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Associated British Energy still not firing on all cylinders

The board is considering putting the operating business of its main subsidiary up for sale

Car engine

Engine parts maker Associated British Engineering PLC (LON:ASBE) said there are “some signs” that sales opportunities are increasing again.

The ray of hope cushioned the blow of another loss-making six-month period, with the company posting a loss before tax of £179,000 in the six months to the end of September on revenue of £557,000.

In the same period of 2018, the engineer made a bigger loss (£342,000) on lower revenue (£498,000).

Co-chairmen of the company, Colin Weinberg and Rupert Pearce Gould, expressed disappointment that sales growth had not been better and revealed that as a result of the sluggish growth the board has instituted a round of reorganisation and rationalisation within the various arms of the business.

Since the end of September, the company has managed to lease out some of its surplus space and this benefit future results from around the start of next year.

Cash and cash equivalents at the end of September had reduced to £271,000 from £474,000 a year earlier, as cash burn in the reporting period increased to £117,000 from £12,000 in the same period of 2018.

In late 2018 the board of British Polar Engines (BPE), the group’s main operating subsidiary, started discussions with the Trustees of the Pension Fund to resolve the longer-term costs to the company of the pension fund. Subsequently, the Pensions Regulator and the Pension Protection Fund have been involved in the discussions.

The board of BPE decided that it should engage FRP Advisory LLP to advise on negotiations with the Trustees and the Pensions Regulator and consider the future of the operating business of BPE including marketing it as for sale. This process is still ongoing.

“There are some signs that sales opportunities are increasing again and we are working hard to convert them. The board is also working to ensure that its investments and cash in the business generate value for shareholders commensurate with the risk,” the company said.

Shares in Associated British Engineering were unchanged.

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