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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 for the six months ended  30 September 2008	6 months to 30 Sept 08 Unaudited £'000	6 months to 30 Sept 07 Unaudited £'000	Year to 31 Mar 08 Audited £'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 - continuing operations	(596)	(643)	(1,497)
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 activities before taxation	(53)	(78)	(477)
Tax charge on profit on ordinary activities	0	(69)	14
Retained profit for the period	(53)	(147)	(463)
Earnings per ordinary share - basic and diluted	(0.54)p	(1.49)p	(4.68)p
Weighted average number of shares	9,885,694	9,885,694	9,885,694

  

Consolidated Unaudited Balance Sheet as at 30 September 2008	30 Sept 08 Unaudited £'000	30 Sept 07 Unaudited £'000	31 Mar 08 Audited £'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 Flow Statement for the Six Months ended 30 September 2008	6 months to 30 Sept 08 Unaudited £'000	6 months to 30 Sept 07 Unaudited £'000	Year to 31 Mar 08 Audited £'000
Net cash inflow from operating activities	213	397	729
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 investing activities	(249)	-	-
Cash inflow before financing activities	(344)	105	126
Financing
New secured loans	50	-	100
Repayment of amounts borrowed	-	-	-
Net cash inflow from financing activities	50	-	100
Increase in cash and cash equivalents	(294)	105	226
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 assets Fair value of non current assets held for sale	- -	- -	50 100
(Increase)/decrease in debtors (Decrease)/increase in inventories	292 -	96 -	(11) 2
(Decrease)/increase in creditors	(468)	12	335
Net cash inflow from operating activities	213	397	729

  

Consolidated Statement of Changes in Equity For the six months ended 30 September 2008	Share Capital £'000	Share Premium £'000	Revaluation Reserve £'000	Retained Earnings £'000	Total Equity £'000
Balance at 1 April 2007	1,522	3,712	2,968	408	8,610
Recognised income and expenses	-	-	-	(463)	(463)
Transfer to profit/loss Revaluation of net tax	- -	- -	(115) 23	115 -	- 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 08 Unaudited £'000	6 months to 30 Sept 07 Unaudited £'000	Year to 31 Mar 08 Audited £'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 services	0	55	81
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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