The rulings, the first based on the FRS5 accounting standard introduced in 1994, are expected to affect many companies in the nursing home, retailing and property industries.
The immediate impact on ANS will be to reduce earnings per share, which sent the price to a new low for 1997 of 136p, down 5.5p.
Daniel Francis, finance director of Nursing Homes Properties, which carried out sale and leaseback deals with ANS, said: "If this ruling is made to stick it will have severe implications across all companies and all sales and leasebacks."
Although ANS's earnings per share will be reduced as a result of the rulings, the panel's decisions do not affect pre-tax profits for 1995 and 1996, which will not have to be restated.
The most important of the two rulings is on sale and leaseback transactions. ANS must put back on to its own books homes it sold and leased back from Nursing Home Properties, raising ANS's gearing.
Dr Narinder Singh Dhandsa, chief executive of ANS, said the borrowing to develop the homes was non-recourse, so ANS was not liable for it, "but in theory we are now borrowing it".
Only two of ANS's 40 homes were financed in this way, and there were much bigger implications for some others in the industry, said Dr Dhandsa.
He said: "It's a grey area. We have had two or three firms of accountants look at this and Nursing Homes Properties has had Deloittes look. They gave clearance as well." But he believed it was "not worth the hassle" of arguing with the panel.
The other ruling was on joint ventures, under which ANS constructed nursing homes and sold them to companies owned 50:50 by itself and a financial institution such as BZW.
ANS would take credit for half the profit on the transaction. The panel has ruled that in future the joint venture must be treated as a quasi- subsidiary. This does not affect the cash received by ANS or its pre- tax profits, but does hit net profits and earnings per share.Reuse content