Fire brigades are one of the last bastions of the public sector to remain virtually untouched by the private sector. Bossed by Northern Irishman John Shannon, AssetCo is a rare interloper, having so far won the only outsourcing contracts put to tender and now gunning for more.

AssetCo holds 20-year contracts with the London and Lincolnshire fire and rescue authorities (FRAs) to quickly provide for all their vehicles and equipment needs. In March 2007, the company reversed into AIM-listed Asfare, a supplier of ladders for all UK fire departments and has since acquired a maker of cutting tools.

Recent results for the six months to September included contributions from two further deals, an acquired electronics specialist and a purchased stake in a software company. Pre-tax profits during the period surged 213% higher to £4.7m, despite revenues shrinking from £52.9m to £27.6m as the company moved out of legacy non-core activities.

House broker ABN Amro expects earnings to increase by 28% to 12.2p for the full year to May, rising to 15.6p in 2009. However AssetCo has the potential for much more, as the remaining UK FRAs put similar contracts out to tender, starting in January. Furthermore in the summer the Government is expected to award two further national tenders – and AssetCo is on both shortlists.

Furthermore, only 5% of the UK FRAs £2.6bn annual spend goes on vehicles and equipment, says Shannon, so he wants to tap into recruitment and training. A new human resources department has been set up, headed by the very well connected Geoff Ord, HM Inspector of Fire.

AssetCo is well connected in the UK fire scene and as a national supplier and the choice of the largest authority in the land, is in a great position to win further business. Even discounting any wins, it trades on competitive earnings multiples. Strong buy.

AssetCo	AIM	£46.96m	64.00p	0.00p
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