30th Apr 2008 07:01
Oak Holdings PLC30 April 2008 FOR IMMEDIATE RELEASE30 APRIL 2008 OAK HOLDINGS PLC PRELIMINARY RESULTS FOR 12 MONTHS TO 31 OCTOBER 2007 Oak Holdings plc, the AIM-listed property development and consultancy group,that is developing the £390m YES! Project, a 1.2m sq ft covered fully integratedmixed-use leisure and entertainment based resort, activity and conventiondestination on a 327-acre site in South Yorkshire, announces its preliminaryresults for the 12 months to 31 October 2007. HIGHLIGHTS • In line with the Board's expectations operating loss reduced to £0.46m compared to £0.58m last year • Consultancy turnover increased to £351K from £59K last year • Net assets remain largely unchanged at £10.09m • Considerable progress maintained at YES! Project o Heads of Terms for Development Agreement and lease of 250 years agreed o Memorandum of Understanding with Sheffield Steelers for purpose- built arena o Partnership Agreement signed with Laing O'Rouke o BT interest cemented o Anchor tenant discussions advance on Development Agreement milestone o Directors' confidence in YES! Project underpinned by independent 'Opinion of Value' Contact: Oak Holdings Plc Tel: 020 7493 5522Steve Lewis, Chief ExecutiveMike Hill, Finance Director Arbuthnot Securities Tel: 020 7012 2000Tom Griffiths CHAIRMAN'S STATEMENT I am once again pleased to be able to report that the Company continues to makesignificant progress in respect of its YES! Project in South Yorkshire. Despitecontinuing to experience frustrating delays in both the planning process and thenegotiation of the Development Agreement with Rotherham Metropolitan BoroughCouncil, the Company has continued to drive the Project forward and I amdelighted to confirm that the Directors believe that firm foundations have nowbeen laid for the future of the Project. On 22 February 2008, we announced that Heads of Terms for a DevelopmentAgreement and a 250 year lease had been agreed with Rotherham MetropolitanBorough Council, the owners of the land. This is a significant achievement andwe are now making progress towards the next phase of the development process. Results I am pleased to report the results for the 12 months to 31 October 2007. Due tothe current nature of its business, and in line with the Board's expectations,the Company made a reduced loss on ordinary activities before taxation of£463,642 (2006: £572,347), on a significantly increased turnover of £350,713(2006: £58,674). Consultancy income constituted the entire turnover and contributed significantlyto the reduced loss which is even more creditable as it includes a first timecharge in respect of FRS 20, Share-based payments, of £127,176 (2006:£nil).Tight expenditure control continues in relation to the general running costs ofthe Company and the YES! Project. Regular management meetings are held tomonitor expenditure to ensure prudent cost control over all areas of theCompany's business. YES! Project costs are not capitalised. In view of the lossfor the year, the Company is unable to recommend the payment of a finaldividend. As at 31 October 2007, the Group had audited net assets of £10.09 million (2006:£10.31 million), the major component being intangible assets, as disclosed inthe Group's balance sheet, of £10.83 million. This sum represents primarily thevalue attributed to the YES! Project Preferred Developer Agreement held by OakVentures Limited following its acquisition by the Group in 2003. The Directorsbelieve that, given the grant of Outline Planning Consent, agreed Heads of Termsfor a Development Agreement and the 250 year lease referred to above, the valueattributed to this scheme would, if a formal valuation were to be undertaken, besubstantially higher than the £10.5 million currently attributed to the YES!Project. In this respect, the Board is relying on their own experience supportedby an indicative 'Opinion of Value' commissioned from independent propertyadvisers. Strategy The development of the YES! Project, the £390 million covered, mixed-use leisurescheme located on a 327 acre former coalfield site adjoining the Rother ValleyCountry Park in South Yorkshire, remains at the core of the Company's futurestrategy. Despite the current economic difficulties, we remain confident thatinvestment in strategically located high quality leisure and entertainmentfacilities will prove to be attractive to institutions investing in real estatein future years. We are sure that the YES! Project represents an exceptionalopportunity to provide shareholder value and we will continue to concentrate themajority of our resources in this area. We are heartened by the approval of Heads of Terms for a Development Agreementand 250 year lease achieved in February of this year. This follows on from theoutline planning permission and Section 106 Agreement granted in January 2007.In March 2007, the Company also acquired the strategically important freehold of27 acres of land between the development site and the A57 which secured the mainaccess to the Project. This acquisition demonstrates our determination to ensurethat this important regional project goes ahead for the benefit of Oak Holdingsplc and its shareholders and gives the Company ownership and total control ofthis critical acreage. Having formally secured Heads of Terms for the Development Agreement,discussions with potential anchor tenants, including leading brand name nationaland international companies, can proceed with confidence. Our recent agreementwith Sheffield Steelers, a leading British ice-hockey team, for the provision ofa purpose built arena and the announcement of Laing O'Rourke as our design teamconstruction partner, reinforces that confidence. Funding The Directors are actively considering sources of funding for the Company andwill only conclude such review when satisfied that a particular source is in thebest interests of the Company and its shareholders. The Directors envisage thatsuch funding will encompass the immediate requirements of the YES! Project andtake the project through to a development loan, but will also include theCompany's day-to-day working capital needs. Preliminary discussions have taken place with bank lenders which have indicatedthat, subject to normal lending criteria, the Company will be able to secure anappropriate development loan to progress the YES! Project to completion. It may also be helpful for me to demonstrate the Directors' confidence in theCompany's future by referring to two matters. First, two directors, namelyStephen Lewis and Graham Axford, have provided guarantees in respect of the bankloan of £250,000 utilised by the Company to purchase the YES! Project accessland, referred to above. Secondly, in October 2007 the Directors subscribed toan issue of new ordinary shares, raising approximately £114,000 for theCompany's immediate working capital needs. Outlook The Board remains confident in both the YES! Project and its potential togenerate substantial shareholder value and of the inherent worth in the Company.The resolution of planning and lease terms for such a ground breaking projectcannot be underestimated. Despite the current economic climate, the Company canapproach the future with confidence. Finally, as always, I would like to thank my colleagues and our shareholders fortheir continued support. Malcolm SavageChairman30 April 2008 CHIEF EXECUTIVE'S REVIEW The YES! Project The Directors are pleased with the progress made during the year. The YES!Project begins to assume better definition as we move towards completion in2011. The £390 million project in South Yorkshire will be an entertainment-basedresort, activity and convention destination that we believe will set newstandards for leisure activity in the UK. Having avoided a public inquiry for the project through our meticulouspreparation, the RMBC granted outline planning consent in January 2007. Thenumerous planning, financial and legal issues surrounding this major projectwere subsequently incorporated into a Section 106 Agreement. In March 2007, the Company acquired the freehold of 27 acres of land between thedevelopment site and the A57, which will be necessary to accommodate the newaccess route and entry plaza to the development. The total consideration forthis acquisition was £1 million with £250,000 paid on acquisition and thebalance payable in May 2008. This key acquisition, which means that Oak now hasfreehold ownership and control over the approved access land, representedfurther progress towards the scheme's realisation. Planning consent and the purchase of the freehold access land augments theDirectors' confidence in the scheme, already supported by the signing in 2006 ofcollaborative Memoranda of Understanding with BT and E.ON, the world's largestinvestor-owned power and gas company. Oak and E.ON are initially working together with a view to designing sustainablesolutions to the scheme's power, cooling and heating needs. The new buildingswill be designed to be environmentally friendly and, in addition, a visitorattraction will entertain and educate the public about sustainable energyproduction. BT has committed to work with Oak to explore ways in which theirextensive array of networked IT services and research and developmentcapabilities can be integrated into, and showcased within, the YES! Project. The negotiations of the terms of the Development Agreement encompassed statutory'best value' tests requiring approval by the District Valuer. In February 2008,we were finally able to announce that the RMBC had approved the Heads of Termsfor the Development Agreement and terms for a 250 year lease. This is asignificant milestone. Solicitors have been instructed and it is expected thatthe formal Development Agreement will be completed shortly. Oak will now focus on completing the scheme's tenant profile, on marketing theProject to prospective tenants, and on detailed design. On completion, the YES!Project will be the UK's first multi-use, year round, covered, leisure,entertainment, sports and convention centre. It will have a critical mass ofdiverse facilities anchored by a number of leading global brands underpinningthe scheme's long term investment value. To underline the potential diversity of the Project's content, we were pleasedto announce in March of this year that a Memorandum of Understanding had beensigned with Sheffield Steelers, one of Britain's top ice-hockey teams. Oak willdevelop a purpose-built arena, covering 60,000 sq ft, holding 5000 spectatorsand offering its own amenities to their visitors in addition to those in therest of the Project. Other potential tenants with whom we have signed Memoranda of Understandinginclude Baydrive's Top Golf, a provider of high tech driving ranges, and VentureXtreme, a destination adventure centre provider. In January 2007, we announced that we had signed a Collaboration Agreement withSkanska Construction UK Plc for them to become Constructor Partner on the YES!Project. For a variety of commercial reasons, the proposed partnership did notfull fully develop and both parties decided not to proceed further. Accordingly,we were pleased in April to sign a partnership agreement with Laing O'Rourke,the UK's largest privately-owned construction company. This ensures that wecontinue to have a relationship with a major international building contractorfor the provision of construction services. We believe that a project of thismagnitude requires construction advice and expertise from its inception and weare pleased to have secured such 'best of breed' support. A Memorandum of Understanding has also been entered into with the Royal Bank ofScotland in respect of the provision of a development loan to progress theproject through to completion. The loan will be subject to normal lendingcriteria and the securing of commitments to lease by anchor tenants. The Board believes that the calibre of the design team and the partnersmentioned above will enable the Company to deliver the YES! Project as a worldclass development, which will prove extremely attractive to a propertyinvestment market currently seeking new opportunities. Consultancy Division Given its continued limited resources the Company's consultancy divisionperformed well in the year with revenues well ahead of the previous year.Initial instructions have been received relating to projects in the UK, Russiaand Kazakhstan. Whilst these have produced some income, it is anticipated thatthey will develop further during the coming year. Stephen LewisChief Executive30 April 2008 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the year ended 31 October 2007 Note 2007 2006 £ £ TURNOVER 350,713 58,674 Cost of sales - - -------- --------- GROSS PROFIT 350,713 58,674 Operating expenses (800,767) (641,012) -------- --------- OPERATING LOSS - continuing (450,054) (582,338) Net interest (payable)/receivable (13,588) 6,674 Profit on sale of investment - 3,317 -------- --------- LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (463,642) (572,347) Taxation - - -------- --------- RETAINED LOSS FOR THE FINANCIAL YEAR (463,642) (572,347) ======== ========= BASIC LOSS PER SHARE (IN PENCE) 5 (3.1) (3.8) ======== ========= The Profit and Loss Account has been prepared on the basis that all operationsare continuing. There were no recognised gains or losses other than the resultfor the year as shown above. BALANCE SHEETS31 October 2007 Group Group Company Company 2007 2006 2007 2006 £ £ £ £FIXED ASSETS Intangible assets 10,828,446 10,828,446 - -Tangible assets 1,074,825 - 1,074,825 -Investments - - 10,435,959 10,435,959 ---------- ---------- ---------- ---------- 11,903,271 10,828,446 11,510,784 10,435,959 ---------- ---------- ---------- ----------CURRENT ASSETS Debtors 4,175 27,149 1,657,261 1,453,302Cash at bank and in hand 63,347 45,069 63,347 45,069 ---------- ---------- ---------- ---------- 67,522 72,218 1,720,608 1,498,371CREDITORS - amounts (1,703,291) (411,549) (1,655,107) (363,366)falling due within one year ---------- ---------- ---------- ---------- NET CURRENT (LIABILITIES)/ASSETS (1,635,769) (339,331) 65,501 1,135,005 --------- ---------- ---------- ----------TOTAL ASSETS LESS CURRENT LIABILITIES 10,267,502 10,489,115 11,576,285 11,570,964 CREDITORS - amounts falling due after moreone year (180,695) (180,695) - - ---------- ---------- ---------- ---------- 10,086,807 10,308,420 11,576,285 11,570,964 ========== ========== ========== ========== CAPITAL AND RESERVES Called up share capital 7,565,067 7,480,886 7,565,067 7,480,886Share premium 3,017,818 2,987,146 3,017,818 2,987,146Capital redemption reserve 164,667 164,667 164,667 164,667 Profit and loss account (5,858,064) (5,521,598) (4,368,586) (4,259,054)Merger reserve 5,197,319 5,197,319 5,197,319 5,197,319 --------- ---------- ---------- ---------- SHAREHOLDERS' FUNDS 10,086,807 10,308,420 11,576,285 11,570,964 ========== ========== ========== ========== CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 October 2007 2007 2006 £ £ NET CASH OUTFLOW FROM OPERATING ACTIVITIES (27,962) (414,969) RETURNS ON INVESTMENTS AND SERVICING OF FINANCENet interest (paid)/received (13,588) 6,674 CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayments to acquire shares in limited companies - (2,758)Sale proceeds of shares in listed companies - 6,075Purchase of land (305,025) - --------- ---------CASH OUTFLOW BEFORE FINANCING (346,575) (404,978) FINANCINGProceeds from issue of shares 114,853 245New bank loan 250,000 - --------- ---------NET CASH INFLOW FROM FINANCING 364,853 245 --------- ---------INCREASE/(DECREASE) IN CASH 18,278 (404,733) ========= ========= OAK HOLDINGS PLC NOTES TO THE FINANCIAL STATEMENTSfor the year ended 31 October 2007 1. The preliminary announcement has been prepared in accordance with applicable accounting standards and under the historical cost convention. The principal accounting policies of the group have remained unchanged from those set out in the group's 2006 annual report and accounts. 2. The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The balance sheet at 31 October 2007 and the profit and loss account, cash flow statement and associated notes for the year then ended have been extracted from the Group's 2007 statutory financial statements on which the auditors will give an unqualified report, without any statement under Section 237(2) or (3) of the Companies Act 1985. The comparative figures for the financial year ended 31 October 2006 have been extracted from the statutory financial statements for that year which have already been filed with the Registrar of Companies and on which the auditor gave an unqualified report. 3. There is no provision for corporation tax on the basis that no liability arose in the year. 4. The Directors are not able to recommend the payment of a dividend. 5. The basic loss per share has been calculated recognising the consolidation of 1p shares into 50p shares consequent to resolutions passed at the Company's last Annual General Meeting on 24 May 2007. Basic loss per ordinary share of 3.1 pence (2006: 3.8 pence) is calculated using the net basis on the Group loss for the year after tax of £463,642 (2006: £572,347) and on the weighted average number of shares in issue during the period of 14,976,400 (2006: 14,961,739 as calculated after consolidation from shares of 1p each to shares of 50p each). 6. The Annual General Meeting of the Company will be held at 11.00 a.m. on 23 May 2008 at the offices of Field Fisher Waterhouse LLP, 35 Vine Street, London EC3N 2AA. 7. The Annual Report and Accounts will be mailed to registered shareholders today at their registered address and copies of the Annual Report will be made available to the public free of charge for one month at the Company's registered office, 35 Vine Street, London EC3N 2AA and from the Company's website, www.oakholdings.co.uk. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
PIRI.L