Ashley House crumbles as lower revenues fuel profit warning

Care home developer and operator Ashley House took a dive on Thursday after it warned that profits are now expected to fall short of market expectations as interim revenues dropped.

For the six months ended 31 October, losses before tax came in at £1.7m, virtually flat on the same period the year before, as revenues dipped from £7.0m to £4.8m as contributions from its Morgan Ashley joint venture are now included within 'Share of results of joint ventures' rather than revenue.

However, the share of results of joint ventures fell from a profit of £0.03m to a loss of £0.4m but the joint venture won six extra care schemes over the period with the scheme expected to hold a value of around £60m.

The AIM-traded company said it expected to become profitable for the full 14-month period ended 30 June but added that uncertainty on timings of some scheme closures could result in revenue slipping into the next financial year, meaning that it now expects profitability to be "below current market expectations for the full financial year".

However, Ashley House reduced its net debt from £3.51m to £1.49m and cash and cash equivalents at 31 October stood at £0.19m, up from £0.01m at the same point the year before.

The company also reported that its health and housing pipeline had increased to 26 schemes with £222.5m of gross development value and said that the pipeline for its modular arm rose to 12 projects with £19.1m of future value.

Christopher Lyons, chairman of Ashley House, said: "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."

Ashley House's shares were down 16.67% at 11.50p at 1627 GMT.