Ashley House Share Discussion Threads

[topvest] 26/9/2014 08:49

Well, who are John and James Moy as they now have 12%?

Audited accounts have no modification of the audit report. This indicates that Deloitte agrees that there isn't a material uncertainty over going concern. Going concern note in the accounting policies is expanded as expected.

Not sure how Deloitte sign-off the £9m JV carrying value given there is no income again in the current year. I'm inclined to agree with other posters that this looks a worthless asset. Not quite sure why Deloitte don't insist on write down or better disclosure of what exactly the expected cash flows are!

[paleje] 24/9/2014 17:07

WHI have issued a speculative Buy target 16p, on a prospective PE of 2.8 for 2015:-

Following the results, we have adjusted our estimates to reflect the actions/events of
recent months, reducing our revenue expectation by £7.0m, whilst increasing the
anticipated gross margin achieved to a blended 32.9%, reflecting the variance in
assumed level of construction pass through revenue. Our EBITDA estimate remains
unchanged, whilst we increase our interest charge assumption by £0.4m to reflect the financing put in place, resulting in a reduction to our EPS estimate of 13.2%. With further land having been acquired since year-end, we increase our year-end net debt expectation by £0.9m to £1.0m. We would also note that with the MOU announced this morning, we would anticipate FY 2015E to be very much H2 weighted. Whilst clear risks remain, with the number of schemes scheduled to come through this year,combined with the current multiples ascribed, we move to Speculative Buy.

[topvest] 24/9/2014 11:24

This is certainly high risk, but does look like they have a good way forward on completed schemes now. Classic high risk potentially high reward investment at this stage. If it all comes good in 2014 then they have a good number of schemes that can start coming through. If not, then I guess it's an equity raise or worse! I will risk it. Would be nice to see directors buying more at this point though.

[goliard] 24/9/2014 10:47

They have £3.3m of admin expenses which seems very high for the level of work they are doing. They also have a note in the accounts which says "Costs of employees engaged wholly in the provision of external services (GBP835,000) have been moved from Administrative expenses to Cost of sales. Gross profit has consequently reduced to GBP5,662,000.", so in reality their admin expenses are more like £4.1m, or with interest payments £4.2m.

They received £3m in forward funding for the Grimsby development on Sept 19th, so they must have been incredibly tight for cash before that came in and I imagine quite a bit went straight out the door to pay people who had been 'held back'. They may get tight for cash at some stage if further payments don't come in, but I am guessing that the fund for completed developments might also allow for forward funding so they will be ok if they get that deal signed and get some cash from it, but stuffed if they don't. So to deal with scburbs point above, they may not even have to raise funding for construction, although that's a very small bit of good news in a sea of misery!

[scburbs] 24/9/2014 09:22

Adam, They have just agreed a memorandum of understanding for a fund providing £100m for completed developments. If that converts into an actual legal agreement then it should be relatively easy to raise funding (debt or equity) for the construction of specific projects (as the finance providers can be confident of being repaid on completion). This would not involve an equity raise at ASH level.

[adam] 24/9/2014 08:56

Worse than i thought, and i was expecting bad. Need to raise equity - how are they going to do that?

[tudes100] 24/9/2014 08:28

Sold a while back for a decent loss so perhaps I'm a little sore but I find it incredible that management could conceivably believe that 6 developments could be delivered in the financial year and not a single one actually happened.
In most of the businesses I've worked in this would have resulted in those responsible being shown the door.

[greedfear] 24/9/2014 07:55

Well we knew results would be bad.
It's all about the future now and that looks very promising.
This year (and following years) just might suprise us in a very postive way (for a change).

[scburbs] 24/9/2014 07:46

Goliard,

Agreed, very very bad. LIFT asset is a distraction as this has been worthless for a long time, just an asset on the balance sheet to ignore on any sensible valuation basis. Not clear why this is not obvious to the auditors (I suspect it is obvious to management).

Whilst I hestitate to say "predict" they did make a statement about the delayed schemes, but keep the salt handy.

"Clearly the Group has had a difficult year, but the momentum in Extra Care has built and the Board is confident that this is the right strategy for the Group. The delayed schemes should all reach financial close in the coming months which will add significant value to the business. The long term funding solutions being established will provide a significant competitive advantage as the Group strives to win more schemes and drive the growth of the Group in the medium term."

The "potential" new fund looks very interesting with £100m of funds over two years to buy completed extra care schemes implies some pretty hefty sales numbers. Potentially exciting as this is, it is all in the delivery and there are some serious question marks there.

"In recent months we have spoken of the progress we were making in securing long term funding solutions for Extra Care developments. We are delighted to announce that we have signed a Memorandum of Understanding with a major UK investment fund manager, giving access to an initial £100m of debt to be deployed over the next two years exclusively on certain of the Company's Extra Care schemes. Standard documentation and the financial model are currently being finalised for this new fund and we will advise of progress in due course. The new Fund will take projects once they are built; the Company is currently exploring funding solutions (equity and debt) for the construction period and is in early stage discussions with potential providers."

[goliard] 24/9/2014 07:15

Those results are about as awful as they could be. Even with their write down the LIFT assets are still massively overvalued.

I note that not a single one of the 6 extra care schemes that they talked about has yet reached financial close and they don't seem to be predicting when they might do now.

[sasannach] 19/9/2014 15:27

Good volume and mainly buys. Usual MM shenanigans. Lots of buys showing as sells. Dummy buy gave me 9.24 while level 2 shows 9.75 on sell!

[goliard] 19/9/2014 09:45

As suspected, they were holding the prelims to announce the forward funding agreement. £3m inflow sounds good, but this is just forward funding, so we don't know how much of it will be profit, if any. Muted reaction because still lots of questions about the business model.

[scburbs] 19/9/2014 08:22

Excellent news, but I think we need to see just how bad the last year has been.

[spooky] 19/9/2014 08:17

I'm slightly surprised by the lack of reaction/interest this morning, if they kitchen sink everything in next week's numbers the future will look much more positive.

[irenekent] 19/9/2014 07:32

Looks like good news. Combined with Salmon(d)+ Sturgeon reduced to fish paste, I'm looking forward to a good day!

[sasannach] 19/9/2014 07:21

Lets hope so. Its been rather too long in the coming!!

[18bt] 19/9/2014 07:09

£3m of cash and a new development allows them to announce interims on going concern basis. They. Ought to beclose to pulling some more rabbits out of the hat.

[tudes100] 05/9/2014 13:59

but the share price doesn't move !

[irenekent] 05/9/2014 13:57

A lot of shares bought today - someone getting ready for a takeover?

[18bt] 05/8/2014 08:17

Even if the LIFT assets are totally impaired, that still leaves NTA of £7.7m and net debt of £1.2m at the half year. The real problem they face is that the balance sheet just isn't big enough to finance the work they can get, so they have to fund externally. And the shareholder base stuffed with ex-directors isn't going to be very happy with a heavy dilutive fund-raising... but they are going to have to bite the bullet and issue some equity IMHO. I'd take it up if there was evidence of planning permissions being given. Odd, but if Anthony Walters is reading this, you really should consider a rights issue. I wouldn't be happy if it is just a discounted placing with new investors with no clawback.

[topvest] 05/8/2014 07:50

Yes, agreed. But, Deloitte should be asking bigger questions on this. Impairment reviews are a key area for a big 4 audit firm. I agree that they could write this down to virtually zero in the next results. Not much of a safety net then in terms of things that they can sell. They basically need to get their schemes away in the next few months otherwise this will be heading to zero. It's a finely balanced investment opportunity at the moment. Plenty of upside, but the risk of losing it all. Lets hope they pull through.

[goliard] 05/8/2014 07:42

Topvest. I think this is exactly why they keep having bullish targets and then missing them. The auditors will sign off if the board can put a set of projections in front of them that justifies the valuation. Unfortunately the auditors won't interrogate the company's projections for the LIFT schemes in much detail.

Maybe, between us all, we have worked out why the projections are always being missed. If they scaled them back they might well have to write down the value to virtually nil. There are very few, if any, LIFT cos getting any schemes approved at the moment, so maybe we will see a bigger write down in the results this time round?

[topvest] 04/8/2014 20:13

Well, I've looked at the accounts again and they are not clear at all but I think you may be right. It's confusing as they should be generating cash from these assets/expecting to, otherwise they would not be worth £11.5m based on what looks fairly flat cash flows and a 14% discount rate.

"The carrying value of the LIFTCo investment was assessed against the discounted future cash flows expected to be generated by that asset. The expected future cash flows are taken from the Board's latest forecast which covers the period to 30 April 2016, extrapolated tocover the remaining life of the arrangement. The Board has assumed that cash flows remain flat from 2016 onwards. The expected future
cash flows are discounted using the Group's weighted average cost of capital of 14.0% (2012: 14.0%). The expected future cash flows consider the following factors: management's expectations, based on historic experience and current knowledge of the marketplace; both industry specific and national expected growth rates; continued political uncertainty in the UK health sector. As a result of these considerations, the asset has been impaired by £1,000,000. The Board has assessed that, whilst it anticipates the LIFT arrangements may still have value
at the end of their exclusivity periods, it is prudent to revise the useful economic life to 11.5 years, the average remaining period of exclusivity."

I think you may be closer to the mark, and these assets have very questionable value, but the auditors shouldn't be signing this off if they are not generating the same sort of cash flow as the annual impairment charge of £1m. The disclosures are poor, but then again that's no surprise for this company.

So, are we actually saying that over 50% of the net assets of this company generate zero cash flow? You would have thought Deloitte would have forced a better job on this. The impairment disclosures do NOT comply with IFRS as they do not cover sensitivity analysis around the cash flows. Get a better auditor!

[goliard] 04/8/2014 19:45

scburbs, yes I think that is right. The Amber deal was done years ago... But then sort of went down the toilet when the buyer went bust and restructured the deal.

[scburbs] 04/8/2014 17:51

Topvest, surely this says that Amber has the income rights?

My recollection is that all Ashley House has is certain exclusivity rights plus the development profits if a development were undertaken (in recent years very few have been). Massively overvalued at £11m in the balance sheet IMV.

The share of profits and loss being reported from the LIFT intangible was nil in 2013 and £(10)k in 2012 (note 10 to the annual accounts). As I understand it the £1.2m profit reported in the LIFTcos in 2013 is for the benefit of Amber.