Preliminary Results

Ashley House plc (the "Company") the health and community care property partner

Diversification into adjacent markets producing results

Preliminary results

Ashley House plc, the health and community care property partner today announces its preliminary results for the year ended 30 April 2013.

Operating highlights:

Ø Diversification of business providing strong pipeline

o Strong progress in the Company's new markets pointing to much improved outlook in the coming years

o Since May 2013, operations divided into two distinct divisions: Ashley House containing Extra Care and GP development businesses; Infracare with Major Projects and NHS LIFT

o Two recent significant contract wins increasing pipeline for Extra Care to £128m

o Total forward pipeline of £295m of scheme value yet to be recognised (including construction which will not always come through as Ashley House revenue) divided between the two divisions as:

§ Ashley House division £186m

§ Infracare division £109m

Ø Reorganisation of Board to provide slimmer more focused leadership

o Board review reduced composition to three Executives and three Non-executives, to be put in place following the 2013 AGM

o Richard Darch joined the Board in April 2013 bringing experience in winning and delivering high profile health and social care projects

o Sir William Wells to step down following six years as Chairman when a successor is appointed

Financial highlights:

Ø Significant profit increase reflecting progress made in newly diversified business

o Gross profit increased 24% to £6,497,000 (2012: £5,229,000) through focus on higher margin activities

o Decrease of £592,000 (11%) in administrative expenses to £4,764,000 (2012: £5,356,000)

o EBITDA before exceptionals of £2,004,000 (2012: £177,000)

o PBT before exceptionals of £1,715,000 (2012: loss £862,000)

o Profit before tax £400,000 (2012: loss £21,769,000)

o Net debt of £2,743,000 (2012: £6,686,000) with further improvement since year end

Commenting on the results, Jonathan Holmes, Chief Executive said:

"We are pleased that our work to build new revenue sources has brought improved results this year. With a strong pipeline of work, particularly in our new markets, we look forward to continued progress." 

Enquires:

Ashley House plc 01628 600 340

Jonathan Holmes, Chief Executive

Antony Walters, Finance Director

WH Ireland Ltd 0207 220 1666

(Nominated Adviser and broker to Ashley House plc)

Adrian Hadden

Nick Field

The responsibility statement below has been prepared in connection with the Company's Annual Report and Accounts for the year to 30 April 2013. Certain parts thereof are not included within this preliminary announcement.

Responsibility statement

We confirm that to the best of our knowledge:

·; the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·; the management report, which is incorporated into the directors' report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

This responsibility statement was approved by the Board of Directors on 24 June 2013 and signed on its behalf by:

Jonathan Holmes

Chief Executive

Results

The year to 30 April 2013 showed significant improvement from the prior year as the benefits of the Company's diversification policy began to be seen. Although revenue fell to £15,782,000 (2012: £23,157,000), in part due to the lack of construction income following the demise of the PCTs, EBITDA before exceptionals increased eleven-fold to £2,004,000 (2012: £177,000) in line with market expectations. As detailed in the Business review section, the Company's net debt position has substantially improved since the end of last year, with net debt falling from £6,686,000 at the end of April 2012 to £2,743,000 at 30 April 2013. With further monies coming through from our new funding partner Invescare in early June the net debt position at 20 June 2013 improved to £1,144,000.

Current trading

We announced on 10 May that the Company had recently won two contracts in our Extra Care business. The first with Nottinghamshire County Council is to deliver over 200 homes for the over 55s and the second is a joint venture agreement to deliver 300 homes over three to five years in the north east. This has meant that our pipeline has grown to £295m as analysed in the Business review section. Trading in the traditional NHS business (now identified as GP and LIFT) remains difficult but is compensated for by the growth in Extra Care. Major Projects, a new area being led by Richard Darch who joined us in April is also showing good progress although, in view of its longer-term nature, little will be recognised in the year to April 2014.

The Board continues to manage the overhead base carefully and the restructure of the business into two divisions will see both improved focus on individual business units and further cost savings being delivered over and above the £592,000 of savings delivered in the year to April 2013.

Board composition

During the year, the Board undertook a full review of its composition and required skills in the light of the new business areas in which it is now working. As part of this review it was announced that I will be stepping down after six years as Chairman of your Company. Whilst the business has gone through difficult times with the reorganisation of the NHS and the general economic climate I am delighted that the diversification of the business is bringing results and I am sure that my successor will help the business gain considerable growth in the coming years. Stephen Minion, one of the founders, moves to a Non-executive position whilst Richard Darch has joined the Executive team to lead the newly formed Infracare division. To ensure balance between Executive and Non-executives, David Hartshorne has agreed to step down from the main board after the AGM, to focus on his role as Chief Operating Officer.

Outlook

The Board is optimistic about the progress already made although much of the growth will be realised in subsequent years as the new schemes pass the relevant stages for revenue recognition.

The following four factors all point to a strong return to growth in the medium term:

·; the traction being achieved in the new business areas;

·; the diversification of the business into two distinct divisions;

·; the recruitment of Richard Darch, an experienced operator in the healthcare arena; and

·; the fact that the Company's products save money for local authorities and create significant social value.

Finally I should like to thank all of Ashley House plc's stakeholders for their support over the last six years and I wish my successor all the very best for the exciting years that lie ahead in the development of the Company.

Sir William Wells

Chairman

24 June 2013

With the opportunities afforded by its diversification strategy beginning to show results and to take full advantage of this growth, Ashley House is evolving its business into a new divisional structure. The Company's traditional GP business remains at depressed levels with only two GP schemes completed in the year and only two started. However, the Company's diversification strategy into adjacent areas has started to deliver, producing two completed schemes, a pathology laboratory in Taunton and a specialist housing unit in St Helens. In the year to 30 April 2013, £7,130,000 of revenue was derived from the new business areas (2012: £5,125,000). This represents 45% of gross revenue (2012: 22%).

New divisional structure

As recently announced the business is reorganising into two distinct divisions to better focus on growth areas. The Ashley House division will encompass the existing GP business along with Extra Care and will be led by Jonathan Holmes, Chief Executive, combining this role with his existing responsibilities. The Infracare division will be led by Executive Director Richard Darch and will contain the NHS LIFT and Major Projects businesses. The reorganisation is expected to provide further savings to the overhead base as well as focus into the various business streams.

Pipeline

The pipeline schedule as at June 2013 has been analysed into the two divisions and is shown below. As a guide, revenues from on-site schemes will continue to flow for up to 18 months. Where the Company is appointed the time frame is likely to be 6 to 36 months and where we are in active discussions 18 to 48 months. For a scheme to be included in Active Discussions, the Company will either be short-listed or in detailed discussions with a client around a scheme where feasibility is established. Revenues are only recognised from on-site schemes and on appointed schemes to the extent that the Company would recover its fees in the circumstances of the scheme not progressing. 'Scheme value to come' represents the likely investment value of the schemes less any revenue already recognised. Not all the scheme value will flow to Company revenue as the Company will not always act as prime contractor.

Whilst there remains a healthy pipeline of GP based schemes, the NHS reorganisation has resulted in an increased time being taken to progress these schemes. The short-term growth is therefore forecast to come from the Extra Care business. This growth will be supplemented in the longer term by opportunities in Major Projects which are larger schemes but will take relatively longer to get to a point where income can be recognised.

Cost reduction

At the end of the year to April 2012 the business announced that a restructuring would result in a £500,000 reduction in overheads on an annualised basis despite further investment in our new business areas. Administrative expenses actually fell by £592,000 to £4,764,000 (2012: £5,356,000). The reorganisation into the divisional structure should see administrative expenses fall further in the year to April 2014.

Investment partners

Ashley House plc is not a property holding company and seeks to work with investment partners who provide the long-term capital to own its developments. The Company announced on 12 June that it had entered into a new trading relationship with Invescare Limited. Invescare will acquire Ashley House's three latest schemes and has appointed Ashley House as Asset Manager providing a new income stream for the Ashley House division.

The ability to structure, package and sell long term Government backed investments remains a key Company strength. The Board is pleased to add Invescare to its list of investment partners.

Cash management

The Company was largely successful in the year in obtaining payment from the former PCTs for aborted NHS schemes. Discussions continue with one region where monies are still outstanding. Despite this the business has been able to reduce its net debt position from £6,686,000 at the end of April 2012 to £2,743,000 at 30 April 2013 as set out in the table below. In the year ended 30 April 2012 the Company funded the development of three schemes from its own resources, raising debt finance against two of these schemes before selling them onto investors as the schemes completed. The debt of £3,433,000 at 30 April 2012 relating to this was sold with the related developments in the early part of this year. During the year to April 2013 a further scheme, Taunton, was financed on the Company's balance sheet. The sale of this scheme completed after the year end producing a further reduction in the Company's overdraft and improvement in the net debt position.

During the year the Company repaid its £2,000,000 revolving credit facility with Lloyds Banking Group replacing it with an overdraft facility initially of £1,800,000 which we have been able to reduce to £500,000 post year-end. The debt relating to AH Scarborough Health Park Limited is secured against the land owned by the 100% subsidiary and is being amortised.

Investments in joint ventures

Following the significant impairment in the year to 30 April 2012, a further review of the LIFT investment was undertaken at 30 April 2013. At the year end the exclusivity periods had an average life of 11.5 years remaining and the directors considered that the value had been impaired by a further £1,000,000. This non-cash impairment has therefore reduced the carrying value of the LIFT investment at the year end to £11,500,000 (2012: £12,500,000).

Dividends

The write downs in previous years mean that the Company currently has negative distributable reserves. The Board will seek to progress a capital restructure to enable the Company to be able to reinstate a cautious, prudent but progressive dividend policy in the medium term. The directors intend to bring a resolution for a capital restructure to the Company's 2013 Annual General Meeting.

Social impact

On 6 June Ashley House plc was announced as one of only eleven founding members of the Social Stock Exchange (SSE). Launched by the Prime Minister, the SSE is a new initiative designed to connect the public financial markets with social impact investment. The SSE provides investors with access to information on publicly listed businesses with strong social and environmental purpose, and guarantees full and transparent disclosure on the impact of those businesses.

Ashley House is proud of the social value its work creates and is delighted to be recognised as a Founder Member of the Social Stock Exchange, enabling us to capture this social value and to differentiate ourselves from our competitors. The Company has published its Social Impact report on the website and encourages investors and all stakeholders to access it. This is the first such report the Company has produced and any feedback or suggestions are welcome.

Summary

Progress in the new business areas has brought improved results for this year. The restructure of the business into two divisions will provide the focus to enable the delivery of an increased number of schemes in the coming year. Work continues on reducing overhead whilst the growth comes through and the reduction in net debt provides the platform for the profitable expansion of the business.

Jonathan Holmes Antony Walters

Chief Executive Finance Director

24 June 2013

All of the activities of the Group are classed as continuing.

* Adjusted EBITDA = EBITDA before exceptionals plus income tax credit.

for the year ended 30 April 2013 

1 Basis of preparation

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The preliminary announcement has been prepared in accordance with applicable standards as stated in financial statements for the year ended 30 April 2013, being based on the Group's financial statements which are prepared in accordance with International Financial Reporting Standards as adopted for use in the EU.

2 Exceptional items

3 Earnings per share

The calculation of the basic earnings per share is based on the profit/(loss) attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year.

* Adjusted EBITDA = EBITDA after exceptionals plus income tax credit.

No dividend was paid in the year ended 30 April 2013 (2012: £Nil).

4 Publication of non-statutory accounts

The financial information set out above does not constitute the Group's statutory accounts for the years ended 30 April 2013 or 2012, but is derived from those accounts. Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

The preliminary announcement was approved by the Board of directors on 24 June 2013.