TIDMASH
RNS Number : 4035D
Ashley House PLC
31 January 2018
Ashley House plc
Interim Report 2017
Ashley House plc ("Ashley House" or the "Company"), the health
and community care property partner today announces its interim
results for the six months ended 31 October 2017.
Highlights
Financial highlights
-- Revenue reduced to GBP7.0m (2015/6: GBP10.7m)
-- Statutory loss before taxation GBP1.9m (2015/6: profit GBP0.8m)
-- Adjusted loss before taxation GBP1.8m (2015/6: profit GBP0.2m)
-- Net debt GBP3.5m (2016: GBP2.4m) but decreased since the period end
Operating highlights
-- Joint venture established with Morgan Sindall Investments to
grow and deliver the Housing pipeline
-- Government makes housing the centre piece of the last budget
and relaxed its plans to cap housing benefit to Local Housing
Allowance rates
-- The above two factors will enable the Company to remain profitable in the full year
-- Two schemes currently on site (2016: three) being the
diagnostic and treatment centre in Durham and the GP surgery and
family centre in Swansea
-- Completion of the Wivenhoe health scheme in the period
"As previously signalled, the Company showed a loss for the
period to 31 October 2017. In the last couple of months the removal
of the threat of the LHA cap along with the establishment of the
joint venture with Morgan Sindall were key events for the future of
the Company enabling it to press forward in the growth and delivery
of its significant housing pipeline as well as the other activity
in the business."
Christopher Lyons, Chairman
Enquires:
Ashley House plc 01628 600 340
Antony Walters
Jonathan Holmes
WH Ireland Ltd 0207 220 1666
(Nominated Adviser and broker to Ashley House plc)
Adrian Hadden
Ed Allsopp
James Sinclair-Ford
Chairman's Statement
Ashley House stands at a significant juncture in this its 27(th)
year. The joint venture agreement signed last month with Morgan
Sindall Investments and last year's acquisition of a majority stake
in the modular business through F1 Modular are key events for the
business which will drive the future growth of the Company.
Although as expected the half year to 31 October 2017 resulted in a
loss, the Government's relaxation of the Local Housing Allowance
("LHA") cap together with the stability afforded by the joint
venture should enable the Company to achieve its profit targets for
the full year.
In the period under review, no schemes reached financial close.
Financial close is the key point in each scheme's development and
the point where, under the Company's accounting policies, the
majority of profit is recognised. The lack of schemes reaching
financial close was principally due to the Government's policy
relating to the LHA cap. In October 2017 the Government announced
that it was dropping its plans announced in 2015 to cap housing
benefit to LHA rates, enabling the business now to proceed with the
delivery of its housing pipeline.
On 15(th) December the Company announced it had signed a joint
venture with Morgan Sindall Investments. The joint venture is now
established as a 50:50 Limited Liability Partnership, Morgan Ashley
Care Developments LLP which will trade under the brand "Morgan
Ashley". By drawing on the market presence, delivery capability and
financial strength of the Morgan Sindall Group together with the
in-house expertise, relationships and brand of Ashley House, this
joint venture will be able to push forward with delivering the
Housing pipeline that the Company has built over the last few
years. The two teams are also now working together to further grow
that pipeline utilising Ashley House networks and via the
relationships and frameworks held by the Morgan Sindall group. In
the last month Ashley House has won a bid for a 54 apartment extra
care scheme in Hampshire which will be delivered by Morgan
Ashley.
Morgan Ashley is a 50:50 limited liability partnership. Neither
party has control of the entity and neither will therefore
consolidate the results and financial position of Morgan Ashley,
but the Company will include its proportion of the joint venture's
results in the 'share of results of joint ventures' line, just
above 'other operating income'. This means that turnover from
schemes in the joint venture will not be recognised in Ashley
House's income statement but the profit arising will be included
gross of corporation tax. The Company has received GBP2.5m of the
consideration from the transaction and expects to receive the
remaining GBP1.5m deferred consideration in the next few weeks.
In November the Company advised that it had two housing schemes
that would reach financial close in the coming weeks. Due to this
the schemes were excluded from the joint venture with Morgan
Sindall. The first of these schemes, in Scarborough should reach
financial close this week and work continues on a smaller scheme in
Peterborough which is being built in the factory via the subsidiary
F1 Modular.
F1 Modular, a business acquired last year, continues to build
its pipeline. The Company has recently delivered a six house scheme
for Cherwell District Council and an eight bungalow development on
former council garage sites for a specialist developer in the North
East. The prospective order book for the modular business is
growing with two large schemes, one an extra care facility and the
other a hotel, both well advanced at the time of writing. Modular
construction continues to receive a significant amount of publicity
and has a role to play in solving the national housing crisis.
Whilst it is still early days for Ashley House in the modular
industry, on the assumption that this business is able to deliver
these two key schemes, the board believes that the F1 Modular
business has a strong future.
Results
The Company expected to make a loss before taxation in the first
half of 2017/18 as clients delayed decisions on projects pending
Government clarify of the rental cap. That loss was GBP1.9m
(2016/17: profit GBP0.8m) on revenue of GBP7.0m (2016/17:
GBP10.7m). The adjusted loss before tax was GBP1.8m (2016/17:
profit GBP0.2m).
Net debt
The table below shows net debt of GBP3.5m at 31 October 2017
(2015: GBP2.4m) which has reduced since the period end. As in
previous periods all debt at the end of October was secured on
amounts incurred on scheme related expenditure. This is largely
land purchased for future schemes which stood at GBP2.8m (2016:
GBP2.8m) as shown in work in progress at the end of October.
Unaudited Unaudited Audited
31 October 31 October 30 April
2017 2016 2017
GBP000 GBP000 GBP000
Cash in bank (820) (476) 89
Loan on Scarborough
land (432) (619) (527)
Loan - Invescare (1,560) (1,300) (1,500)
Loan - Other (700) - (500)
Loan F1M (109) - (109)
(3,512) (2,395) (2,547)
------------ ------------ -----------
Since the period end the loan from Maureen Moy for GBP200,000,
included in 'Loan - Other' above, has been repaid. Following
financial close on the Scarborough scheme, the Company's overdraft
facility will reduce from GBP950,000 to GBP650,000 whilst the loan
relating to Scarborough continues to be repaid at the rate of
GBP17,500 per month.
Pipeline
Following the joint venture with Morgan Sindall Investments, the
presentation of the Company's pipeline has changed. The table below
shows the activity in the four main areas of the business, with an
estimate of the development value of the schemes in each area. The
"Housing (outside the Joint Venture)" column will be removed once
the schemes in Scarborough and Peterborough are built out as
similar schemes will be delivered by Morgan Ashley in the future.
As the Morgan Ashley joint venture is a 50% partnership, the
results will not be consolidated and therefore the scheme value
will not show as turnover of the Company, but profit from those
schemes will be included as share of profits within the income
statement. Profit recognition and timing for the schemes under
Morgan Ashley will follow the normal Ashley House accounting
policy.
Morgan Ashley Housing (outside Health F1 Modular
Joint Venture Joint Venture)
----------- ------------------------ ------------------------- ------------------------- -------------------------
Number Total Number Total Number Total Number Total
of development of schemes development of schemes development of schemes development
schemes value value, value, value,
less less less
income income income
recognised recognised recognised
----------- ---------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
On Site - - - - 2 GBP3.83m - -
----------- ---------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
Appointed 20 GBP203.33m 2 GBP13.14m 2 GBP5.44m 3 GBP13.13m
----------- ---------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
Total 20 GBP203.33m 2 GBP13.14m 4 GBP9.27m 3 GBP13.13m
----------- ---------- ------------ ----------- ------------ ----------- ------------ ----------- ------------
Outlook
In recent times the Company has suffered delays in getting its
much needed extra care housing pipeline to financial close. This
has been due to the Government's changing policy on rents which has
made the last few periods extremely difficult for the Company.
Since the Government's announcement at the end of October this
pipeline has now started to be unlocked although some residual risk
remains on rent levels. We are excited to be working with our new
colleagues in Morgan Sindall. This joint venture, whilst it will
take time to evolve, provides a real impetus to the delivery of the
current pipeline and establishes a significant platform for our
future development and growth capabilities.
The board remains confident that the Company should achieve its
profit expectations for the full year. However risk still remains
on the timing of closing of the schemes due to the inherent
difficulties of dealing with public bodies. This week's expected
financial close on Scarborough does highlight the fact that schemes
can now progress which means the Company is well placed to grow in
the coming months and years.
Christopher Lyons
30 January 2018
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Audited
6 months 6 months Year to
to to
31 October 31 October 30 April
2017 2016 2017
Note GBP000 GBP000 GBP000
Revenue 7,004 10,744 18,565
Cost of sales (6,346) (9,059) (14,934)
-------------------------------------------------- ---- ---------- ---------- --------
Gross profit 658 1,685 3,631
Administrative expenses (2,202) (1,269) (3,008)
Depreciation (50) (55) (59)
Profit on disposal of property, plant & equipment 11 - -
Reversal of impairment - - 73
Share of results of joint ventures 28 165 185
Exceptional adjustment - 655 -
Operating (loss)/profit (1,555) 1,181 822
Interest payable (330) (401) (755)
(Loss)/profit before taxation (1,885) 780 67
(Loss)/profit before taxation (1,885) 780 67
Depreciation 50 55 59
Profit on disposal of property, plant & equipment (11) - -
Reversal of impairment - - (73)
Exceptional adjustment - (655) -
Adjusted (loss)/profit before taxation* (1,846) 180 53
-------------------------------------------------- ---- ---------- ---------- --------
Tax credit - - -
-------------------------------------------------- ---- ---------- ---------- --------
Total comprehensive (expense)/income for the
period (1,885) 780 67
-------------------------------------------------- ---- ---------- ---------- --------
Basic and diluted (loss)/earnings per share 3 (3.16)p 1.32p 0.11p
-------------------------------------------------- ---- ---------- ---------- --------
Basic and diluted (loss)/earnings per share on
Adjusted PBT* 3 (3.10)p 0.31p 0.09p
-------------------------------------------------- ---- ---------- ---------- --------
* Adjusted PBT = Profit before taxation, depreciation,
impairment, other operating income and exceptional adjustments.
Condensed consolidated interim balance sheet
Unaudited Unaudited Audited
31 October 31 October 30 April
2017 2016 2017
GBP000 GBP000 GBP000
--------------------------------- ---------- ------------------------ --------
Non-current assets
Property, plant and equipment 187 106 226
Investments in joint ventures 1,140 764 1,137
Deferred tax asset 1,400 1,400 1,400
Goodwill 415 - 415
Other receivables 30 760 387
---------------------------------- ---------- ------------------------ --------
3,172 3,030 3,565
--------------------------------- ---------- ------------------------ --------
Current assets
Inventories and work in progress 2,923 2,807 2,953
Trade and other receivables 5,471 6,687 5,231
Cash and cash equivalents 11 - 89
---------------------------------- ---------- ------------------------ --------
8,405 9,494 8,273
--------------------------------- ---------- ------------------------ --------
Total assets 11,577 12,524 11,838
---------------------------------- ---------- ------------------------ --------
Current liabilities
Trade and other payables (5,863) (5,303) (5,296)
Bank borrowings and overdrafts (3,464) (1,962) (2,300)
Provisions (47) (56) (79)
(9,374) (7,321) (7,675)
--------------------------------- ---------- ------------------------ --------
Net current (liabilities)/assets (969) 2,173 598
Non-current liabilities
Amounts falling due after
more than one year (243) (433) (336)
Long term provisions (115) (128) (137)
Total liabilities (9,732) (7,882) (8,148)
---------------------------------- ---------- ------------------------ --------
Net assets 1,845 4,642 3,690
---------------------------------- ---------- ------------------------ --------
Equity
Share capital 598 590 594
Share premium 108 59 82
Share-based payments reserve 41 21 31
Special reserve 3,113 3,248 3,113
Non-controlling interest (137) - (4)
Retained earnings (1,878) 724 (126)
---------------------------------- ---------- ------------------------ --------
Total equity 1,845 4,642 3,690
---------------------------------- ---------- ------------------------ --------
Condensed consolidated interim statement of changes in
equity
Share Share Share-based Special Non-controlling Retained Total
capital Premium payment reserve Interest earnings equity
reserve
GBP000 GBP'000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------------- ------- ------- ----------- ------- --------------- -------- -------
Balance at 1 May 2017 594 82 31 3,113 (4) (126) 3,690
Total comprehensive expense
for the period - - - - (133) (1,752) (1,885)
Transaction with owners
Issue of shares to Ashley
House Share Incentive Plan 4 26 - - - - 30
Share-based payments charge - - 10 - - - 10
Balance at 31 October 2017 598 108 41 3,113 (137) (1,878) 1,845
----------------------------------- ------- ------- ----------- ------- --------------- -------- -------
Balance at 1 May 2016 588 43 10 3,248 - (56) 3,833
Total comprehensive income
for the period - - - - - 780 780
Transaction with owners
Issue of shares to Ashley
House Share Incentive Plan 2 16 - - - - 18
Share-based payments charge - - 11 - - 11
Balance at 31 October 2016 590 59 21 3,248 - 724 4,642
----------------------------------- ------- ------- ----------- ------- --------------- -------- -------
Balance at 1 May 2016 588 43 10 3,248 - (56) 3,833
Total comprehensive income
for the year - - - (135) 12 190 67
Non-controlling interest
adjustment arising on acquisition
of F1 Modular Limited - - - - (14) - (14)
Non-controlling interest
adjustment arising on increase
in shareholding in F1 Modular
Limited - - - - (2) - (2)
Charge to equity arising
on increase in shareholding
in F1 Modular Limited - - - - - (260) (260)
Transaction with owners
Issue of shares to Ashley
House Share Incentive Plan 6 39 - - - - 45
Share-based payments charge - - 21 - - - 21
At 30 April 2017 594 82 31 3,113 (4) (126) 3,690
----------------------------------- ------- ------- ----------- ------- --------------- -------- -------
Condensed consolidated interim statement
of cash flows
Unaudited Unaudited Audited
6 months 6 months Year to
to to
31 October 31 October 30 April
2017 2016 2017
GBP000 GBP000 GBP000
----------------------------------------- ---------- ---------- --------
Operating activities
Profit before taxation (1,885) 780 67
Adjustments for:
Share-based payments charge 10 11 21
Depreciation 50 55 59
Profit on disposal of fixed assets (11) - -
Reversal of impairment - - (73)
Share of results of joint ventures (28) (165) (185)
Dividends received from joint ventures 25 159 185
Interest paid 330 401 755
Operating cash flows before movements
in working capital (1,509) 1,241 829
Decrease/(increase) in work in
progress 30 - (146)
Decrease/(increase) in trade and
other receivables 118 (1,071) 478
Increase/(decrease) in trade and
other payables 567 (147) (154)
Decrease in provision (54) (43) (11)
----------------------------------------- ---------- ---------- --------
Cash (used by)/generated from operations (848) (20) 996
Interest paid (330) (401) (755)
----------------------------------------- ---------- ---------- --------
Net cash (used by)/generated from
operating activities (1,178) (421) 241
Investing activities
Purchase of shares in subsidiary - - (262)
Acquisition of trade and assets
of Swift Manufacturing Solutions - - (415)
Cash acquired - - (12)
Purchase of property, plant and
equipment (143) (5) (157)
Proceeds from disposal of property,
plant and equipment 142 - -
Net cash used by investing activities (1) (5) (846)
Financing activities
Issue of ordinary shares 30 18 45
Proceeds from borrowings 338 - 2,000
Repayment of borrowings (93) (90) (1,374)
----------------------------------------- ---------- ---------- --------
Net cash generated from / (used
by) financing activities 275 (72) 671
Net (decrease)/increase in cash
and cash equivalents (904) (498) 66
Cash and cash equivalents at beginning
of period 89 23 23
----------------------------------------- ---------- ---------- --------
Cash and cash equivalents at end
of period (815) (475) 89
----------------------------------------- ---------- ---------- --------
Notes to the condensed consolidated interim financial
statements
1 Nature of operations
The principal activity of the Group is the supply of design,
construction management and consultancy, primarily working with
providers of health and social care on infrastructure developments
from project inception to completion of construction and beyond.
During the year to 30 April 2017 the Group added an offsite modular
construction capability through its 76%, F1 Modular Limited.
Ashley House's condensed consolidated interim financial
statements (the interim financial statements) are presented in
pounds sterling (GBP), which is also the functional currency of the
parent company. These interim financial statements were approved
for issue by the Board of directors on 30 January 2018.
The financial information set out in these interim financial
statements does not constitute statutory accounts as defined in
Section 434 of the Companies Act 2006. The Group's statutory
financial statements for the year ended 30 April 2017 have been
filed with the Registrar of Companies. The auditor's report on
those financial statements was unqualified and did not contain a
statement under Section 498(2) of the Companies Act 2006.
2 Basis of preparation
These interim financial statements are for the six months ended
31 October 2017. They have been prepared following the recognition
and measurement principles of IFRS. They do not include all of the
information required for full annual financial statement and should
be read in conjunction with the consolidated financial statements
of the Group for the year ended 30 April 2017.
These interim financial statements have been prepared on the
going concern basis, under the historical cost convention, except
for the revaluation of certain financial instruments which are
carried at fair value.
These interim financial statements have been prepared in
accordance with the accounting policies adopted in the last annual
financial statements for the year to 30 April 2017.
3 Earnings per share
The calculation of the basic earnings per share is based on the
profit attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Weighted
Adjusted average Per share
PBT* Profit number amount
6 months to 31 October GBP000 GBP000 of shares Pence
2017
------------------------ -------- ------- ---------- ---------
Basic and diluted loss
per share (1,885) 59,597,016 (3.16)p
------------------------ -------- ------- ---------- ---------
Loss per share based on
Adjusted PBT* (1,846) 59,597,016 (3.10)p
------------------------ -------- ------- ---------- ---------
Weighted
Adjusted average Per share
PBT* Profit number amount
6 months to 31 October GBP000 GBP000 of shares Pence
2016
--------------------------- -------- ------ ---------- ---------
Basic and diluted earnings
per share 780 58,932,721 1.32p
--------------------------- -------- ------ ---------- ---------
Profit per share based
on Adjusted PBT* 180 58,932,721 0.31p
--------------------------- -------- ------ ---------- ---------
Weighted
Adjusted average Per share
PBT* Profit number amount
Year to 30 April 2017 GBP000 GBP000 of shares Pence
--------------------------- -------- ------ ---------- ---------
Basic and diluted earnings
per share 67 59,102,203 0.11p
--------------------------- -------- ------ ---------- ---------
Profit per share based
on Adjusted PBT* 53 59,102,203 0.09p
--------------------------- -------- ------ ---------- ---------
* Adjusted PBT = Profit before taxation, depreciation,
impairment, other operating income and exceptional adjustments
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR URUARWOAAOUR
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January 31, 2018 02:00 ET (07:00 GMT)
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