30th Apr 2008 12:16
Wren Homes Group PLC30 April 2008 For release on 30 April 2008 Wren Homes Group Plc Interim Results for the Half Year Ended 31 January 2008 Wren Homes Group Plc ("Wren" or "the Group"), the AIM Listed retirement home and"Extra Care" specialist developer and provider of services to the independentelderly, with operations in the South of England, announces interim results forthe six months to 31 January 2008. •Turnover of £84,000 (2007: £477,485) arising solely from a profit sharing agreement; timing differences on the completion of sales has resulted in turnover deferred to subsequent periods •Loss on ordinary activities before tax of £393,970 (2007: Profit £245,504) given the absence of sales in the period •In the second half, Wren is looking for an upturn in sales •Refocused strategy towards the "Extra Care" Market, with an innovative model for the retirement sector •Indicative offers of finance received for funding numerous Extra Care developments •Solid base for material increase in scale of operations •Increase in the scale of developments to 50 units+ •Double the size of "virtual" development portfolio •Appointment of new non-executive director Brian Nathan, Chairman of Wren Homes Group Plc, commented: "Whilst the current market in the UK for residential developments remainschallenging, Wren expects to sell the majority of its existing finished unitswithin the next twelve months. Wren's virtual land bank has doubled over thelast twelve months and we hope that it will continue to expand at a similarrate, and at minimal cost, for the foreseeable future. The Extra Care model developed by Wren has attracted much interest in financialcircles, both from lending banks and potential institutional investment sources.We are confident that the Company will benefit significantly from thedevelopment of homes within its Extra Care model over the medium term." Enquiries: Wren Homes Group plcPaul Treadaway, Managing Director Tel: 01372 742 244www.wrenhomesplc.co.uk Shore CapitalAlex Borrelli Tel: 020 7408 4090 Adventis Financial PRTarquin Edwards Tel: 020 7034 4758 / 07879 458 364Chris Steele Tel: 020 7034 4759 / 07979 604 687 WREN HOMES GROUP PLC CHAIRMAN'S STATEMENT HALF YEAR ENDED 31 JANUARY 2008 I was appointed Chairman in early 2008, having been the independentnon-executive Director of Wren Homes Group Plc for the previous seven years. Trading Results This represents the first set of results to be announced by Wren under my tenurewhich, unfortunately, coincides with one of the worst downturns for the housingsector in two decades. Wren, along with most others in the construction anddevelopment industry, has experienced a modest decline in its activities andreports a small loss on ordinary activities before tax of £393,970 (2007: profit£245,504) on turnover of £84,000 (2007: £477,485), for the six months ended 31January 2008. The turnover for this period relates to the profit received undera profit sharing agreement. The Directors of Wren feel strongly that the Company has performed well andcontinues to do so, in the current trading conditions, particularly bycomparison with its peers in the industry. Dividend Whilst it is the Directors' wish to continue with a progressive dividend policy,we feel that the current uncertainty and slow down in trading in the housingsector generally, with a knock-on effect on retirement housing, predicates theneed for caution. As a result, the Directors feel it appropriate to declare areduced interim dividend amounting to 0.125p per share at this stage (2007:0.25p per share). The situation for the year as a whole will be kept underreview. Work-in-Progress Although sales of finished retirement units at Warlingham and traditional flatsat Kenley have slowed, we believe that Wren is well placed to weather thisdownturn being exposed in cash terms only to a small number of completed units.Of the nineteen completed units remaining, seven are reserved and we expect thatseveral of these should convert into completed sales shortly. The slowdown insales has been exacerbated by falling property prices as a result of illiquidityin the mortgage and banking markets. Several planning gains have been achieved from within Wren's portfolio of sites.The most notable being the adjoining site at Warlingham, for 54 Extra Careunits, which has been secured on the same development terms as the first site.Planning has also been received for two other retirement housing schemes, eachcomprising 19 units, at Carshalton, which has now been purchased and Oxted, forwhich final written funding terms are awaited agreed and it is envisaged thatconstruction work on these three sites will commence once market conditionsstabilise. Land Bank Wren has continued with its proven successful formula of acquiring sites underoption and subsequently submitting planning applications, for which it has asuccess ratio of over 70%. This effectively provides Wren with a "virtual" landbank at limited cost (up until land purchase is completed) until such time assuitable planning permission is gained, the land purchase completed andconstruction costed and started, all in quick succession. WREN HOMES GROUP PLC CHAIRMAN'S STATEMENT CONTINUED As a result, Wren's virtual land portfolio consists of the following elements,spread over twenty sites in the South East:- Categories Units Under discussion and negotiation 231Under Option and/or Planning Applied For 318Planning Consent Granted/Owned 147Built Completed for Sale 19 ------Total 715 === With the exception of the five units at Kenley, all of the above sites and unitsare focused on the retirement housing market, of which the majority will be forExtra Care schemes ranging typically between 50 and 75 units each. Retirement Market Focus The Company's concept of repositioning its business towards the Extra Caresector, as a result of a carefully researched and well conceived strategic move,is now underpinned and justified by the grant of its first Extra Care planningconsent, announced on 28 April 2008, within Tandridge Local Authority AreaSurrey as its retirement housing schemes include an increasing number of healthand care options for the ageing population of its residents. Wren sees its move into this second generation of retirement living ("ExtraCare" as defined by the Government being positioned between the traditionalretirement homes and nursing homes) as a step closer towards the provision of awider range of services to support the independent elderly so that they maycontinue to live for longer in the comfort and security of their own homes. Environmental Responsibility Wren is committed to caring for the environment and minimising any adverseimpact its developments may have. As a forward thinking company we arecontinually considering new ideas and ways to create more environmentallyfriendly homes, coupled with reducing the cost of living, for our ageingresidents. Thus our regeneration of "brownland" sites offers benefits, not onlyto the environment but also to our customers. The use of previously developedland ensures we work to preserve our countryside for future generations but alsoallows us to situate our developments in established communities with easyaccess to shops, transport and other amenities. We are also at the forefront of efforts to use alternative technologies forsustainable, renewable energy. All future projects in contemplation will includeEarthEnergyTM Systems (or such later suitable technology that may becomeavailable) to utilise geothermal energy in household heating and hot watersystems. This not only helps us to conserve energy but also allows ourhomeowners to save up to 15% on their bills. WREN HOMES GROUP PLC CHAIRMAN'S STATEMENT CONTINUED Corporate Wren completed its successful move to AIM just over 15 months ago and this hasenabled the Company to make significant progress, as outlined below:- •refocused strategy on the Extra Care market with an innovative model for retirement sector; •indicative offers of finance received for funding numerous Extra Care developments; •solid base for material increase in scale of operations; •increase in the scale of developments to 50 units+; •double the size of "virtual" development portfolio; •appointment of new non-executive director. Board Changes We are pleased to welcome David Slade to the Board as a non-executive Directorwho was appointed on 21 April 2008 and has an interest of 9.56% in Wren. Peter West retired as Chairman on 5 February 2008 and we wish him well on hisretirement. Outlook and Prospects The Company's products have been refined as a result of the retirement marketfocus, set out above, and Wren is now engaged in acquiring, under option, moresuitable sites, seeking the necessary planning consents and making arrangementsto fund such schemes. Whilst the current market in the UK for residential developments remainschallenging, Wren expects to sell the majority of its existing finished unitswithin the next 12 months. Despite the adverse trading over the last six months, shareholders should be inno doubt as to the underlying strength of the Company, with its virtual landportfolio, which itself contains significant value and the support and hard workprovided by Wren's small dedicated management team. Wren's virtual land bank has doubled over the last 12 months and we hope that itwill continue to expand at a similar rate, and at minimal cost, for theforeseeable future. The Extra Care model developed by Wren has attracted muchinterest in financial circles, both from lending banks and potentialinstitutional investment sources. We are confident that the Company will benefitsignificantly from the development of homes within its Extra Care model over themedium term. Brian NathanChairman30 April 2008 WREN HOMES GROUP PLC CONSOLIDATED INCOME STATEMENT For the six months ended 31 Six months Six months YearJanuary 2008 ended ended ended 31 Jan 2008 31 Jan 2007 31 July 2007 unaudited unaudited audited Note £ £ £ Continuing operationsRevenue 84,000 477,485 2,218,000Cost of sales (95) (36,569) (872,312) Gross profit 83,905 440,916 1,345,688 Administration expenses (540,950) (364,990) (851,502) (Loss)/profit from operations (457,045) 75,926 494,186 Investment income 90,440 196,831 322,889 Finance cost (27,365) (27,253) (57,941) (Loss)/profit before tax fromcontinuing operations (393,970) 245,504 759,134 Income tax 124,240 (76,800) (224,000) (Loss)/profit for the period fromcontinuing operations after tax (269,730) 168,704 535,134All attributable to equityholders of the parent Earnings per share The weighted number of shares in 40,422,387 34,942,315 37,659,830issue Basic and diluted 2 (0.66)p 0.48p 1.42p WREN HOMES GROUP PLC CONSOLIDATED BALANCE SHEET 31 Jan 2008 31 Jan 2007 31 July 2007 unaudited unaudited audited Note £ £ £Non-current assetsGoodwill 3 3,135,203 3,135,203 3,135,203Investment property 240,000 240,000 240,000Property plant & equipment 4 216,470 82,888 75,248Trade & other receivables 2,675,000 2,150,000 2,675,000 Total non-current assets 6,266,673 5,608,091 6,125,451 Current AssetsInventories 6,797,555 1,569,715 2,435,571Trade & other receivables 1,300,991 2,224,140 2,315,489Cash & cash equivalents 5,182 1,500,174 902,665 Total current assets 8,103,728 5,294,029 5,653,725 Total Assets 14,370,401 10,902,120 11,779,176 Current liabilitiesTrade payables 328,090 291,912 262,507Tax liabilities 184,934 679,275 866,393Obligations under finance leases 66,212 11,965 53,361Other payables 122,811 43,915 77,073Bank overdrafts and loans 4,879,019 1,137,429 1,577,415 Total current liabilities 5,581,066 2,164,496 2,836,749 Non-current liabilitiesObligations under finance leases 116,638 47,020 - Total liabilities 5,697,704 2,211,516 2,836,749 8,672,697 8,690,604 8,942,427 EquityIssued share capital 5 4,042,238 4,140,266 4,042,238Share premium account 6 3,751,365 3,764,896 3,751,365Capital redemption reserve 6 98,028 - 98,028Accumulated profits 6 781,066 785,442 1,050,796 Total equity attributable toequity holders of the parent 8,672,697 8,690,604 8,942,427 WREN HOMES GROUP PLC STATEMENT OF CHANGES IN EQUITY Six months ended 31January 2008 Share Share Capital Retained Total Capital Premium Reserves Redemption £ £ £ £ £Balance at 1 August 2007 4,042,238 3,751,365 98,028 1,050,796 8,942,427Net loss for the period - - - (269,730) (269,730) Balance at 31 January 4,042,238 3,751,365 98,028 781,066 8,672,6972008 Six months ended 31January 2007 Share Share Capital Retained Total Capital Premium Redemption Reserves £ £ £ £ £Balance at 1 August 2006 3,306,933 2,104,763 - 616,738 6,028,434Net profit for the period - - - 168,704 168,704Share issue 833,333 1,660,133 - - 2,493,466 Balance at 31 January 4,140,266 3,764,896 - 785,442 8,690,6042007 Year ended 31 July 2007 Share Share Capital Retained Total Capital Premium Redemption Reserves £ £ £ £ £Balance at 1 August 2006 3,306,933 2,104,763 - 616,738 6,028,434Net profit for the period - - - 535,134 535,134Share issue 833,333 2,166,667 - - 3,000,000Share cost - (504,999) - - (504,999)Capital reduction (98,028) - 98,028 - -Capital reduction cost - (15,066) - - (15,066)Payment of dividends - - - (101,076) (101,076) Balance at 31 July 2007 4,042,238 3,751,365 98,028 1,050,796 8,942,427 WREN HOMES GROUP PLC CONSOLIDATED CASH FLOW STATEMENT For the 6 months ended 31 January Six months Six months Year2008 Ended ended Ended 31 Jan 2008 31 Jan 2007 31 July 2007 unaudited unaudited audited Note £ £ £ Cash flows from operating 10 (4,239,124) (377,333) (1,343,360)activities Investing activitiesInterest received 90,440 196,831 322,889Interest paid on loans and bank (15,857) (7,336) (20,357)overdraftsInterest paid on development - - (44,228)loansOther interest paid (11,508) (19,917) (37,584)Purchase of tangible assets (152,527) (18,420) (20,800) Cash flows from investing (89,452) 151,158 199,920activities Financing activitiesNew loans 3,141,151 140,266 519,985Other loans repaid - - (501,737)Loans repaid (269,633) (757,004) (269,088)New hire purchase agreement 136,852 - -Hire purchase repayments (7,363) (4,911) (10,535)Share issue - 2,493,466 2,479,935Dividends paid - - (101,076) Cash flows from financing 3,001,007 1,871,817 2,117,484activities Net (decrease)/increase in cashand cash equivalents (1,327,569) 1,645,642 974,044Cash and cash equivalents brought 741,044 (233,000) (233,000)forward Cash and cash equivalents carried (586,525) 1,412,642 741,044forward WREN HOMES GROUP PLC NOTES TO THE INTERIM RESULTS For the 6 months ended 31 January 2008 1. Accounting policies The accounting policies used for the preparation of these condensed financial statements follow the same accounting policies and methods of computation as applied in the most recent financial statements and have been prepared under International Accounting Standards (IAS). The financial information contained in this report has been prepared in accordance with the requirements of IAS 34 'Interim Financial Reporting'. It has not been audited and does not constitute statutory accounts within the meaning of Section 240 of the companies Act 1985. The statutory accounts for 2007, which were prepared under International Accounting Standards (IAS), have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified and does not contain a statement made under Section 237(2) and Section 237(3) of the Companies Act 1985. The directors consider that in preparing the condensed financial statements they have taken into account the forecasts and all information that could reasonably be expected to be available. On this basis, the directors have formed a judgement at the time of approving the condensed financial statement that they consider it appropriate to prepare these condensed financial statements on the going concern basis. The financial statements do not include any adjustments that would result should the going concern basis of accounting no longer be appropriate. WREN HOMES GROUP PLC NOTES TO THE INTERIM RESULTS 2. (Loss)/earnings per share Basic (loss)/earnings per share The calculation of basic (loss)/earnings per share for the year ended 31 July 2007 and for the six months ended 31 January 2007 and 2008 have been determined as the net (loss)/profit after tax divided by the weighted average number of equity shares in issue in the year. 6 Months 6 Months Year ended ended 31 Jan ended 31 Jan 31 July 2008 2007 2007 £ £ £ Net (loss)/profit attributable to ordinary shareholders (269,730) 168,704 535,134 Number of ordinary shares Issued ordinary shares at the beginning of the period 40,422,387 32,089,054 32,089,054 Issue of shares in the period - 8,333,333 8,333,333 Issued ordinary shares at the end of 40,422,387 40,422,387 40,422,387 the period Weighted average number of ordinary shares Issued ordinary shares at the beginning of the period 40,422,387 32,089,054 32,089,054 Issue of shares part way through the - 2,853,261 5,570,776 period Weighted average number of ordinary shares during the year 40,422,387 34,942,315 37,659,830 Basic (loss)/earnings per share (0.66p) 0.48p 1.42p Diluted (loss)/earnings per share 6 Months 6 Months Year ended ended 31 Jan ended 31 Jan 31 July 2008 2007 2007 Diluted (loss)/earnings per share at (0.66)p 0.48p 1.42p period end Diluted earnings/(loss) per share is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period adjusted for the effects of all potentially dilutive shares. There were no potentially dilutive shares in issue during the periods under review. WREN HOMES GROUP PLC NOTES TO THE INTERIM RESULTS 3. Goodwill The directors are of the opinion that there has been no impairment to the goodwill. 4. Property, plant and equipment Fixtures, fittings and equipment Motor Total vehicles £ £ £ Cost At 31 July 2007 33,334 92,146 125,480 Additions in period 2,354 150,173 152,527 At 31 January 2008 35,688 242,319 278,007 Depreciation At 31 July 2007 16,276 33,956 50,232 Charge for the period 3,000 8,305 11,305 At 31 January 2008 19,276 42,261 61,537 Net book values At 31 January 2008 16,412 200,058 216,470 At 31 July 2007 17,058 58,190 75,248 Included above are assets held under finance leases or hire purchase contracts asfollows : Fixtures, fittings and equipment Motor Vehicles Total £ £ £ Net book values At 31 January 2008 - 200,058 200,058 At 31 July 2007 - 58,190 58,190 Depreciation charge for the period Six months to 31 January 2008 - 8,305 8,305 WREN HOMES GROUP PLC NOTES TO THE INTERIM RESULTS 5. Share Capital 31 Jan 2008 31 Jan 2007 31 July 2007 £ £ £ Authorised 100,000,000 Ordinary shares of 10p 10,000,000 9,901,972 10,000,000 each 10,892,000 Deferred shares of 0.9p - 98,028 - each 10,000,000 10,000,000 10,000,000 Allotted, issued and fully paid 40,422,387 Ordinary shares of 10p each 4,042,238 4,042,238 4,042,238 10,892,000 Deferred shares of 0.9p - 98,028 - each 4,042,238 4,140,266 4,042,238 On 18 April 2007 the company was granted permission by the High Court of Justice to cancel the deferred shares. The deferred shares ranked pari passu with existing ordinary shares after the holders of ordinary shares shall have received in return or distribution of £1 million for each ordinary share held, as to the right to return or distribution of capital. They also rank pari passu with existing ordinary shares after the holders of ordinary shares shall have received payment of a dividend in each financial year of £1 million for each ordinary share held, as to the right to payment of dividends. 6. Reserves Share Capital Profit and premium redemption loss account reserve account £ £ £ Balance at 1 August 2007 3,751,365 98,028 1,050,796 Retained loss for the period - - (269,730) Balance at 31 January 2008 3,751,365 98,028 781,066 The capital redemption reserve relates to the cancellation of the deferred shares (note 5). WREN HOMES GROUP PLC NOTES TO THE INTERIM RESULTS 7. Operating lease arrangements The group as a lessee The total of future minimum lease payments under non cancelable operating leases are as follows: Land and Building Other 31 January 31 January 31 July 31 January 31 January 31 July 2008 2007 2007 2008 2007 2007 Expiry Date : £ £ £ £ £ £ In the second to fifth years inclusive 116,135 147,435 132,310 4,145 5,417 4,695 Operating lease payments in respect of land and building represents rentals payable by the group for its registered office. The lease expires on 15 October 2011, with 6.5% increases on the lease payments on 15 October 2007 and 15 October 2008. Other operating lease payments represent rentals payable by the group for office equipment. Leases are negotiated for an average term of 5 years and rentals are fixed for an average of 5 years. The group as a lessor Property rental income earned during the period was £7,245 (31 January 2007 £5,100 31 July 2007 £10,250). The properties held by the group are expected to generate rental yields of 4.38% on an ongoing basis. The group only held one investment property at the balance sheet date. This property has a committed tenant until April 2008, generating future operating lease income of £2,625. The existing tenant will not renew the tenancy and the Company is currently carrying out a market appraisal in respect of the future of the property. 8. Transactions with Directors At 31 January 2008 the Group owed P J West £289 (31 January 2007 £289, 31 July 2007 £289). No interest is charged on the loan. During the period £20,000 (31 January 2007 £10,000, 31 July 2007 £19,600) was paid to Self & Co (of which P Self is the sole proprietor) for the provision of accountancy services. During the period £5,000 (31 January 2007 £1,250 31 July 2007 £6,250) was paid to B Nathan for his services as a non-executive director. 9. Availability Copies of the interim results will be sent to all shareholders and will also be available at the registered office of the Company, Suite 4, Oaks House, 12-22 West Street, Epsom, KT18 7RG. WREN HOMES GROUP PLC NOTES TO THE INTERIM RESULTS 10. Cash flow statement Reconciliation of operating profit to operating cash flow 31 Jan 2008 31 Jan 2007 31 July 2007 £ £ £ (Loss)/profit from operations (457,045) 75,926 494,186 Depreciation of tangible assets 11,305 7,762 17,782 Development loan interest included in cost of sales - - 44,228 (Increase)/decrease in work in (4,361,984) (336,775) (1,202,631) progress Increase/(decrease) in receivables 1,014,498 (341,668) (958,017) Decrease in payables 70,677 217,422 261,092 Net cash outflow from operating (3,722,549) (377,333) (1,343,360) activities Income tax paid (516,575) - - Cash flows from operating (4,239,124) (377,333) 1,343,360) activities 11. Investment in subsidiary During the period under review Crowborough SPV Limited was incorporated, a wholly owned subsidiary of Wren Homes Plc, the results of which are consolidated into the condensed financial information. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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