TIDMASH
RNS Number : 6040O
Ashley House PLC
31 January 2019
Ashley House plc
Interim Report
Six months ended 31 October 2018
Ashley House plc ("Ashley House", the "Company" or "Group"), the
health and community care property partner today announces its
interim results for the six months ended 31 October 2018.
Highlights
Financial highlights
-- Revenue decreased to GBP4,766,000 (2017: GBP7,004,000) as
contributions from Morgan Ashley (extra care pipeline) are now
included within 'Share of results of joint ventures' as opposed to
Revenue.
-- Loss before taxation of GBP1,709,000 (2017: GBP1,734,000) for
first six months is expected to become profitable for the full 14
month period to 30 June 2019, albeit uncertainty on timings of some
scheme closures might result in revenue slipping into the next
financial year. Accordingly, the Company expects profitability to
be below current market expectations for the full financial
year.
-- Net debt significantly reduced to GBP1,490,000 (2017: GBP3,512,000).
Operating highlights
-- Joint Venture with Morgan Sindall ("Morgan Ashley") is well
established with schemes on site.
-- Six extra care schemes recently won by Morgan Ashley through
public tender, total expected scheme value in the region of
GBP60m.
-- F1 Modular delivering first modules on Aberdare extra care scheme.
-- Health and housing pipeline grown to 26 schemes with GBP222.5m of gross development value.
-- Modular pipeline increased to 12 projects with GBP19.1m of future value.
"The foundations have been laid for the next few months to
deliver further scheme closures and enable the construction of some
much needed accommodation for elderly people, to commence on
site."
Christopher Lyons, Chairman
Enquiries:
Ashley House plc 01628 600 340
Antony Walters
James Hathaway
WH Ireland 0207 220 1666
(Nominated Adviser and Broker)
Adrian Hadden
James Sinclair-Ford
Chairman's Statement
In recent years Ashley House has undertaken an extensive
diversification policy, from its primary healthcare origins, into
adjacent areas. The acquisition of a 76% interest in F1 Modular
Limited ("F1M") together with the creation of Morgan Ashley Care
Developments LLP ("Morgan Ashley"), the joint venture with Morgan
Sindall Investments, has complemented the existing health business
to provide a wider range of activities to support people in their
local communities. Whilst traditionally the vast majority of Ashley
House's business has been conducted in conjunction with the public
sector, the Company continues to seek opportunities which further
expand the mix in client and tenure whilst continuing to utilise
the skill sets established by the Company throughout its 28 year
history.
Health and housing
The development business of the Ashley House Group, the major
part of which sits within Morgan Ashley, is reliant on schemes
reaching financial close such that all parties are legally
committed and the development can progress to site. This involves
complex commercial negotiations with multiple third parties and
their legal teams. The Company has a large pipeline of schemes and
has recently further increased this through bid successes, although
the speed of financial closes has not been as fast as the Board
would have liked. Morgan Ashley's first scheme, at Ryde, Isle of
Wight reached financial close towards the end of the year to 30
April 2018 and construction is now well advanced.
However, whilst a large amount of work was undertaken on the
pipeline of schemes, no financial closes were achieved in the six
months to 31 October 2018, the pipeline having been significantly
affected by the Government's threatened Local Housing Allowance Cap
which was not finally removed until August 2018. Since that time,
clients have re-engaged and there has been real progress with an
extra care scheme in Grimsby (60 apartments, all for affordable
rent) reaching financial close in November 2018 and further schemes
expected to reach financial close in the coming months.
Morgan Ashley's most advanced extra care schemes include two
developments in Leicester which will provide 155 extra care
apartments over two sites; a 54 apartment scheme in Romsey,
Hampshire and a 65 apartment scheme in Freshwater, Isle of
Wight.
In addition, contracts for an 80 bed care home in Burnholme,
York are all but complete with the funding documents for this
scheme to be signed shortly and with work on site due to commence
in February.
As a guide most of our extra care developments have a gross
development value ("GDV") of around GBP10m with the six schemes at
or around financial close within Morgan Ashley (including Grimsby)
having a combined GDV in the region of GBP60m.
The majority of future pipeline schemes are with parties with
whom Morgan Ashley now has established contractual structures which
should significantly simplify and speed up the legal process.
Morgan Ashley is also looking to further cement some of these
relationships to reduce the time and cost taken to bring schemes to
financial close. The Company finds that schemes are taking a longer
period to reach financial close than initially expected and
consequently expects profitability to be below market expectations
for the full financial year. Since the end of October, Morgan
Ashley has been successful in winning contracts for extra care
schemes in Hampshire and Yorkshire with a combined GDV of c GBP60m.
Two 60 apartment schemes in New Milton and Gosport were secured in
conjunction with Places for People, whilst Morgan Ashley worked
with another major national Registered Provider, Home Group to win
four schemes in Leeds providing around 240 new affordable extra
care apartments. The Leeds schemes have a combined GDV in the
region of GBP40m with work on the first site starting towards the
end of 2019 and all four sites to be completed and operational by
2021.
As mentioned, Morgan Ashley is currently on site in Ryde, Isle
of Wight and the scheme at Grimsby is now commencing. Ashley House
is on site and building in Scarborough (63 apartment extra care)
and Peterborough (twelve room care home for disabled young adults
with complex needs). Peterborough is a modular construction with
the modules currently being manufactured in F1M's factory.
Furthermore, on land adjoining both the Scarborough and Ryde sites
the team is working up two additional schemes of bungalows for
elderly occupation for private sale, thus further diversifying the
activities of the business with some private sector activity.
Modular
This week marked a significant milestone in the history of F1M
with commencement of the transportation to site of the first
modules for the 40 apartment extra care scheme in Aberdare. The
scheme is for Linc Cymru Housing Association and Rhondda Cynon Taf
Council and is the largest scheme to date undertaken by F1M. The
development consists of 36 one-bedroom and four two-bedroom
apartments for people aged 50 and over, within a single
three-storey building. A total of 94 modules are being built in the
factory and works have been undertaken to prepare the site for
delivery of the modules. The scheme is expected to complete in
Summer 2019.
Since the end of April 2018, F1M has completed school classrooms
in Egham and retail units for Costa, Greggs and Evans Halshaw.
Current schemes in the factory in addition to Aberdare and
Peterborough include a second school under the Education and Skills
Funding Agency framework; further Costa units to be housed in Moto
service stations and a small modular housing pilot for a Registered
Provider in North Wales. Further details can be seen on F1M's new
website www.f1modular.co.uk.
F1M is known in the market for the quality of its product and it
is now looking to achieve BOPAS (Build Offsite Product Assurance
Scheme) accreditation which demonstrates to funders, lenders,
valuers and purchasers that homes built with non-traditional
methods will stand the test of time for at least 60 years. As part
of this exercise, the business is seeking to further improve its
efficiency and productivity. The next major scheme will be a 75
module, 150 room hotel in Doncaster where F1M is currently
appointed to provide a pre-construction design service with the
full order expected shortly.
Clinical Services
Ashley House, through its historic Clinical Services investment,
was one of the founders of Partnering Health Limited ("PHL"). PHL
currently runs the Hampshire Doctors on Call (Out of Hours) Service
serving circa 1.7 million patients across Hampshire together with a
range of other acute and primary care services. Ashley House still
owns a third of the business although has no clinical
responsibilities or any costs arising from its operations. Whilst
the other, relatively small scale, partnerships that made up the
Ashley House Clinical Services business have been sold or ended,
PHL has now grown into a significant health business in the South
of England. Ashley House is supporting the PHL business through a
loan which continues to be repaid on a monthly basis. The loan had
a balance of GBP575,000 at the end of October 2018 (2017:
GBP987,000) and currently stands at GBP525,000. As PHL currently
has a negative balance sheet it is not contributing to Group
profits. However, as trading profit continues to improve, PHL is
expected to move into a positive balance sheet position during this
calendar year at which point it will start to become a contributor
to the Group.
Change of Year End
As recently advised, it has been agreed that Ashley House plc
will change its year end to 30 June with effect from this year,
such that the current period will be for the fourteen months to 30
June 2019.
IFRS 15
International Financial Reporting Standard 15 ("IFRS 15")
specifies how and when a company will recognise revenue as well as
requiring more informative, relevant disclosures. IFRS 15 applies
to annual reporting periods beginning on or after 1 January 2018
and will therefore be applicable for Ashley House for the period to
30 June 2019. These interim figures have therefore been reported in
accordance with IFRS 15. Ashley House's revenue recognition policy
remains largely unchanged other than in order to comply with
IFRS15, pre-construction costs must now be capitalised on the
balance sheet when incurred and only released to profit when the
relevant scheme achieves financial close. Previously all
pre-construction costs were expensed as incurred. The comparative
figures in this report have been restated in line with IFRS 15.
Results
As discussed above, Ashley House's reported results are
sensitive to timings of financial closures. For the six months to
31 October 2018, no schemes reached financial close and therefore
the Group posted a loss of GBP1,709,000 (2017: GBP1,734,000 (as
restated for IFRS15)). However, the Grimsby scheme close and the
further closures mentioned above should more than cover that loss.
Whilst the Board expects that the Company will be profitable in the
fourteen month period to 30 June 2019, as ever that profit level
will depend on timings of financial closures. Likewise, the Company
is expecting this trend to continue in the near term, with scheme
closures reflecting a pace lower than initially anticipated.
Accordingly, the Company expects that its profitability will be
below market expectations for the full financial year and will
continue to update the market as to progress.
Net debt
The table below shows net debt of GBP1,490,000 at 31 October
2018, which is significantly reduced from GBP3,512,000 at the end
of October 2017. The Company's overdraft facility was recently
renewed at GBP650,000 with the next review at 31 December 2019. The
loan relating to Scarborough continues to be repaid by monthly
instalment and will be fully repaid by 31 December 2019.
Unaudited Unaudited Audited
31 October 31 October 30 April
2018 2017 2018
GBP000 GBP000 GBP000
Cash in bank 151 (820) 250
Loan on Scarborough
land (237) (432) (338)
Loan - Invescare (1,295) (1,560) (1,295)
Loan - Other - (700) -
Loan F1M (109) (109) (109)
(1,490) (3,512) (1,492)
------------ ------------ -----------
Pipeline
The business is now segmented into Health & housing and
Modular. Health & housing incorporates Morgan Ashley activity
as well as the health schemes to be developed by Ashley House. It
also includes the Scarborough and Peterborough housing schemes
which are outside the Morgan Ashley Joint Venture, although similar
future schemes are likely to be provided by Morgan Ashley.
Revenue earned by Morgan Ashley is not consolidated into Ashley
House Group revenue. Instead, the Group's share (50%) of the net
profit of Morgan Ashley is included in Share of Income from Joint
Ventures and Associates in the Group's Statement of Comprehensive
Income. Profit recognition and timing for the schemes under Morgan
Ashley follows the normal Ashley House accounting policy. The
pipeline schedule should only provide the reader with a sense of
the scale and estimated development value of the Group's pipeline
and not as an indication of future Group revenues.
Health & housing Modular
Number of Development Number of Development
schemes value schemes value
(not Group Revenue)
---------- --------------------- ----------
On site / in factory 4 GBP27.9m 5 GBP9.0m
---------- --------------------- ---------- ------------
Appointed / advanced 22 GBP194.6m 7 GBP10.1m
---------- --------------------- ---------- ------------
TOTAL 26 GBP222.5m 12 GBP19.1m
---------- --------------------- ---------- ------------
Outlook
Whilst, as last year, a loss has been reported for the first six
months of the financial period, also as last year it is expected
that this will be more than covered in the second part of the
period. The foundations have been laid for the next few months to
deliver further scheme closures and enable the construction of some
much needed accommodation for elderly people, to commence on
site.
The threat of the Local Housing Allowance Cap that had so
affected Ashley House in recent times was removed in the period,
which is now beginning to help our pipeline of developments to move
forward at a faster pace. F1M is making good progress and the
diversification of the business continues such that Ashley House is
becoming a Group operation with two supporting pillars in Morgan
Ashley and F1M supplemented by the traditional health activity
through Ashley House along with some fledgling private sale
developments and the growth of Partnering Health.
Christopher Lyons
January 2019
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Audited
6 months 6 months to Year to
to
31 October 31 October 30 April
2018 2017 2018
Restated Restated
Note GBP000 GBP000 GBP000
Revenue 4,766 7,004 18,474
Cost of sales (4,074) (6,195) (14,703)
-------------------------------------------------- ---- ---------- ----------- --------
Gross profit 692 809 3,771
Administrative expenses (1,810) (2,202) (3,411)
Depreciation (46) (50) (101)
Profit on disposal of property, plant & equipment - 11 11
Reversal of impairment - - 512
Share of results of joint ventures (442) 28 513
Operating (loss)/profit (1,606) (1,404) 1,295
Interest payable (103) (330) (490)
-------------------------------------------------- ---- ---------- ----------- --------
(Loss)/profit before taxation (1,709) (1,734) 805
-------------------------------------------------- ---- ---------- ----------- --------
Tax credit - - -
-------------------------------------------------- ---- ---------- ----------- --------
Total comprehensive (expense)/income for the
period (1,709) (1,734) 805
-------------------------------------------------- ---- ---------- ----------- --------
Basic and diluted (loss)/earnings per share 3 (2.85)p (2.91)p 1.35p
-------------------------------------------------- ---- ---------- ----------- --------
Condensed consolidated interim balance sheet
Unaudited Unaudited Audited
31 October 31 October 30 April
2018 2017 2018
Restated Restated
GBP000 GBP000 GBP000
--------------------------------- ---------- ---------- --------
Non-current assets
Property, plant and equipment 159 187 139
Investments in joint ventures 1,357 1,140 1,952
Deferred tax asset 1,400 1,400 1,400
Goodwill 415 415 415
Other receivables - 30 -
---------------------------------- ---------- ---------- --------
3,331 3,172 3,906
--------------------------------- ---------- ---------- --------
Current assets
Inventories and work in progress 2,069 4,043 1,877
Trade and other receivables 5,537 5,471 6,364
Cash and cash equivalents 187 11 250
---------------------------------- ---------- ---------- --------
7,793 9,525 8,491
--------------------------------- ---------- ---------- --------
Total assets 11,124 12,697 12,397
---------------------------------- ---------- ---------- --------
Current liabilities
Trade and other payables (5,388) (5,863) 4,888
Bank borrowings and overdrafts (1,680) (3,464) (1,742)
Provisions (48) (47) (48)
(7,116) (9,374) (6,678)
--------------------------------- ---------- ---------- --------
Net current assets 677 151 1,813
Non-current liabilities
Bank borrowings and overdrafts - (243) -
Finance lease payable (79) - (91)
Long term provisions (90) (115) (108)
Total liabilities (7,285) (9,732) (6,877)
---------------------------------- ---------- ---------- --------
Net assets 3,839 2,965 5,520
---------------------------------- ---------- ---------- --------
Equity
Share capital 600 598 598
Share premium 136 108 116
Share-based payments reserve 55 41 49
Special reserve 3,113 3,113 3,113
Non-controlling interest (417) (137) (294)
Retained earnings 352 (758) 1,938
---------------------------------- ---------- ---------- --------
Total equity 3,839 2,965 5,520
---------------------------------- ---------- ---------- --------
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 2018 (restated) 598 116 49 3,113 (294) 1,938 5,520
Total comprehensive expense for the
period - - - - (123) (1,586) (1,709)
Transaction with owners
Issue of shares to Ashley House Share
Incentive Plan 2 20 - - - - 22
Share-based payments charge - - 6 - - - 6
Balance at 31 October 2018 600 136 55 3,113 (417) 352 3,839
------------------------------------------ ------- ------- ----------- ------- --------------- -------- -------
Balance at 1 May 2017 (restated) 594 82 31 3,113 (4) 843 4,659
Total comprehensive income for the period - - - - (133) (1,601) (1,734)
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 (restated) 598 108 41 3,113 (137) (758) 2,965
------------------------------------------ ------- ------- ----------- ------- --------------- -------- -------
Balance at 1 May 2017 (restated) 594 82 31 3,113 (4) 843 4,659
Total comprehensive income for the year - - - - (290) 1,095 805
Transaction with owners
Issue of shares to Ashley House Share
Incentive Plan 4 34 - - - - 38
Share-based payments charge - - 18 - - - 18
At 30 April 2018 (restated) 598 116 49 3,113 (294) 1,938 5,520
------------------------------------------ ------- ------- ----------- ------- --------------- -------- -------
Condensed consolidated interim statement of cash flows
Unaudited Unaudited Audited
6 months to 6 months Year to
to
31 October 31 October 30 April
2018 2017 2018
GBP000 GBP000 GBP000
--------------------------------------------------- ----------- ---------- --------
Operating activities
(Loss)/profit before taxation (1,709) (1,734) 805
Adjustments for:
Share-based payments charge 6 10 18
Depreciation 46 50 101
Profit on disposal of fixed assets - (11) (11)
Reversal of impairment - - (512)
Share of results of joint ventures 442 (28) (513)
Dividends received from joint ventures 153 25 698
Interest paid 103 330 490
Operating cash flows before movements in
working capital (959) (1,358) 1,076
(Increase)/decrease in work in progress (192) (121) 2,045
Decrease/(increase) in trade and other receivables 827 118 (1,234)
Increase/(decrease) in trade and other payables 488 567 (317)
Decrease in provision (18) (54) (60)
--------------------------------------------------- ----------- ---------- --------
Cash generated from/(used by) operations 146 (848) 1,510
Interest paid (103) (330) (490)
--------------------------------------------------- ----------- ---------- --------
Net cash generated from/(used by) operating
activities 43 (1,178) 1,020
Investing activities
Purchase of property, plant and equipment (66) (143) (145)
Proceeds from disposal of property, plant
and equipment - 142 142
Net cash used by investing activities (66) (1) (3)
Financing activities
Issue of ordinary shares 22 30 38
Proceeds from borrowings - 338 200
Repayment of borrowings (98) (93) (1,094)
--------------------------------------------------- ----------- ---------- --------
Net cash generated from/(used by) financing
activities (76) 275 (856)
Net (decrease)/increase in cash and cash
equivalents (99) (904) 161
Cash and cash equivalents at beginning of
period 250 89 89
--------------------------------------------------- ----------- ---------- --------
Cash and cash equivalents at end of period 151 (815) 250
--------------------------------------------------- ----------- ---------- --------
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.
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 [--] January 2019.
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 2018 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 2018. 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 2018.
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 are the first financial
statements to have been prepared by the Company in accordance with
IFRS15 Revenue from Contracts with Customers. The comparative
information presented for the six months to 31 October 2017 and for
the year to 30 April 2018 has been restated to be compliant with
the requirements of IFRS15.
In the comparative period to 31 October 2017 profit before tax
is GBP151,000 and net assets are GBP1,120,000 higher than
previously reported. In the year to 30 April 2018 profit before tax
is GBP947,000 lower and net assets are GBP22,000 higher than
previously reported. Full details of the impact of the adoption of
IFRS15 will be provided in the Annual Report and Accounts for the
14 months to 30 June 2019.
In all other respects 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
2018.
3 Earnings per share
The calculation of the basic earnings per share is based on the
(loss)/profit attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Weighted
average Per share
Loss number amount
6 months to 31 October 2018 GBP000 of shares Pence
--------------------------------- ------- ---------- ---------
Basic and diluted loss per share (1,709) 59,981,619 (2.85)p
--------------------------------- ------- ---------- ---------
Weighted
average Per share
Loss number amount
6 months to 31 October 2017 (restated) GBP000 of shares Pence
--------------------------------------- ------- ---------- ---------
Basic and diluted loss per share (1,734) 59,597,016 (2.91)p
--------------------------------------- ------- ---------- ---------
Weighted
average Per share
Profit number amount
Year to 30 April 2018 (restated) GBP000 of shares Pence
------------------------------------- ------ ---------- ---------
Basic and diluted earnings per share 805 59,696,089 1.35p
------------------------------------- ------ ---------- ---------
Company information
Company registration number
02563627
Registered office
Unit 1, Barnes Wallis Court
Wellington Road
Cressex Business Park
High Wycombe
HP12 3PS
Directors
C P Lyons Non-executive Chairman
S G Minion Non-executive Deputy Chairman
A J Walters Chief Executive
J Holmes Commercial Director
J A J Hathaway Finance Director
A J Willetts Non-executive director
Secretary
J A J Hathaway
Nominated Adviser and Broker
W H Ireland Limited
24 Martin Lane
London EC4R 0DR
Bankers
Lloyds Banking Group
High Street
Slough
Berkshire SL1 1DH
Solicitors
Addleshaw Goddard LLP
One St Peter's Square
Manchester M2 3DE
Auditor
Grant Thornton UK LLP
3140 Rowan Place
John Smith Drive
Oxford Business Park South
Oxford OX4 2WB
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BMMLTMBAJBJL
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January 31, 2019 02:00 ET (07:00 GMT)
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