RNS Number:4544T
Wren Homes Group PLC
30 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 independent
elderly, with operations in the South of England, announces interim results for
the 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 remains
challenging, Wren expects to sell the majority of its existing finished units
within the next twelve months. Wren's virtual land bank has doubled over the
last twelve months and we hope that it will continue to expand at a similar
rate, and at minimal cost, for the foreseeable future.
The Extra Care model developed by Wren has attracted much interest in financial
circles, both from lending banks and potential institutional investment sources.
We are confident that the Company will benefit significantly from the
development of homes within its Extra Care model over the medium term."
Enquiries:
Wren Homes Group plc
Paul Treadaway, Managing Director Tel: 01372 742 244
www.wrenhomesplc.co.uk
Shore Capital
Alex Borrelli Tel: 020 7408 4090
Adventis Financial PR
Tarquin Edwards Tel: 020 7034 4758 / 07879 458 364
Chris 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 independent
non-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 tenure
which, unfortunately, coincides with one of the worst downturns for the housing
sector in two decades. Wren, along with most others in the construction and
development industry, has experienced a modest decline in its activities and
reports 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 31
January 2008. The turnover for this period relates to the profit received under
a profit sharing agreement.
The Directors of Wren feel strongly that the Company has performed well and
continues to do so, in the current trading conditions, particularly by
comparison 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 housing
sector generally, with a knock-on effect on retirement housing, predicates the
need for caution. As a result, the Directors feel it appropriate to declare a
reduced 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 under
review.
Work-in-Progress
Although sales of finished retirement units at Warlingham and traditional flats
at Kenley have slowed, we believe that Wren is well placed to weather this
downturn 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 that
several of these should convert into completed sales shortly. The slowdown in
sales has been exacerbated by falling property prices as a result of illiquidity
in 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 Care
units, which has been secured on the same development terms as the first site.
Planning has also been received for two other retirement housing schemes, each
comprising 19 units, at Carshalton, which has now been purchased and Oxted, for
which final written funding terms are awaited agreed and it is envisaged that
construction work on these three sites will commence once market conditions
stabilise.
Land Bank
Wren has continued with its proven successful formula of acquiring sites under
option and subsequently submitting planning applications, for which it has a
success ratio of over 70%. This effectively provides Wren with a "virtual" land
bank at limited cost (up until land purchase is completed) until such time as
suitable planning permission is gained, the land purchase completed and
construction 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 231
Under Option and/or Planning Applied For 318
Planning Consent Granted/Owned 147
Built Completed for Sale 19
------
Total 715
===
With the exception of the five units at Kenley, all of the above sites and units
are focused on the retirement housing market, of which the majority will be for
Extra Care schemes ranging typically between 50 and 75 units each.
Retirement Market Focus
The Company's concept of repositioning its business towards the Extra Care
sector, 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 planning
consent, announced on 28 April 2008, within Tandridge Local Authority Area
Surrey as its retirement housing schemes include an increasing number of health
and care options for the ageing population of its residents.
Wren sees its move into this second generation of retirement living ("Extra
Care" as defined by the Government being positioned between the traditional
retirement homes and nursing homes) as a step closer towards the provision of a
wider range of services to support the independent elderly so that they may
continue 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 adverse
impact its developments may have. As a forward thinking company we are
continually considering new ideas and ways to create more environmentally
friendly homes, coupled with reducing the cost of living, for our ageing
residents. Thus our regeneration of "brownland" sites offers benefits, not only
to the environment but also to our customers. The use of previously developed
land ensures we work to preserve our countryside for future generations but also
allows us to situate our developments in established communities with easy
access to shops, transport and other amenities.
We are also at the forefront of efforts to use alternative technologies for
sustainable, renewable energy. All future projects in contemplation will include
EarthEnergyTM Systems (or such later suitable technology that may become
available) to utilise geothermal energy in household heating and hot water
systems. This not only helps us to conserve energy but also allows our
homeowners 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 has
enabled 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 Director
who 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 his
retirement.
Outlook and Prospects
The Company's products have been refined as a result of the retirement market
focus, set out above, and Wren is now engaged in acquiring, under option, more
suitable sites, seeking the necessary planning consents and making arrangements
to fund such schemes.
Whilst the current market in the UK for residential developments remains
challenging, Wren expects to sell the majority of its existing finished units
within the next 12 months.
Despite the adverse trading over the last six months, shareholders should be in
no doubt as to the underlying strength of the Company, with its virtual land
portfolio, which itself contains significant value and the support and hard work
provided by Wren's small dedicated management team.
Wren's virtual land bank has doubled over the last 12 months and we hope that it
will continue to expand at a similar rate, and at minimal cost, for the
foreseeable future. The Extra Care model developed by Wren has attracted much
interest in financial circles, both from lending banks and potential
institutional investment sources. We are confident that the Company will benefit
significantly from the development of homes within its Extra Care model over the
medium term.
Brian Nathan
Chairman
30 April 2008
WREN HOMES GROUP PLC
CONSOLIDATED INCOME STATEMENT
For the six months ended 31 Six months Six months Year
January 2008
ended ended ended
31 Jan 2008 31 Jan 2007 31 July 2007
unaudited unaudited audited
Note # # #
Continuing operations
Revenue 84,000 477,485 2,218,000
Cost 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 from
continuing operations
(393,970) 245,504 759,134
Income tax 124,240 (76,800) (224,000)
(Loss)/profit for the period from
continuing operations after tax
(269,730) 168,704 535,134
All attributable to equity
holders of the parent
Earnings per share
The weighted number of shares in 40,422,387 34,942,315 37,659,830
issue
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 assets
Goodwill 3 3,135,203 3,135,203 3,135,203
Investment property 240,000 240,000 240,000
Property plant & equipment 4 216,470 82,888 75,248
Trade & 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 Assets
Inventories 6,797,555 1,569,715 2,435,571
Trade & other receivables 1,300,991 2,224,140 2,315,489
Cash & 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 liabilities
Trade payables 328,090 291,912 262,507
Tax liabilities 184,934 679,275 866,393
Obligations under finance leases 66,212 11,965 53,361
Other payables 122,811 43,915 77,073
Bank 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 liabilities
Obligations 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
Equity
Issued share capital 5 4,042,238 4,140,266 4,042,238
Share premium account 6 3,751,365 3,764,896 3,751,365
Capital redemption reserve 6 98,028 - 98,028
Accumulated profits 6 781,066 785,442 1,050,796
Total equity attributable to
equity 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 31
January 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 8,942,427
Net loss for the period - - - (269,730) (269,730)
Balance at 31 January 4,042,238 3,751,365 98,028 781,066 8,672,697
2008
Six months ended 31
January 2007
Share Share Capital Retained Total
Capital Premium Redemption Reserves
# # # # #
Balance at 1 August 2006 3,306,933 2,104,763 - 616,738 6,028,434
Net profit for the period - - - 168,704 168,704
Share issue 833,333 1,660,133 - - 2,493,466
Balance at 31 January 4,140,266 3,764,896 - 785,442 8,690,604
2007
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 6,028,434
Net profit for the period - - - 535,134 535,134
Share issue 833,333 2,166,667 - - 3,000,000
Share 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 Year
2008
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 activities
Interest received 90,440 196,831 322,889
Interest paid on loans and bank (15,857) (7,336) (20,357)
overdrafts
Interest paid on development - - (44,228)
loans
Other interest paid (11,508) (19,917) (37,584)
Purchase of tangible assets (152,527) (18,420) (20,800)
Cash flows from investing (89,452) 151,158 199,920
activities
Financing activities
New loans 3,141,151 140,266 519,985
Other 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 2,479,935
Dividends paid - - (101,076)
Cash flows from financing 3,001,007 1,871,817 2,117,484
activities
Net (decrease)/increase in cash
and cash equivalents
(1,327,569) 1,645,642 974,044
Cash and cash equivalents brought 741,044 (233,000) (233,000)
forward
Cash and cash equivalents carried (586,525) 1,412,642 741,044
forward
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 as
follows :
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 Exchange
END
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