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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Adl | LSE:AD. | London | Ordinary Share | GB0005739999 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 50.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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ADL plc
Chairman's statement
Financial Results
I am pleased to report that turnover for the year ended 31 March 2006 was £4.92
million (2005: £4.95 million), the profit on ordinary activities before
taxation was £114,409 (2005: £30,842) before an exceptional loss of £15,100
(2005: gain £1.18 million). Profits after taxation were £130,309 (2005: £
1,211,940 and earnings per share 1.38p (2005: 13.64p). Retained profits, have
eliminated the deficit on the Group's distributable reserves. As a result of
this the Directors intend, subject to acceptable trading results, to announce
an interim dividend for the current year at the Annual General Meeting.
We continued the major refurbishment programme of the Group's care homes, which
started in March 2004, in the year under review at a cost of £215,357 (2005: £
220,858), which has been written off to the profit and loss account, as
incurred, in accordance with the Group's accounting policy. This represents an
average cost of £1,400 per bed over two years. Most of the work has now been
completed bringing the Group's care homes up to the high physical standards we
require.
Unfortunately progress in the year has been difficult owing to considerable
resources being diverted to Newsham House and the continuing lack of Local
Authority placements in three of ADL's care homes in Torbay which reduced
turnover by £200,000.
As previously announced, on 26 July 2005 the police and CSCI inspectors arrived
unannounced at Newsham House with a warrant to search the care home and remove
residents' records. CSCI informed the Directors that they intended to apply
under Section 20 of the Care Standards Act 2000 for immediate closure of the
home. Having instructed lawyers the Directors were able to persuade CSCI to
stop their action on condition a Director became acting manager. I am please
to report that in a subsequent inspection there were no significant issues
outstanding as a result of ADL compliance with all CSCI requirements. The
police, however, are continuing their enquires which we understand relate in
the main to a period prior to ADL's ownership. One-off legal costs, amounting
to £32,759, are subject to a claim from our insurers although we have fully
expensed them in these accounts.
The Group's nine freehold properties, the profit sharing agreement with South
Garth Residential Care Home Partnership and the rights to Newford Limited
dividends were re-valued by Christie & Co. at 31 March 2006 at £14.13 million.
The increase in value has resulted in a further addition to revaluation
reserves amounting to £1.42 million (2005: £1.33 million). Net assets per
share at 31 March 2006 amounted to 81.5p (2005: 68.7p) and have increased by
103% since 31 March 2004.
Outlook
The cornerstone of the management team's strategy has been to upgrade the care
homes in preparation to franchising them. The rationale for franchising is
that, from an operational perspective, care homes owned by their management
have better marketing and attention to detail which should lead to improved
profitability and thus increased care home values.
The Directors have invested considerable time in developing unique franchise
and joint venture operating models. ADL is now in a position to commence a
programme of franchising its portfolio of care homes. This will free up
operational management to improve the performance of the existing care homes
and seek further care homes to purchase.
The current year has seen the acquisition of Solutions (Yorkshire) Limited,
which owns a 40 bed nursing home in Leeds, and the refinancing of the Groups
bank facility with IXIS Corporate & Investment Bank S.A.. The new facility
will allow the Group to acquire a further £16 million of care homes. Group
trading in the first three months of the current year is slightly behind budget
although I expect this to recover as occupancy increases. I remain cautiously
optimistic of the outlook for the current year.
Peter Dewe-Mathews
Chairman
26 July 2006
Managing Director's review
The Group continues its policy of improving its care homes with a view to
franchising them. The identification and disposal of surplus land has resulted
in a number of transactions during the year:
* On 26 July 2005 the Company entered into a conditional contract with Elmley
Homes Limited, subject to detailed planning consent to convert Morton Manor
into six flats, to sell Morton Manor for a consideration of £499,000 plus a
share of the development profits. In March 2006 the Company received £
250,000 initial consideration following grant of planning permission.
Elmley Homes Limited's marketing campaign commences in August and the
Company is looking to receive £249,000 deferred consideration by the end of
December 2006. Negotiations have commenced with Elmley Homes Limited to
develop a care village of 40 to 50 flats on an area of unutilised land
adjacent to Morton Manor;
* Planning Permission for four dwellings at Newsham House was granted by the
City of Gloucester on 6 September 2005. The Company is in negotiation with
several purchasers regarding the sale of the four plots; and
* On 26 July 2006 the Company entered into a conditional contract with
Garalexin (Nuneaton) Limited, to sell them part of the garden at Allambie
Court for £225,000 plus £15,000 contribution to the Company's architects
fees in respect of Allambie Court. The contract is conditional on the
purchaser obtaining detailed planning permission, which is free from
onerous planning conditions, for the development of eight apartments. At
the same time the Company intends to submit a planning application for an
extension to the front of Allambie Court to significantly increase the day
space at ground floor level, thus providing all day space on one floor.
This scheme will also increase the number of beds from 30 to 36 , whilst at
the same time bringing the home up to National Minimum Standards.
The refurbishment of Nightingale has not led to the expected increase in
occupancy. The Directors are exploring alternative health related uses for
which demand exists. At the same time the Company has been approached by the
developer of an adjacent site to convert the buildings into apartments. The
Directors intend to maximise the value of this property;
On 1 January 2006 the Company entered into a joint venture with Newford Limited
to operate Newford Nursing Home, Milton, Stoke on Trent, Staffordshire.
Newford Nursing Home comprises a 40 bed single storey care home with all beds
in single rooms with en suite toilets. The Company entered into a
shareholders' agreement and subscribed for one "B" share in Newford. This
agreement provides for the first £120,000 of profits per annum to be paid as
dividends to the existing shareholder of Newford, with the next £120,000 of
profits per annum to be paid as dividends to ADL. Any surplus profits per
annum are divided equally between the existing shareholder of Newford and ADL.
The agreement lasts for an initial period of five years and has been valued by
Christie and Co at £390,000. Trading is in line with budget and ADL has
received £24,000 dividends in the year under review.
On 25 May 2006 the Company entered into an conditional acquisition agreement to
acquire the entire issued share capital of Solutions (Yorkshire) Limited, owner
and operator of a purpose built 40 bed nursing home in Leeds, from Pearl
Jackson, Operations Director of the Company. On 4 July 2006 the Company
completed the acquisition for £1.76 million and assumed Solution's debt
amounting to approximately £770,000. Deferred consideration, subject to a
maximum of £0.5 million, representing the net tangible assets of Solutions as
derived from its statutory accounts at 31 March 2006 is payable in cash within
10 business days of finalisation of the completion accounts.
On 26 July 2006 the Company entered into conditional contracts with Hume
Laboure Limited and L E Taylor, to franchise Harewood Court Nursing Home,
Leeds. The franchise agreement is for five years with an option for the
franchisee to renew for further periods of five years. The Company has leased
Harewood Court Nursing Home at an initial rent of £240,000 plus 50% of Hume
Laboure Limited's EBITDA after rent. The contract is conditional on the
registration of Hume Laboure Limited and the registration of L E Taylor as
manager with the Commission for Social Care Inspection.
Jeremy Davies
Managing Director
26 July 2006
Financial review
Group Profit and Loss Account
Turnover for the year ended 31 March 2006 amounted to £4.92 million (2005: £
4.95 million).
Operating profit amounted to £541,914 (2005: £1,685,265), after £15,100 costs
of obtaining planning permission for the development of Morton Manor (2005: £
1,180,000 exceptional gain from the reversal of provisions of previous year's
impairment charges in respect of freehold properties) and £83,658 (2005: £
66,893) other income. After net interest costs, the profit before taxation
amounted to £99,309 (2005: £1,210,842). There was a tax credit of £31,000
(2005: £1,098) leaving a retained profit for the year of £130,309 (2005: £
1,211,940). Earnings per share amounted to 1.38p (2005: 13.64p per share).
Group Balance Sheet
The Group's nine freehold properties, the profit sharing agreement with South
Garth Residential Care Home Partnership and the Newford Limited "B" Redeemable
Ordinary Share, entitling the Company to a share of dividends, were re-valued
by Christie & Co. at 31 March 2006 at £14.13 million. The increase in value
has resulted in a further addition to revaluation reserves amounting to £1.42
million (2005: £1.33 million). Net assets per share at 31 March 2006 amounted
to 81.5p (2005: 68.7p).
The Group's freehold care homes were valued, on an existing use basis. In
arriving at the portfolio valuation, Christie & Co. have separately assessed
the market values of the individual care homes and made an adjustment by way of
a portfolio premium equating to around 7.5%.
Bank Facility and Hedging
On 19 January 2004 the Company entered into a £9.75 million facilities
agreement with Fortis Bank S.A./N.V. This provided an initial £5.4 million
seven year term loan and £600,000 working capital facility, which has been
increased to £900,000. A further £3.75 million seven year term loan was
available for acquisitions. Interest was payable on the term loans at 1.5% over
LIBOR and £300,000 repayments were made during the year (2005: nil). On 20 May
2004 £1 million of the additional seven year term loan was used to purchase
Jubilee House. Finance costs incurred in obtaining bank loans are written off
over the period of the loan. The bank loans were refinanced on 4 July 2006
and, as a result, the balance of the finance costs at 4 July 2006 was written
off to the profit and loss account in the current year.
The Fortis Bank facility required the Company to purchase an interest rate cap
from it by which the interest rate on at least 75% of the facility is hedged
for the term of the facility. On 21 April 2004 the Company purchased, through
Fortis Bank, an interest rate cap of a 6% interest rate, in the amount of £5
million from 30 April 2004 to 30 April 2009, at a cost of £87,000.
On 3 May 2006 the Company signed a £25 million loan facility with IXIS
Corporate & Investment Bank S.A. ("IXIS"). The interest rate is 1.25% over
LIBOR falling to 1.125% over LIBOR if interest cover is between 2.5 and 2.75
times EBITDA and 1% over LIBOR if interest cover is over 2.75 times EBITDA.
There are no repayments on the IXIS loan facility until 30 October 2009.
On 4 July 2006 the Company drew £9.25 million of the IXIS £25 million loan
facility to repay the Fortis Bank A and B Facilities and the overdraft and
complete the acquisition of Solutions (Yorkshire) Limited. Further drawings on
the £25m IXIS facility are subject to IXIS 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.
Daniel Francis
Finance Director
26 July 2006
Group profit and loss account
Year ended 31 March 2006
Note Year to Year to
31 Mar 06 31 Mar 05
Audited Audited
£ £
Group turnover 2 4,916,890 4,949,982
Cost of sales (3,231,269) (3,367,172)
_________ __________
Gross profit 1,685,621 1,582,810
Administrative expenses - (1,212,265) (1,144,438)
ordinary
Exceptional (loss)/gain 3 (15,100) 1,180,000
Other operating income 3 83,658 66,893
________ _________
Operating profit 3 541,914 1,685,265
Costs of restructuring the - (34,873)
company
________ _________
541,914 1,650,392
Interest receivable 3,067 3,801
Interest payable 6 (445,672) (443,351)
_______ _________
Profit on ordinary activities 99,309 1,210,842
before taxation
Tax credit on profit on ordinary 7 31,000 1,098
activities
________ _________
Retained profit for the year 8 130,309 1,211,940
======== =========
Earnings per ordinary share 9 1.38p 13.64p
(pence)
======= =======
All of the activities of the group are classed as continuing.
Group statement of total recognised gains and losses
Year ended 31 March 2006
Year to Year to
31 Mar 06 31 Mar 05
£ £
Profit attributable to the shareholders 130,309 1,211,940
Unrealised surplus on revaluation 1,032,000 1,203,906
of freehold properties
Unrealised surplus on revaluation of -
the rights to Newford Limited dividends 390,000
Unrealised surplus on revaluation of 125,000
South Garth Residential Care Partnership -
------ ------
Total gains recognised since the 1,552,309 2,540,846
last annual report
====== ======
Group balance sheet
31 March 2006
31 Mar 06 31 Mar 05
Note £ £
Fixed assets
Intangible assets 10 981,050 610,137
Tangible assets 11 13,506,930 12,533,509
Investments 12 1,600 -
------ ------
Total fixed assets 14,489,580 13,143,646
------ ------
Current assets
Stocks 13 10,520 10,520
Debtors 14 816,303 494,474
Cash at bank and in hand 8,313 5,508
------ ------
835,136 510,502
Creditors: Amounts falling due
within one year 15 (1,626,191) (1,578,960)
------ ------
Net current liabilities (791,055) (1,068,458)
------ ------
Total assets less current liabilities 13,698,525 12,075,188
Creditors: Amounts falling
due after more than one year 16 (5,644,819) (5,973,791)
------ ------
Net assets 8,053,706 6,101,397
------ ------
Capital and reserves
Called-up equity share capital 22 1,521,825 1,471,825
Share Premium Account 23 3,712,396 3,362,396
Revaluation reserve 23 2,750,906 1,328,906
Profit and loss account 23 68,579 (61,730)
------ ------
Total equity shareholders' funds 24 8,053,706 6,101,397
====== ======
Net assets per ordinary share 26 81.5p 68.7p
====== ======
Group cash flow statement
Year ended 31 March 2006
Year to Year to
31 Mar 06 31 Mar 05
Note £ £
Net cash inflow from 25 351,794 236,310
operating activities
------ ------
Returns on investments and
servicing of finance
Interest paid (445,672) (443,351)
Interest received 3,067 3,801
------ ------
Net cash outflow from returns on investments (442,605) (439,550)
And servicing of finance
------ ------
Taxation
UK Corporation Tax refunded/(paid) 21,087 (335,545)
------ ------
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (63,527) (25,046)
Sale Morton Manor/(purchase of Jubilee
House) 499,000 (1,046,094)
Investment in Newford Limited (1,600) -
------ ------
Net cash inflow/(outflow) from capital
expenditure 433,873 (1,071,140)
And financial investment
------ ------
Cash inflow/(outflow) before financing 364,149 (1,609,925)
------ ------
Financing
New secured loans - 996,144
Repayments of amounts borrowed (300,000) -
------ ------
Net cash (outflow)/inflow from financing (300,000) 996,144
------- ------
Increase/(decrease) in cash in the year 64,149 (613,781)
======= ======
Material non-cash transaction
During the year the Company issued 1 million Ordinary Shares of 5p each, at a
premium of 35p per share, as deferred consideration for the purchase of Newsham
House Limited.
Notes to the financial statements
Year ended 31 March 2006
1. Accounting policies
Basis of accounting
The Financial Statements have been prepared under the historical cost
convention, modified to include the revaluation of certain fixed assets, and in
accordance with applicable accounting standards.
In preparing the Financial Statements the Group has included a policy
of impairment review, under FRS 15, of its freehold land and buildings,
including fixtures and fittings, representing the Group's care homes.
Basis of consolidation
The consolidated Financial Statements incorporate the Financial
Statements 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 on consolidation is
capitalised and written off over twenty years from the year of acquisition.
The results of companies acquired or disposed of are included in the Group
profit and loss account after or up to the date that control passes
respectively. As a consolidated Group profit and loss account is published, a
separate profit and loss account for the parent company is omitted from the
Group Financial Statements by virtue of section 230 of the Companies Act 1985.
Turnover
The turnover shown in the Group profit and loss account represents the
value of services provided during the year.
Goodwill
Positive purchased goodwill arising on acquisitions is capitalised,
classified as an asset on the balance sheet and amortised over its estimated
useful life up to a maximum of 20 years. This length of time is presumed to be
the maximum useful life of purchased goodwill because it is difficult to make
projections beyond this period. Goodwill is reviewed for impairment at the end
of the first full financial year following each acquisition and subsequently as
and when necessary if circumstances emerge that indicate that the carrying
value may not be recoverable.
Amortisation
Amortisation is calculated so as to write off the cost of an asset,
less its estimated residual value, over the useful economic life of that asset
as follows:
Goodwill 20 years
Intangible assets 8.75 years and 4.75 years from 31
March 2006
Fixed assets
All fixed assets are initially recorded at cost.
Depreciation
Depreciation is calculated so as to write off the cost of an asset,
less its estimated residual value, over the useful economic life of that asset
as follows:
Motor vehicles 25% straight line
Office equipment 25% straight line
Depreciation is provided on all tangible fixed assets, other than
freehold land and buildings. Included within freehold land and buildings are
all fixtures and fittings in respect of care homes. An impairment review
permitted by FRS 15 is carried out each year to ensure the carrying value of
the cost of the care homes is not overstated. The care homes must be
maintained to a standard approved by the Commission for Social Care Inspection.
Stocks
Stocks are valued at the lower of cost and net realisable value, after
making due allowance for obsolete and slow moving items.
Operating lease agreements
Rentals applicable to operating leases, where substantially all of the
benefits and risks of ownership remain with the lessor, are charged against
profits on a straight line basis over the period of the lease.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that
have originated but not reversed at the balance sheet date where transactions
or events have occurred at that date that will result in an obligation to pay
more, or a right to pay less or to receive more tax, with the following
exceptions:
Provision is made for tax on gains arising from the revaluation
(and similar fair value adjustments) of fixed assets, and gains on disposal of
fixed assets that have been rolled over into replacement assets, only to the
extent that, at the balance sheet date, there is a binding agreement to dispose
of the assets concerned. However, no provision is made where, on the basis of
all available evidence at the balance sheet date, it is more likely than not
that the taxable gain will be rolled over into replacement assets and charged
to tax only where the replacement assets are sold; and
Deferred tax assets are recognised only to the extent that the
Directors consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that
are expected to apply in the periods in which timing differences reverse, based
on tax rates and laws enacted or substantively enacted at the balance sheet
date.
Group Relief
Taxable losses acquired by the Company from another company within the
Group are charged/credited to the profit and loss account at a fair value
reflecting the reduction in corporation tax liability of the Company.
Capital Instruments
Shares are included in shareholders' funds. Other instruments are classified
as liabilities if they contain an obligation to transfer economic benefits and
if they are not included in shareholders' funds. The finance cost recognised
in the profit and loss account in respect of capital instruments other then
equity shares is allocated to periods over the term of the instrument at a
constant rate on the carrying amount.
2. Turnover
The turnover and loss before tax are attributable to the one principal
activity of the Group.
An analysis of turnover is given below:
Year to Year to
31 Mar 06 31 Mar 05
£ £
United Kingdom 4,916,890 4,949,982
====== ======
3. Operating profit
Operating profit includes other operating income:
Year to Year to
31 Mar 06 31 Mar 05
£ £
South Garth profit share 59,658 66,893
Newford Limited dividends 24,000 -
------ ------
Total other operating income 83,658 66,893
====== ======
Operating profit is stated after charging/(crediting):
Directors' emoluments 235,000 183,000
Amortisation: - intangible assets 19,087 10,867
Depreciation: - of owned fixed assets 22,106 26,547
Auditors' remuneration: 36,000 33,037
- as auditors
- other services 22,590 40,209
Exceptional loss/(gain) 15,100 (1,180,000)
======= =======
The exceptional loss relates to the costs of obtaining planning
permission for the development of Morton Manor and the exceptional gain relates
to the reversal of previous years' impairment charges in respect of freehold
properties.
4. Particulars of employees
The average number of staff employed by the Group during the year
amounted to:
Year to Year to
31 Mar 06 31 Mar 05
No. No.
Engaged in provision of care 95 114
Catering, domestic and maintenance 30 37
Management and administration 19 24
------- ------
144 175
====== =======
The aggregate payroll costs of the above were:
Year to Year to
31 Mar 06 31 Mar 05
£ £
Wages and salaries 2,594,145 2,668,939
Social security costs 233,000 196,193
------ ------
2,827,145 2,865,132
====== ======
5. Directors' emoluments
The Directors' aggregate emoluments in respect of qualifying services
were:
Year to Year to
31 Mar 06 31 Mar 05
£ £
Emoluments receivable 235,000 183,000
======= ======
The highest paid Director's emoluments amounted to £55,000 (2005: £
55,000)
6. Interest payable
Year to Year to
31 Mar 06 31 Mar 05
£ £
Interest payable on bank and other loans 445,672 443,351
====== ======
7. Tax charge/(credit) on profit on ordinary activities
(a) Analysis of charge in the year
Year to Year to
31 Mar 06 31 Mar 05
£ £
Current tax: in respect of the year
UK Corporation tax based on the results
for the year at 19% 20,000 6,260
(2005: 19%)
Over provision in prior years - (7,358)
------ ------
Total tax charge/(credit) 20,000 (1,098)
Deferred tax:
Deferred tax credit (51,000) -
------ ------
Tax credit on profit on ordinary activities (31,000) (1,098)
====== ======
(b) Factors affecting current tax charge
The difference between the total current tax shown above and the amount
calculated by applying the effective standard rate of UK corporation tax to the
loss before tax is as follows:
Year to Year to
31 Mar 06 31 Mar 05
£ £
Profit on ordinary activities before taxation 99,309 1,210,842
====== =======
Profit on ordinary activities by rate of tax 18,869 230,060
Difference between depreciation and capital (1,286) (8,813)
allowances
Over provision in prior period - (7,358)
Expenses not deductible for tax 2,417 9,213
Revaluation of property - (224,200)
------ ------
Total tax charge/(credit) (note 7(a)) 20,000 (1,098)
====== ======
8. Profit attributable to members of the parent company
The loss dealt with in the accounts of the parent company was £55,168
(2005: profit £829,984).
9. Earnings per share
Year to Year to
31 Mar 06 31 Mar 05
Pence Pence
Earnings per ordinary share 1.38 13.64
====== ======
Earnings per share have been calculated on the net basis on the profit
on ordinary activities after taxation of £130,309 (2005: £1,211,940 using the
weighted average number of ordinary shares in issue during the year of
9,414,461 (2005: 8,885,694).
10. Intangible fixed assets
Intangible
Group Goodwill Asset Total
£ £ £
Cost
At 1 April 2005 381,733 250,000 631,733
Revaluation - 390,000 390,000
------ ------ ------
At 31 March 2006 381,733 640,000 1,021,733
====== ====== ======
Amortisation
At 1 April 2005 21,596 - 21,596
Charge for the year 19,087 - 19,087
------ ------ ------
At 31 March 2006 40,683 - 40,683
====== ====== =======
Net book value
At 31 March 2006 341,050 640,000 981,050
====== ====== ======
At 31 March 2005 360,137 250,000 610,137
====== ====== ======
£250,000 of the intangible assets represents Christie & Co (valuers,
surveyors and agents) open market valuation at both 31 March 2005 and 2006 of a
profit sharing agreement with South Garth Residential Care Home Partnership. £
390,000 revaluation represents Christie & Co (valuers, surveyors and agents)
open market valuation, at 31 March 2006 of the rights to Newford Limited
dividends.
11. Tangible fixed assets
Group Fixtures
Freehold Motor and Office
Property Vehicles and Fittings Equipment Total
£ £ £ £ £
Cost or valuation
At 1 April 2005 12,500,000 23,600 7,245 90,677 12,621,522
Additions 455,000 - - 8,527 463,527
Disposals (500,000) - - - (500,000)
Revaluation 1,032,000 - - - 1,032,000
----- ------ ----- ----- -----
At 31 March
2006 13,487,000 23,600 7,245 99,204 13,617,049
===== ===== ===== ===== =====
Depreciation
At 1 April
2005 - 23,600 1,767 62,646 88,013
Charge for
the year - - 2,120 19,986 22,106
----- ----- ----- ----- -----
At 31
March 2006 - 23,600 3,887 82,632 110,119
===== ===== ===== ===== =====
Net book value
At 31 March
2005 13,487,000 - 3,358 16,572 13,506,930
===== ===== ===== ===== =====
At 31 March
2004 12,500,000 - 5,478 28,031 12,533,509
===== ===== ===== ===== =====
The freehold properties are held for long term retention and were valued by
Christie & Co (valuers, surveyors and agents) at 31 March 2006 at open market
value for existing use on both portfolio and 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 Group's freehold properties at 31 March 2006 was £
11,402,806.
12. Investments
The Group investment represents the cost of one Newford Limited
redeemable "B" Share of £1.
13. Stocks
Group
31 Mar 06 31 Mar 05
£ £
Stock 10,520 10,520
====== ======
14. Debtors
Group
31 Mar 06 31 Mar 05
£ £
Trade debtors 365,299 288,043
Amounts owed by group undertakings - -
Other debtors 29,622 58,655
Deferred taxation (note 19) 51,000 -
Deferred consideration Morton Manor 249,000 -
Prepayments and accrued income 121,382 147,776
----- -----
816,303 494,474
====== ======
15. Creditors: Amounts falling due within one year
Group
31 Mar 06 31 Mar 05
£ £
Bank overdrafts 688,705 750,049
Bank loans 350,000 300,000
Trade creditors 150,013 194,547
Amount due to group undertaking - -
Corporation tax 20,309 -
PAYE and social security 129,382 101,084
Other creditors 179,896 185,444
Accruals and deferred income 107,886 47,836
------ ------
1,626,191 1,578,960
====== ======
Creditors: Amounts falling due after more than one year
Group
31 Mar 06 31 Mar 05
£ £
Bank loans 5,750,000 6,100,000
Less finance costs (105,181) (126,209)
------ ------
5,644,819 5,973,791
====== ======
The bank loan and overdraft are 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 1.5% over LIBOR and is repayable in instalments.
Finance costs incurred in obtaining bank loans are written off over the
period of the loan. The bank loans were refinanced on 4 July 2006 and, as a
result, the balance of the finance costs at 4 July 2006 has been written off to
the profit and loss account in the current year.
17. Creditors - capital instruments
Creditors include finance capital which is due for repayment as
follows:
Group
31 Mar 06 31 Mar 05
£ £
Amounts repayable:
In one year or less or on demand 350,000 300,000
In more than one year but not more than
two years 400,000 350,000
In more than two years but not more than
five years 1,450,000 1,350,000
In more than five years 3,900,000 4,400,000
------ ------
6,100,000 6,400,000
====== ======
18. Bank loans and overdrafts
The Group's financial instruments comprise borrowings, some cash and
liquid resources, and various items, such as trade debtors, trade creditors 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:
31 Mar 06 31 Mar 05
£ £
Floating rate:
Bank overdraft 688,705 750,049
Bank loan 6,100,000 6,400,000
------ ------
Total 6,788,705 7,150,049
====== ======
The interest rate on floating rate financial liabilities is 1.5% above
LIBOR for the bank loan and 1.75% above LIBOR for the bank overdraft (2005:
1.5% and 1.75% above LIBOR).
The Group finances its operations through a mixture of retained profits
and bank borrowings.
Short term debtors and creditors have been excluded for the purposes of
FRS 13 disclosure requirements.
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
(2005: nil).
The Fortis Bank facility required the Company to purchase an interest
rate cap from it by which the interest rate on at least 75% of the facility is
hedged for the term of the facility. On 21 April 2004 the Company purchased
through Fortis Bank an interest rate cap of a 6% interest rate, in the 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 19 January 2004 the Group arranged a £9.75 million facility with
Fortis Bank S.A./N.V. split into £5,400,000 Facility A, which was drawn down in
full on 13 February 2004 to refinance the Company and complete the acquisitions
of Newsham House Limited and Woodland Healthcare Limited, £3,750,000 Facility
B, which is available for acquisitions, £1,000,000 of which was drawn down on
20 May 2004 to purchase Jubilee House, and a £600,000 Overdraft Facility. The
Overdraft Facility has been increased to £900,000.
Repayment of Facility A: The Company must repay the Facility A loan in
the following amounts on the following dates:
Repayment Date Amount £
30 April 2006 £150,000
30 October 2006 £150,000
30 April 2007 £175,000
30 October 2007 £175,000
30 April 2008 £200,000
30 October 2008 £200,000
30 April 2009 £225,000
30 October 2009 £225,000
30 April 2010 £225,000
30 October 2010 £225,000
30 April 2011 £3,200,000
Total £5,150,000
Repayment of Facility B: On each of the above repayment dates, the
Company must repay the Facility B loan in the amount of 2.5% of the aggregate
of all amounts from time to time advanced under the Facility B loan and, on the
final repayment date, the Company must repay in full all amounts outstanding
under the Facility B loan. Based on £950,000 loan drawn at 31 March 2006, £
25,000 is repayable on each of the above repayment dates with a final repayment
of £700,000 on 30 April 2011.
Repayment of Overdraft Facility: The Overdraft Facility is repayable on
demand.
On 3 May 2006 the Company signed a £25 million loan facility with IXIS
Corporate & Investment Bank S.A.("IXIS"). On 4 July 2006 the Company drew £
9.25 million to repay the Fortis Bank A and B Facilities and the Overdraft and
complete the acquisition of Solutions (Yorkshire) Limited.
Further drawings on the £25m IXIS facility are subject to IXIS 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.
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 on the IXIS loan facility until 30 October 2009 when
the following repayments are to be made:
Repayment Date Amount £
30 October 2009 2.5% of the loan outstanding
30 April 2010 2.5% of the loan outstanding
30 October 2010 2.5% of the loan outstanding
30 April 2011 2.5% of the loan outstanding
30 October 2011 2.5% of the loan outstanding
30 April 2012 2.5% of the loan outstanding
30 October 2012 2.5% of the loan outstanding
30 April 2013 the remaining balance of the loan in full
19. Deferred taxation
The deferred taxation asset of £51,000 included in debtors (note 14) represents
excess of capital allowances over depreciation.
The Directors have made no 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 un-provided at the end of each year were as follows:
Year to Year to
31 Mar 06 31 Mar 05
£ £
Revaluation of intangible assets and
freehold properties 824,792 398,672
======= ======
20. Contingencies
The Company has agreed to issue a further 250,000 ordinary shares of 5
pence each at price of 40 pence per share to the shareholders of Newsham House
Limited as deferred consideration if planning permission is granted in respect
of further development.
21. Related party transactions
During the year 31 March 2005, Star Healthcare Limited, a company owned by P L
Jackson a Director, provided goods to the Company for a consideration of £895
(2006; nil).
During the year ended 31 March 2006, Solutions (Yorkshire) Limited, a company
owned by P L Jackson, a Director, provided goods and services to the Group for
a consideration of £10,282 (2005: £4,668).
During the year ended 31 March 2006 the Company paid £12,000 to Mrs P L
Jackson, a Director, for the rent of the Company's head office (2005: £11,000).
During the year ended 31 March 2005 the Company paid £5,842 to Mr A Jackson
(husband of Mrs P L Jackson, a Director), for services to the Company (2006:
nil).
During the year ended 31 March 2006, Energy Telecom Limited, a company of which
Directors, W J Davies and R J Ellert are directors and shareholders, provided
telecommunications services to the Group for a consideration of £5,645 (2005: £
5,101).
During the year ended 31 March 2005, Compton Consulting Limited, a company of
which D F Francis, a Director, is a director and shareholder, provided
accounting services to the Group for a consideration of £37,099 (2006: nil).
During the year ended 31 March 2006 the Company issued 700,000 Ordinary
Shares of 5p each to W J Davies, a Director, at a price of 40 pence per share
in respect of deferred consideration for Newsham House Limited.
All the above transactions were undertaken on an arms length basis.
During the year ended 31 March 2006 the Company paid a health insurance
premium on behalf of P L Jackson, a Director, which has been repaid since the
year end.
22. Share capital
Authorised share capital:
31 Mar 06 31 Mar 05
£ £
15,000,000 Ordinary shares of £0.05 each 750,000 750,000
45,000,000 Deferred non equity shares of £0.05 each 2,250,000 2,250,000
------ ------
3,000,000 3,000,000
====== ======
Allotted, called up and fully paid:
31 Mar 06 31 Mar 05
No. £ No. £
Ordinary shares of £0.05 each 9,885,694 494,285 8,885,694 444,285
Deferred non equity shares of £0.05 20,550,798 1,027,540 20,550,798 1,027,540
each
----------- ------ ----------- ------
30,436,492 1,521,825 29,436,492 1,471,825
=========== ====== =========== ======
During the year the Company issued 1 million Ordinary Shares of 5p each, at a
premium of 35p per share, as deferred consideration for the purchase of Newsham
House Limited.
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.
Reserves
Group Revaluation Share Premium Profit and Loss
Reserve Account Account
£ £ £
At 1 April 2005 1,328,906 3,362,396 (61,730)
Movement for the
year 1,422,000 350,000 130,309
------- -------- ------
At 31 March 2006 2,750,906 3,712,396 68,579
====== ======== ======
24. Reconciliation of movements in shareholders' funds
Year to Year to
31 Mar 06 31 Mar 05
£ £
Profit on ordinary activities after taxation 130,309 1,211,940
New equity share capital subscribed 50,000 -
Premium on new share capital subscribed 350,000 -
Increase in revaluation reserve 1,422,000 1,328,906
------ ------
Net addition to funds 1,952,309 2,540,846
Opening shareholders' funds 6,101,397 3,560,551
------ ------
Closing shareholders' funds 8,053,706 6,101,397
====== ======
Included within shareholders' funds is £1,027,540 (2005: £1,027,540)
relating to non-equity interests.
25. Notes to statement of cash flows
Reconciliation of operating profit to net cash inflow/(outflow) from
operating activities
Year to Year to
31 Mar 06 31 Mar 05
£ £
Operating profit 541,914 1,685,265
Amortisation 19,087 10,867
Depreciation 22,106 26,547
Increase in stocks - (1,000)
Increase in debtors (284,680) (172,051)
Increase/(decrease) in creditors 38,267 (98,445)
Exceptional item - loss on sale/
revaluation of fixed assets 15,100 (1,180,000)
Re-organisation costs - (34,873)
------ -------
Net cash inflow from operating activities 351,794 236,310
======= =======
Reconciliation of net cash flow to movement in net debt
Year to Year to
31 Mar 06 31 Mar 05
£ £
Increase/(decrease) in cash in the period 64,149 (613,781)
Amortisation of finance costs (21,028) -
New secured loans - (996,144)
Repayment of amounts borrowed 300,000 -
------ ------
Change in net debt 343,121 (1,609,925)
Net debt at 1 April 2005 (7,018,332) (5,408,407)
------ ------
Net debt at 31 March 2006 (6,675,211) (7,018,332)
====== ======
Analysis of changes in net debt
At 1 Apr 05 Cash Flows At 31 Mar 06
£ £ £
Net cash:
Cash in hand and at bank 5,508 2,805 8,313
Overdrafts (750,049) 61,344 (688,705)
Debt:
Bank loans due after (5,973,791) 328,972 (5,644,819)
more than one year
Bank loans due within (300,000) (50,000) (350,000)
one year
------ ------ ------
Net debt (7,018,332) 343,121 (6,675,211)
====== ====== ======
26. Net asset value per share
The calculation of 81.5p (2005: 68.7p) net asset value per share at 31 March
2006 is based on net assets of £8,053,706 (2005: £6,101,397) divided by the
9,885,694 ordinary shares in issue at that date (2005: 8,885,694).
27. Post balance sheet events
On 3 May 2006 the Company signed a £25 million loan facility with IXIS
Corporate & Investment Bank S.A.("IXIS"). The interest rate is 1.25% over
LIBOR falling to 1.125% over LIBOR if interest cover is between 2.5 and 2.75
times EBITDA and 1% over LIBOR if interest cover is over 2.75 times EBITDA.
There are no repayments on the IXIS loan facility until 30 October 2009 when
the following repayments are to be made:
Repayment Date Amount £
30 October 2009 2.5% of the loan outstanding
30 April 2010 2.5% of the loan outstanding
30 October 2010 2.5% of the loan outstanding
30 April 2011 2.5% of the loan outstanding
30 October 2011 2.5% of the loan outstanding
30 April 2012 2.5% of the loan outstanding
30 October 2012 2.5% of the loan outstanding
30 April 2013 the remaining balance of the loan in full
On 25 May 2006 the Company conditionally entered into an acquisition agreement
to acquire the entire issued share capital of Solutions (Yorkshire) Limited,
owner and operator of a 40 bed nursing home in Leeds, from P L Jackson,
Operations Director of the Company. The acquisition was conditional on, inter
alia, the consent of shareholders. The consideration for the acquisition is a
maximum of £2.26 million payable in cash. In addition, the Company assumed
Solution's debt amounting to approximately £770,000.
On 12 June 2006 shareholders unanimously approved the acquisition of Solutions
(Yorkshire) Limited) at an Extraordinary General Meeting.
On 4 July 2006 the Company drew £9.25 million of the IXIS £25 million loan
facility to repay the Fortis Bank A and B Facilities and the overdraft and
complete the acquisition of Solutions (Yorkshire) Limited. Further drawings on
the £25m IXIS facility are subject to IXIS beingsatisfied 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.
On 26 July 2006 the Company entered into a conditional contract with Garalexin
(Nuneaton) Limited, to sell them part of the garden at Allambie Court for £
225,000 plus £15,000 contribution to the Company's architects fees in respect
of Allambie Court. The contract is conditional on the purchaser obtaining
detailed planning permission, which is free from onerous planning conditions,
for the development of eight separate residential units of an average 62 square
metres per unit.
On 26 July 2006 the Company entered into conditional contracts with Hume
Laboure Limited and L E Taylor, to franchise Harewood Court Nursing Home,
Leeds. The franchise agreement is for five years with an option for the
franchisee to renew for further periods of five years. The Company has leased
Harewood Court Nursing Home at an initial rent of £240,000 plus 50% of Hume
Labour Limited's EBITDA after rent. The contract is conditional on registration
of Hume Laboure Limited and the registration of L E Taylor as manager with the
Commission for Social Care Inspection.
28. Ultimate controlling party
W J Davies, by virtue of his 50.02% shareholding, controls the Company.
29. This summary of results does not constitute the statutory financial
statements for the year ended 31 March 2006. The financial statements have not
yet been delivered to the Registrar of Companies, nor have the auditors yet
reported on them. The statutory accounts for the year ended 31 March 2006 will
be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies. The financial information for the year ended 31 March
2005 has been extracted from the full report and statements which have been
filed with the Registrar of Companies. The auditors reported on those
accounts; their report was unqualified and did not contain a statement under
s.237 (2) or (3) Companies Act 1985.
END
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