Trading update, Board review and strategy progress

10 May 2013

Ashley House plc

Trading update, Board review and strategy progress

Ashley House plc ("Ashley House" or the "Company") the health and community care property partner is pleased to provide the following update on trading, Board review and strategic progress.

·; Profit for year ended 30 April 2013 in line with market expectations

·; Net debt reduced year on year to £2.7m (net debt 2012 £6.7m)

·; Slimmer more focused Board

·; Two significant contract wins in targeted growth area of Extra Care

·; Establishment of two divisions

Trading update

The Board is pleased to confirm that the profit for the year just ended (to 30 April 2013) is anticipated to be in line with market expectations.

Progress in the Company's new markets has been strong pointing to a much better outlook in the next couple of years. More detail on strategy is provided below.

Net debt reduced year on year to £2.7m (2012: £6.7m) and is expected to reduce further post year end. The Company continues to manage working capital carefully as it seeks payment of legacy PCT funds (relating to cost recovery on schemes aborted by PCTs) whilst still paying down debt. When these legacy funds are paid the Company will see a marked improvement to its short term finances.

Board review

On 11 March 2013 the Company announced that with the success of its strategy to generate new business from outside the primary healthcare sector now materialising, the Board was undertaking a review of its structure and membership.

That review has now been completed and the Board has concluded that it should become a smaller body focused on delivering growth from the Company's new activities whilst maintaining the existing core business. After the Company's 2013 AGM the Board will therefore shrink to comprise three Executives and three Non-Executives. Planning for this has started with Steve Minion, one of Ashley House's founders, moving to a Non-Executive role with immediate effect and joining the Audit and Remuneration Committees.

In addition, Sir William Wells, who has completed 6 years as Chairman, has decided that with a new strategy in place, now is an appropriate time to step down from the Board. He intends to leave after the AGM when a new Chair is appointed.

Strategic progress and contract wins

Ashley House plc's work to diversify revenues away from what remains an extremely difficult primary healthcare market continues.

We have made good progress in Extra Care. In the year to 30 April 2012 we reached financial close on 27 homes. In the year to 30 April 2013 we reached financial close on 60 homes and in the year to 30 April 2014 we expect further significant growth. This expectation is supported by the signature of a Development Agreement with Nottinghamshire County Council (NCC) to deliver over 200 homes for the over 55s. NCC will invest over £4m of a total project value in excess of £20m. In addition the Company has signed a Joint Venture Agreement in the North East to deliver 300 homes over 3 to 5 years.

The Nottinghamshire deal, won in partnership with a national contractor, followed a competitive public tender and in itself justifies the investment made in hiring a Head of New Business and establishing a bid team, whilst at the same time cutting overall overhead by £500,000 annualised in the year.

As previously advised, Richard Darch was appointed Executive Director in March. Richard has previously won and delivered many high profile projects in both NHS and social care markets. With Richard's appointment the Group has taken a first step towards building a business around larger health schemes. Demand for these schemes comes from providers to the NHS, whether private companies or consortia, public bodies in the form of NHS Foundation Trusts and other NHS Trusts, or combinations of the two. These are longer term schemes but more significant in value and in the space of a few months we have initiated detailed discussions around three such schemes with NHS Trusts and are in final negotiations with a private provider to become its infrastructure partner. Revenues for the current year will be relatively small but this new business is expected to deliver significant growth next year.

As a result the Company is to divide its operations in to two distinct divisions. The first will be called Ashley House and will incorporate Extra Care and the Company's longstanding GP surgery business - these two business streams are included together due to the similarities in the way in which they are delivered in terms of the skill sets required, their contractual arrangements and the funding they attract. The delivery of specialist housing and supported living is recognised by both central and local Government as the most appropriate means of providing care and accommodation for vulnerable older people. Given the ageing population significant growth in this type of accommodation is forecast. Jonathan Holmes will lead the Ashley House division as well as remaining Chief Executive of the overall Group. The second division will be called InfraCare and will include the new large projects business and Public Private Partnerships to include the NHS LIFT business acquired in 2008. Richard Darch, Executive Director, will lead the InfraCare division.

Both divisions will be served by a shared Administrative and Finance function led by Antony Walters, Finance Director and by a Support and Delivery function headed by David Hartshorne, Chief Operations Officer. 

The Company's pipeline at the end of April 2013 can be analysed as follows:

The presentation of the Company's pipeline data will be revised to reflect the new divisional structure in the next trading update.

Jonathan Holmes, Chief Executive commented "With the long, slow demise of PCTs, which caused a slow down and reduction in projects, Ashley House has had a tough few years. However, the Company's decision to move our business into new markets where there is both demand and funding is now producing results. The Board is very grateful to Sir William for his guidance throughout this period and he will be leaving Ashley House well set to grow over the coming years."

Enquiries:

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