18 Dec 2012 07:00
Ashley House plc
Interim report 2012
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 2012.
Highlights
6 months ended 31 October 2012
"We are pleased that the demand from our new business areas is coming through and remain confident that the future prospects are strong. The Board expects our NHS business to continue to be challenging in the short term, but we cautiously anticipate a recovery in the medium term."
Sir William Wells, Chairman
Financial
• Revenue of £7.2m (2011: £11.3m)
• EBITDA profit of £0.5m (2011: loss £0.2m)
• Loss before taxation £0.5m (2011: loss £19.4m)
• Net assets of £17.9m (2011: £20.7m)
• Net debt £2.2m (2011: £2.0m)
• £7m of tax losses to be carried forward
Operational
• Strategy to increase level and diversity of earnings whilst reducing cost base is bearing fruit
• Revenues from new business areas increasing, representing 41% of total revenue (2011: 20%)
• Four schemes currently on site with others expected to commence shortly (2011: Seven)
• Forward pipeline totalling £274.5m
• As anticipated NHS pipeline down 8% to £97.8m from the amount disclosed in July 2012
• New business pipeline up 10% to £176.7m from the amount disclosed in July 2012
Enquiries:
Ashley House plc 01628 600 340
Jonathan Holmes, Chief Executive
Antony Walters, Finance Director
Citigate Dewe Rogerson 0207 638 9571
Ginny Pulbrook, Executive Director
Jos Bieneman, Manager
Numis Securities (Nominated Adviser and broker to Ashley House) 0207 260 1000
Oliver Cardigan / David Poutney
Chairman's statement
Results
I stated in July that we expected trading in the year to 30 April 2013 to remain tough, although the new strategy to increase the level and range of earnings whilst managing the cost base would lead to growth in the medium term. I am pleased to report that we are on track and the Company has been able to show a profit of £0.5m at EBITDA level in the first half of the year (2011: EBITDA loss £0.2m). This led to a loss after tax of £0.5m (2011: £18.2m) following interest, restructuring costs and the expected non cash impairment of the LIFTCo intangible of £0.5m. Current trading is in line with the Board's expectations subject to the receipt of planning consent within the normal statutory period on two important schemes.
As expected, our core NHS market remains tough although we have seen growth in our new business areas. Revenues from new business, particularly in extra care social housing, represented 41% of total revenue in this period compared to 20% in the corresponding period last year. In total, revenue was down to £7.2m compared to £11.3m for the same period last year. This fall is a natural consequence in the drop off in work in our core NHS business with fewer schemes on site. Our activity in this period comprised more pre construction work on schemes in our new sectors.
Net Debt
The table below shows a net debt position at 31 October 2012 of £2.2m (2011 £2.0m; April 2012 £6.7m). The Company currently holds no scheme related debt on the balance sheet and the Scarborough borrowing is being amortised (following the acquisition of the remaining 50% of the company at the end of April 2012). Whilst existing working capital requirements will be met within our current facilities, cash remains tight and there is little additional scope to finance growth. As a consequence we are working on funding solutions for our schemes to resolve this.
Restated | |||||||||||||||
Unaudited | Unaudited | Audited | |||||||||||||
31 October | 31 October | 30 April | |||||||||||||
2012 | 2011 | 2012 | |||||||||||||
£000 | £000 | £000 | |||||||||||||
Cash and cash equivalents | 7 | 1,358 | 857 | ||||||||||||
Overdraft (RCF prior to April 2012) | (580) | (2,000) | (2,000) | ||||||||||||
Scarborough (100% owned from April 2012) | (1,660) | (1,329) | (2,110) | ||||||||||||
St Helens | - | - | (2,307) | ||||||||||||
Doddinghurst | - | - | (1,126) | ||||||||||||
(2,233) | (1,971) | (6,686) | |||||||||||||
| |||||||||||||||
Pipeline
Compared to the last discussed chart in July, our new markets continue to prosper and the pipeline is growing both in this sector and overall. This is in spite of the on-going delays which continue to restrict the NHS derived schemes (PCT funded) which show a modest fall in value. The schemes in "active discussion" are those on which we are currently bidding (short list stage) or where we are in discussions with providers, often exclusively. A significant number of these schemes will come through to the appointed stage. Our pipeline as at December 2012 can be analysed as follows:
PCT funded | New Markets | TOTAL | ||||
No. of Schemes | Scheme value to come | No. of Schemes | Scheme value to come | No. of Schemes | Scheme value to come | |
On Site |
2 |
£4.8m |
2 |
£4.6m |
4 |
£9.4m |
Fee Protected |
8 |
£8.1m |
2 |
£13.4m |
10 |
£21.5m |
Appointed |
13 |
£37.8m |
1 |
£2.6m |
14 |
£40.4m |
Active Discussion |
16 |
£47.1m |
20 |
£156.1m |
36 |
£203.2m |
TOTAL |
39 |
£97.8m |
25 |
£176.7m |
64 |
£274.5m |
As a guide, revenues from on site schemes will be recognised over the next 12 months. Schemes where the Company is in a fee protected position will see revenues recognised over the next 24 months. Where the Company is appointed the time frame is likely to be 12 to 36 months and where we are in active discussions 18 to 48 months.
NHS Core Business
The re-organisation of the NHS is nearing completion but ahead of the abolition of the PCTs in March 2013, is still not finished. However, there has been some further clarity in the last few weeks which we cautiously believe will help both ourselves and our partners, in both the public and private sectors, re-invigorate our LIFT and Health business. We are considering ways of enhancing this opportunity and will report further in due course.
New Business Sectors
The Company has made substantial progress in extra care housing. Our offer, which reduces costs being paid by Local Authorities and improves lives by keeping people out of residential and institutional care settings, is proving of great interest. We anticipate further significant contract wins in the coming year.
Outlook
The Board expects our NHS business to continue to be challenging in the short term, but we cautiously anticipate a recovery in the medium term. We are pleased that the demand from our new business areas is coming through and are confident that the future prospects are strong.
Sir William Wells
ChairmanAshley House plc
17 December 2012
Condensed consolidated interim statement of comprehensive income
| ||||
Restated* | ||||
Unaudited | Unaudited | Audited | ||
6 months to | 6 months to | year to | ||
31 October | 31 October | 30 April | ||
2012 | 2011 | 2012 | ||
Note | £000 | £000 | £000 | |
Revenue |
| 7,232 | 11,288 | 23,157 |
Cost of sales |
| (4,414) | (9,153) | (17,928) |
Gross profit |
| 2,818 | 2,135 | 5,229 |
|
|
|
|
|
Administrative expenses |
| (2,420) | (2,466) | (5,356) |
Share of results of joint ventures & associates |
| 4 | 98 | 279 |
Depreciation, amortisation & impairment of non-financial assets |
| (538) | (18,981) | (21,708) |
Exceptional items - restructuring |
| (226) | (113) | (114) |
|
|
|
|
|
Operating loss |
| (362) | (19,327) | (21,670) |
Interest receivable |
| 9 | - | 6 |
Interest payable |
| (120) | (34) | (105) |
Profit on disposal of fixed assets |
| - | 2 | - |
Loss before taxation |
| (473) | (19,359) | (21,769) |
|
|
|
|
|
Loss before taxation |
| (473) | (19,359) | (21,769) |
Depreciation, amortisation & impairment of non-financial assets |
| 538 | 18,981 | 21,708 |
Exceptional items - restructuring |
| 226 | 113 | 114 |
Depreciation, amortisation & taxation included in share of results of joint ventures & associates |
| 52 | 59 | 25 |
Interest receivable |
| (9) | - | (6) |
Interest payable |
| 120 | 34 | 105 |
Profit on disposal of fixed assets |
| - | (2) | - |
EBITDA before exceptional items |
| 454 | (174) | 177 |
|
|
|
|
|
Income tax credit |
| - | 1,112 | 1,230 |
Total comprehensive expense for the period |
| (473) | (18,247) | (20,539) |
|
|
|
|
|
Basic and diluted loss per share | 3 | (0.81)p | (31.29)p | (35.22)p |
Basic earnings per share on adjusted EBITDA** | 3 | 0.78p | 1.61p | 2.41p |
* See note 2
** Adjusted EBITDA = EBITDA plus adjustment for exceptional items and income tax credit
Condensed consolidated interim balance sheet
| ||||
|
|
|
|
|
|
|
| Restated* |
|
|
| Unaudited | Unaudited | Audited |
|
| 31 October | 31 October | 30 April |
|
| 2012 | 2011 | 2012 |
| Note | £000 | £000 | £000 |
ASSETS |
|
|
|
|
Non-current assets |
|
|
|
|
Goodwill |
| - | 126 | - |
Investments in joint ventures and associates | 5 | 12,230 | 14,772 | 12,555 |
Property, plant and equipment |
| 146 | 196 | 174 |
Deferred tax asset |
| - | 27 | - |
|
| 12,376 | 15,121 | 12,729 |
Current assets |
|
|
|
|
Work in progress |
| 2,557 | 1,929 | 2,674 |
Trade and other receivables |
| 9,977 | 13,752 | 15,797 |
Cash and cash equivalents |
| 7 | 1,358 | 857 |
|
| 12,541 | 17,039 | 19,328 |
Total assets |
| 24,917 | 32,160 | 32,057 |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| (4,807) | (8,157) | (6,171) |
Bank borrowings and overdrafts |
| (2,240) | (3,329) | (7,543) |
Total liabilities |
| (7,047) | (11,486) | (13,714) |
Net assets |
| 17,870 | 20,674 | 18,343 |
|
|
|
|
|
EQUITY |
|
|
|
|
Share capital |
| 583 | 583 | 583 |
Share premium |
| 34,996 | 34,996 | 34,996 |
Share-based payment reserve |
| - | 503 | - |
Retained earnings |
| (17,709) | (15,408) | (17,236) |
Total equity |
| 17,870 | 20,674 | 18,343 |
* See note 2
Condensed consolidated interim statement of changes in equity
| ||||||
|
|
|
|
|
|
|
|
|
| Merger | Share-based |
|
|
| Share | Share | relief | payment | Retained | Total |
| capital | premium | reserve | reserve | earnings | equity |
| £000 | £000 | £000 | £000 | £000 | £000 |
Balance at 1 May 2012 | 583 | 34,996 | - | - | (17,236) | 18,343 |
Other comprehensive expense |
|
|
|
|
|
|
Loss for the period | - | - | - | - | (473) | (473) |
Total comprehensive expense for the period | - | - | - | - | (473) | (473) |
Balance at 31 October 2012 | 583 | 34,996 | - | - | (17,709) | 17,870 |
|
|
|
|
|
|
|
Balance at 1 May 2011 | 583 | 34,996 | 4,395 | 491 | (1,556) | 38,909 |
Share-based payment charge | - | - | - | 12 | - | 12 |
Distributions made by associated companies | - | - | - | - | - | - |
Transactions with owners | - | - | - | 12 | - | 12 |
Other comprehensive income |
|
|
|
|
|
|
Loss for the period | - | - | - | - | (18,247) | (18,247) |
Impairment of SPCD goodwill and other intangible asset offset against merger relief reserve | - | - | (4,395) | - | 4,395 | - |
Total comprehensive expense for the period | - | - | (4,395) | - | (13,852) | (18,247) |
Balance at 31 October 2011 (restated) | 583 | 34,996 | - | 503 | (15,408) | 20,674 |
|
|
|
|
|
|
|
Balance at 1 May 2011 | 583 | 34,996 | 4,395 | 491 | (1,556) | 38,909 |
Movement on deferred tax | - | - | - | (27) | - | (27) |
Transactions with owners | - | - | - | (27) | - | (27) |
Other comprehensive income |
|
|
|
|
|
|
Loss for the year | - | - | - | - | (20,539) | (20,539) |
Transfer of share-based payment reserve to retained earnings on waiver of options | - | - | - | (464) | 464 | - |
Impairment of SPCD goodwill and other intangible asset offset against merger relief reserve | - | - | (4,395) | - | 4,395 | - |
Total comprehensive expense for the year | - | - | (4,395) | (464) | (15,680) | (20,539) |
At 30 April 2012 | 583 | 34,996 | - | - | (17,236) | 18,343 |
Condensed consolidated interim cash flow statement
| |||
|
|
|
|
|
| Restated* |
|
| Unaudited | Unaudited | Audited |
| 6 months to | 6 months to | year to |
| 31 October | 31 October | 30 April |
| 2012 | 2011 | 2012 |
| £000 | £000 | £000 |
Operating activities |
|
|
|
Loss before taxation | (473) | (19,359) | (21,769) |
Adjustments for: |
|
|
|
Depreciation, amortisation and impairment of non-financial assets | 538 | 18,981 | 21,708 |
Share of results of joint ventures and associates | (4) | (98) | (279) |
Dividends received from joint ventures and associates | 64 | 152 | 303 |
Share-based payment charge | - | 12 | - |
Interest received | (9) | - | (6) |
Interest paid | 120 | 34 | 105 |
Profit on disposal of fixed assets | - | (2) | - |
Operating cash flows before movements in working capital | 236 | (280) | 62 |
Decrease/(increase) in work in progress | 117 | (65) | 68 |
Decrease/(increase) in trade and other receivables | 5,581 | (538) | (3,080) |
Decrease in trade and other payables | (1,364) | (2,229) | (2,379) |
Cash from/(used by) operations | 4,570 | (3,112) | (5,329) |
Income taxes (paid)/credit received | - | (41) | 67 |
Interest receivable | 9 | - | 6 |
Interest paid | (120) | (34) | (105) |
Net cash generated from/(used in) operating activities | 4,459 | (3,187) | (5,361) |
Investing activities |
|
|
|
Purchase of property, plant and equipment | (6) | (85) | (108) |
Proceeds from disposal of fixed asset | - | 2 | - |
Net cash used in investing activities | (6) | (83) | (108) |
Financing activities |
|
|
|
(Repayment of)/increase in borrowings | (5,303) | (1) | 3,120 |
Payment of deferred consideration | - | - | (1,423) |
Net cash (used in)/generated by financing activities | (5,303) | (1) | 1,697 |
Net decrease in cash and cash equivalents | (850) | (3,271) | (3,772) |
Cash and cash equivalents at beginning of period | 857 | 4,629 | 4,629 |
Cash and cash equivalents at end of period | 7 | 1,358 | 857 |
* See note 2
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, 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.
The address of registered office is in the Company information below.
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 17 December 2012.
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 2012. 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 2012.
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 2012.
In the year ended 30 April 2012 the Group revised its accounting policy in respect of joint ventures and associates. The Group now accounts for investments in joint ventures and associates under the equity accounting method where previously the proportional consolidation method was used. This revision was made in anticipation of adopting IFRS11 Joint Arrangements in the current period, under which the proportional consolidation method is not permitted. Full details of the effects of this revision are included within the Group's Annual Report and Financial Statements for the year ended 30 April 2012.
As a result of this accounting policy revision, the comparative financial statements and related disclosures for the period ended 31 October 2011 have been restated in these interim financial statements. Due to the revised treatment of dividend distributions made by joint ventures and associated companies prescribed by the equity accounting method this restatement has increased the retained earnings for the period to 31 October 2011 and the net assets at that date by £422,000 from the amounts reported in the interim financial statements for the period to 31 October 2011.
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 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* | Loss | number | amount |
6 months to 31 October 2011 | £000 | £000 | of shares | Pence |
Profit/(loss) after tax | 938 | (18,247) |
|
|
Profit/(loss) attributable to ordinary shareholders |
|
|
|
|
Weighted average number of shares |
|
| 58,319,755 |
|
Basic loss per share |
|
|
| (31.29)p |
Basic earnings per share based on adjusted EBITDA (restated) |
|
|
| 1.61p |
| Reported |
| Weighted |
|
| adjusted |
| average | Per share |
| EBITDA* | Loss | number | amount |
Year to 30 April 2012 | £000 | £000 | of shares | Pence |
Profit/(loss) after tax | 1,407 | (20,539) |
|
|
Profit/(loss) attributable to ordinary shareholders |
|
|
|
|
Weighted average number of shares |
|
| 58,319,755 |
|
Basic loss per share |
|
|
| (35.22)p |
Basic earnings per share based on adjusted EBITDA |
|
|
| 2.41p |
* Adjusted EBITDA = EBITDA plus adjustment for exceptional items and income tax credit.
4 Dividends
No dividend was paid or proposed in the 6 months to 31 October 2012 (Year to 30 April 2012: £nil)
5 Investments in joint ventures and associates
|
| Restated |
|
| Unaudited | Unaudited | Audited |
| 31 October | 31 October | 30 April |
| 2012 | 2011 | 2012 |
| £000 | £000 | £000 |
Investments in joint ventures and associates |
|
|
|
LIFTCo | 12,000 | 14,722 | 12,500 |
Other joint ventures and associates | 230 | 50 | 55 |
As at 31 October/30 April | 12,230 | 14,772 | 12,555 |
|
|
|
|
Movement in joint ventures and associates in the reporting period |
|
|
|
As at 1 May | 12,555 | 28,076 | 28,076 |
Share of comprehensive income | 4 | 98 | 279 |
Reclassification of loan due from joint venture | 239 | - | - |
Impairment charge | (504) | (13,250) | (15,497) |
Dividends received | (64) | (152) | (303) |
As at 31 October/30 April | 12,230 | 14,772 | 12,555 |
|
|
|
|
Share of comprehensive income |
|
|
|
LIFTCo | - | 22 | (10) |
Other joint ventures | 4 | 76 | 289 |
As at 31 October/30 April | 4 | 98 | 279 |
LIFTCo intangibles
The Group holds interests in seven NHS Local Improvement Finance Trust companies ("LIFTCo"). The exclusivity periods of these arrangements which underpin the value of the business have a further 12 years to run on average.
Impairment
The carrying value of the LIFTCo investment was reviewed at 31 October 2012, and an impairment of £500,000 was recorded. A full impairment review of the LIFTCo investment will be performed before 30 April 2013.
The carrying value of the Group's investment in Best Practice (South of England) Limited was also reviewed at 31 October 2012. As a result of this review the carrying value was written down to £nil, resulting in an impairment charge of £4,000.