10 Dec 2013 07:00
Ashley House plc
Interim report 2013
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 2013.
Highlights
Six months ended 31 October 2013
"The Board is pleased that we have started to build momentum in our new business areas and expects these schemes to further progress through the pipeline to enable the Company to meet its market expectations. This will support the continued recovery of the Company in the medium term."
Christopher Lyons, Chairman
Operational
• Four bid wins in the last six months with an expected scheme value of £22.9m
• Four schemes currently on site with others expected to commence shortly (2012: four)
• Total forward pipeline, on-site or appointed of £103.3m of scheme value yet to be recognised (June 2013: £85.1m; December 2012: £71.3m) (including construction which will not always come through as Ashley House revenue)
• Momentum building in new business with Extra Care pipeline (on-site or appointed) of £62.7m up 46% from the amount disclosed in June 2013
Financial
• Revenue of £5.5m (2012: £7.2m)
• EBITDA of £0.02m (2012: £0.5m)
• Loss before taxation £0.8m (2012: £0.5m)
• Net assets of £18.9m (2012: £17.9m)
• Net debt £1.2m (2012: £2.2m)
• £4m of tax losses to be carried forward
Enquiries:
Ashley House plc 01628 600 340
Jonathan Holmes, Chief Executive
Antony Walters, Finance Director
WH Ireland
(Nominated Adviser and broker to Ashley House plc)
Adrian Hadden
Nick Field 0207 220 1666
In my first statement as Chairman of Ashley House plc, I must pay tribute to my predecessor Sir William Wells. His leadership over six years and sound advice in shepherding the business during recent difficult times was much appreciated by the Board.
The Company continues its evolution through this period of transition and diversification. Much progress has been made since the decision to widen the Company's strategic focus into related health and social care markets in part driven by a material and well documented diminution in its historical NHS core health market and the prevailing economic climate.
My predecessor's optimism regarding progress appears to be well founded. We continue to see positive signs that the new business areas, particularly in Extra Care, are showing some real traction as outlined below. Pipeline should be a good indicator of future activity and I'm encouraged by the growth we are seeing, but it should be noted that the phasing of project milestones is not uniform and can lead to uneven revenue streams.
It is an honour to have been invited to join the Board at such an exciting time as the Company continues to manage its transition and establishes itself in new markets. I look forward to working with the Board and supporting the management team and staff to shape the business and deliver our planned growth strategy.
Results - A business in transition
Good progress has been made so far this year in pursuit of the revised strategy against a backdrop of challenging market conditions in the health sector. It continues to be our belief that diversifying the range of activities, together with tight management of overheads, will lead to growth in the medium term. Four bid wins in the last six months together with growth in the pipeline, especially in affordable Extra Care Housing, show encouraging signs that growth is on track to be delivered.
The Board recognised that a period of transition would lead to a distinct second half year bias to the 30 April 2014 results. The Company was breakeven at EBITDA level in the first half (2012: profit £0.5m). The loss before tax was £0.8m (2012: loss £0.5m) following interest, restructuring costs and the expected non cash impairment of the LIFTCo intangible of £0.5m. A combination of reorganised resources and a relentless focus on costs reduced our cost base by 17% compared to the same period last year.
Although health remains a difficult market as reforms take hold, we have put additional focus on delivering value from our investment in NHS LIFT by putting a structure around the Infracare brand. This will become a business that builds on Public Private Partnerships and delivers services required by our Public Sector partners to include asset management, estate strategies, advisory services as well as investment and development. This approach and focus has generated visibility on a number of larger health infrastructure schemes that will come through in 2014 and onwards and allows Infracare to access the core competencies within Ashley House to project manage and deliver health infrastructure projects.
We expect to meet our profit expectations for the year as new Extra Care schemes are budgeted to reach financial close before our year end. Three scheme applications are already with planning authorities and a further three schemes are in advanced preparation for planning submission. These schemes have a value approaching £50 million with the high margin pre-construction revenue being recognised at financial close. At this time we are focussed on gaining planning approval and completing agreements to lease on these schemes and providing around two thirds of these are successful then our numbers will be secure for the year.
Reduction in net debt
The table below shows a reduction in net debt of £1m in the last 12 months, with the position at 31 October 2013 being £1.2m (October 2012 £2.2m; April 2013 £2.7m). The overdraft relating to a site owned by a subsidiary in Scarborough was converted to a loan with effect from 1 October 2013, and is being amortised over a period of 65 months, although there are no early repayment fees should the site be developed and sold as anticipated.
Unaudited | Unaudited | Audited | ||||
31 October 2013 | 31 October 2012 | 30 April 2013 | ||||
£000 | £000 | £000 | ||||
Cash and cash equivalents | 22 | 7 | 5 | |||
Overdraft | (111) | (580) | (1,418) | |||
Scarborough loan (Overdraft until 1 October 2013) | (1,130) | (1,660) | (1,330) | |||
(1,219) | (2,233) | (2,743) |
Further, a scheme at Eltham in South East London from our LIFT segment is expected to reach financial close in the next 10 days. This will provide a significant cash inflow into the business. We also expect payment in the next few days of a substantial part of monies owed to us relating to a scheme aborted by the NHS, again under LIFT, in the Midlands. Once fully paid this closes off all legacy issues relating to the abolition of PCTs.
Increase in pipeline
Our pipeline as at December 2013 is shown in the table below. This shows an overall increase of £18m on schemes where we are the appointed development partner compared to the chart issued with the preliminary results in June.
As new business areas are now better established we no longer intend to report on 'active discussions'. For reference, these would have risen in this period to £222.5m from the last published figure of £209.2m in June 2013 and £203.2m in December 2012.
ASHLEY HOUSE DIVISION | INFRACARE DIVISION | TOTAL | ||||||||
Extra Care | GP | Major Projects | LIFT | |||||||
No. of Schemes | Scheme value to come | No. of Schemes | Scheme value to come | No. of Schemes | Scheme value to come | No. of Schemes | Scheme value to come | No. of Schemes | Scheme value to come | |
On Site |
1 |
£5.3m |
2 |
£1.2m |
1 |
£0.5m |
- |
- |
4 |
£7.0m |
Appointed |
11 |
£57.4m |
14 |
£36.9m |
2 |
£2.0m |
- |
- |
27 |
£96.3m |
TOTAL |
12 |
£62.7m |
16 |
£38.1m |
3 |
£2.5m |
- |
- |
31 |
£103.3m |
Delivering real social value
We are delighted to be a Founder Member of the Social Stock Exchange which was formally launched by the Prime Minister in June 2013. The Social Stock Exchange is a platform allowing investors to seek companies like ours that deliver real social value as a core activity. It is our belief that this initiative will continue to gain prominence both from a trading and an investing perspective. We have published our impact report on our website and look forward to enhancing the social value we are able to create with our partners as we drive growth in the business. We will refine this reporting and look forward to demonstrating that growth in profit and growth in social value can and should go hand in hand.
Outlook - continued recovery in medium term
The Board is pleased that we have started to build momentum in our new business areas and expects these schemes to further progress through the pipeline to enable the Company to meet its market expectations. This will support the continued recovery of the Company in the medium term.
Christopher Lyons
ChairmanAshley House plc
9 December 2013
*Restated | *Restated | |||
Unaudited | Unaudited | Audited | ||
6 months to | 6 months to | year to | ||
31 October | 31 October | 30 April | ||
2013 | 2012 | 2013 | ||
Note | £000 | £000 | £000 | |
Revenue |
| 5,537 | 7,232 | 15,782 |
Cost of sales |
| (3,956) | (4,817) | (10,120) |
Gross profit |
| 1,581 | 2,415 | 5,662 |
|
|
|
|
|
Administrative expenses |
| (1,674) | (2,017) | (3,929) |
Share of results of joint ventures & associates |
| 103 | 4 | 214 |
Depreciation, amortisation & impairment of non-financial assets |
| (536) | (538) | (1,072) |
Exceptional items - restructuring |
| (230) | (226) | (311) |
|
|
|
|
|
Operating (loss)/profit |
| (756) | (362) | 564 |
Interest receivable |
| 5 | 9 | 19 |
Interest payable |
| (37) | (120) | (183) |
(Loss)/profit before taxation |
| (788) | (473) | 400 |
|
|
|
|
|
(Loss)/profit before taxation |
| (788) | (473) | 400 |
Depreciation, amortisation & impairment of non-financial assets |
| 536 | 538 | 1,072 |
Exceptional items - restructuring |
| 230 | 226 | 311 |
Depreciation, amortisation & taxation included in share of results of joint ventures & associates |
| 12 | 52 | 57 |
Interest receivable |
| (5) | (9) | (19) |
Interest payable |
| 37 | 120 | 183 |
EBITDA |
| 22 | 454 | 2,004 |
|
|
|
|
|
Tax credit |
| 71 | - | 865 |
Total comprehensive (expense)/income for the period |
| (717) | (473) | 1,265 |
|
|
|
|
|
Basic and diluted (loss)/earnings per share | 3 | (1.23)p | (0.81)p | 2.17p |
Basic and diluted earnings per share on adjusted EBITDA** | 3 | 0.16p | 0.78p | 4.92p |
* See note 2
** Adjusted EBITDA = EBITDA plus adjustment for exceptional items and tax credit
|
|
|
|
|
|
| Unaudited | Unaudited | Audited |
|
| 31 October | 31 October | 30 April |
|
| 2013 | 2012 | 2013 |
| Note | £000 | £000 | £000 |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Investments in joint ventures and associates | 4 | 11,189 | 12,230 | 11,737 |
Property, plant and equipment |
| 115 | 146 | 150 |
Deferred tax asset |
| 936 | - | 865 |
|
| 12,240 | 12,376 | 12,752 |
Current assets |
|
|
|
|
Work in progress |
| 2,556 | 2,557 | 2,556 |
Trade and other receivables |
| 9,768 | 9,977 | 12,857 |
Cash and cash equivalents |
| 22 | 7 | 5 |
|
| 12,346 | 12,541 | 15,418 |
Total assets |
| 24,586 | 24,917 | 28,170 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| (4,454) | (4,807) | (5,814) |
Bank borrowings and overdrafts |
| (273) | (2,240) | (2,748) |
|
| (4,727) | (7,047) | (8,562) |
Non current liabilities |
|
|
|
|
Bank borrowings |
| (968) | - | - |
Total liabilities |
| (5,695) | (7,047) | (8,562) |
|
|
|
|
|
Net assets |
| 18,891 | 17,870 | 19,608 |
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital | 5 | 583 | 583 | 583 |
Share premium | 6 | - | 34,996 | 34,996 |
Special reserve | 6 | 14,670 | - | - |
Retained earnings |
| 3,638 | (17,709) | (15,971) |
Total equity |
| 18,891 | 17,870 | 19,608 |
Condensed consolidated interim statement of changes in equity
|
|
|
|
|
|
| Share | Share | Special | Retained | Total |
| capital | premium | reserve | earnings | equity |
| £000 | £000 | £000 | £000 | £000 |
Balance at 1 May 2013 | 583 | 34,996 | - | (15,971) | 19,608 |
|
|
|
|
| |
Result for the period to date of capital restructure | - | - | (1,340) | - | (1,340) |
Result for the period post date of capital restructure | - | - | - | 623 | 623 |
|
|
|
|
| |
Cancellation of share premium |
|
|
|
| |
Transfer of share premium to special reserve account | - | (34,996) | 34,996 | - | - |
Transfer of accumulated losses to special reserve account | - | - | (18,986) | 18,986 | - |
|
|
|
|
| |
Balance at 31 October 2013 | 583 | - | 14,670 | 3,638 | 18,891 |
|
|
|
|
|
|
Balance at 1 May 2012 | 583 | 34,996 | - | (17,236) | 18,343 |
Loss after tax | - | - | - | (473) | (473) |
Balance at 31 October 2012 | 583 | 34,996 | - | (17,709) | 17,870 |
|
|
|
|
|
|
Balance at 1 May 2012 | 583 | 34,996 | - | (17,236) | 18,343 |
Profit after tax | - | - | - | 1,265 | 1,265 |
At 30 April 2013 | 583 | 34,996 | - | (15,971) | 19,608 |
|
|
|
|
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year to |
| 31 October | 31 October | 30 April |
| 2013 | 2012 | 2013 |
| £000 | £000 | £000 |
Operating activities |
|
|
|
(Loss)/profit before taxation | (788) | (473) | 400 |
Adjustments for: |
|
|
|
Depreciation, amortisation and impairment of non-financial assets | 536 | 538 | 1,072 |
Share of results of joint ventures and associates | (103) | (4) | (214) |
Dividends received from joint ventures and associates | 142 | 64 | 319 |
Interest received | (5) | (9) | (19) |
Interest paid | 37 | 120 | 183 |
Operating cash flows before movements in working capital | (181) | 236 | 1,741 |
|
|
|
|
Decrease in work in progress | - | 117 | 118 |
Decrease in trade and other receivables | 3,097 | 5,581 | 2,649 |
Decrease in trade and other payables | (1,360) | (1,364) | (357) |
Cash from operations | 1,556 | 4,570 | 4,151 |
|
|
|
|
Interest receivable | 5 | 9 | 19 |
Interest paid | (37) | (120) | (183) |
Net cash generated from operating activities | 1,524 | 4,459 | 3,987 |
|
|
|
|
Investing activities |
|
|
|
Purchase of property, plant and equipment | - | (6) | (44) |
Net cash used in investing activities | - | (6) | (44) |
|
|
|
|
Financing activities |
|
|
|
Repayment of borrowings | (1,507) | (5,303) | (4,795) |
Net cash used in financing activities | (1,507) | (5,303) | (4,795) |
|
|
|
|
Net increase/(decrease) in cash and cash equivalents | 17 | (850) | (852) |
|
|
|
|
Cash and cash equivalents at beginning of period | 5 | 857 | 857 |
|
|
|
|
Cash and cash equivalents at end of period | 22 | 7 | 5 |
1 Nature of operations
The principal activity of the Group is the supply of design, construction management, consultancy and asset management services, primarily working with providers of healthcare 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 (£), which is also the functional currency of the parent company. These interim financial statements were approved for issue by the Board of directors on 9 December 2013.
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 2012 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 2013. 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 2013.
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 2013.
In the current financial period the Group has revised its policy for accounting for the employment costs associated with individuals exclusively engaged in the fulfilment of customer contracts. Such costs are now charged to cost of sales whereas in previous periods they were charged to administrative expenses. The comparative numbers presented in these interim financial statements for the six months ended 31 October 2012 and the year ended 30 April 2013 have been restated accordingly. This change in policy does not affect profit or loss before taxation or retained earnings in either of the restated periods and has no impact on net assets.
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.
| Reported |
| Weighted |
|
| adjusted |
| average | Per share |
| EBITDA* | Loss | number | amount |
6 months to 31 October 2013 | £000 | £000 | of shares | Pence |
Profit/(loss) after tax | 93 | (717) |
|
|
Profit/(loss) attributable to ordinary shareholders |
|
|
|
|
Weighted average number of shares |
|
| 58,319,755 |
|
Basic loss per share |
|
|
| (1.23)p |
Basic earnings per share based on adjusted EBITDA* |
|
|
| 0.16p |
| Reported |
| Weighted |
|
| adjusted |
| average | Per share |
| EBITDA* | Loss | number | amount |
6 months to 31 October 2012 | £000 | £000 | of shares | Pence |
Profit/(loss) after tax | 454 | (473) |
|
|
Profit/(loss) attributable to ordinary shareholders |
|
|
|
|
Weighted average number of shares |
|
| 58,319,755 |
|
Basic loss per share |
|
|
| (0.81)p |
Basic earnings per share based on adjusted EBITDA* |
|
|
| 0.78p |
| Reported |
| Weighted |
|
| adjusted |
| average | Per share |
| EBITDA* | Profit | number | amount |
Year to 30 April 2013 | £000 | £000 | of shares | Pence |
Profit after tax | 2,869 | 1,265 |
|
|
Profit attributable to ordinary shareholders |
|
|
|
|
Weighted average number of shares |
|
| 58,319,755 |
|
Basic earnings per share |
|
|
| 2.17p |
Basic earnings per share based on adjusted EBITDA* |
|
|
| 4.92p |
* Adjusted EBITDA = EBITDA plus adjustment for exceptional items and tax credit.
4 Investments in joint ventures and associates
|
|
|
|
| Unaudited | Unaudited | Audited |
| 31 October | 31 October | 30 April |
| 2013 | 2012 | 2013 |
| £000 | £000 | £000 |
Investments in joint ventures and associates |
|
|
|
LIFTCo | 11,000 | 12,000 | 11,500 |
Other joint ventures and associates | 189 | 230 | 237 |
As at 31 October/30 April | 11,189 | 12,230 | 11,737 |
|
|
|
|
Movement in joint ventures and associates in the reporting period |
|
|
|
As at 1 May | 11,737 | 12,555 | 12,555 |
Share of comprehensive income | 103 | 4 | 214 |
Reclassification of loan due from joint venture | (9) | 239 | 291 |
Impairment charge | (500) | (504) | (1,004) |
Dividends received | (142) | (64) | (319) |
As at 31 October/30 April | 11,189 | 12,230 | 11,737 |
|
|
|
|
Share of comprehensive income |
|
|
|
LIFTCo | - | - | - |
Other joint ventures | 103 | 4 | 214 |
As at 31 October/30 April | 103 | 4 | 214 |
LIFTCo investment
The Group holds interests in seven NHS LIFT companies (Local Improvement Finance Trust). The exclusivity periods of these arrangements which underpin the value of the investment have a further eleven years to run on average.
Impairment
The carrying value of the LIFTCo investment was reviewed at 31 October 2013, and an impairment of £500,000 was recorded. A full impairment review of the LIFTCo investment will be performed prior to 30 April 2014.
5 Share options
On 30 September 2013, and following shareholders' approval at the Annual General Meeting, the Company granted 5,225,000 share options to the Company's executive directors and certain senior managers, as set out below:
J Holmes | 1,100,000 |
A J Walters | 1,000,000 |
R Darch | 1,000,000 |
Senior management | 2,125,000 |
Total | 5,225,000 |
The options, which have an exercise price of 15p, will not become exercisable unless and until the Company's share price equals or exceeds 37p for a period of at least 20 consecutive workings days on or before 20 May 2016, and upon exercise is at or above the 37p threshold.
6 Share premium
At the Company's Annual General Meeting, held on 29 July 2013, a special resolution proposing the cancellation of the share premium account was passed by the Company's members. This resolution was heard in court in October 2013, being passed and becoming effective upon conclusion of the last hearing on 23 October 2013.
Upon adoption of the resolution, the Company's share premium and retained earnings were transferred to a special reserve, against which any future losses will be offset. Details are set out in the condensed consolidated interim statement of changes in equity above.