Ashley House Share Discussion Threads

[cockerhoop] 05/2/2019 13:53

Yump,

It's not going to get any easier as Morgan Ashley will almost be a black box providing a profit or loss rather than a full set of accounts - until they eventually appear at Companies House.

[yump] 05/2/2019 12:42

Thanks for your posts guys, its good to have some ideas of when/where revenue flows, although I suppose in the end, the forecasts are the best guide unless can get some more information from ASH themselves.

At least the forecasts can halve and ASH will still be cheap.

I think a bit more clarity on the flows of fees and revenues might help with new investors - shouldn't have to be digging this much really.

[rndm355] 05/2/2019 12:26

Ashley House discussed on the Cube podcast, 28 minutes in:

[cockerhoop] 04/2/2019 22:00

They state they expense all prior expenditure for a project(except land) at financial close.

Just had a look through prior accounts to try to isolate projects and found the Harwich & Walton on the Naze Extra Care Projects which reached financial close in the period end April 16 and were the only extra care schemes on site. Their combined GDV was £21m and they had £12.2m left to book suggesting £8.8mm was perhaps booked at financial close. So 42% on those projects.

[scburbs] 04/2/2019 20:53

Recognising over 50% GDV at financial close before they start on site would be very punchy! Around 30-35% might be more realistic if you are reflecting the land value with planning.

[cockerhoop] 04/2/2019 18:55

My understanding is prior to the Morgan Ashley joint venture all GDV flowed through the revenue line of Ashley House accounts.

[scburbs] 04/2/2019 18:00

It will also depend on how/if they report the construction costs. If the main construction cost is just being invoiced directly from a third party to the end purchaser then the ASH initial portion might be well over 50% (of their total not of GDV) as they will just be charging project management type fees at the construction stage.

However, that would just tell you that the GDV was never directly relevant to what they were going to invoice and you would need to know what percentage of GDV is typically their share (or the JV’s going forward).

[yump] 04/2/2019 17:08

Yes, I thought I'd seen it somewhere and now I can't find it !

If it doesn't turn up, I'll just contact them I think.

[cockerhoop] 04/2/2019 16:27

Not sure of the exact figure but believe it to be greater than 50% recognised on financial close. I'll try to dig a reference out but sure it's been described as the majority or large proportion in the past by Antony.

[scburbs] 04/2/2019 16:14

I think once they recover the design/advisory fees on financial close it is then a percentage of completion recognition for the rest (assuming in line with budget).

Not sure on percentage on financial close probably quite variable depending how hard it has been and how much value they have added.

[yump] 04/2/2019 13:17

It would be nice to know what sort of proportion of payments happen on financial close and what appear afterwards. I find the revenue recognition policy quite hazy ie. after the fees on close, how and when is the rest recognised ?

Perhaps you have a grip on it ?

[scburbs] 02/2/2019 09:35

They have to build/sell them to achieve the equivalent of £30m via the JV. On financial close they can invoice various design/advisory fees. It is the design/advisory fees that they may not fully achieve to 30 June if the schemes don’t reach financial close. There is no prospect of the JV having £60m revenue by 30 June.

[yump] 01/2/2019 22:55

and you're just going back over the past again - I don't see the point.

£20mln revenue has always produced a mixture of profits and losses. Now it looks as if ASH will have the equivalent of £30mln from the JV and a bit more from modular. That's what investors are here for I presume and they were here for that before the one-off payment from MS, probably because at this level, they only need to do a couple of pence in earnings for it to be on a p/e of 5.

I admit they could have been a bit clearer about the accounting of the MS payment for shareholders (probably not for accounting purposes unless for some reason you just don't trust them), but you could easily argue that it counted as a proper sale, because it was selling half their pipeline.

Without that one-off, we don't know what the results would have been.

It might in fact have been better to post 1p earnings and then 2p this year.

Then it would look like the genuine beginning of something special with a 100% increase !!

So a rational view of the business is difficult if people get hung up on 3p down to 2p. The good thing is, its not on a forward racy multiple and that's an understatement. Perhaps it would have been if it had gone 1p-2p, or even 0.5p-2p. That always gets the sentiment going.

[microscope] 01/2/2019 22:08

Tom, sorry Top..vest. ;) if it's a choice between your view, and the company's accountants... Not the hardest choice ever :))

[topvest] 01/2/2019 20:47

Just my view and I know a bit about annual reports. A one-off disposal of a business shouldn't be mixed with the underlying trading position which it was in the prior year annual report. It was either 1. not transparent or 2. deliberately misleading. Form your own view.
As you can see the business made a thumping loss in H1. If you back-out the one-off profit from the sale of the business in H2 last year what was the underlying trading position? Probably break-even or loss making I suspect. Wouldn't have looked as nice would it!

[microscope] 01/2/2019 18:39

Serious accusation there tv. Hope your case is as watertight as your recent sympathetic posts for Luke Johnson ?

[topvest] 01/2/2019 18:23

They only made a profit last year because they sold 50% of the main business. This should have been disclosed separately. Not sure their auditors are doing their job properly. I don’t consider last years accounts to represent a true and fair view of the business as they were misleading on the most important transaction in the year.

[cockerhoop] 01/2/2019 12:27

In addition to the 4 schemes on currently on site they're 12 further schemes with possible financial close in calendar year 2019.

Grimsby - Financial Close Nov 18

Leicester x 2

Romsey

Freshwater IoW

Burnholme Oak - Work commencing in Feb

New Milton (People for Places)
Gosport

Leeds x 4 (Home Group) Work Start Late 2019.

That's approximately £120m of GDV (so £60m to ASH), the key is the operating margin but in the past 15% was achievable. It certainly looks like some of the new MA schemes have leapfrogged some stale Ashley House projects in the pipeline.

[yump] 01/2/2019 09:46

Probably doesn't want to hear it. If you look into the past, you can see that 20mln appears to be around the critical level of revenue needed to start decent profits. Assuming the profitability of the JV is the same as ASH's was, then £60mln of revenue for the full year should be easily capable of generating that 2.6p of earnings and even if it ends up being 2p, then the rating is still miserly.

ie. in effect ASH will have got £30mln of the £60mln.

[microscope] 31/1/2019 21:40

They still reported an overall profit last year and are forecasting a fy profit this year, topvest!

[topvest] 31/1/2019 21:23

Results underline the point that I made previously, that last year's results were distorted by one-off's which made the business look profitable, but the underlying business was and is still loss making.

[qackers] 31/1/2019 13:46

From today's RNS


Outlook

Whilst, as last year, a loss has been reported for the first six months of the financial period, also as last year it is expected that this will be more than covered in the second part of the period. The foundations have been laid for the next few months to deliver further scheme closures and enable the construction of some much needed accommodation for elderly people, to commence on site.



The threat of the Local Housing Allowance Cap that had so affected Ashley House in recent times was removed in the period, which is now beginning to help our pipeline of developments to move forward at a faster pace. F1M is making good progress and the diversification of the business continues such that Ashley House is becoming a Group operation with two supporting pillars in Morgan Ashley and F1M supplemented by the traditional health activity through Ashley House along with some fledgling private sale developments and the growth of Partnering Health.



Christopher Lyons

January 2019

[microscope] 31/1/2019 11:38

On the face of it, disappointing, but I did say I suspected the interims might not be anything special. What is surprising is that with the longer second half they aren't more bullish. The planning procedures seem to be slower than ever.

On balance though they appear to me to be erring on the side of caution by saying: '...expected to become profitable for the full 14 month period to 30 June 2019, albeit uncertainty on timings of some scheme closures might result in revenue slipping into the next financial year. Accordingly, the Company expects profitability to be below current market expectations for the full financial year.'

So it is, as always here, more a question of 'when, not if'.

The finances are obviously much stronger than for a while, however i'm mildly frustrated debt is virtually unchanged from finals at just under 1.5 million, though of course vastly improved on a year ago.

Market reaction probably fair, but for the medium or long term, these are still cheap imho.

[paleje] 31/1/2019 10:47

Looking forward WHI current best guess for YE Jun 2020 is EPS 2.6 which if it comes to pass makes current share price cheap for a stable business in a sector forecasting growth to at least 2035.

[dave4545] 31/1/2019 09:01

Cannot even buy 1000 shares online

Huge buy order at these levels or mm are all buyers to bank big profits having sold upwards to 14p