25th May 2006 07:02
Asfare Group plc25 May 2006 Press Release 25 May 2006 Asfare Group plc ('Asfare' or 'Asfare Group') Final Results for the Year Ended 31 March 2006 Asfare Group plc, a leading supplier of products and services to the emergencyand homeland security markets, reports its full year results for the year ended31st March 2006. Financial Highlights • Turnover has increased by 25% to £4.905 million (2005: £3.925 million) • Profit Before Tax has risen to £358,000 (2005: £109,000) • Basic Earnings Per Share of 7.0p (2005: 2.8p) • Earnings Per Share adjusted for goodwill amortisation 10.6p (2005: 6.3p) • Cash generated from operations £774,000 (2005: £487,000) • Proposed dividend of 2 pence per share • Net asset value increased to 80 pence per share (2005: 71 pence) Significant Business Achievements • Won a £435,000 order for the replacement of ladders for the London Fire Brigade • Developed the business strategy to incorporate a focus on homeland security products, resulting in the acquisition of Todd Research Limited in November 2005 • Established a focussed European sales operation in the Netherlands • Strengthened the senior executive team Commenting on the final results to March 2006, Chairman Tim Wightman said: "The last financial year has been one of solid progress for the Asfare Group.The second half of the year saw a strong trading performance and demonstratedthe ability of Asfare to generate healthy profits and strong cash flow. Ourincreasing focus on the European market through the establishment of a Europeansales subsidiary will provide wider access to current and potential customers. The acquisition of Todd Research, represents a key element in our broaderstrategy and provides us with a good growth opportunity in the homeland securitysector. The Group is currently in the advanced stages of negotiations to acquirea business in the fire equipment market. It is intended to fund this throughfurther debt finance. I have been encouraged by our recent progress and the Group enters the newfinancial year with a strong order book. I look forward to continued positivedevelopment and growth of the business through both organic and acquisitiveactivity." For further information, please contact: Asfare Group plc www.asfare.comTony O'Neill, Chief Executive Tel: +44 (0) 2380 861 966Tim O'Connor, Finance Director Seymour PierceMark Percy / John Depasquale Tel: +44 (0) 20 7107 8000 Abchurch CommunicationsCharles Jack Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com--------------------------------- ------------------------- Chairman's Statement 2006 The financial year ended 31st March 2006 was a year of two halves for AsfareGroup with a challenging beginning and a positive end. The first six months started poorly as the impact of the review by the Office ofthe Deputy Prime Minister (ODPM) on the procurement practices of the fireservice continued to restrict purchasing. During this time the Group remainedfocussed on supporting its existing customers, maintaining market share andgenerating a positive cash flow. In September the Group received a significantorder for £435,000 to deliver ladders to Assetco for the London Fire Brigade. Inview of the Group's dependency on the UK fire industry, the Board decided duringthe first half to broaden the strategy and to strengthen the senior executiveteam with managers who have experience outside the fire equipment industry. The second half of the year was stronger as the business began to deliver theLondon Fire Brigade order. In November the Group announced the acquisition ofTodd Research Limited, a market leader in the provision of x-ray scanningequipment in the security market. The Group strengthened its internationalpresence with the establishment of AS Security Equipment BV based in theNetherlands to focus on supplying the European fire equipment market. Trading inthe final quarter was particularly strong across the business buoyed by newproduct launches and market initiatives. Financial Results Profit & Loss Account The results for the year ended 31st March 2006 represent twelve months tradingby AS Fire and Rescue Equipment Limited ("AS Fire") and the Asfare Group plc,and trading for the period from 11th November 2005 for Todd Research Limited("Todd"). Turnover for the twelve months to 31st March 2006 amounted to £4,905,000, agrowth of 25% from the £3,925,000 achieved in the previous twelve months. ASFire turnover rose by 4% in the year to £4,092,000 and Todd recorded £813,000 insales. Gross margins were strong in the year at 57.8% (2005: 52.9%). The AS Firegross margin was improved by the mix of sales and higher margin productsparticularly in the second half of the year. The Todd gross margin was strong asmore of the new product range was sold. Operating profit before goodwill amortisation and curtailment gain for thetwelve month period was £574,000, an increase of £236,000 compared with theprior year. The Operating Profit (after goodwill) in the twelve month period was £456,000(2005: £190,000). The profit before tax for the period was £358,000 (2005:£109,000). Profit after tax was £313,000 (2005: £119,000). Fully dilutedearnings per weighted average share for the twelve months were 7.0 pence (2005:2.8 pence). Fully diluted earnings per weighted average share adjusted forgoodwill amortisation were 10.6 pence (2004: 6.3 pence). Taxation Tax losses of £514,000 have been utilised during the year (2005: £292,000),which along with a charge carried over from last year of £4,000, has resulted ina tax cost of £4,000 in the results for the year ended 31 March 2006. A further£41,000 of deferred tax charge has been accrued for in the profit and lossrelating to the pension fund deficit acquired with Todd. Carried forward tax losses amount to £149,000 (2005: £644,000) and will beavailable to offset against future profits, thereby reducing the tax charge andfuture tax payments. The tax losses are currently estimated and need to beagreed with the Inland Revenue. Balance Sheet At 31st March 2006, shareholders' funds increased to £3,966,000 (2005:£2,962,000) equivalent to 80 pence per share. Goodwill of £1,007,000 arose onthe acquisition of Todd. An element of the goodwill arose due to the pensiondeficit in Todd, as a result of closing the scheme to future accruals the Grouphas reduced this liability and has taken the decision to accelerate theamortisation of the goodwill by £95,000. The carrying value of the remaininggoodwill in the balance sheet has been reviewed and in the Board's opinion therehas been no diminution in the value. The Directors believe the benefits of theacquisitions will continue for a period not less than 20 years, and accordinglythe goodwill is being amortised over a 20 year period. The normalised amount ofgoodwill amortisation charged against profits during the year was £164,000(2005: £148,000). The Group took the opportunity to revalue the freeholdproperty at Todd by £605,000 to its current market value of £1,250,000. Todd Acquisition Financing The Group acquired Todd on the 11th November 2005 for an initial cashconsideration of £1,650,000 plus the cash balance of £262,000; the costs forcompleting the transaction were £284,000 (including £28,000 of financing costs).In order to finance the acquisition the Group raised £1,250,000 of loan financeand raised a further £694,000 through a share placing of 771,112 shares at 90pence per share. There is a potential further £2,080,000 of contingentconsideration. This has not been included in goodwill as the Board considersthat the outcome of this can not be reliably measured at this time. Cash Balances and Loan Finance The Group again demonstrated a strong Net Cash Inflow from Operating Activitiesof £774,000 (2005: £487,000). This represented a cash conversion rate of 135%when compared to Operating Profit before Goodwill Amortisation and theCurtailment Gain. The Group had loans outstanding of £1,830,000 on the 31st March 2006 after loanrepayments of £280,000 during the year. The Group's cash position has improvedby £326,000 to £501,000 and at the year end the Group had headroom againstfacilities of £851,000. Share Capital and Dividends Following the share placing of 771,112 ordinary shares on the 11th November 2005the total number of shares issued is 4,971,112 at a nominal value of 25 penceper share. The called up share capital of the Company is £1,242,778. The directors are proposing a final dividend of 2.0 pence per share reflectingthe good performance of the business in the second half of the financial year to31st March 2006. The dividend is subject to shareholder approval at the AGM onthe 18th July 2006 and will be paid on the 25th July 2006. The associated Recorddate will be the 16th June 2006 and the ex-dividend date shall be the 14th June2006. Strategy & Business Update During the year the directors carried out a strategic review and concluded thatthe Group would be stronger if the Group was positioned so that it could benefitfrom opportunities within the broader Homeland Security market rather than beingdependent on the fire and rescue sector. The aim of the new strategy is to provide high quality Homeland Security relatedequipment and services to agencies, rescue services and end-usersinternationally. By creating a Group of specialist suppliers we can utilise ourmanagement skills, expert market knowledge and excellent product reputation toforge strong and lasting relationships with customers. In order to service the customers in the most effective manner the business isfocussing on two areas: 'Detection & Protection' and 'Fire, Search & Rescue'.Whilst there will be continued shared knowledge, access to resources andmanagement across the Group the product development and marketing strategieswill be centred on the divisions. Fire, Search & Rescue - AS Fire AS Fire is currently focussed on the fire markets, with much of its business inthe UK, this market has now been through the purchasing restrictions imposedduring the ODPM procurement review. In the year to the 31st March 2006 thebusiness saw the development of a number of new products including the AS Literoller shutter designed for fire appliances, which is lighter for ease of use,very robust and is offered at a competitive price. The business saw a strengthening in the financial positions of its OEM customersand an increase in the numbers of new vehicles planned for production. AS Firestrengthened its position in Europe with the establishment of a sales focussedcompany AS Security BV in Holland. During the financial year to March 2007 the business aims to continue to developits product lines and offer them for wider use. Detection & Protection - Todd Since November our Chief Executive Tony O'Neill has worked successfully tointegrate Todd into the overall business and in March we announced theappointment of Chris Awcock as the Managing Director for Todd. Chris waspreviously Managing Director of Call Performance Limited and prior to that aSales and Marketing Director within the Pitney-Bowes Group. Todd supplies x-ray scanning equipment that is mainly used in mail rooms. Itscustomers include government departments, embassies, police, broadcasters,pharmaceutical companies and banks. During the year Todd released its first new product range for 5 years. The newproducts provide enhanced powder detection capability and a remote operationfacility as well as updated aesthetics. Customer response to the new range hasbeen very positive and the market interest is high. During the financial year to March 2007 Todd will build on its early successwith the new product range. The addition of Chris Awcock brings a heavy weight,professional sales approach into an untapped market. People & Management The Board is grateful for the strong support, enthusiasm and flexibility shownby the staff of AS Fire and Todd during what has been a year of change for manyof them. The Board looks forward to continuing to build and develop the businesswith them in the future. The Group has seen a number of key personnel changes in the year including theappointment of Tony O'Neill as Chief Executive in August 2005 and Tim O'Connoras Group Finance Director in September 2005. On the 1st April 2006 DavidChisnall became the Non-Executive Deputy Chairman. Future Prospects The Board has been encouraged by a strong second half in the financial year to31st March 2006. We expect there to be good opportunities for both AS Fire andTodd in the Homeland Security market during the new financial year with theGroup entering the new financial year with a strong order book. The Boardbelieves the current organisation can continue to grow organically and thatthere are also a number of acquisition opportunities which would strengthen itsposition in its chosen markets. The Group is currently in the advanced stages ofnegotiations to acquire a business in the fire equipment market. It is intendedto fund this through further debt finance. CONSOLIDATED PROFIT AND LOSS Year Year Ended Ended 31 March 31 March Note 2006 2005 ------ --------- --------- £000 £000 Turnover Continuing Operations 1 4,092 3,925 Acquisitions 813 -Group Turnover 4,905 3,925Cost of sales (2,069) (1,847) --------- ---------Gross profit 2,836 2,078 Administrative expenses (2,380) (1,888) Operating profit before goodwill amortisation &curtailment gain 574 338Curtailment gain 5 141 -Goodwill amortisation 4 (259) (148) Operating ProfitContinuing operations 346 190Acquisitions 110 - --------- ---------Group operating profit 456 190 Interest receivable 8 3Interest payable and similar charges (106) (84) --------- ---------Profit on ordinary activities before taxation 2 358 109 Tax on ordinary activities (45) 10 --------- ---------Profit for the financial year 313 119 ========= =========Earnings per share 3Basic earnings per share 7.0p 2.8p ========= =========Diluted earnings per shareDiluted basic earnings per share 3 7.0p 2.8p ========= ========= CONSOLIDATED BALANCE SHEET At 31 March Note 2006 2005 ------- ------ ------ £000 £000FIXED ASSETSIntangible assets 4 3,510 2,762Tangible assets 1,280 131 ------- ------ 4,790 2,893 CURRENT ASSETSStock and work in progress 6 697 506Debtors 7 1,269 914Cash at bank and in hand 501 175 ------- ------ 2,467 1,595 CREDITORS: amounts falling due within one year 8 (1,786) (889) ------- ------NET CURRENT ASSETS 681 706 ------- ------TOTAL ASSETS LESS CURRENT LIABILITIES 5,471 3,599 CREDITORS: amounts falling due after more thanone year 9 (1,443) (637) ------- ------NET ASSETS EXCLUDING PENSION LIABILITY 4,028 2,962 ------- ------Pension Liability (62) - ------- ------NET ASSETS 3,966 2,962 ======= ====== CAPITAL AND RESERVESCalled up share capital 1,243 1,050Share premium account 10 2,346 1,872Profit and loss account 10 377 40 ------- ------EQUITY SHAREHOLDERS' FUNDS 11 3,966 2,962 ======= ====== CONSOLIDATED CASH FLOW STATEMENT Year Year Ended Ended 31 March 31March Note 2006 2005 ----- ------- ------- £000 £000 Net cash inflow from operating activities 12 774 487 ------- -------Returns on investment and servicing of financeInterest received 8 3Interest paid (92) (74)New loans issue costs (18) - ------- ------- (102) (71) ------- ------- TaxationCorporation tax paid (4) (2) Capital expenditure and financial investmentPurchase of tangible fixed assets (73) (30)Sale of tangible fixed assets 7 ------- ------- (73) (23) ------- ------- Acquisitions and disposalsPurchase of subsidiary undertakings (2,168) -Net cash acquired with subsidiaries 262 - ------- ------- (1,906) - ------- ------- Equity dividends paid - (42) ------- -------Net cash (outflow)/inflow before financing (1,311) 349 ------- ------- FinancingPlacing Costs (27)Share Issue 694 -New long term loan 1,250 -Long-term loan repayments (280) (240) ------- -------Net cash inflow/(outflow) from financing 1,637 (240) ------- -------Increase in cash for the year 326 109 ======= ======= NOTES TO ACCOUNTS BASIS OF PREPARATION The accounts have been prepared in accordance with applicable accountingstandards and under the historical cost accounting rules. The accounts cover theyear ended 31 March 2006. 1 Analysis of turnover By Division Period Year Ended Ended 31 March 31 March 2006 2005 £000 £000 AS Fire & Rescue Equipment (1) 4,092 3,925Todd Research (from 11/11/05) (2) 813 - --------- ---------Total 4,905 3,925 ========= ========= There were two classes of business for the year: 1) Manufacture of ladders, gantries and ancillary equipment, sold under several brand names to emergency and rescue services. 2) Manufacture of x-ray scanning equipment for post and baggage aimed at the mail room market. By Geographical Market Year Year Ended Ended 31 March 31 March 2006 2005 £000 % £000 %UK 4,159 85% 3,288 84%Rest of World 746 15% 637 16% -------- ------- ------- ------ 4,905 100% 3,925 100% ======== ======= ======= ====== 2. PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION Profit on ordinary activities before taxationis stated after charging Year Year Ended Ended 31 March 31 March 2006 2005 -------- ------- £000 £000Research and Development current year 21 21Operating leases : land and buildings 133 138Operating leases : plant and machinery 3 3Amortisation of goodwill 259 148Depreciation of tangible fixed assets 72 49Profit on disposal of tangible fixed assets - 1Auditor remuneration - Audit fees 30 18Auditor remuneration - Further assurance service - 34Auditor remuneration - Tax compliance 4 2 ======== ======= 3. EARNINGS PER SHARE Year Year Ended Ended 31 March 31 March 2006 2005 -------- -------- £000 £000 Profit after taxation 313 119Adjustments :Goodwill amortisation* 164 148 -------- --------Adjusted profit 477 267 -------- -------- Number Number Basic weighted average number of shares 4,496,582 4,200,000Dilutive effect of ordinary shares: Share - 22,057 options Warrants - - --------- --------- 4,496,582 4,222,057 --------- -------- Year Year Ended Ended 31 March 31 March 2006 2005 -------- -------- Basic earnings per share 7.0p 2.8pLoss per share on goodwill amortisation 3.6p 3.5p -------- --------Adjusted earnings per share 10.6p 6.3p ======== ======== Diluted basic earnings per share 7.0p 2.8pDiluted loss per share on goodwillamortisation 3.6p 3.5p -------- --------Diluted adjusted earnings per share 10.6p 6.3p ======== ======== The dilutive effect of share options has been calculated in accordance withaccounting standards. For this purpose the fair value of the shares has beentaken as the average market price of the Group's shares for the year ended 31March 2006 of 89.7p. The share warrants and share options are anti-dilutive inthe year as their exercise price exceeds the fair value of the shares. \* The goodwill amortisation is normalised, it does not include the acceleratedamortisation of goodwill of £95,000 which arose from a movement on the pensiondeficit resulting from the closure of the defined benefit scheme acquired inNovember 2005. 4. INTANGIBLE FIXED ASSETS GROUP Note Goodwill ------ £000 CostAt 31 March 2005 2,946 -------Acquired Goodwill Todd Research Limited 11th November 2006 5 1,007 -------Cost At 31 March 2006 3,953 -------Provision for amortisationAt 31 March 2005 184Accelerated amortisation* 95Charge for the year 164 -------At 31 March 2006 443 -------Net book valueAt 31 March 2005 2,762 =======At 31 March 2006 3,510 ======= The Directors believe the benefits to be derived from having acquired Speed 5019Limited in 2004 and Todd Research Limited in 2005 will continue for a period ofnot less than 20 years and accordingly the Directors are amortising goodwillover this period. \* The accelerated amortisation of goodwill adjusts the goodwill that arosethrough the acquisition of the defined benefit pension scheme fund deficit, thisdeficit was subsequently reduced by the closure of the scheme to the accrual ofnew benefits. 5. ACQUISITION of todd research limited On the 11th November 2005 the Asfare Group plc acquired ordinary shares with anominal value of £13,500 in Todd Research Limited, being 100% of its nominalshare capital. The total consideration of £2,168,000 (including £256,000 ofcosts) was satisfied in cash and financed via the placing of 771,112 ordinaryshares for £694,000, cash resources of £224,000 and the raising of £1,250,000 indebt. Goodwill arising on the acquisition of Todd Research Limited has beencapitalised. The purchase of Todd Research Limited has been accounted for by theacquisition method of accounting. The assets and liabilities of Todd Research Limited acquired were as follows: Book Revaluation Accounting Other Fair Value Values Policy adjustments £000 £000 £000 £000 £000Fixed AssetsTangible 596 605 (33) (20) 1,148 Current AssetsStock 480 (68) (135) 277Debtors 129 129Bank & Cash 262 262Total Assets 1,467 537 (33) (155) 1,816 CreditorsTrade Creditors 355 30 385Other Creditors 35 35Accruals 8 8 ProvisionsPension 181 181Taxation 46 46 ------- --------- -------- ----- ------ -------TotalLiabilities 535 90 - 30 655 ------- --------- -------- ----- ------ ------- Net assets excludingpensionliability 1,023 537 (33) (185) 1,342PensionLiability 181 181 ------- --------- -------- ----- ------ -------Net Assets 842 537 (33) (185) 1,161 ------- --------- -------- ----- ------ -------Purchasedgoodwillcapitalised 1,007 ------- ------- 2,168Satisfied by:Share placing 694Loan Financing 1,250Cash 224 -------InitialConsideration 2,168 ContingentConsideration 2,080 -------TotalPotentialConsideration 4,248 ======= Included in the above table are accounting policy related adjustments on fixedassets of £33,000, these have been made to bring the Todd Research depreciationpolicy in line with the policy of the Group. The fixed assets have been reducedby £20,000 in relation to the disposal of assets and £135,000 of stock has beenwritten down. Fair value adjustments were made to the freehold property which was increased by£605,000 to the current market value, the stock was re-valued and reduced by£68,000 and the pension deficit of £181,000 (net of the associated deferred taxasset of £78,000) has been recognised. During the period post acquisition theGroup closed the defined benefit scheme to the accrual of future benefits, thisresulted in a curtailment gain of £141,000 which was credited to the profit &loss account. There is a potential further £2,080,000 of contingent consideration, this hasnot been included in goodwill as the Board considers that the outcome of thiscan not be reliably measured at this time. 6. STOCKS AND WORK IN PROGRESS 2006 2005GROUP £000 £000 Work in progress 152 2Raw materials and finished goods 545 504 ------- ------- 697 506 ======= ====== 7. DEBTORS 2006 2005 £000 £000 Trade debtors 1,099 836Other debtors 2 3Prepayments and accrued income 168 75 ------ ------ 1,269 914 ====== ====== 8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR 2006 2005 £000 £000 Bank loans 387 231Trade creditors 912 388Social security and other taxes 209 156Other creditors - 2Accruals 275 112Corporation tax 3 - ------- ------ 1,786 889 ======= ====== 9. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR 2006 2005 £000 £000 Bank loan 1,443 637 ------ ------ 1,443 637 ====== ======The amounts are repayable as follows:- Amounts falling due:in one year or on demand 398 240after one year and within two 398 240after two years and within five 638 420In more than five 437 - ------ ------ 1,871 900Less: Issue costs (41) (32) ------ ------ 1,830 868Included in creditors falling due within one year (387) (231) ------ ------ 1,443 637 ====== ====== 10. SHARE PREMIUM AND RESERVES Share Profit and Premium Loss Account AccountGROUP £000 £000 At 31 March 2005 1,872 40Actuarial net gain 24Share premium arising on placing 474 313Retained profit ------- -------At 31 March 2006 2,346 377 ======= ======= 11. RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS Group £000 Equity shareholders' funds at 31 March 2005 2,962Called up share capital 193Share premium account 474Actuarial net gain 24Profit for the financial year 313 --------Equity shareholders' funds at 31 March 2006 3,966 ======== 12. NET CASHFLOW FROM OPERATING ACTIVITIES Year Year Ended Ended 31 March 31 March 2006 2005 -------- -------- £000 £000 Operating profit 411 190Depreciation 72 49Goodwill amortisation 164 148Profit on sale of tangible fixed assets - (1)Decrease in stock 86 129Increase in debtors (226) (84)Increase in creditors 267 56 -------- --------Net cash inflow from operating activities 774 487 ======== ======== This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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