RNS Number : 7694K
ADL PLC
24 December 2008
ADL plc
Interim Report for the six months to 30 September 2008
Financial Highlights
* �361,000 Operating Profit before deducting �110,000 exceptional costs (30 September 2007: �631,000 before exceptional costs of
�417,000)- a reduction of 43%
* (�53,000) Retained loss after exceptional items (30 September 2007: Retained profit �78,000)
* (0.54)p Earnings per Ordinary Share (30 September 2007: (1.49)p)
* 82.1p Net Assets per Ordinary Share (30 September 2007: 85.1p) - a decrease of 3.5% (Allowing for the transition from UK GAAP to
IFRS)
* Trading in the second half is showing a similar performance to that experienced in the first half
Sir William Wells, Chairman, commented "The past six months in particular have presented extraordinary challenges for our business and I
am delighted that, with the end of the legal action, we have been vindicated. Your management team, who have borne these challenges with
fortitude, are now determined to work to rebuild shareholder value"
For further information please contact:
ADL plc
Jeremy Davies, Managing Director 07860 717458
Blue Oar Securities
Andrew Raca 0207 448 4400
Chairman's statement
Financial Results
I have pleasure in presenting ADL's Interim Report for the six months ended 30 September 2008. In this period turnover was �2.925
million (30 September 2007: �3.023 million and year to 31 March 2008 �6.043 million). The profit on ordinary activities before interest,
taxation and exceptional costs fell to �361,000 from �631,000 in the six months to 30 September 2007.
Our net assets at the period end were �8.117m, equivalent to 82.1p per share. Our relationship with our bankers remains positive. Our
banking facilities at 30th September 2008 were �9m and no repayments are due until October 2009.
Your board does not consider it appropriate at the present time to declare an interim dividend.
The reduction in turnover within the Company is primarily due to the impact of the closure of The Knoll noted below.
Despite exceptional expenditure of �110,000 in relation to the legal action against the Company and its directors, and the distraction
caused in this respect, the Company has managed to minimise the overall loss for the Company to �53,000 for the six months.
Review of Business
Progress over the last six months has been difficult owing to the considerable resources and senior management time which were deployed
in the defence against the criminal charges brought against the Company under the Mental Health Act 1983. These charges were (as previously
announced) stayed by His Honour Judge Ticehurst in Bristol Crown Court on the 21st November 2008.
This legal action followed the dawn raid by Police and the Commission for Social Care Inspection ("CSCI") on the 26th July 2005 at
Newsham House Nursing Home in Gloucester and this has undoubtedly affected the performance of the group since that date. Direct costs
incurred in defending the Company, its Directors and employees since 2005 are in excess of �430,000.
Clearly the issues at Newsham House have affected the Company's relationship with both the regulatory body and other associated bodies
throughout the country. In the Company's view this was a contributory factor in the emptying of The Knoll (a 42 bed facility in Bradford) by
the local authority on the 4th July 2008. The six month period under review shows the impact of its closure on income and the redundancy
costs incurred.
At the time of the Company and its Directors being charged it was our intention to acquire a compatible group of five homes to
complement our provision in the northern area. Previously arranged funding was withdrawn as a result of the Company being charged. As a
consequence in the year end accounts the costs incurred of �310,112 were written off.
The court case has impacted the CSCI ratings of our homes throughout the country and impacted group earnings.
Your Board is currently in consultation with its legal team and are assessing the quantum of the claim for consequential damages which
they believe could be in excess of �1 million.
CSCI insisted on the removal of the Acting Manager at Gloucester following her being charged in September 2007, and your Directors were
precluded from general access to the home. This action led to CSCI seeking to close the home. As a result and to protect the home, its
residents and the Company's investment, a management agreement has been entered into with Lifeline Homes Limited until re-registration takes
place in their name. Following that it is your Company's intention to lease the home to this company on a 35 year lease and to subsequently
seek a sale of the resultant investment.
As previously reported it is the Company's policy to de-gear and reduce bank debt by selected asset sales.
Development Opportunities
Completion of the sale of surplus land at Gloucester has been delayed due to planning problems by the developers. Building work on the
new car park is virtually complete. Financial completion of the sale is expected in early 2009.
The developer who acquired Morton Manor managed to sell four of the six units prior to the market collapse. Your Directors have taken a
lease of one of the remaining flats in satisfaction of the developer's outstanding debt of some �250,000. This will be let in the short term
with the intention of a sale once market conditions allow.
The developers of surplus land at Allambie Court, Nuneaton have withdrawn from the conditional contract to develop some eight flats in
view of deteriorating demand. The Company has received planning consent to extend the property to provide six single rooms in view of the
lack of demand for twin rooms. Now the court case has ceased and as cash flow allows, this extension will be built.
In addition the Company is currently analysing demand in the area with a view to seeking planning permission for a further extension to
bring the home up to 60 beds.
Outlook
It is your Board's intention to seek to rebuild relationships with both the regulator, CSCI, throughout the country and purchasing
authorities, thus stabilising the business. Once this has been achieved we will seek appropriate opportunities to grow the business.
Sir William Wells
Chairman
24 December 2008
Unaudited Income Statement 6 months to 30 Sept 6 months to 30 Sept 07 Year to
for the six months ended 08 Unaudited 31 Mar 08
30 September 2008 Unaudited �'000 Audited
�'000 �'000
Turnover
Continuing operations 2,925 3,023 6,043
Acquisitions - - -
2,925 3,023 6,043
Cost of sales
Continuing operations (2,015) (1,830) (3,764)
Acquisitions - - -
(2,015) (1,830) (3,764)
Gross profit 910 1,193 2,279
Administrative expenses - (596) (643) (1,497)
continuing operations
Administrative expenses - - - -
acquisitions
Exceptional loss (110) (417) -
Other operating income 48 81 136
(658) (979) (1,361)
Operating profit 251 214 918
Continuing operations 251 214 (651)
Acquisitions - - (150)
251 214 (801)
Interest receivable 8 7 20
Interest payable (312) (299) (614)
(Loss) / Profit on ordinary (53) (78) (477)
activities before taxation
Tax charge on profit on 0 (69) 14
ordinary activities
Retained profit for the period (53) (147) (463)
Earnings per ordinary share - (0.54)p (1.49)p (4.68)p
basic and diluted
Weighted average number of 9,885,694 9,885,694 9,885,694
shares
Consolidated Unaudited Balance 30 Sept 08 30 Sept 07 31 Mar 08
Sheet as at Unaudited Unaudited Audited
30 September 2008 �'000 �'000 �'000
Non-current assets
Intangible assets 753 950 891
Tangible assets 16,442 16,281 16,180
Investments 2 2 2
Deferred tax assets 37 44 37
17,234 17,277 17,110
Current assets
Inventories 9 11 9
Debtors 553 787 852
Assets held for resale 500 700 500
Cash and cash equivalents 273 446 567
1,335 1,944 1,928
Current liabilities (772) (1,016) (1,240)
Net current assets 563 928 688
Non-current liabilities (9,680) (9,792) (9,628)
Net assets 8,117 8,413 8,170
Equity
Called-up equity share capital 1,522 1,522 1,522
Share premium account 3,712 3,712 3,712
Revaluation reserve 2,876 2,362 2,876
Retained earnings 7 817 60
Total equity 8,117 8,413 8,170
Net assets per ordinary share 82.1p 85.1p 82.6p
Consolidated Unaudited Cash 6 months to 30 Sept 6 months to 30 Sept Year to
Flow Statement 08 Unaudited 07 31 Mar 08
for the Six Months ended �'000 Unaudited Audited
30 September 2008 �'000 �'000
Net cash inflow from operating 213 397 729
activities
Returns of investments and
servicing of finance
Interest received 8 7 20
Interest paid (312) (299) (614)
Finance charges paid -
Net cash inflow from returns
on investments
and servicing of finance (304) (292) (594)
Taxation
UK Corporation tax paid (4) - (9)
Capital expenditure and
financial investment
Asset purchased for 3rd party (249) - -
Net cash outflow from (249) - -
investing activities
Cash inflow before financing (344) 105 126
activities
Financing
New secured loans 50 - 100
Repayment of amounts borrowed - - -
Net cash inflow from financing 50 - 100
activities
Increase in cash and cash (294) 105 226
equivalents
Reconciliation of operating
profit to net cash inflow from
operating activities
Operating profit 251 214 117
Amortisation 138 56 115
Amortisation of finance costs - 18 19
Depreciation - 1 2
Profit on disposal of fixed - - 50
assets - - 100
Fair value of non current
assets held for sale
(Increase)/decrease in debtors 292 96 (11)
(Decrease)/increase in - - 2
inventories
(Decrease)/increase in (468) 12 335
creditors
Net cash inflow from operating 213 397 729
activities
Consolidated Statement of Share Share Premium Revaluation Retained Earnings Total
Changes in Equity Capital �'000 Reserve �'000 Equity
For the six months ended �'000 �'000 �'000
30 September 2008
Balance at 1 April 2007 1,522 3,712 2,968 408 8,610
Recognised income and expenses - - - (463) (463)
Transfer to profit/loss - - (115) 115 -
Revaluation of net tax - - 23 - 23
Balance at 31 March 2008 1,522 3,712 2,876 60 8,170
Recognised income and expenses - - - (53) (53)
Balance at 30 September 2008 1,522 3,712 2,876 7 8,117
Notes
1. Accounting Policies
Basis of Accounting
These unaudited interim financial statements were approved for issue by the ADL plc Board of Directors on 23 December 2008.
These consolidated interim financial statements for the six months ended 30 September 2008 have been prepared in accordance with the
Listing Rules of the Financial Services Authority and with IAS 34. 'Interim Financial Reporting' as adopted by the European Union ("EU").
The interim financial statements should be read in conjunction with the financial statements for the year ended 31 March 2008 which have
been prepared in accordance with UK Generally Accepted Accounting Practice ("UK GAAP").
The Group now prepares its consolidated financial statements in accordance with applicable International Financial Reporting Standards
("IFRS") as adopted by the EU. This is the first financial information on the Group to have been prepared under IFRS and the disclosures
required by IFRS 1 "First time adoption of IFRS" concerning the transition from UK GAAP to IFRS have been included in these notes.
The Group has applied consistent accounting policies in preparing the consolidated interim financial statements for the six months ended
30 September 2008, the comparative information for the six months ended 30 September 2007, the financial statements for the year ended 31
March 2008 and the preparation of the opening IFRS balance sheet as at 1 April 2007, the date of transition.
These interim financial results are unaudited and do not constitute statutory financial statements as defined in section 240 of the
Companies Act 1985. The functional currency of the Group is UK Sterling and accordingly the amounts in the interim results are denominated
in that currency.
The statutory financial statements for ADL plc for the year ended 31 March 2008 received an unqualified Auditor's Report and have been
filed with the Registrar of Companies.
Basis of Consolidation
The consolidated interim results incorporate the interim results of the Company and all Group undertakings. These are adjusted, where
appropriate, to conform to Group accounting policies. Acquisitions are accounted for under the acquisition method and goodwill arising on
consolidation is capitalised and the value of this goodwill is reviewed on a periodic basis. The results of companies acquired are included
in the Group profit and loss account after the date that control passed.
2. Operating Profit
Operating profit is stated after charging / (crediting):
6 months to 30 Sept 6 months to 30 Sept 07 Year to
08 Unaudited 31 Mar 08
Unaudited �'000 Audited
�'000 �'000
Director's remuneration 67 106 168
Amortisation - intangible assets 138 74 134
Depreciation of owned fixed assets 0 1 -
Auditors' remuneration - as auditors 0 27 34
- non-audit 0 55 81
services
Exceptional costs 110 417 651
3. The retained loss per ordinary share have been calculated on the loss on ordinary activities after taxation of �53,128 (30 September
2007: Retained profit �77,567, 31 March 2008: Retained profit �462,650) using the weighted average number of shares in issue during the six
months ended 30 September 2008 of 9,885,694 shares (30 September 2007: 9,885,694, 31 March 2008 9,885,694).
4. Net assets per ordinary share have been calculated on net assets of �8,117,000 (30 September 2007: �8,413,000, 31 March 2008
�8,170,000) divided by 9,885,694 ordinary shares in issue at 30 September 2008, 30 September 2007 and 31 March 2008.
5. Comparative period
The corresponding amounts in the prior interim period for the six months ended 30 September 2007 and the audited financial statements
for the year ended 31 March 2008 have been adjusted for the effects of changes to accounting policies on transition to IFRS as follows:
a) Goodwill arising on the acquisition of Newsham House Limited, Woodland Healthcare Limited and Solutions (Yorkshire) Limited of
�9,543 in the 6 months ended 30 September 2006 and �23,577 in the year to 31 March 2007 has been written back to the profit and loss account
and Goodwill on the balance sheet.
b) Deferred tax arising on the revaluation of properties as at 30 September 2006 of �824,792 and �1,446,000 as at 31 March 2007 has
been provided in full and deducted from the Revaluation Reserve.
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