1st Apr 2014 08:09
LONDON (Alliance News) - Shares in Ashley House PLC plunged Tuesday after it said it was not likely to make a profit in the financial year ending April 30.
Shares in Ashley House were trading down 22% at 12.65 pence Tuesday morning, the second biggest faller in the AIM All-Share.
The health and community care property company had previously said that, in order to reach market expectations for profit for the year, it would need to achieve planning and exchange legal contracts on four out of six of its extra care schemes.
Although it said this is likely to be achieved, completing legal agreements with prospective tenants and purchases has been slower than Ashley House had expected. It said it is confident that all six schemes will successfully close, but is not confident they will do so before the end of its financial year.
Ashley said that profits from the schemes that do not close before the year end will contribute to profitability in the 2014/15 financial year.
The company highlighted a silver lining to the delays: it has been in discussions with institutional funders who are proposing to provide long-term capital for the schemes it produces, and the delayed schemes could now potentially be funded in this way.
WH Ireland downgraded Ashley's full-year earnings before interest, tax, depreciation and amortisation to a loss of GBP1.0 million, assuming one of the six schemes achieves completion. However, it cautiously maintained its full year EBITDA forecast for 2015 at GBP2.5 million.
"Whilst we believe that the strategy being undertaken in the Extra Care segment will yield a positive return in due course, the shares will clearly move lower in the short-term," the brokerage said.
WH Ireland has moved to a neutral stance on the company, and placed its price target for Ashley House under review until more detail on the timing of project completions is revealed.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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