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ADL plc

Directors' Report and Financial Statements

 for the year ended

31 March 2008

Operational and financial highlights

Turnover increased 7% to £6,043,335 from £5,648,448

Gross profit improved by 9.9% to £2,278,913 from £2,073,287

Core operational profit before exceptional and property items up 0.4% to £918,533 from £914,501

Operating profit £117,444 compared to £891,551 in 2007

Loss after tax £462,898 compared to a profit of £357,295 in 2007

Group properties valued at £17.12m compared to £17.59m in 2007

Company and two executive directors have been charged with wilful neglect under the Mental Health Act

For further information please contact:

ADL plc
Jeremy Davies, Director	07860 717458
Blue Oar Securities
John Wakefield, Corporate Finance Director	0117 933 0020

  

Chairman's Statement

The year to 31 March 2008 was largely dominated with issues and allegations arising out of the actions of the current regulatory body for the care industry, The Commission for Social Care Inspection (CSCI).

The amount of senior management time expended and the considerable costs of external advisors have naturally been a severe constraint on our business of caring for the elderly. The Group has a total of 329 operational beds (out of 346 registered for care) in 11 separate facilities.  The Company's properties have been valued by Christie & Co as at 31 March 2008 at £17.12m at which time indebtedness was £8.45m and no repayments are due until 30 October 2009.

All of these 11 facilities contributed positively to the profit of the Group, operating cash flow covered all financing costs and contributed to the payment of exceptional costs.

The turnover for the year showed an increase of 7.0% over the previous year to £6,043,335. The gross profit earned amounted to £2,278,913 (2007: £2,073,287), an increase of 9.9%.  

Core profitability, before exceptional items, profits or losses related to property transactions, interest and tax, rose from £914,501 in 2007 to £918,533 in 2008, an increase of 0.4%.

The operating profit, after the exceptional costs of £651,090 attributable to professional fees incurred on an acquisition which had to be aborted following CSCI's actions, legal fees incurred in connection with defending the Company against the resultant legal proceedings and settlement of a claim by a former director, amounted to £117,444 (2007: £891,552) .  

The resultant loss for the period was £462,898 (2007: Profit of £357,295) equivalent to a loss of 4.68 pence per share (2007: profit 3.61 pence per share).

Since the year end on 31 March 2008, the two executive directors have been engaged with the Company's legal advisors to deny and refute the allegations of CSCI which form the basis of both the action taken to close Newsham House and the charges under the Mental Health Act. The Company has been advised that the case against it in respect of the allegation of wilful neglect has little or no merit and should it come to trial, will be strenuously defended. The two executive directors are similarly advised and will separately contest the charges against them. 

The impact of the legal proceedings is a major cause of concern and affects the long term future of your Company as a provider of care for the elderly.  Accordingly, the directors are considering how best to maintain shareholder value and recognise that this might involve operating differently, possibly in conjunction or in partnership with others. 

These times remain difficult for our staff to whom I am grateful for their continued loyalty and dedication to our residents and to you as a shareholder.

Sir William Wells

Chairman

29 September 2008

  

Managing Director's Report

Group Development

Despite our intention to acquire a group of five homes, once the Company was charged funding was no longer available and therefore the Company has been forced to write off the abortive costs of £310,112.

Property

The Company has secured the outstanding money (£249,000) after the year end from the developer at Morton by taking the leasehold interest in a flat in exchange for discharging the outstanding charge to cover the loan. It is the Company's intention to utilise this flat for staff on an Assured Short hold Tenancy until such time as the market returns for the sale of apartments of this type.

The surplus land at Allambie, which was contracted to be sold subject to the obtaining of a valid planning consent for residential development, has not progressed. The Developer, Garalexin, notified us in April that they would not be proceeding. Your Board has assessed the provision of care beds in the area and will, when funds allow, be seeking Planning Consent for the provision of 24 beds to increase the registration to 60 beds. 

Jeremy Davies

Director

29 September 2008

  

Group Income Statement

for the year ended 31 March 2008

					Year to		Year to
				Notes	31 Mar 08		31 Mar 07
					£'000		£'000
Revenue				1
	Continuing operations				6,043		4,973
	Acquisitions				-		675
					6,043		5,648
Cost of Sales
	Continuing operations				3,764		3,166
	Acquisitions				-		409
					3,764		3,575
Gross Profit					2,279		2,073
	Administrative expenses
	- continuing operations				(1,497)		(1,239)
	- acquisitions				-		(89)
	Other operating income			2	136		169
					(1,361)		(1,159)
Operational profit before exceptional and other gains and losses					918		914
	Exceptional costs			2	(651)		(255)
	Other gains or (losses)			2	(150)		233
					(801)		(22)
Profit from operations				2	117		892
	Continuing operations				117		715
	Acquisitions				-		177
					117		892
	Finance income			6	20		11
	Finance costs			7	(614)		(527)
(Loss)/profit on ordinary activities before tax					(477)		376
	Corporation tax credit /(expense)			8	14		(18)
(Loss)/profit for the financial year					(463)		358
(Loss)/earnings per ordinary share  attributable to the equity holders of the Company- basic and diluted				9	(4.68)p		3.61p

All of the activities of the group are classed as continuing.

The company has taken advantage of section 230 of the Companies Act 1985 not to publish its own Profit and Loss Account.

  

Group Balance Sheet

at 31 March 2008

				Notes	31 Mar 08		31 Mar 07
					£'000		£'000
Non-current assets
	Intangible assets			10	891		1,006
	Property, plant and equipment			11	16,180		16,432
	Investments			12	2		2
	Deferred tax assets			21	37		44
					17,110		17,484
Non-current assets held for sale				16	500		600
Current assets
	Inventories			13	9		11
	Trade and other receivables			14	852		891
	Cash and cash equivalents			15	567		341
					1,428		1,243
Total assets					19,038		19,327
Current liabilities
Trade and other payables				17	(1,235)		(900)
Corporation tax liabilities					(5)		(34)
					(1,240)		(934)
Non-current liabilities
	Borrowings			18	(8,456)		(8,337)
	Deferred tax			21	(1,172)		(1,446)
					(9,628)		(9,783)
Total liabilities					(10,868)		(10,717)
Net assets					8,170		8,610
Capital and Reserves attributable to Equity holders of the Company
	Called-up share capital			23	1,522		1,522
	Share premium account			24	3,712		3,712
	Revaluation reserve			24	2,876		2,968
	Retained earnings			24	60		408
Total equity					8,170		8,610
Net assets per ordinary share				26	82.6p		87.1p

  

Group Statement of Changes in Equity

for the year ended 31 March 2008

			Share	Share	Revaluation	Profit & Loss
			Capital	Premium	Reserve	Account	Total
			£'000	£'000	£'000	£'000	£'000
Balance at 1 April 2006			1,522	3,712	1,926	69	7,229
	Profit for the year					158	158
	Transfer to profit and loss				(80)	80	-
	Revaluation net of tax				1,322		1,322
	Transfer of land for resale to income				(200)	200	-
	Dividends					(99)	(99)
Balance at 31 March 2007			1,522	3,712	2,968	408	8,610
	(Loss) for the year					(463)	(463)
	Transfer to profit and loss				(115)	115	-
	Revaluation net of tax				23		23
Balance at 31 March 2008			1,522	3,712	2,876	60	8,170

  

Group Cash Flow Statement

for the year ended 31 March 2008

						Year to		Year to
					Notes	31 Mar 08		31 Mar 07
						£'000		£'000
Cash flows from operating activities
Operating profit						117		892
Amortisation						115		80
Amortisation of finance costs						19		119
Depreciation						2		18
Loss / (profit) on disposal of fixed assets						50		(1)
Fair value of non current assets held for sale						100		(200)
Decrease / (increase) in inventories						2		-
Decrease / (increase) in trade and other receivables						(11)		100
Increase in trade and other payables						335		120
UK Corporation tax paid						(9)		(46)
Net Cash Inflow from Operating Activities						720		1,082
Cash flows from investing activities
	Purchase of Solutions (Yorkshire) Ltd					-		(2,469)
	Sale of Nightingale Nursing Home					-		800
	Interest received					20		11
	Interest paid					(614)		(527)
	Finance charges paid					-		(127)
Net Cash (used in) investing activities						(594)		(2,312)
Cash flows from financing activities
Proceeds from borrowings						100		9,250
Repayment of amounts borrowed						-		(6,900)
	Dividends paid					-		(99)
Net Cash from financing activities						100		2,251
Net increase in cash and cash equivalents						226		1,021
Cash and cash equivalents at beginning of year						341		(680)
Cash and cash equivalents at end of year					15	567		341

  

Notes to the Financial Statements

1.  Revenue

Revenue represents amounts derived from the provision of services which fall within the group's continuing ordinary activities.

The activity of the business is the provision of residential care to elderly people and elderly people with mental disorders or dementia, and as such comprises one business, or primary format, as required by IAS 14. The group operates within one principal geographic market, the United Kingdom, and all sales are made within the United Kingdom.

2.  Profit from operations

	Operating profit includes other operating income:						2008					2007
							£'000					£'000
	South Garth profit share							38					61
	Newford Limited dividends							98					108
								136					169

	Operating profit includes other gains or (losses)						2008					2007
							£'000					£'000
	(Loss) / gain on disposal of property							(50)					33
	Unrealised (loss) / gain on recognition of non-current assets held for sale							(100)					200
								(150)					233

	Operating profit is stated after charging:							2008			2007
								£'000			£'000
	Depreciation							2			18
	Amortisation (including finance costs)						134					80
	Exceptional costs							651			256

The exceptional costs comprises three elements; £310,112 in corporate finance costs which had previously been capitalised and were incurred on the abortive acquisition of a group of five care homes in Bradford, £285,978 in legal fees incurred by the Company in defending itself and two directors from charges raised by the Crown, and exceptional costs of £55,000 that were incurred as a result of the unsuccessful defence by the Company of a claim for wrongful dismissal by a former executive director of the Group, who had relocated to the USA.

3.  Auditors' remuneration

Auditors' remuneration for audit and non audit services is analysed below:

					2008				2007
					£'000				£'000
	Fees payable for the audit of the company's financial statements				34				48
	Fees payable for the audit of the company's subsidiaries					12				12
	Fees payable for other services pursuant to legislation					-				18
	Fees payable for tax services					4				4
	Fees payable for services relating to corporate finance transactions				55				126
	Fees payable for assistance with IFRS				10				-

  

4.  Staff costs

The average number of staff employed (full time equivalents) by the group during the year amounted to:

					2008		2007
					No.		No.
	Engaged in provision of care				119		142
	Catering, domestic and maintenance				61		44
	Management and administration				14		18
					194		204

The aggregate payroll costs of the above were:

					2008		2007
					£'000		£'000
	Wages and salaries				3,228		3,017
	Social security costs				231		232
					3,459		3,249

5.  Directors' emoluments

The directors' aggregate emoluments in respect of qualifying services were:

					2008		2007
					£'000		£'000
	Emoluments including benefits				168		244
	Compensation for loss of office				55		55
					223		299

The highest paid director's emoluments amounted to £55,000 (2007: £55,000)

6.  Finance income

					2008		2007
					£'000		£'000
	Bank interest received				20		11

7.  Finance costs

					2008		2007
					£'000		£'000
	Bank loan interest payable				614		527

  

8.  Income tax (credit)/expense

	The tax is calculated as follows:				2008		2007
					£'000		£'000
	UK corporation tax				-		23
	Adjustment in respect of prior year				(21)		(12)
	Total current tax				(21)		11
	Deferred tax				7		7
	Tax on (loss) / profit on ordinary activities				(14)		18

Factors affecting the current tax for the period:

The tax (credit) / charge for the year does not equate to the (loss) / profit for the year at the standard rate of UK corporation tax.

The differences are explained below:

					2008		2007
					£'000		£'000
	(Loss)/profit on ordinary activities before tax				(477)		376
	(Loss)/profit on ordinary activities by rate of tax - 2008: 20% (2007: 19%)				(95)		71
	Difference between depreciation and capital allowances				(2)		(5)
	Amortisation				27		16
	Dividends not taxed				(20)		(21)
	Unrealised losses/(gains)				30		(38)
	Disallowable expenses				66		-
	Other differences				(26)		(12)
					(21)		11

9.  (Loss)/earnings per share

The (loss)/earnings per share are based on the loss for the year of £462,898 (2007: profit £357,295) divided by 9,885,694 (2007: 9,885,694) ordinary shares, being the weighted average number of shares in issue during the year.

					2008		2007
					Pence		Pence
	(Loss)/earnings per ordinary share				(4.68)		3.61

  

10.  Intangible fixed assets

				Goodwill		Intangible assets		Total
	Cost or valuation			£'000		£'000		£'000
	At 1 April 2006			382		640		1,022
	Additions			104		-		104
	At 1 April 2007			486		640		1,126
	Impairment			-		-		-
	At 31 March 2008			486		640		1,126
	Amortisation
	At 1 April 2006			40		-		40
	Charge for the year			-		80		80
	At 1 April 2007			40		80		120
	Charge for the year			-		115		115
	At 31 March 2008			40		195		235

	Net book value
	At 31 March  2008			446		445		891
	At 31 March 2007			446		560		1,006
	At 31 March 2006			342		640		982

  

11.  Property, plant and equipment

		Freehold Property		Motor Vehicles		Fixtures and Fittings		Office Equipment		Total
	Cost or valuation	£'000		£'000		£'000		£'000		£'000
	At 1 April 2006	13,487		24		7		99		13,617
	Additions	2,400		-		-		-		2,400
	Disposals	(800)		(24)		-		-		(824)
	Revaluation	1,943		-		-		-		1,943
	Transfers to non current assets held for sale	(600)		-		-		-		(600)
	At 1 April 2007	16,430		-		7		99		16,536
	Impairment	(250)		-		-		-		(250)
	At 31 March 2008	16,180		-		7		99		16,286

	Depreciation
	At 1 April 2006	-		24		4		82		110
	Charge for the year	-		-		2		16		18
	Disposals	-		(24)		-		-		(24)
	At 1 April 2007	-		-		6		98		104
	Charge for the year	-		-		1		1		2
	At 31 March 2008	-		-		7		99		106

	Net book value
	At 31 March  2008	16,180		-.		-		-		16,180
	At 31 March 2007	16,430		-		1		1		16,432
	At 31 March 2006	13,487		-		3		17		13,507

The freehold properties are held for long term retention and were valued by Christie & Co (valuers, surveyors and agents) at 31 March 2008 at open market valuation for existing use on an individual property basis in accordance with The Appraisal and Valuation Standards published by the Royal Institution of Chartered Surveyors.  The portfolio basis has been used in the Group valuation.

The historical cost of the freehold property at 31 March 2008 was £12,202,518.

12.  Investments

The investment of £1,600 represents the cost of one Newford Limited redeemable 'B' share of £1.

Subsidiary  Undertakings	Country of incorporation	Holding	Proportion of voting rights and shares held	Nature of business
Woodland Healthcare Limited	England	Ordinary	100%	Care home operator
Solutions (Yorkshire) Limited	England	Ordinary	100%	Care home operator
Woodland Nursing Homes Limited	England	Ordinary	100%	Dormant
The Knoll Nursing Home Limited	England	Ordinary	100%	Dormant
Barleyglow Limited	England	Ordinary	100%	Dormant

  

13.  Inventories

					2008		2007
					£'000		£'000
	Inventories				9		11

14.  Receivables and prepayments

					2008		2007
					£'000		£'000
	Trade and other receivables				516		260
	Other debtors				27		28
	Deferred consideration Morton Manor				249		249
	Prepayments and accrued income				60		354
					852		891

None of the trade receivables are secured by collateral or other credit enhancements.  The major proportion of the fees receivable is due from local councils and social services.

At 31 March 2008, trade receivables of £309,596 (31 March 2007: £59,509) were overdue but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing of these receivables is:

						2008		2007
						£'000		£'000
		Up to 3 months				181		60
		3 to 6 months				129		-
		Over 6 months				-		-
	Total					310		60

Trade debtors are stated net of bad debt provisions, the movement on which was as follows:

						2008		2007
						£'000		£'000
		1 April 2007				243		179
		Charge for the year				88		64
	31 March 2008					331		243

15.  Cash and cash equivalents

					2008		2007
					£'000		£'000
	Cash at bank and in hand				567		341

  

16.  Non current assets held for sale

							2008				2007
							£'000				£'000
	At 1 April 2007						600				-
	Transfers from Freehold Property							-				600
	Impairment							(100)				-
								500				600

Surplus development land at Newsham House, Morton Close  and The Knoll was valued by Christie & Co (valuers, surveyors and agents) at £600,000 as at 31 March 2007. Of this amount £400,000 relates to land at Newsham House for which sale contracts have been exchanged after the year end at a value of approximately £300,000 net of costs.

17.  Current liabilities

					2008		2007
					£'000		£'000
	Trade and other payables				281		189
	PAYE and social security				157		184
	Other creditors				515		342
	Accruals and deferred income				282		185
					1,235		900

18.  Non current liabilities

											2008				2007
											£'000				£'000
	Borrowings:
		Bank loans									8,450				8,450
		Less finance costs									(94)				(113)
											8,356				8,337
		Other loans									100				-
											8,456				8,337

The bank loan is secured by way of a legal charge and fixed and floating charges over all the Company's and the Group's freehold properties and other assets both present and future. Interest on the bank loan is 1.25% over LIBOR and is repayable in instalments.

Finance costs incurred in obtaining bank loans are written off over the period of the loan.  The loan facility of £24,200,000 was reduced to £9,000,000 at the Company's request with effect from 4 April 2008.

Other loans comprise £100,000 lent to the Group by Atreus Investments Limited, a company controlled by Jeremy Davies, one of the directors, pursuant to an undertaking given to provide some of the funding for the Group's on-going legal actions. This amount was unsecured as at 31 March 2008.  Mr Davies has confirmed that it is not due for repayment in less than one year, and no interest has yet been charged.

  

19.  Non current liabilities - capital instruments

Non current liabilities include finance capital which is due for repayment as follows:

					2008		2007
					£'000		£'000
	Amounts repayable:
	In one year or less or on demand				-		-
	In more than one year but not more than two years				311		-
	In more than two years but not more than five years				1,268		1,056
	In more than five years				6,971		7,394
					8,550		8,450

20.  Bank loans and overdrafts

The Group's financial instruments comprise borrowings, some cash and liquid resources, and various items, such as trade receivables, trade payables etc that arise directly from its operations. The main purpose of these financial instruments is to provide finance for the Group's operations.

 

	The interest rate profile of the financial liabilities was as follows:				2008		2007
					£'000		£'000
Floating rate:
	Other  loan				100		-
	Bank loan				8,450		8,450
					8,550		8,450

The interest rate on floating rate financial liabilities is 1.25% above LIBOR for the bank loan (2007: 1.25% above LIBOR). No interest has yet been charged on the other loan.

The Group finances its operations through a mixture of retained profits and bank borrowings.

It is, and has been throughout the year under review, the Group's policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Group's financial instruments are interest rate risk and liquidity risk. The directors review and agree policies for managing each of these risks and they are summarised below:

Interest Rate Risk:

At the year end none of the Group's borrowings were at fixed rates (2007: nil).

On 21 April 2004 the Company purchased through a Bank an interest rate cap of a 6% interest rate, on an amount of £5 million from 30 April 2004 to 30 April 2009, at a cost of £87,000. This cost has been capitalised and is being amortised over the life of the interest rate cap.

Liquidity Risk:

As regards liquidity, the Group's policy has throughout the year been to ensure continuity of funding. In order that this is achieved, the Group maintains close control over future cash flows and regularly reviews medium and long-term finance against those future cash flows.

On 4 April 2008 the Natixis facility was reduced to £9 million at the Company's request.

  

Repayment of Facility: The Company must repay the loan in the following amounts on the following dates:

Repayment date		Amount
30 October 2009		£211,250
30 April 2010		£211,250
30 October 2010		£211,250
30 April 2011		£211,250
30 October 2011		£211,250
30 April 2012		£211,250
30 October 2012		£211,250
30 April 2013		£6,971,250
Total		£8,450,000

On each of the above repayment dates, the Company must repay the loan in the amount of 2.5% of the aggregate of all amounts from time to time advanced under the loan and, on the final repayment date, the Company must repay in full all amounts outstanding under the loan. Based on £8,450,000 loan drawn at 31 March 2007, £211,250 is repayable on each of the above repayment dates with a final repayment of £6,971,250 on 30 April 2013.

Further drawings on the Natixis facility are subject to Natixis being satisfied in all respects with the proposed acquisition to be funded and that the loan does not exceed 70% of the value of the Group's charged properties.  Following discussions with the bank, the company requested that the facility be reduced to £9m as of 4 April 2008.

The interest rate is 1.25% over LIBOR falling to 1.125% over LIBOR if net interest cover is between 2.5 and 2.75 times EBITDA and 1% over LIBOR if net interest cover is over 2.75 times EBITDA.

There are no repayments due on the Natixis loan facility until 30 October 2009.

No repayment term has been agreed on the other loan.

21.  Deferred taxation

					2008		2007
					£'000		£'000
	At 1 April 2007				44		51
	Charge to profit and loss account				(7)		(7)
	At 31 March 2008				37		44

The deferred taxation asset included in non current assets represents the excess of capital allowances over depreciation.

The Directors have made provision in the Financial Statements for deferred tax on the revaluation of the Group's intangible assets and freehold properties as these assets are held for continuing use in the business. The amounts provided at the end of each year were as follows:

					2008		2007
					£'000		£'000
	At 1 April 2007				1,446		824
	Revaluation of intangible and freehold properties				(274)		622
	At 31 March 2008				1,172		1,446

  

22.  Related party transactions 

During the year ended 31 March 2008 the Company paid £12,000 to Mrs P L Jackson, a director, for the rent of the Company's head office (2007: £12,000).

During the year ended 31 March 2008, Energy Telecom Limited, a company of which W J Davies is a director and shareholder, provided telecommunications services to the Group for a consideration of £8,476 (2007: £10,360).

All of the above transactions were on an arm's length basis.

P L Jackson is owed £64,821 deferred consideration following the purchase of Solutions (Yorkshire) Limited in 2007. This amount is unsecured and included in current creditors.

During the year ended 31 March 2008 Atreus Investments Limited, a company controlled by W J Davies, lent £100,000 to the company, which as at 31 March 2008 remains outstanding and is unsecured.

23.  Share capital

	Authorised share capital:				2008		2007
					£'000		£'000
	15,000,000 Ordinary shares of £0.05 each				750		750
	45,000,000 Deferred non equity shares of £0.05 each				2,250		2,250
					3,000		3,000

		31 March 2008				31 March 2007
	Allotted, called up and fully paid:	No.		£'000		No.		£'000
	Ordinary shares of £0.05 each	9,885,694		494		9,885,694		494
	Deferred non equity shares of £0.05 each	20,550,798		1,028		20,550,798		1,028
		30,436,492		1,522		30,436,492		1,522

The deferred shares, issued in January 2001, are considered to be non equity shares since they carry no voting rights, no rights to receive a dividend and have no value in a winding up unless ordinary share valuation exceeds £1,000 per share. Whilst they are stated in the financial statements at their nominal value, they have no commercial value. 

  

24. Reserves

				Share	Share	Revaluation	Profit and Loss
				Capital	Premium	Reserve	Account	Total
				£'000	£'000	£'000	£'000	£'000
At 1 April 2006				1,522	3,712	1,926	69	7,229
	Profit for the year						158	158
	Revaluation					1,322
	Transfer of land for resale					(200)	200	-
	Dividends						(99)	(99)
	Transfer to profit and loss					(80)	80
At 31 March 2007				1,522	3,712	2,968	508	8,610
	(Loss) for the year						(463)	(463)
	Transfer to profit and loss					(115)	115	-
	Revaluation					23		23
At 31 March 2008				1,522	3,712	2,876	60	8,170

25.  Reconciliation of movement in shareholders' funds

					2008		2007
					£'000		£'000
	Profit/(loss) for the year				(463)		158
	Revaluation				23		1,322
	Dividends paid				-		(99)
	Net (decrease)/increase in shareholders' funders				(440)		1,381
	Opening shareholders' funds				8,610		7,229
	Closing shareholders' funds				8,170		8,610

26.  Net assets per share

The net assets per share are based on the net assets as at 31 March 2008 of £8,170,000 (2007: £8,610,000) and on 9,885,694 (2007: 9,885,694) ordinary shares, being the weighted average number of shares in issue during the year.

					2008		2007
					Pence		Pence
	Net assets per ordinary share				82.6		87.1

  

27.  Dividends

Dividends charged to reserves in accordance with IAS 10 are as follows:

		2008				2007
		Pence		£'000		Pence		£'000
	Interim	-		-		1		99
	Final	-		-		-		-
		-		-		1		99

28.  Comparative period

The corresponding amounts in the prior period for the audited financial statements for the year ended 31 March 2007 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 £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 31 March 2007 of £1,446,000 has been provided in full and deducted from the Revaluation Reserve.  Deferred tax arising on the revaluation of properties as at 1 April 2006 of £824,000 has been provided in full and deducted from the Revaluation Reserve. 

(c) Non-current assets held for sale comprise surplus land at Newsham House, Morton Manor and the Knoll which has been transferred from non-current assets as at 31 March 2007 in accordance with IFRS 5, 'Non-current Assets Held for Sale and Discontinued Operations'. £200,000 has been transferred from the revaluation reserve and included in income for the year ended 31 March 2007 accordingly.

(d) The interim accounts for the six months ended 30 September 2007 included an adjustment in respect of the conversion to IFRS (as described in (c) above) for the year ended 31 March 2007 of £700,000 in respect of the transfer of surplus land from fixed assets to non current assets held for sale.

This adjustment was subsequently found to be overstated by £500,000 and has been amended in the Group Financial Statements to 31 March 2008.

29.  Litigation

As announced on 5 September 2007, the Company and two of its directors were charged on 4 September 2007 with wilful neglect under the Mental Health Act 1983 section 127(1). The Company and its two directors will vigorously defend the charges.

30.  Post Balance Sheet Events

On 4 July 2008 the Bradford Metropolitan District Council, in contravention of their contract with the Company, removed all the residents from The Knoll nursing home in Bradford. The Company has sought explanations for this action and it continues to maintain the property with the intention of readmitting residents. The Company has sought legal advice and may consider a claim for breach of contract.

The Knoll nursing home has been valued by professional valuers on an existing use basis as a nursing home at £2,080,000 on a portfolio basis as at 31 March 2008. The market value of the property if it remains a closed nursing home is £1,200,000. In the Group Financial Statements this would result in a reduction in freehold property values of £880,000 of which £586,000 net of tax at 28% would be deducted from the revaluation reserve and the group loss for the year would increase by £66,000 resulting in a reduction in net assets of £652,000.

  

ADL has been informed that it is the intention of CSCI to rescind the registration of Newsham House in Gloucester and this is being strenuously contested but as yet no date for the relevant tribunal hearing has been set.

Newsham House nursing home has been valued by professional valuers on an existing use basis as a nursing home at £3,120,000. The market value of the property if the home was closed is estimated to be £1,600,000. If this were to happen this would result in a reduction in freehold property values of £1,520,000 of which £1,095,000 net of tax at 28% would be deducted from revaluation reserves resulting in a reduction in net assets of £1,095,000.

Contracts were exchanged to sell surplus land at Newsham House for £350,000 on 29 May 2008, with the Group to pay for ground works to change the access way and provide landscaping and car parking for the Home, which it is estimated may cost up to £50,000.

31.  Ultimate controlling party

W J Davies, by virtue of his 50.02% shareholding, controls the Company.

32. Annual General Meeting

The Annual General Meeting of ADL plc will be held at the offices of Blue Oar Securities Plc, 30 Old Broad Street, London EC2N 1HT at 12.00 noon on Tuesday 28 October 2008.

The Annual Report and Accounts for the year ended 31 March 2008 will be sent by post to all shareholders today. The Annual Report and Accounts may also be viewed on ADL plc's website at www.adlcare.com 

ENDFR LLMFTMMATBIP