ASH.L Regulatory News (ASH)

15 Jan 2007 07:00

Ashley House PLC15 January 2007 ASHLEY HOUSE PLC Admission to AIM and fundraising of £5m Ashley House plc ("AH" or "Ashley House" or the "Company") the Primary Careinfrastructure specialist today announces that its ordinary shares have beenadmitted to trading on the AIM market of London Stock Exchange plc ("AIM") andthat unconditional dealings in its ordinary shares will commence today("Admission"). The ticker symbol on AIM is "ASH". The Company's shares no longertrade on PLUS. The Company also announces the successful placing (the "Placing") of 3,333,333new ordinary shares and 976,666 existing ordinary shares in the Company("Placing Shares") at 150p per share ("Placing Price") to raise approximately£5.0m for the Company and £1.5m for the Selling Shareholders before expenses. Placing statistics Placing Price 150 penceNumber of New Ordinary Shares being issued 3,333,333Number of Shares being placed on behalf of Selling Shareholders 976,666Number of Shares in issue immediately following Admission 27,097,469Placing Shares as a percentage of the Enlarged Issued Share Capital 15.9%Estimated net proceeds of the Placing receivable by the Company £4 millionMarket capitalisation at the Placing Price on Admission £40.6 million Key Highlights • AH has been established for 16 years and has gained a wealth of experience in the delivery of Primary Care infrastructure • Government policy calls for the increasing devolvement of services to the Primary Care Sector • The agreement with Babcock & Brown gives AH access to a potential pipeline of projects under the NHS LIFT ("Local Improvement Finance Trust") initiative which could be as significant as the Company's own current pipeline • Asset management revenues are set to grow materially with the expansion of the AH Medical Properties plc portfolio to c. £100m • The Company's long term association with the GP community provides the background, trust and contact from which the Company is launching its expansion into clinical services Jonathan Holmes, Chief Executive, said "The move to AIM and the capital raisingwill significantly benefit Ashley House and help us continue the expansion ofour core infrastructure business. The new capital and profile will also help usdeliver growth from related business streams: asset management, health villages,clinical services via joint ventures with clinicians, and delivering NHS LIFTschemes and other health projects via our new strategic alliance with Babcockand Brown." Enquiries Ashley House plc 01753 891 189Jonathan Holmes, Chief ExecutiveBruce Walker, Finance Director Numis Securities 0207 776 1500David PoutneyMichael MeadeOliver Cardigan Citigate Dewe Rogerson 020 7638 9571Sarah GestetnerGed Brumby NOTES TO EDITORS: The following information has been extracted from the AIM admission document referred to above 1. Introduction Established in 1991, the principal activity of AH is the supply of projectmanagement and consultancy services, primarily allied to the provision ofmedical property facilities delivering NHS led Primary Care. AH has benefitedfrom the Government's policy of devolving an increasing range of services to thePrimary Care sector whilst allocating significant resource to the renewal of thePrimary Care estate. Now operating from four main regional offices in the UK,the range of AH's services has expanded to include the asset management of manyof the properties the Company delivers and, more recently, the provision ofmedical services through partnership arrangements with Primary Care clinicians. AH has a strong pipeline of projects at different stages of development frominitial inquiry through to the later stages of construction. Projects range fromthe building of traditional GP surgeries, which was the mainstay of theCompany's early growth, to integrated 'one stop shop' health centres. Thisincludes an increasing number through the NHS LIFT initiative as a strategicsupply chain partner to Babcock & Brown and Health Villages where the Company'sfirst scheme has recently been submitted for planning approval. 2. Business overview History and background AH has been involved in the development of over 200 Primary Health Carefacilities ranging from simple rural branch surgeries to multi tenanted 'onestop shops' of up to 50,000 sq ft. The dedicated in-house team of AH covers themany professional disciplines needed to deliver complex health infrastructureprojects and includes architecture, planning, project management, finance andlegal. An integrated professional team leads projects from initial inquirythrough site finding, concept design, planning, detailed design and constructionthrough to final handover. The Company operates from a head office near Gerrards Cross in Buckinghamshireand three regional offices located in Newcastle upon Tyne, Kelvedon nearColchester and Llanellen near Abergavenny in Wales. Core infrastructure projects AH's core business is the design and construction of Primary Care infrastructureprojects using its inhouse professional team. These assets may either be ownedby unrelated third parties, typically GPs or Primary Care Trusts, or, as is moreoften the case, by AH Medical Properties plc. To date nearly all of theCompany's revenues have been derived from such projects which have beenresponsible for increasing turnover by over 150% over the past two years. NHS LIFT Strategic alliance with Babcock & Brown As announced on 14 December 2006 AH has entered into the Babcock & BrownAgreement relating to its healthcare infrastructure business in the sub £20million health and social care sector. Babcock & Brown is a global investmentand advisory firm with long standing expertise in infrastructure (includingproject finance), real estate, operating leasing, structured finance andcorporate finance. Babcock & Brown being one of the leading participants in the NHS LIFT programme,with interests in LIFT companies in London, the Midlands and the West ofEngland, has the ability to introduce AH to a significant volume of work as aresult of partnering with a well respected and capitalised participant in thehealthcare infrastructure market. Increasing AH's exposure to and involvement inthe delivery of larger healthcare related schemes including NHS LIFT, HealthVillages and Community Hospitals has long been a key part of AH's growthstrategy and completing the Babcock & Brown Agreement will allow AH to gainimmediate exposure and involvement, on a substantial scale, to this area of themarket with the potential for significant further work. NHS LIFT initiatives are led by local Primary Care Trusts within definedgeographical areas, and enable the public and the private sectors to develop newPrimary Care facilities jointly through a LIFT company. The LIFT company foreach area has the exclusive right for up to 20 years to develop the PCT ledprimary care facilities on behalf of the local health economy in an area inresponse to that local health economy's Strategic Service Development Plan.Delivery of the Strategic Service Development Plan is likely to includesignificant Primary Care infrastructure development which, following the Babcock& Brown Agreement, provides a substantial opportunity for the business. Thedelivery of each development is subject to affordability, value for money andbest value criteria. Babcock & Brown and AH, working in conjunction with various LiftCo's, haveidentified some 12 LIFT schemes with an estimated total construction value of£56 million. AH is currently advising and carrying out the design anddevelopment work in accordance with the Babcock & Brown Agreement on those 12LIFT schemes. Both Babcock & Brown and AH anticipate that, by deliveringaffordable and value for money solutions to LiftCo's, the number of schemesthrough which AH are able to provide such services should increase, bringing amajor benefit to the future turnover and profits of AH. As part of the transaction, AH has granted Babcock & Brown a warrant tosubscribe for 7,880,000 Shares at an exercise price of 120p per Share. Havingthis interest in the share capital of AH underlines Babcock & Brown's commitmentto the working relationship and Babcock & Brown's belief in the prospect ofsignificant enhancement in the value of AH as a consequence of a successfulworking arrangement Health Villages AH has recently launched its Health Villages concept based on the development offacilities which deliver NHS Primary Care as well as a wide range of otherrelated public and private health and community services. A planning applicationhas recently been submitted for the first scheme which includes a nursing homefor the elderly, a private hospital, key worker housing and a major Primary Carefacility. These Health Villages provide co-location for related uses whichmutually benefit from being in close proximity to each other. The Company iscurrently working on three other similar projects and anticipates entering jointventure agreements with Babcock & Brown, particularly on projects which in somecases may require significant capital commitment prior to the securing ofplanning approval. Asset management AH manages the property portfolio of AHP which currently comprises 31 completedproperties and 11 other projects at various stages of development with aprojected completed value of c. £100 million and annual rental income of £5.7million. These properties were almost all designed and built by AH and aremedical facilities leased on typically 20 or 25 year terms where the NHSprovides over 90% of the rental income either directly or indirectly via GPs.Under a new asset management agreement, AH will earn fees based on the value ofthe portfolio and a profit share incentive dependent on the total returndelivered. AH will also derive regular investment income from its investment in AHP sinceit has agreed to subscribe £1.85 million as part of a new share issue by AHP.Assuming full subscription of AHP's new share issue, AH will own approximately7.4% of the enlarged share capital of AHP. Clinical services The 2006 White Paper emphasised the increase in the role of the NHS as acommissioner of services with greater opportunities for the private sector as ahealthcare services provider. AH has started to respond to this opportunity byleveraging its existing strong relationships with GPs and PCTs. The businessmodel it is developing relies upon a partnership approach where the Companyprovides management, infrastructure services and capital to leave clinicians toconcentrate their expertise and knowledge on delivering an extended range oflocal healthcare services. This activity is at an early stage of development andis expected to represent a small proportion of revenues. Income streams AH's business going forward now has a balance of revenue streams from: • design and delivery of health infrastructure for: • Owner occupiers such as PCTs and GPs; • AHP where the properties are mostly leased to PCTs and GPs; • NHS LIFT companies; and • Health Villages. • asset management fee income and investment income from AHP • clinical services revenue. Future growth will come from: • the strong and continuing demand for renewal and replacement of the c9,000 strong GP surgery estate; • the design and construction of larger schemes such as Community Hospitals and Health Villages, typically in conjunction with Babcock & Brown; • growing asset management and investment income from an expanding AHP portfolio - AHP has the exclusive first right of refusal to acquire the Primary Care 'Third Party Developer' infrastructure facilities designed, built and controlled by AH; and • increasing clinical service revenues. 3. Financials The Company has shown strong growth in turnover and profitability over the lastthree years with turnover increasing from £9.2 million in the year to 30 April2004 through £12.6 million in the year to 30 April 2005 (up 37%) to £23.1million in the year to 30 April 2006 (up 83%). Profitability has grown from apre-tax loss in the year to 30 April 2004 of £466,000 through a pre-tax profitof £561,000 in the year to 30 April 2005 to a pre-tax profit of £2.24 million inthe year to 30 April 2006. Over the past 3 years the business has been cashgenerative and as a consequence has no debt and strong positive cash flow. This information is provided by RNS The company news service from the London Stock Exchange