completed six acquisitions and made one strategic
investment. Details of the most significant acquisitions are given in the table below.
AES UVM TVAC RIG
�m �m �m �m
Month of acquisition Nov Dec Dec Mar
Consideration 2.2 0.7 2.1 1.1
Potential deferred consideration 1.8 0.8 6.9 0.9
Profit/(Loss) - last accounts (0.1) (1.5) 0.6 0.1
Profit/(Loss) - to 31 March 2008 0.5 0.2 0.5 -
Net assets/(liabilities) on acquisition 0.5 (2.5) 0.1 0.4
Net assets/(liabilities) at 31 March 2008 1.0 (2.3) 0.6 0.4
a) Miquest Limited
In November 2007, we also acquired a 25% shareholding in Miquest Limited for �414,000
Miquest provides asset management solutions to the Fire and Rescue Services, and the products developed by Miquest will complement those
of MFlow.
b) Others
These acquisitions referred to above will complement the purchases of Simentra Limited (April 2007) and Blue Amber Red Limited (June
2007) which were outlined in my report last year.
Share placing
On 7 February 2008, in order to assist with the financing of the companies that we acquired during the year and to preserve our cash
balances, a sum of �6.3 million was raised, before commission and expenses, through the placing of 5% of our issued share capital to
existing and new institutional investors. I am delighted to report that the placing was nearly 100% over-subscribed.
Disposals
As part of our strategy to focus exclusively on the emergency services market we continue to dispose of our non-core activities.
Historically, the Group was involved in fleet management for a number of large utility companies and local authorities. Although significant
turnover was generated by these contracts, they were low margin in nature and are not considered to be part of our core business. In March
2008 and April 2008, we disposed of two business units as outlined in the Chairman's Statement.
Share price
Our share price, which year-on-year remained virtually unchanged, has out-performed the FTSE-AIM All Share Index (16% fall) during the
year but has fallen back from its peak in August 2007 on the back of very thin trading volumes. Our move to a new Stock Exchange settlement
system in December 2007 has also increased the volatility of our share price. We are proactively working with our brokers in order to manage
this and ensure that small numbers of shares that become available are placed with investors where we believe, as demonstrated by the
results of our share placing, that there is significant demand for larger volumes.
The market capitalisation of the Group is approximately �140 million.
Outlook
Our principal challenge for the year ahead is to integrate the acquired companies into the AssetCo Group and to generate economies of
scale with our existing businesses and to continue to deliver our ongoing continuous improvement programme. Our focus remains on generating
new business with our existing key clients through our long-term contracts. If we achieve these goals, and I am confident that we will, then
FY09 should deliver enhanced returns for our shareholders.
Frank Flynn
Chief Financial Officer
Consolidated Income Statement
Year ended 31 March 2008
Year Ended31.03.08 Year Ended31.03.07
�*000 �*000
Continuing operations
Revenue 68,848 90,628
Cost of sales (34,795) (68,438)
Gross profit 34,053 22,190
Administrative expenses (19,135) (16,272)
Other gains 1,016 138
Restructuring costs (1,549) -
Operating profit 14,385 6,056
Finance income 429 3,379
Finance costs (5,373) (5,099)
Profit before taxation 9,441 4,336
Taxation 3 (1,860) (2,211)
Profit for the year from 7,581 2,125
continuing operations
Discontinued operations
Profit for the year from 456 1,101
discontinued operations
Profit for the year 8,037 3,226
Earnings per share (pence)
From continuing operations
Basic 5 11.1 p 4.4 p
Diluted 5 10.8 p 4.2 p
From continuing and discontinued
operations
Basic 5 11.8 p 6.7 p
Diluted 5 11.5 p 6.4 p
Consolidated Balance Sheet
Year ended 31 March 2008
As at31.03.08 As at31.03.07
�*000 �*000
ASSETS
Non-current assets
Property, plant and equipment 76,727 50,835
Goodwill 51,922 34,646
Other intangible assets 1,576 44
Investment in associates 414 -
Deferred tax asset 1,817 267
Retirement benefit surplus 429 329
132,885 86,121
Current assets
Inventories 8,048 4,235
Trade and other receivables 21,513 14,052
Cash and cash equivalents 12,896 10,231
Assets held for sale 3,370 -
Derivative financial instruments 2,190 -
48,017 28,518
Total assets 180,902 114,639
EQUITY
Attributable to equity holders of the Company
Issued share capital 17,958 16,800
Share premium account 25,197 17,890
Reverse acquisition reserve (11,701) (11,701)
Hedging reserve 1,577 -
Translation reserve 356 -
Other reserve 384 -
Retained earnings 11,506 3,413
Total equity 45,277 26,402
LIABILITIES
Non-current liabilities
Borrowings 69,970 49,763
Deferred tax liabilities 5,961 3,438
Retirement benefit obligations - 42
75,931 53,243
Current liabilities
Trade and other payables 27,871 21,016
Current income tax liabilities 330 213
Borrowings 26,825 13,765
Provisions 1,549 -
Liabilities associated with assets classified as held for 3,119 -
sale
59,694 34,994
Total liabilities 135,625 88,237
Total equity and liabilities 180,902 114,639
Approval
This preliminary announcement were approved by the Board of directors and authorised for issue on 27 May 2008. They were signed on its
behalf by:
Consolidated Statement of Changes in Equity
Year ended 31 March 2008
Share Reserve
Share Premium Acquisition Hedging Translation Other Retained Total
Capital Account Reserve Reserve reserve reserve earnings Equity
�*000 �*000 �*000 �*000 �*000 �*000 �*000 �*000
At 1 April 2006 100 2,971 - - - - 1,854 4,925
Loss on fair value of shares
classified as financial - - - - - - (1,667) (1,667)
liabilities
Net losses recognised directly - - - - - - (1,667) (1,667)
in equity
Accounting for the reserve 16,700 14,919 (11,701) - - - - 19,918
acquisition
Profit for the year - - - - - - 3,226 3,226
At 31 March 2007 16,800 17,890 (11,701) - - - 3,413 26,402
Gain recognised on cash flow - - - 2,190 - - - 2,190
hedge interest rate swap
Tax on items taken directly to - - - (613) - - - (613)
equity
Exchange differences on - - - - 356 - - 356
translation of overseas
operations
Movement on share options in - - - - - (56) 56 -
the year
Net gains recognised directly - - - 1,577 356 (56) 56 1,933
in equity
Movement relating to - - - - - 440 - 440
share-based payments
Profit for the year - - - - - - 8,037 8,037
Net proceeds from issue of 1,158 7,307 - - - - - 8,465
shares
At 31 March 2008 17,958 25,197 (11,701) 1,577 356 384 11,506 45,277
Consolidated Cash flow Statement
Year ended 31 March 2008
Year Ended31.03.08 Year Ended31.03.07
�*000 �*000
Cash flows from operating activities
Cash generated from operations 6 14,123 15,137
Finance costs (5,373) (5,099)
Corporation tax paid (177) (136)
Net cash generated from operating activities 8,573 9,902
Cash flows from investing
activities
Acquisition of subsidiaries, net of cash acquired (4,910) (1,313)
Investment in associated undertaking (414) -
Purchase of intangible assets (1,089) (36)
Purchases of property, plant and equipment (38,550) (13,818)
Proceeds from sale of property, plant and equipment 3,518 7,316
Proceeds from sale of subsidiary undertakings 900 -
Net cash used in investing activities (40,545) (7,851)
Cash flows from financing activities
Proceeds from issuance of ordinary shares 6,378 18,251
Net repayments of borrowings (4,552) (12,445)
Net increase in /(repayments of) finance leases 27,493 (10,841)
Finance income 429 3,379
Net cash used in financing activities 29,748 (1,656)
Net increase/(decrease) in cash, cash equivalents (2,224) 395
and bank overdrafts
Cash, cash equivalents and bank overdrafts at 2,618 2,223
beginning of period
Cash, cash equivalents and bank overdrafts at end of 394 2,618
period
NOTES TO THE CONSOLIDATED PRELIMINARY ANNOUNCEMENT
NOTES:
1. Basis of preparation
The preliminary announcement comply with the AIM Rules and have been prepared in accordance with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union. The preliminary announcement is prepared using the historical cost convention as
modified for the revaluation of certain assets.
This is the first full period in which the preliminary announcement has been prepared under IFRSs. A summary of the impact of the
transition from UK GAAP to IFRSs can be found in Note 7. In preparing the preliminary announcement, the Group has started from an opening
balance sheet as at 1 April 2006, the Group's date of transition to IFRSs. As part of the transition, all accounting policies have been
reviewed and changes made as appropriate.
Comparative information in respect of the year ended 31 March 2007 has been restated to comply with IFRSs.
Exemptions
IFRS 1, "First-time Adoption of International Financial Reporting Standards", provides a number of optional exemptions to the general
principles of full retrospective application of IFRSs. The Group has elected to take advantage of the following optional exemptions:
IFRS 3, "Business Combinations", has not been applied to acquisitions of subsidiaries or interests in joint ventures that occurred
before 1 April 2006 as these were business combinations effected before the date of transition to IFRSs.
The Group has elected to recognise all cumulative actuarial gains and losses in relation to employee benefit schemes at the date of
transition.
Critical accounting estimates and judgements
The preparation of preliminary announcement in conformity with IFRSs 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.
Accounting standards and interpretations
a) Interpretations to existing standards that are not yet effective
Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group's
accounting periods beginning on or after 1 April 2008 or later periods but which the Group has not early adopted:
Standards
IFRS 8, "Operating Segments" (effective for annual periods beginning on or after 1 January 2009). IFRS 8 sets out requirements for
disclosure of information about an entity's operating segments and also about the entity's products and services, the geographical areas in
which it operates, and its major customers. Management is currently assessing the impact of IFRS 8 on the Group's operations.
IAS 1 (revised), "Presentation of Preliminary announcement" (effective for annual periods beginning on or after 1 January 2009). IAS 1
(revised) sets out revisions to the presentation of financial information. Management is currently assessing the impact of IAS 1 (revised)
on the preliminary announcement of the Group.
IFRS 3 (revised), "Business Combinations"; IAS 27 (amended), "Consolidated and Separate Preliminary announcement"; IAS 28 (amended),
"Investments in Associates"; and IAS 31 (amended), "Interests in Joint Ventures" (all effective for annual periods beginning on or after 1
July 2009). The changes made to these accounting standards are designed to ensure uniformity in the accounting treatment for business
combinations under both United States Generally Accepted Accounting Principles and
IFRSs. Management is currently assessing the impact of these revisions and amendments on the Group's operations.
IAS 32 (amended), "Financial Instruments: Presentation" (effective for annual periods beginning on or after 1 January 2009). IAS 32
(amended) includes changes to the presentation of puttable instruments and obligations arising on a liquidation. Management is currently
assessing the impact of IAS 32 (amended) on the preliminary announcement of the Group.
IFRS 2 (amended), "Share-based Payment" (effective for annual periods beginning on or after 1 January 2009). IFRS 2 (amended) provides
clarification surrounding vesting conditions and the cancellation of options. Management is currently assessing the impact of IFRS 2
(amended) on the preliminary announcement of the Group.
Interpretations
IFRIC 12, "Service Concession Arrangements" (effective for annual periods beginning on or after 1 January 2008). IFRIC 12 is not
relevant to the Group's operations.
IFRIC 13, "Customer Loyalty Programmes" (effective for annual periods beginning on or after 1 July 2008). IFRIC 13 is not relevant to
the Group's operations.
IFRIC 14, IAS 9, "The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction" (effective for annual
periods beginning on or after 1 January 2008). Management is currently assessing the impact of IFRIC 14 on the Group's operations.
b) Revisions to existing standards that have been early adopted
IAS 23 (revised), "Borrowing Costs" (effective for annual periods beginning on or after 1 January 2009). IAS 23 (revised) requires
borrowing costs that relate to assets that take a substantial period of time to get ready for use or sale to be capitalised. The Group has
chosen to early adopt this revised standard. The impact of early adoption of IAS 23 (revised) is to increase the carrying cost of property,
plant and equipment by �382,000 with a corresponding reduction in borrowing costs in the consolidated income statement.
1.2 Consolidation
a) Reverse acquisition accounting
Under IFRS 3 "Business Combinations", the acquisition of AssetCo Group Limited (the "legal subsidiary") by the Company (the "legal
parent") has been accounted for as a reverse acquisition and the consolidated IFRS financial information of the Company is therefore a
continuation of the financial information of AssetCo Group Limited.
Under reverse acquisition accounting, the cost of a business combination is deemed to have been incurred by the legal subsidiary in the
form of equity instruments issued to the owners of the legal parent.
The assets and liabilities of the legal subsidiary (the "acquirer") are recognised and measured in the consolidated preliminary
announcement at their pre-combination carrying amounts. The assets and liabilities of the legal parent (the "acquiree") are fair valued at
the acquisition date.
The retained earnings and other reserves recognised in the consolidated preliminary announcement should be those of the legal subsidiary
immediately before the business combination. The equity structure shown in the consolidated preliminary announcement should reflect the
legal parent's equity structure, including the equity instruments issued by the legal parent to effect the combination.
Further details can be found in Note 7 to the preliminary announcement.
b) Subsidiaries
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and
operating policies generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is
measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a
business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority
interest. The excess of the cost of acquisition over the fair value of the Group's share of identifiable net assets acquired is recorded as
goodwill. If the cost of an acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is
recognised directly in the income statement.
When settlement of all or any part of the cost of a business combination is deferred, the fair value of that deferred component shall be
determined by discounting the amounts payable to their present value at the date of exchange, taking into account any premium or discount
likely to be incurred in settlement.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated, unless there is evidence of impairment of the asset, but considered an impairment indicator of the asset transferred.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
c) Associates
Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between
20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially
recognised at cost. The Group's investment in associates includes goodwill identified on acquisition, net of any accumulated impairment
loss.
The Group's share of the post-acquisition profit or loss of its associates is recognised in the income statement, and its share of
post-acquisition movement in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the
associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
d) Joint ventures
The Group's interests in joint ventures, which are 50% jointly owned with another entity, are accounted for by proportionate
consolidation. The Group combines its share of the joint ventures' individual income and expenses, assets and liabilities and cash flows on
a line-by-line basis with similar items in the Group's preliminary announcement. The Group recognises the portion of gains or losses on the
sale of assets by the Group to the joint venture that is attributable to the other venturers. The Group does not recognise its share of
profits or losses from the joint venture that result from the Group's purchase of assets from the joint venture until it resells the assets
to an independent party. However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the
net realisable value of current assets, or an impairment loss.
e) Recognition of assets and liabilities as part of a business combination
In accordance with IFRS 3, "Business Combinations", an intangible asset acquired in a business combination is deemed to have a cost to
the Group of its fair value at the acquisition date. The fair value of the intangible asset reflects market expectations about the
probability that the future economic benefits embodied in the asset will flow to the Group. Where an intangible asset might be separable,
but only together with a related tangible or intangible asset, the group of assets is recognised as a single asset separated from goodwill
where the individual fair values of the assets in the group are not reliably measurable. Where the individual fair value of the
complimentary assets are reliably measurable, the Group recognises them as a single asset provided the individual assets have similar useful
lives.
f) Assets held for sale
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less
costs to sell.
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale
transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or
disposal group) is available for immediate sale in its present condition. Management must be committed to the sale which should be expected
to qualify for its recognition as a completed sale within one year from the date of classification.
1.3 Revenue recognition
Revenue comprises the fair value of the consideration received or receivable from the provision of services in the ordinary course of
the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the
Group.
The Group recognises revenue when specific criteria have been met for each of the Group's activities as described below. The amount of
revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved.
a) Rendering of services
Emergency-related managed services
The majority of revenue from the assets provided under the two long-term contracts held by the Group is recognised through a monthly
"slot price" that is agreed with the customer prior to supplying the vehicle or equipment. The "slot price" is based on a financial model
prepared at the outset of the contract which is revised, on a monthly basis, for inflation and other equipment specification changes. The
"slot price" takes into account the cost of funding the asset as well as an estimated cost for its ongoing maintenance and repair.
Revenue is only recognised in respect of these contracts when it can be measured reliably and it is probable that economic benefits will
flow which is generally when the asset provided under the long-term contract has been accepted by the customer and is first available for
use.
b) Sale of goods
Revenue from the sale of goods to the emergency services market is recognised when all of the following conditions have been satisfied:
* the Group has transferred to the buyer the significant risks and rewards of ownership of the goods which is generally when the
goods have been successfully delivered to the customer and accepted;
* the Group retains neither continuous managerial involvement to the degree usually associated with ownership nor effective control
over the goods sold which is generally when the goods have been despatched;
* the amount of revenue can be measured reliably;
* it is probable that the economic benefits associated with the transaction will flow to the Group; and
* the costs incurred or to be incurred in respect of the transaction can be measured reliably.
c) Leasing and short-term hire
Revenue from the leasing and short-term hire of assets is recognised in the income statement on a straight-line basis over the period of
the hire.
d) Interest income
Interest is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the
interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to the net carrying amount of the financial asset.
1.4 Foreign currency translation
a) Functional and presentation currency
Items included in the preliminary announcement of each of the Group's entities are measured using the currency of the primary economic
environment in which the entity operates ("the functional currency"). The consolidated preliminary announcement are presented in sterling
(�), which is the Company's functional and presentation currency.
There has been no change in the Company's functional or presentation currency during the year under review.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
1.5 Government grants
Grants from the government are recognised at their fair value when there is a reasonable assurance that the grant will be received and
the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the
costs that they are intended to compensate.
Government grants relating to property, plant and equipment are included in non-current liabilities as deferred government grants and
are credited to the income statement on a straight-line basis over the expected lives of the related assets.
1.6 Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns
that are difference from those of other business segments. A geographical segment is engaged in providing products or services within a
particular economic environment that are subject to risks and returns that are difference from those of segments operating in other economic
environments.
1.7 Property, plant and equipment
Land and buildings are shown at fair value, based on periodic valuations by external independent valuers, less subsequent depreciation
for buildings. The frequency of valuations is designed to ensure that the fair value of land and buildings does not differ materially from
the carrying amount disclosed in the preliminary announcement. Any accumulated depreciation at the date of revaluation is eliminated against
the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other increases in the
carrying amount arising on revaluation of land and buildings are credited to other reserves in shareholders' equity. Decreases that offset
previous increases of the same asset are charged against other reserves directly in equity; all other decreases are charged to the income
statement. Each year the difference between depreciation based on the revalued carrying amount of the asset charged to the income statement
and depreciation based on the asset's original cost is transferred from other reserves to retained earnings.
All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is
directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other repairs and maintenance is charged to the income statement during the
financial period in which they are incurred.
Borrowing costs incurred specifically for the construction of an item of property, plant and equipment are capitalised.
Depreciation on assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated
useful lives as follows:
Leasehold land and buildings Over the term of the lease
Leasehold improvements Over the term of the lease
Fixtures and fittings 3 - 5 years
Equipment, plant and machinery 2 - 5 years
Operational equipment and motor vehicles 2 - 25 years
Land is not depreciated.
Operational equipment and motor vehicles that have been provided to customers under long-term contracts are grouped as "assets under
long-term arrangements" in Note 16 to the preliminary announcement.
The residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within "other gains"
or "other losses" in the income statement.
1.8 Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of
the acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is
tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains
and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units (separately identifiable cash flows) for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose. The Group allocates goodwill to each contract that it operates and the underlying business to which
the goodwill relates.
Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific
software. These costs are amortised over their estimated useful lives of three to five years.
Impairment testing of goodwill, other intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash
flows. As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.
Goodwill, other individual assets or cash-generating units that include goodwill, other intangible assets with an indefinite useful
life, and those intangible assets not yet available for use are tested for
impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes
in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the carrying amount exceeds the recoverable amount of the asset or
cash-generating unit. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use
based on an internal discounted cash flow evaluation. With the exception of goodwill, all assets are subsequently reassessed for indications
that an impairment loss previously recognised may no longer exist.
1.9 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in first-out ("FIFO") method.
The cost of finished goods and work in progress comprises design costs, raw materials, direct labour, other direct costs and related
production overheads based on normal operating capacity. It excludes borrowing costs. Net realisable value is the estimated selling price in
the ordinary course of business, less applicable variable selling expenses.
1.10 Financial instruments
a) Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss or loans and receivables.
The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its
financial assets at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless
they are designated as hedges. Assets in this category are classified as current assets.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are quoted in an active market. They
are included in current assets, except for maturities greater than twelve months after the balance sheet. These are classified as
non-current assets. The Group's loans and receivables comprise "trade and other receivables" and "cash and cash equivalents".
Trade receivables
Trade receivables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at
amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is
established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation, and default in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the
difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective
interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised
in the income statement within administrative expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts
previously written off are credited against administrative expenses in the income statement.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities on the balance sheet.
Interest rate swaps
Derivative financial instruments such as interest rate swaps are occasionally entered into in order to manage interest rate risks
arising from long-term debt. Where such derivative transactions are executed, gains and losses in the fair value of such arrangements are
taken either to reserves or to the income statement dependent upon the nature of the instrument.
b) Financial liabilities and equity instruments
A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another entity or
to exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavourable to the entity.
An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into.
Where the contractual obligations of financial instruments, including share capital, are equivalent to a similar debt instrument, those
financial instruments are classed as financial liabilities. Financial liabilities are classified as such in the balance sheet.
Finance costs and gains or losses relating to financial liabilities are included in the income statement. Finance costs are calculated
so as to produce a constant rate or return on the outstanding liability.
Where the contractual terms of share capital do not have any terms meeting the definition of a financial liability then this is classed
as an equity instrument. Dividends and distributions relating to equity instruments are debited direct to equity.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised
cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the
period of the borrowings using the effective interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at
least twelve months after the balance sheet date.
Any gains or losses arising from changes in the fair value of derivatives during the year that do not qualify for hedge accounting are
taken directly to the income statement. The fair value of interest rate swap contracts is determined by reference to market values for
similar instruments.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
1.11 Equity
Issued share capital
Ordinary shares are classified as equity.
Costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Share premium
The share premium account represents the excess over nominal value of the fair value of consideration received for equity shares, net of
expenses of the share issue.
Reverse acquisition reserve
The reverse acquisition reserve arises on the acquisition of Asfare Group Plc by AssetCo Group Limited and represents the extent to
which the reserves of AssetCo Group Limited have been capitalised as a result of the business combination.
Hedging reserve
Under cash flow hedge accounting, movements on the effective portion of the hedge are recognised through the hedging reserve, while any
ineffectiveness is taken to the income statement.
Translation reserve
The translation reserve represents the movement on the translation of the net investment in foreign operations recorded in foreign
currencies at the balance sheet date. Exchange differences arising in the ordinary course of trading are included in the income statement.
Other reserve
The other reserve represents equity-settled share-based employee remuneration until such share options are exercised, forfeited, lapse
or expire.
1.12 Research and development
The Group incurs expenditure on research projects and on projects to apply research findings to develop new or substantially improved
products. This expenditure is recognised in the income statement as an expense as incurred.
Once detailed criteria have been met that confirm that the product is both technically and commercially feasible, that there is an
intention and ability to complete the asset and use it or sell it, that future economic benefits will be generated, that there is adequate
technical and financial support available to complete the asset and expenditure can be measured reliably, any further expenditure incurred
on the project is capitalised if the expenditure is expected to be material.
1.13 Leases
Group as a lessee
The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all
the risk and rewards of ownership are classified as finance leases. Finance leases are capitalised at the commencement of the lease at the
lower of the fair value of the leased asset and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance
outstanding. The corresponding rental obligations, net of finance charges, are included in other short-term and other long-term payables.
The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate
of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases is
depreciated over the shorter of the useful life of the asset and the lease term.
Leases other than finance leases are classified as operating leases and payments are charged to the income statement on a straight-line
basis over the lease term. Lease incentives, if applicable, are spread over the term of the lease.
Group as a lessor
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The difference
between the gross receivable and the present value of the receivable is recognised as unearned finance income.
When assets are leased out under an operating lease, the asset is included in the balance sheet based on the nature of the asset.
1.14 Income taxes
Income tax payable is provided on taxable profits using tax rates enacted or substantially enacted at the balance sheet date.
Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated preliminary announcement. However, the deferred income tax is not accounted
for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that is it probable that future taxable profit will be available against which
the temporary differences can be utilised.
1.15 Employee benefits
Pension obligations - defined benefit schemes
Group companies operate two defined benefit pension schemes.
Scheme assets are measured at fair values. Scheme liabilities are measured on an actuarial basis using the projected unit method and are
discounted at appropriate high quality corporate bond rates that have terms to maturity approximating to the terms of the related liability.
Appropriate adjustments are made for unrecognised actuarial gains or losses and past service costs. Past service cost is recognised as an
expense on a straight-line basis over the average period until the benefits become vested. To the extent that benefits are already vested
the Group recognises past service cost immediately.
Actuarial gains and losses are recognised as an expense and charged or credited to the income statement over the employees' expected
average remaining working lives. The resulting surplus or deficit is presented with other net assets on the balance sheet. The related
deferred tax is shown with
other deferred tax balances. A surplus is recognised only to the extent that it is recoverable by the Group.
The current service cost, past service cost and costs from settlements and curtailments are charged against administrative expenses.
Interest on the scheme liabilities and the expected return on scheme assets are included in other finance costs.
Pension contributions - defined contribution scheme
For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid.
Contributions to defined contribution schemes are recognised in the income statement during the period in which they become payable.
Equity settled share-based payment
All share-based payment arrangements are recognised in the preliminary announcement.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values using the
Black-Scholes options pricing model. Where employees are rewarded using share-based payments, the fair values of employees' services are
determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant
date and excludes the impact of any non-market vesting conditions.
All equity-settled share-based payments are ultimately recognised as an expense in the income statement with a corresponding credit to
"other reserve".
If vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication that the
number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the
current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that
estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital, and where
appropriate share premium.
Termination benefits
Termination benefits are payable when an employment is terminated by the Group before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably
committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal;
or providing termination benefits as a result of acceptance of an offer of voluntary redundancy. Benefits falling due more than 12 months
after the balance sheet date are discounted to their present value
1.16 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item
included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision
due to passage of time is recognised as an interest expense.
1.17 Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a liability in the Group's preliminary announcement in the period
in which the dividends are approved by the Company's shareholders.
2. Primary segment information
For management purposes, the Group is organised into two main business segments which are the Emergency Services Division and the
Emergency Equipment Division. These divisions are the basis on which the Group reports its primary segment information. 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.
The principal activities of the three Divisions are as follows:
Emergency Services - provision of management services to the emergency services market
Emergency Equipment - sale and supply of specialist equipment to the homeland security market and automotive engineering
Non Emergency - provision of asset management services
Year ended 31 March 2008
Emergency Emergency Non Discontinued Consolidation Group
services equipment emergen operations adjustments
cy
�'000 �'000 �'000 �'000 �'000 �'000
Continuing operations
Segment revenue 26,119 61,886 6,129 3,221 (25,286) 72,069
Segment operating profit 8,573 4,804 1,261 643 (440) 14,841
/(loss)
Segment finance income 103 27 299 - - 429
Segment finance costs (2,948) (412) (1,826) (187) - (5,373)
Segment profit / (loss) before 5,728 4,419 (266) 456 (440) 9,897
tax
Depreciation and amortisation 4,616 409 2,240 220 - 7,485
Segment assets 195,093 48,121 22,686 3,370 (88,368) 180,902
Cost of acquired property, 36,920 1,300 - 38,550
plant and equipment 277 53
Segment liabilities 159,465 28,681 12,941 3,119 (68,581) 135,625
The consolidation adjustments affecting the segment profit before tax relate to the elimination of inter-segment sales from the
Emergency Equipment Division to the Emergency Services Division (�25.286 million) and a charge for share-based payments (�440,000).
Inter-segment sales are at cost.
The disclosures above in respect of discontinued operations all relate to the Non Emergency segment.
The depreciation and amortisation charges for each segment have been reported within the segment profit before tax.
The investment in Miquest Limited forms part of the Emergency Services segment.
Year ended 31 March 2007
Emergency Emergency Non Discontinued Consolidation Group
services equipment Emerge operations adjustments
ncy
�'000 �'000 �'000 �'000 �'000 �'000
Continuing operations
Segment revenue 22,915 21,006 50,214 3,478 (3,507) 94,106
Segment operating profit 6,756 948 942 1,272 (2,761) 7,157
Segment finance income 45 - - - 3,334 3,379
Segment finance costs (2,954) (40) (439) (171) (1,495) (5,099)
Segment profit before tax 3,847 908 503 1,101 (922) 5,437
Depreciation and amortization 4,633 393 3,957 510 - 9,498
Segment assets 157,483 50,425 32,589 5,880 (131,738) 114,639
Cost of acquired property, 11,009 149 - 13,818
plant and equipment 2,010 650
Segment liabilities 62,490 29,368 20,152 4,006 (27,779) 88,237
The consolidation adjustments affecting the segment profit before tax relate to the movement on the valuation of the pension scheme of
�101,000, an effective finance cost on the fair value of shares classified as financial liabilities of �1.67 million, a finance gain of
�3.34 million on the waiving of
deferred consideration, cancellation of intra-group sales of �29,000 and previously capitalised transaction costs of �1.59 million
expensed through the income statement.
Further details on some of these adjustments which arise through the adoption of International Financial Reporting Standards can be
found in.Note 7.
The depreciation and amortisation charges for each segment have been reported within the segment profit before tax.
Secondary reporting format - geographical segments
The Group manages its business segments in the UK, which is the home country of the parent Company. In addition, the Group provides
business support services from its base in the Republic of Ireland which is disclosed under "Europe" below.
The revenue analysis below is based on the location of the service provided or sale made.
2008 2007
�'000 �'000
Revenue - continuing operations
UK 64,028 88,524
Europe 4,820 2,104
68,848 90,628
The majority of current assets are located in the UK where most of the capital expenditure is also incurred.
2008 2007
�'000 �'000
Current assets
UK 47,837 28,500
Europe 180 18
48,017 28,518
2008 2007
�'000 �'000
Capital expenditure
UK 38,512 13,211
Europe 38 607
38,550 13,818
3. Taxation
2008 2007
�'000 �'000
Current tax
Domestic tax
Current tax on income for the period 172 -
Adjustment in respect of prior years (58) (113)
Foreign tax
Current tax on income for the period 217 -
Current tax charge / (credit) 331 (113)
Deferred tax
Tax expense relating to the origination and reversal of 1,734 2,324
temporary differences
Deferred tax income resulting from reduction in tax (205) -
rate
Deferred tax charge 1,529 2,324
Taxation 1,860 2,211
Corporation tax is calculated at 30% (2007: 30%) of the estimated assessable profit for the year.
In 2007, the UK government announced its intention to reduce the corporation tax rate from 30% to 28% with effect from 1 April 2008.
Taxation for other jurisdictions is calculated at the rates prevailing in those jurisdictions.
At 31 March 2008, net trading losses of approximately �3.436 million are available to be carried forward.
Of the charge to tax, approximately �300,000 related to profits from AssetCo (Ireland) Limited, AssetCo Management Limited, Star Rentals
Limited and Irish Truck Rental Limited which were disposed of during the year. No tax charge or credit arose on the disposal of these
subsidiaries.
Tax reconciliation
The tax on the Group's profit before tax differs from the theoretical amount that would arise using the weighted average tax rate
applicable to profits of the consolidated entities as follows:
2008 2007
�'000 �'000
Profit before tax 9,441 4,336
Profit for the year from 456 1,101
discontinued operations
Profit for the year 9,897 5,437
Tax calculated at domestic tax 2,969 1,631
rates applicable to profits
Effect of: (43)
Income not subject to tax (37)
Expenses not deductible for 426 35
tax purposes
Utilisation of previously 373 (497)
unrecognised tax losses
Amortisation of intangible (53) 12
assets
Difference between tax and accounting values on assets transferred to - 692
Group companies
Rate difference on tax charge (324) (40)
Rate difference on deferred (205) -
tax charge
Adjustment in respect of prior (58) (113)
periods - current tax
Adjustment in respect of prior (1,231) 534
periods - deferred tax
Current tax charge for the 1,860 2,211
period
4. Dividends
No dividend was paid during the year.
In respect of the year ended 31 March 2008, the directors recommend a final dividend of one pence per share which, if approved, will be
paid on 26 September 2008 to eligible shareholders on the register at 29 August 2008.
5. Earnings per share
a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year.
From continuing operations 2008 2007
�'000 �'000
Profit attributable to equity holders of the Company 8,037 3,226
Profit from discontinued operations (456) (1,101)
Profit from continuing operations used to determine 7,581 2,125
basic earnings per share
Weighted average number of ordinary shares in issue 68,100,097 48,434,483
Basic earnings per share (pence per share) 11.1 4.4
From continuing and discontinued operations 2008 2007
�'000 �'000
Profit attributable to equity holders of the Company 8,037 3,226
Weighted average number of ordinary shares in issue 68,100,097 48,434,483
Basic earnings per share (pence per share) 11.8 6.7
b) Diluted
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of
all dilutive potential ordinary shares. Dilutive potential ordinary shares comprise share options and warrants. A calculation is made to
determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the
Company's shares) based on the monetary value of the subscription rights attached to outstanding share options and warrants. The number of
shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options and
warrants.
From continuing operations 2008 2007
�'000 �'000
Profit attributable to equity holders of the Company 8,037 3,226
Profit from discontinued operations (456) (1,101)
Profit from continuing operations used to determine 7,581 2,125
diluted earnings per share
Weighted average number of ordinary shares in issue 68,100,097 48,434,483
Adjustments for:
- share options and warrants 1,829,827 2,156,205
Weighted average number of ordinary shares used for 69,929,924 50,590,688
diluted earnings
per share
Diluted earnings per share (pence per share) 10.8 4.2
From continuing and discontinued operations 2008 2007
�'000 �'000
Profit attributable to equity holders of the Company 8,037 3,226
Weighted average number of ordinary shares in issue 68,100,097 48,434,483
Adjustments for:
- share options and warrants 1,829,827 2,156,205
Weighted average number of ordinary shares used for 69,929,924 50,590,688
diluted earnings per share
Diluted earnings per share (pence per share) 11.5 6.4
6 . Reconciliation of profit before tax to net cash generated from operations
2008 2007
�'000 �'000
Profit before taxation 9,897 5,437
Adjustments for:
- Depreciation 7,462 9,493
- Amortisation 23 -
- Profit on disposal of property, plant and equipment (16) (138)
- Profit on disposal of subsidiary undertakings (1,000) -
- Increase in share-based payments 440 -
- Increase in restructuring provision 1,549 -
- Decrease in retirement benefit obligations (142) (59)
- Finance income (429) (3,379)
- Finance costs 5,373 5,099
Changes in working capital (excluding the effects of
acquisitions)
- Inventories 1,493 4,394
- Trade and other receivables 452 33,307
- Trade and other payables (10,979) (39,017)
Cash generated from operations 14,123 15,137
7. First time adoption of International Financial Reporting Standards
For all periods up to and including the year ended 31 March 2007, the Group prepared its preliminary announcement in accordance with
United Kingdom Generally Accepted Accounting Practice ("UK GAAP").
These preliminary announcement, for the year ended 31 March 2008, are the first that the Group is required to prepare that are compliant
with International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU").
In preparing these preliminary announcement, the Group has started from an opening balance sheet as at 1 April 2006, the Group's date of
transition to IFRSs, and made those changes in accounting policies and other restatements required by IFRS 1 for the first-time adoption of
IFRSs.
This note explains the principal adjustments made by the Group in re-stating its UK GAAP balance sheet as at 1 April 2006 and its
previously published UK GAAP preliminary announcement for the year ended 31 March 2007.
Exemptions applied
IFRS 1 provides a number of optional exemptions to the general principles of full retrospective application of IFRSs. The Group has
elected to take advantage of the following optional exemptions.
Business combinations
IFRS 3, "Business Combinations", has not been applied to acquisitions of subsidiaries or of interests in joint ventures that occurred
before 1 April 2006.
Employee benefit schemes
The Group has elected to recognise all cumulative actuarial gains and losses in relation to employee benefit schemes at the date of
transition.
Reconciliation of equity at 1 April 2006
UK GAAP Note A Note B IFRSs
�'000 �'000 �'000 �'000
Non-current assets
Property, plant and equipment 53,320 (8) - 53,312
Goodwill 34,327 - - 34,327
Other intangible assets - 8 - 8
Retirement benefit surplus - 228 - 228
Current assets
Inventories 8,629 - - 8,629
Trade and other receivables 47,587 (228) - 47,359
Cash and cash equivalents 2,223 - - 2,223
Current liabilities
Trade and other payables (60,033) - - (60,033)
Current income tax liabilities (113) - - (113)
Borrowings (6,354) - - (6,354)
Shares classified as financial liabilities (10,000) - 1,667 (8,333)
Non-current liabilities
Borrowings (64,514) - - (64,514)
Deferred tax liabilities (1,814) - - (1,814)
Net assets 3,258 - 1,667 4,925
Equity
Share capital 100 - - 100
Share premium account 2,971 - - 2,971
Profit and loss account 187 - 1,667 1,854
Total equity 3,258 - 1,667 4,925
Notes
(A) Under UK GAAP, software costs were included within tangible fixed assets. Under IAS 38, *Intangible Assets*, computer software
requires separate disclosure on the face of the balance sheet as an intangible asset. The effect of this balance sheet reclassification is
to move software costs with a net book amount of �8,000 from property, plant and equipment to other intangible assets.
Also under UK GAAP, surpluses and deficits in relation to pension schemes were classified within other debtors or other
creditors respectively. Under IAS 19, *Employee Benefits*, separate disclosure is required on the face of the balance sheet. The effect of
this balance sheet reclassification is to move �228,000 from trade and other receivables and show this amount separately within non-current
assets.
(B) In accordance with IAS 39, *Financial Instruments: Recognition and Measurement*, a financial liability is required to be measured
initially at fair value. At the date of transition to IFRSs, the fair value of the shares classified as financial liabilities has been
calculated to be �8.333 million instead of the �10 million recorded under UK GAAP. An adjustment of �1.667 million has therefore been
reflected in reserves and shares classified as financial liabilities.
Goodwill was reviewed for impairment at the date of transition to IFRSs and no adjustment to the carrying amount was deemed to be necessary.
The amortisation of goodwill arising prior to the date of transition to IFRSs has been netted with the cost of the goodwill.
Reconciliation of equity at 31 March 2007
UK GAAP Note A Note B Note C Note D IFRSs
�'000 �'000 �'000 �'000 �'000 �'000
Non-current assets
Property, plant and equipment 50,879 - - (44) - 50,835
Goodwill 112,123 (76,290) 2,070 - (3,257) 34,646
Other intangible assets - - - 44 - 44
Deferred tax asset - - - 267 - 267
Retirement benefit surplus - - - 329 - 329
Current assets
Inventories 4,235 - - - - 4,235
Trade and other receivables 14,381 - - (329) - 14,052
Cash and cash equivalents 10,231 - - - - 10,231
Current liabilities
Trade and other payables (21,058) - - 42 - (21,016)
Current income tax liabilities (213) - - - - (213)
Borrowings (13,765) - - - - (13,765)
Non-current liabilities
Borrowings (49,763) - - - - (49,763)
Deferred tax liabilities (3,171) - - (267) - (3,438)
Retirement benefit obligations - - - (42) - (42)
Net assets 103,879 (76,290) 2,070 - (3,257) 26,402
Equity
Share capital 16,800 - - - - 16,800
Share premium account 17,890 - - - - 17,890
Merger reserve 68,293 (68,293) - - - -
Reverse acquisition reserve - (8,367) - - (11,701)
(3,334)
Profit and loss account 896 370 2,070 - 77 3,413
Total equity 103,879 (76,290) 2,070 - (3,257) 26,402
Notes
(A) On 30 March 2007, AssetCo Group Limited completed the reverse acquisition of Asfare Group plc. On the same day, the name
of Asfare Group plc was changed to AssetCo plc. Under UK GAAP, a *true and fair* over-ride was adopted and the transaction was accounted for
using conventional acquisition accounting. Under IFRSs, the business combination qualifies as a reverse acquisition and has been accounted
for as such. The factors indicating that a reverse acquisition has taken place include the fact that the former directors and shareholders
of AssetCo Group Limited held 59% of the equity of the combined entity and had the power to govern the financial and operating policies of
the enlarged Group.
By adopting reverse acquisition accounting, the merger reserve of �68.293 million, previously reported under UK GAAP, is replaced by a
reverse acquisition reserve of �8.367 million, which represents the extent of the reserves of AssetCo Group Limited which have been
capitalised. The adjustment to the profit and loss account of �0.37 million reflects the fact that the retained earnings of AssetCo Group
Limited at 30 March 2007 (�1.266 million) are replacing those of Asfare Group plc, previously reported under UK GAAP. A corresponding
adjustment to goodwill of �76.290 million is required. The share capital and share premium account of the company formerly known as Asfare
Group plc replace those of AssetCo Group Limited.
The net assets acquired in the transaction, and the goodwill arising, are as follows:
Carrying amount Fair value Fair value
Before Adjustments
combination
�'000 �'000 �'000
Goodwill 5,768 - 5,768
Property, plant and equipment 368 - 368
Inventories 1,366 - 1,366
Trade and other receivables 3,108 - 3,108
Cash and cash equivalents 797 - 797
Trade and other payables (4,650) 42 (4,608)
Retirement benefit obligations - (42) (42)
Borrowings (2,057) - (2,057)
Net assets 4,700 - 4,700
Goodwill 3,552
Deemed consideration 8,252
The deemed consideration is calculated by reference to the number of issued shares of Asfare Group plc, prior to the business
combination on 30 March 2007, multiplied by the market value on that date.
Goodwill arises on the business combination due to the underlying profitability of Asfare Group plc and anticipated synergies with
existing Group companies.
(B) Under UK GAAP, goodwill was amortised over its estimated expected useful life. Under IFRS 3 *Business Combinations*, goodwill is
considered to have an indefinite life and is therefore not amortised but subject to annual impairment testing. The goodwill charge made
under UK GAAP has been reversed under IFRSs from 1 April 2006, the IFRSs transition date. The IFRSs restatement results in a reduction in
the amortisation charge, within administrative expenses, of �2.070 million for the year ended 31 March 2007 and a corresponding increase in
goodwill as at 31 March 2007.
(C) Under UK GAAP, software costs were included within tangible fixed assets. Under IAS 38, *Intangible Assets*, computer software
requires separate disclosure on the face of the balance sheet as an intangible asset. The effect of this balance sheet reclassification is
to move software costs with a net book amount of �44,000 from property, plant and equipment to other intangible assets.
Also under UK GAAP, surpluses and deficits in relation to pension schemes were classified within other debtors or other creditors
respectively. Under IAS 19, *Employee Benefits*, separate disclosure is required on the face of the balance sheet. The effect of this
balance sheet reclassification is to move �329,000 from trade and other receivables and �42,000 from trade and other payables and show these
amounts separately within non-current assets and non-current liabilities respectively.
Under IAS 12, "Income Taxes", the offsetting of deferred tax assets and deferred tax liabilities is only permitted if there is a legally
enforceable right to set off. Under UK GAAP, the Group previously netted its deferred tax assets and deferred tax liabilities and presented
the net balance on the face of its balance sheet. As part of the transition to IFRSs, the Group has presented the two balances separately
which results in a deferred tax asset of �267,000 and a deferred tax liability of �3.438 million.
(D) Under UK GAAP, costs incurred by Asfare Group plc in connection with the business combination with AssetCo Group Limited were
capitalised in goodwill. Under IFRSs, the business combination is deemed to be a reverse acquisition and, in substance, AssetCo Group
Limited acquired Asfare Group plc. The costs incurred by Asfare Group plc should therefore not be reflected in goodwill but charged to the
income statement. The result is an increase in administrative expenses of �1.59 million for the year ended 31 March 2007.
Under IFRSs, the carrying value of financial liabilities is required to be stated at fair value. An assessment of the fair value of shares
classified as financial liabilities at 30 March 2007, the date at which the shares were re-purchased, results in a net increase in finance
costs of �1.667 million for the year ended 31 March 2007. On the same date, deferred consideration of �5 million was waived by the former
owners of AssetCo Group Limited which results in a finance gain of �3.334 million for the year ended 31 March 2007.
Reconciliation of profit for the year ended 31 March 2007
UK GAAP Note A Note B Note C Note D IFRSs
�'000 �'000 �'000 �'000 �'000 �'000
Revenue 94,106 - - - - 94,106
Cost of sales (70,644) - - - - (70,644)
Gross profit 23,462 - - - - 23,462
Administrative expenses (16,614) 2,070 (138) - (1,590) (16,272)
Other gains - - 138 - - 138
Operating profit 6,848 2,070 - - (1,590) 7,328
Finance income 45 - - 3,334 - 3,379
Finance costs (3,603) - - (1,667) - (5,270)
Profit on ordinary activities 3,290 2,070 - 1,667 (1,590) 5,437
before taxation
Tax on profit on ordinary (2,211) - - - - (2,211)
activities
Profit on ordinary activities 1,079 2,070 - 1,667 (1,590) 3,226
after taxation
Notes
(A) As noted in the reconciliation of equity at 31 March 2007, amortisation of �2.070 million reported under UK GAAP has been
reversed under IFRSs.
(B) Under UK GAAP, the profit on disposal of fixed assets was reported within administrative expenses. Under IFRSs, for
presentational purposes only, the profit on disposal has been separately shown on the face of the income statement within *Other gains*.
(C) Under IFRSs, the carrying value of financial liabilities is required to be stated at fair value. An assessment of the fair value
of shares classified as financial liabilities at 30 March 2007, the date at which the shares were re-purchased, results in a net increase in
finance costs of �1.667 million for the year ended 31 March 2007. On the same date, deferred consideration of �5 million was waived by the
former owners of AssetCo Group Limited which results in a finance gain of �3.334 million for the year ended 31 March 2007.
(D) Under UK GAAP, costs incurred by Asfare Group plc in connection with the business combination with AssetCo Group Limited were
capitalised in goodwill. Under IFRSs, the business combination is deemed to be a reverse acquisition and, in substance, AssetCo Group
Limited acquired Asfare Group plc. The costs incurred by Asfare Group plc should therefore not be reflected in goodwill but charged to the
income statement. The result is an increase in administrative expenses of �1.59 million for the year ended 31 March 2007.
Cash flows
There have been no material changes to the information previously published in the Group's cash flow statements during the periods under
review.
8. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the
Companies Act 1985.
The consolidated balance sheet at 31 March 2008 and the consolidated income statement, consolidated cash flow statement and associated
notes for the year then ended have been extracted from the Group's 2008 statutory financial statements upon which the auditors opinion is
unqualified and does not include any statement under Section 237 of the Companies Act 1985.
Those financial statements have not yet been delivered to the registrar of companies.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR APMBTMMATTJP
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