30th Jan 2015 11:20
LONDON (Alliance News) - Ashley House PLC said Friday that its likely to post a pretax loss for its full year, after it reported a widened pretax loss for its first half due to significant investment made into establishing its Extra Care fund and ongoing challenges in its healthcare business.
Ashley House said it expects to post a full-year pretax loss as a result of the newly established fund being incorporated into its business as a subsidiary.
The company has reached an agreement with M&G Investment Management Ltd to create an investment vehicle, which it has dubbed the Extra Care fund, and for the time behind the investment vehicle has been incorporated as a subsidiary of the company called AH Supported Living Ltd.
Previously the company has recognised profit both at financial close and throughout construction, but this will not be the case for the new fund in the short-term, as schemes will not have been sold outside the group. It will reduce its holding in the subsidiary to less than 25% in the medium term, and said that as a result of diluting its holding, its future profit recognition will return to its current model.
The health and community care property partner firm posted a pretax loss of GBP1.9 million for the half year to end-October, widened from a pretax loss of GBP788,000 a year before, as a rise in revenue to GBP5.6 million from GBP5.3 million was offset by higher cost of sales.
Ashley House said that whilst its has made progress, it has taken longer than expected to progress its Extra Care fund due to the time it took to raise the required funding. It said its current year should be seen as a "transitional year" whilst it establishes the Extra Care business.
Additionally, the company warned that the upcoming UK General Election in May will mean that activity with government bodies, particularly contract signings in the run up to the election, will "inevitably be slow", and its full-year earnings "may not reflect the progress being made".
Shares in Ashley House are trading down 23% at 5.50 pence Friday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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