TIDMWHG
RNS Number : 5370M
Wren Homes Group PLC
30 January 2009
Wren Homes Group Plc (WHG/L)
("Wren" or "the Group"),
Preliminary Statement of results
For Year Ended 31 July 2008
Wren Homes Group Plc, the AIM listed provider of retirement living, through a
range of Extra Care and other services for the independent elderly, announces
preliminary results for
the year ended 31 July 2008.
Highlights
* Market conditions continue to be very difficult and Wren has not been immune to
these conditions. Although sales of remaining retirement units continue, the
pace of sales has slowed
* Turnover of GBP84,000 (2007: GBP2,218,000) and loss for the year of GBP910,137
(2007: profit GBP535,134), reflecting the adverse conditions encountered in the
housing market during the year and the Board's decision 18 months ago to curtail
new building work into the downturn and thereby to reduce potential exposure to
unsold units across portfolio
* Continued focus on the Extra Care sector - growing demographic and government
imperative to offer Extra Care to an ageing UK population
* Building work commenced at the first 54 unit Extra Care development at the
second site in Warlingham, Surrey - already 110 people have registered an
interest
* Planning permission granted for further 53 Extra Care units at Crowborough;
other planning consents expected in near future
* GBP4m investment into Wren by Dominic Wainford in October 2008
* Company is taking opportunity to review and strengthen a number of its business
practices and to reduce its cost base
* Part-exchange packages and letting of unsold retirement units will be considered
where appropriate; unsold houses have all been let
* These measures will generate further revenues and produce a cost base more in
line with activity
* The Group's Bank has confirmed that at the time of writing, it sees no reason
why existing loans cannot be renegotiated and extended, with sufficient
facilities made available to support the company
* To preserve cash, Directors have decided not to pay a dividend (2007:
GBP121,267)
Brian Nathan, Non-Executive Chairman of Wren Homes Group Plc, commented:
"At the time of writing, we are faced by a very difficult and challenging market
which is constantly changing and evolving. Despite this, Wren is making steady
progress and is positioning itself so that it can most effectively weather the
storm and also capitalise on any improvements in market conditions when they
arise. "
"The Board is confident that the new revenue generation and cost saving measures
outlined below, together with planned developments, will substantially improve
the company's outlook and prospects."
"In addition, Wren has continued to acquire sites under option and the Group has
a substantial and growing "virtual" land bank, which underpins the confidence
your Directors have in Wren's future as an Extra Care developer."
"Wren has an intentionally lean, dedicated and effective team of staff and I
thank them for their loyalty and conscientious work during these difficult
times, which will undoubtedly have its rewards for the company in the coming
years."
Enquiries:
+-----------------------------+------------------------------------------+
| Wren Homes Group plc | |
+-----------------------------+------------------------------------------+
| Paul Treadaway | Tel: 01372 742 244 |
| CEO | www.wrenhomesplc.co.uk |
+-----------------------------+------------------------------------------+
| | |
+-----------------------------+------------------------------------------+
| Shore Capital | |
+-----------------------------+------------------------------------------+
| Pascal Keane | Tel: 020 7408 4090 |
+-----------------------------+------------------------------------------+
| | |
+-----------------------------+------------------------------------------+
| Adventis Financial PR | |
+-----------------------------+------------------------------------------+
| Tarquin Edwards / Chris | Tel: 020 7034 4758/59 - 07879 458 364 / |
| Steele | 07979 604 687 |
+-----------------------------+------------------------------------------+
The financial information set out in this preliminary announcement does not
constitute the Group's financial statements (as defined by s240 of the companies
Act 1985) for the year ended 31 July 2008.
Wren Homes Group Plc
Chairman's Statement
Year ended 31 July 2008
Trading Results
When I wrote my Chairman's statement in April 2008 for our interim results for
the six months ending 31 January 2008, I emphasised the difficult trading
conditions. As shareholders will be acutely aware, the economic situation in the
UK has deteriorated considerably since the spring of 2008 and has driven the
housing market into a severe crisis which is considered comparable with some of
the worst on record.
Fortunately, the Board adopted a prudent approach to planned developments 18
months ago when market conditions began to deteriorate and postponed new
building works. The company therefore has a smaller inventory of unsold housing
units than might otherwise have been the case and by comparison with some of its
competitors.
That said, we have not been immune from the difficult market conditions and
sales of the remainder of our retirement units at our first site at Warlingham,
have slowed. Although the purchasers of our retirement homes are generally
mortgage free, they are likely to have to sell their existing homes first, which
causes a considerable delay to the purchase of their retirement home. The
company is, however, still seeing continued sales, albeit at a slower pace.
It is with these challenges in mind, that I report a disappointing loss for the
year of GBP910,137 (2007: profit - GBP535,134) on turnover of GBP84,000 (2007:
GBP2,218,000).
In light of the difficult market conditions, the company is taking the
opportunity to review and strengthen a number of its business practices and to
reduce its cost base. The company has a manageable debt position and is in the
process of renegotiating some outstanding loans that have come up for renewal.
The Board believes that these measures will generate further revenues and
produce a cost base which is more in line with the level of activity in the
company. Further information is included below.
Dividend
Preserving cash is paramount in the current economic climate and although the
company has sufficient funds to pay a dividend, your Directors have taken the
decision not to pay one until property market activity returns to more normal
levels.
Measures to Strengthen the Company
In a renewed focus on revenue generation and cash flow, the Board has already
undertaken or has identified a number of measures to improve the company's
performance.
I have already mentioned that there remains interest in our original development
of retirement homes at Warlingham, but that the conversion of interest to sales
has been hampered by the inability of our potential clients to sell their
existing homes, brought on by difficulties in the mortgage market.
To address this delay, we have decided to offer potential buyers a part-exchange
package, where appropriate. The properties to be assumed by Wren will be
independently valued and will be good properties in the South East and typically
two to three bedroom houses which will be readily saleable in a normal market.
Wren will sell these properties immediately or rent them out until conditions
improve and it is already in the process of letting a number of those homes that
come into its possession through part-exchange. As a result, we are confident of
selling the few remaining retirement homes at Warlingham during the coming
months either directly or through part-exchange and receiving new rental income
to offset interest payments where a part-exchange takes place.
Where there are offers to rent existing units at Warlingham, rather than to
purchase them outright, Wren will consider any letting opportunities and plan to
sell them when markets improve.
For our completed house stock, we have already taken the opportunity to secure
rental income and have let nearly all our empty, unsold homes. This has
nullified the effect of interest payable on financing associated with the
development of those homes and will allow for the sale of those houses when
conditions improve.
The company has already reviewed its cost base in detail and has identified
significant cost savings throughout the company. It has started the process for
reducing costs so that they are more in line with the levels of company activity
and the Board believes that with these savings in place, Wren will be better
positioned until market conditions improve and new developments are ready for
sale.
As mentioned above, in order to improve cash flow the company will not be paying
a dividend (2007: GBP121,267)
With these and other measures as necessary in place, the Board believes that the
company will be in a much stronger position going forward.
Repositioning Wren in the Marketplace
In my statement for our interim results dated 30 April 2008, I explained the
importance of our focus on the second generation of retirement living, "Extra
Care" (defined by the Government as being positioned between 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 of their own homes. This sector is
now at the forefront of Government thinking because of the benefits it offers to
those people who require increasing support but are still able to live an
independent life.
Wren's Extra Care developments will enable residents to receive extra care in
accordance with changing needs over time and will support them with additional
facilities such as 24/7 on-site staffing and care lines, a restaurant, a
lounge/conservatory, a coffee bar, activities room, salon and treatment room, a
laundry and other complementary support facilities.
Work in Progress
Wren has recently commenced the building works of its first Extra Care
development at its second site at Warlingham in Surrey which will comprise 54
units. This building will be completed in Spring 2010. It is encouraging that
since building commenced in early November 2008, 110 people have registered
their interest in buying a unit in this development. Wren hopes to have a
register of 500 interested parties by the time the building is completed.
I am also pleased to report that planning permission for a development of 53
Extra Care units has been granted at our site at Crowborough and it is our
intention to commence construction there as soon as possible. Other planning
consents are expected in the near future.
Capital Investment
Towards the end of October 2008, a successful property developer, Dominic
Wainford, confirmed the inherent potential of Wren by investing GBP4m in the
company, in accordance with the terms of the agreement ratified by the EGM on 31
October 2008. It gives me great pleasure to welcome Mr Wainford to our Board and
his experience will be invaluable as Wren expands its activities in the coming
months and years.
Bank support
The Group's Bank has confirmed that it intends to continue its banking and
financing relationship with Wren Homes and at the time of writing sees no reason
why existing loans cannot be renegotiated and extended, with sufficient
facilities made available to support the company. As per the normal course of
business, the Banking facilities will be subject to approval by the Bank's
Credit Committee.
Going Concern
As set out in the notes to the consolidated financial statements, the group's
working capital facility and loan agreements are currently being renegotiated
with the bankers. The Directors, after making appropriate enquiries, as
described in note 2 to the preliminary announcement, believe that the Group,
with the renegotiated loans and facilities, has adequate resources to continue
in operational existence for the foreseeable future. For this reason, they
continue to adopt the going concern basis in the preparation of the Financial
Statements.
Outlook and Prospects
At the time of writing, we are faced by a very difficult and challenging market
which is in a constant state of change. Notwithstanding this, Wren is making
steady progress and is positioning itself so that it can most effectively
weather the storm and also capitalise on any improvements in market conditions
when they arise.
The Board is confident that the new business strengthening measures outlined
above, together with planned developments, will substantially improve the
company's outlook and prospects.
In addition, Wren has continued to acquire sites under option and the Group has
a substantial and growing "virtual" land bank, which underpins the confidence
your Directors have in Wren's future as an Extra Care developer.
Wren has an intentionally lean, dedicated and effective team of staff and I
thank them for their loyalty and conscientious work during these difficult
times, which will undoubtedly have its rewards for the company in the coming
years.
B Nathan
Chairman
30 January 2009
Wren Homes Group Plc
Consolidated Income Statement (unaudited)
For the year ended 31 July 2008
+--------------------------------------+------------+-------------+-------------+
| | | Year ended | Year ended |
| | | 31 July | 31 July |
| | | 2008 | 2007 |
+--------------------------------------+------------+-------------+-------------+
| | Note | GBP | GBP |
+--------------------------------------+------------+-------------+-------------+
| Revenue | | 84,000 | 2,218,000 |
+--------------------------------------+------------+-------------+-------------+
| Cost of sales | | (141,255) | (872,312) |
| | | | |
+--------------------------------------+------------+-------------+-------------+
| Gross(loss)/profit | | (57,255) | 1,345,688 |
+--------------------------------------+------------+-------------+-------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
| Administrative expenses | | (1,178,471) | (851,502) |
| | | | |
+--------------------------------------+------------+-------------+-------------+
| (Loss)/profit from operations | | (1,235,726) | 494,186 |
+--------------------------------------+------------+-------------+-------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
| Net loss from fair value adjustment | 4 | (10,000) | - |
+--------------------------------------+------------+-------------+-------------+
| Investment income | | 161,253 | 322,889 |
+--------------------------------------+------------+-------------+-------------+
| Finance cost | | (38,578) | (57,941) |
| | | | |
+--------------------------------------+------------+-------------+-------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
| (Loss)/profit before tax | | (1,123,051) | 759,134 |
+--------------------------------------+------------+-------------+-------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
| Income tax charge | | 212,914 | (224,000) |
| | | | |
+--------------------------------------+------------+-------------+-------------+
| (Loss)/profit for the year from | | (910,137) | 535,134 |
| continuing operations | | | |
+--------------------------------------+------------+-------------+-------------+
| All attributable to equity holders | | | |
| of the parent | | | |
+--------------------------------------+------------+-------------+-------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
| (Loss)/earnings per share | | | |
+--------------------------------------+------------+-------------+-------------+
| Basic | 3 | (2.23)p | 1.42p |
+--------------------------------------+------------+-------------+-------------+
| Diluted | 3 | (2.23)p | 1.42p |
+--------------------------------------+------------+-------------+-------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
| |
+-------------------------------------------------------------------------------+
| | | | |
+--------------------------------------+------------+-------------+-------------+
Wren Homes Group Plc
Consolidated Balance Sheet as at 31 July 2008 (unaudited)
+----------------------------+-------+--------------+--------------+------------+
| | | | 31 July 2008 | 31 July |
| | | | | 2007 |
+----------------------------+-------+--------------+--------------+------------+
| | Note | | GBP | GBP |
+----------------------------+-------+--------------+--------------+------------+
| Non-current assets | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Goodwill | 6 | | 3,135,203 | 3,135,203 |
+----------------------------+-------+--------------+--------------+------------+
| Investment property | 4 | | 230,000 | 240,000 |
+----------------------------+-------+--------------+--------------+------------+
| Property plant & equipment | | | 194,214 | 75,248 |
+----------------------------+-------+--------------+--------------+------------+
| Trade & other receivables | | | 2,675,000 | 2,675,000 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Total non-current assets | | | 6,234,417 | 6,125,451 |
+----------------------------+-------+--------------+--------------+------------+
| Current Assets | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Inventories | | | 6,932,160 | 2,435,571 |
+----------------------------+-------+--------------+--------------+------------+
| Trade & other receivables | | | 1,035,384 | 2,315,489 |
+----------------------------+-------+--------------+--------------+------------+
| Cash & cash equivalents | | | 80 | 902,665 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Total current assets | | | 7,967,624 | 5,653,725 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Total Assets | | | 14,202,041 | 11,779,176 |
+----------------------------+-------+--------------+--------------+------------+
| Current Liabilities | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Trade payables | | | 365,474 | 262,507 |
+----------------------------+-------+--------------+--------------+------------+
| Tax liabilities | | | 122,327 | 866,393 |
+----------------------------+-------+--------------+--------------+------------+
| Obligations under finance | | | 35,497 | 53,361 |
| leases | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Other payables | | | 286,639 | 77,073 |
+----------------------------+-------+--------------+--------------+------------+
| Bank overdrafts and loans | | | 5,352,340 | 1,577,415 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Total current liabilities | | | 6,162,277 | 2,836,749 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Non-current liabilities | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Obligations under finance | | | 128,741 | - |
| leases | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Total liabilities | | | 6,291,018 | 2,836,749 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| | | | 7,911,023 | 8,942,427 |
+----------------------------+-------+--------------+--------------+------------+
| | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Equity | | | | |
+----------------------------+-------+--------------+--------------+------------+
| Issued share capital | | | 4,042,238 | 4,042,238 |
+----------------------------+-------+--------------+--------------+------------+
| Share premium account | | | 3,751,365 | 3,751,365 |
+----------------------------+-------+--------------+--------------+------------+
| Capital redemption reserve | | | 98,028 | 98,028 |
+----------------------------+-------+--------------+--------------+------------+
| Retained earnings | | | 19,392 | 1,050,796 |
| Total equity attributable | | | 7,911,023 | 8,942,427 |
| to equity holders of the | | | | |
| parent | | | | |
+----------------------------+-------+--------------+--------------+------------+
Wren Homes Group Plc
Consolidated Statement of Changes in Equity (unaudited)
For the year ended 31 July 2008
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | | | | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | Share | Share | Capital | Retained | Total |
| | Capital | Premium | Redemption | Reserves | GBP |
| | GBP | GBP | Reserve | GBP | |
| | | | GBP | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Balance at 1 August 2007 | 4,042,238 | 3,751,365 | 98,028 | 1,050,796 | 8,942,427 |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| (Loss) for the year | - | - | - | (910,137) | (910,137) |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Payment of dividends | - | - | - | (121,267) | (121,267) |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | | | | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Balance at 31 July 2008 | 4,042,238 | 3,751,365 | 98,028 | 19,392 | 7,911,023 |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | | | | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | | | | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | | | | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | | | | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| | Share | Share | Capital | Retained | Total |
| | Capital | Premium | Redemption | Reserves | GBP |
| | GBP | GBP | Reserve | GBP | |
| | | | GBP | | |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Balance at 1 August 2006 | 3,306,933 | 2,104,763 | - | 616,738 | 6,028,434 |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Profit for the year | - | - | - | 535,134 | 535,134 |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Issue of shares | 833,333 | 2,166,667 | - | - | 3,000,000 |
+---------------------------+-----------+-----------+------------+-----------+-----------+
| Share costs | - | (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 (unaudited)
For the year ended 31 July 2008
+----------------------------------+--------+---------------+------------+-------------+
| | | 2008 | | 2007 |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| | Note | GBP | | GBP |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Cash flows from operating | 5 | (4,659,725) | | (1,343,360) |
| activities | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Investing activities | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Interest received | | 161,255 | | 322,889 |
+----------------------------------+--------+---------------+------------+-------------+
| Interest paid on loans and bank | | (42,362) | | (20,357) |
| overdrafts | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Interest paid on development | | (8,606) | | (44,228) |
| loans | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Other interest paid | | 12,390 | | (37,584) |
+----------------------------------+--------+---------------+------------+-------------+
| Purchase of tangible assets | | (153,431) | | (20,800) |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Cash flows from investing | | (30,755) | | 199,920 |
| activities | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Financing activities | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| New bank loans | | 3,209,364 | | 519,985 |
+----------------------------------+--------+---------------+------------+-------------+
| New hire purchase agreements | | 136,853 | | - |
+----------------------------------+--------+---------------+------------+-------------+
| Directors loan | | 23,360 | | |
+----------------------------------+--------+---------------+------------+-------------+
| Other loans repaid | | - | | (501,737) |
+----------------------------------+--------+---------------+------------+-------------+
| Bank loans repaid | | (235,974) | | (269,088) |
+----------------------------------+--------+---------------+------------+-------------+
| Hire purchase repayments | | (25,976) | | (10,535) |
+----------------------------------+--------+---------------+------------+-------------+
| Share issue | | - | | 2,479,935 |
+----------------------------------+--------+---------------+------------+-------------+
| Dividends paid | | (121,267) | | (101,076) |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Cash flows from financing | | 2,986,360 | | 2,117,484 |
| activities | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Net increase/(decrease) in cash | | (1,704,120) | | 974,044 |
| and cash equivalents | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Cash and cash equivalents | | 741,044 | | (233,000) |
| brought forward | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| Cash and cash equivalents | | (963,076) | | 741,044 |
| carried forward | | | | |
+----------------------------------+--------+---------------+------------+-------------+
| | | | | |
+----------------------------------+--------+---------------+------------+-------------+
Wren Homes Group Plc
Notes to the Consolidated Financial Statement
For the year ended 31 July 2008
1. Financial information
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the years ended 31 July 2008 and 2007.
The accounts have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted for use by the European Union. Whilst the
financial information included in this preliminary announcement has been
prepared in accordance with the recognition and measurement criteria of IFRS, it
does not include sufficient information to comply with IFRS. The Group expects
to publish full financial statements which comply with IFRS on 30 January 2009.
The financial information has been prepared under the same accounting policies
as the Group's interim announcement for the period ended 31 January 2008 and
which can be viewed on the Group's website at www. wrenhomesplc.co.uk.
The comparative financial information for the year ended 31 July 2007 is derived
from the statutory accounts for the year ended 31 July 2007. The statutory
accounts for the year ended 31 July 2007 have been delivered to the Registrar of
Companies. The auditors have reported on the 2007 accounts; their report was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985.
The auditors have yet to sign their report on the 2008 accounts. The auditors
opinion on the consolidated financial statements for the year ended 31 July 2008
will include two emphases of matter, The first relates to Wren's ability to
continue as a going concern as detailed in note 2 below. The second relates to
the uncertainty of the forecasts prepared for the goodwill annual impairment
test as disclosed in note 6 below. The statutory accounts for the year ended 31
July 2008 will be finalised on the basis of the financial information presented
by the Directors in this preliminary announcement and on events which take place
between the date of this preliminary announcement and the date of finalising the
statutory accounts and will be delivered to the Registrar of Companies following
the company's Annual General Meeting. The financial information set out in this
announcement was approved by the Board of Directors on 30 January 2009.
2. Going concern
The Directors have projected cash flow information for the period to April 2010.
In preparing these cash flows, the Directors are assessing on a regular basis
the sales activity and costs of the business. On the basis of this cash flow
information, the Directors are of the opinion that a working capital facility
and development bank loans are required to fund new developments and running
costs. In addition, there are loans and overdraft facilities of GBP5,383,658
which are due for renewal during the ensuing year. The group is currently
renegotiating the facility and loans with the bank and has correspondence from
the bank indicating that the bank is expecting to continue its banking and
financing relationship with the Group and that at the time of writing, saw no
reason why existing loans could not be renegotiated and extended, with
sufficient facilities made available to support the company, subject to approval
by the Bank's Credit Committee.
The financial statements have been prepared on the going concern basis. This
basis of preparation relies on the successful outcome of the renewal of the
working capital facility and loans. The directors are confident of a successful
outcome. Accordingly the directors consider that the going concern basis for
the preparation of the consolidated financial statements is appropriate.
+----+----------------------------------------+--------+------------+------------+
| | | | | |
+----+----------------------------------------+--------+------------+------------+
Wren Homes Group Plc
Notes to the Consolidated Financial Statement
For the year ended 31 July 2008
+----+----------------------------------------+--------+------------+------------+
| 3 | Earnings per Share | | | |
+----+----------------------------------------+--------+------------+------------+
+---+---+---+----------------------------------------+---+--------+-------------+-----+---+---+
| | | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Basic (loss)/earnings per share | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | The calculation of basic (loss)/earnings per share for the years ended 31 |
| | July 2008 and 31 July 2007 have been determined as the net profit after tax |
| | divided by the weighted average number of equity shares in issue in the |
| | year. |
+-----------+---------------------------------------------------------------------------------+
| | | | 2008 | 2007 |
+-----------+----------------------------------------+------------+-------------+-------------+
| | | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Net profit attributable to ordinary | | (910,137) | 535,134 |
| | shareholders | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Number of ordinary shares | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Issued ordinary shares at the | | 40,422,387 | 32,089,054 |
| | beginning of the year | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Issue of shares in the year | | - | 8,333,333 |
| | | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Issued ordinary shares at the end of | | 40,422,387 | 40,422,387 |
| | the year | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Weighted average number of ordinary | | | |
| | shares | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Issued ordinary shares at the | | 40,422,387 | 32,089,054 |
| | beginning of the year | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Issue of shares part way through the | | - | 5,570,776 |
| | year | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Weighted average number of ordinary | | 40,422,387 | 37,659,830 |
| | shares during the year | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | Basic (loss)/earnings per share | | (2.23)p | 1.42p |
| | | | | |
+-----------+----------------------------------------+------------+-------------+-------------+
| | | | | |
+-------+------------------------------------------------+--------+-------------+---------+
| | Diluted (loss)/earnings per share | | (2.23)p | 1.42p |
+-------+------------------------------------------------+--------+-------------+---------+
| | | | | |
+-------+------------------------------------------------+--------+-------------+---------+
| | Earnings per share requires presentation of diluted loss per share when a |
| | company could be called upon to issue shares that would decrease net profits |
| | or increase net loss per share. For a loss making company with outstanding |
| | share options, net loss per share would only be decreased by the exercise of |
| | out-of-the-money share options. No adjustment has been made to diluted loss |
| | per share for out-of-the-money share options and there are no other diluting |
| | future share issues, therefore diluted loss per share is identical to the |
| | basic loss per share. |
| | |
+---+---+---+----------------------------------------+---+--------+-------------+-----+---+---+
Wren Homes Group Plc
Notes to the Consolidated Financial Statements
For the year ended 31 July 2008
+----+------------------------------------------+-------------+----------+----------+
| | | | | |
+----+------------------------------------------+-------------+----------+----------+
+-------------------------------------------------------+-------------+------------+
| 4 Investment Property |
+----------------------------------------------------------------------------------+
| | | |
+-------------------------------------------------------+-------------+------------+
| Fair value | GBP | |
| | | |
+-------------------------------------------------------+-------------+------------+
| Balance at 1 August 2006 and 2007 | 240,000 | |
| | | |
+-------------------------------------------------------+-------------+------------+
| Impairment charge | (10,000) | |
+-------------------------------------------------------+-------------+------------+
| | | |
+-------------------------------------------------------+-------------+------------+
| Balance at 31 July 2008 | 230,000 |
+-------------------------------------------------------+-------------+
| | | |
+-------------------------------------------------------+-------------+------------+
| Investment properties have been valued on 31 July 2008 at fair value at an open |
| market value basis. An impairment charge has been made in the year of GBP10,000 |
| to reflect the decrease in the value of the property. |
| The property rental income earned by the group from its investment property, |
| which is leased out under an operating lease, amounted to GBP10,992 (2007: |
| GBP10,250). Direct operating expenses arising on the investment property in the |
| period amounted to GBP10,392 (2007: GBP26,449). |
+-------------------------------------------------------+-------------+------------+
+------------------------------------+------------+-------------+-------------+
| 5 Cash flow statement | | | |
+------------------------------------+------------+-------------+-------------+
| Reconciliation of operating (loss)/profit to cash flows from | |
| operating activities | |
+---------------------------------------------------------------+-------------+
| | | | |
+------------------------------------+------------+-------------+-------------+
| | | 31 July | 31 July |
| | | 2008 | 2007 |
+------------------------------------+------------+-------------+-------------+
| | | GBP | GBP |
+------------------------------------+------------+-------------+-------------+
| | | | |
+------------------------------------+------------+-------------+-------------+
| (Loss)/profit from operations | | (1,235,726) | 494,186 |
+------------------------------------+------------+-------------+-------------+
| Depreciation of tangible assets | | 34,465 | 17,782 |
+------------------------------------+------------+-------------+-------------+
| Development loan interest included | | - | 44,228 |
| in cost of sales | | | |
+------------------------------------+------------+-------------+-------------+
| (Increase)/decrease in work in | | (4,496,589) | (1,202,631) |
| progress | | | |
+------------------------------------+------------+-------------+-------------+
| Decrease/(increase) in receivables | | 1,294,055 | (958,017) |
+------------------------------------+------------+-------------+-------------+
| Increase/(decrease) in payables | | 269,099 | 261,092 |
+------------------------------------+------------+-------------+-------------+
| | | | |
+------------------------------------+------------+-------------+-------------+
| Net cash (outflow)/inflow from operating | (4,134,696) | (1,343,360) |
| activities | | |
| | | |
+-------------------------------------------------+-------------+-------------+
| Income tax paid | (525,029) | - |
| | | |
+-------------------------------------------------+-------------+-------------+
| Cash flows from operating activities | (4,659,725) | (1,343,360) |
| | | |
+------------------------------------+------------+-------------+-------------+
+----+------------------------------------------------------------+------------+
| 6 | Wren Homes Group Plc | GBP |
| | Notes to the Consolidated Financial Statements | |
| | For the year ended 31 July 2008 | |
| | Goodwill | |
+----+------------------------------------------------------------+------------+
| | Cost | |
+----+------------------------------------------------------------+------------+
| | At 1 August 2007 | 3,420,221 |
| | | |
+----+------------------------------------------------------------+------------+
| | | |
+----+------------------------------------------------------------+------------+
| | At 31 July 2008 | 3,420,221 |
| | | |
+----+------------------------------------------------------------+------------+
| | Accumulated amortisation: | |
+----+------------------------------------------------------------+------------+
| | At 1 August 2007 | 285,018 |
+----+------------------------------------------------------------+------------+
| | | |
+----+------------------------------------------------------------+------------+
| | At 1 July 2008 | 285,018 |
| | | |
+----+------------------------------------------------------------+------------+
| | Net book Values | |
| | | |
+----+------------------------------------------------------------+------------+
| | At 31 July 2008 | 3,135,203 |
| | | |
+----+------------------------------------------------------------+------------+
| | At 31 July 2007 | 3,135,203 |
| | | |
+----+------------------------------------------------------------+------------+
| | The group conducts annual impairment tests of the carrying value of |
| | goodwill, based on the recoverable amount of the cash generating unit |
| | (CGU), of which the Group only has one. |
| | The recoverable amounts for the cash-generating units are determined |
| | from value in use calculations. The key assumptions for the value in |
| | use calculations are those regarding the discount rates, growth rates |
| | and expected changes to selling prices and direct costs during the |
| | period. Management estimates discount rates using pre-tax rates that |
| | reflect the current market assessments of the time value of money and |
| | the risks specific to the cash-generating unit. The growth rates are |
| | based on industry growth forecasts. Changes in selling prices and |
| | direct costs are based on past practices and expectations of future |
| | changes in the market. |
| | The group prepares cash flow forecasts derived from the most recent |
| | financial budgets approved by management for the next five years and |
| | extrapolates cash flows for the following five years based on the |
| | development of the company's property portfolio. This rate does not |
| | exceed the average long term growth rate for the relevant markets. The |
| | approved cash flow projections in the three financial years following |
| | this year reflect management's expectation of the performance of the |
| | CGU and growth prospects in the Extra Care retirement sector. Whilst |
| | these cash flows do show the value in use is in excess of the carrying |
| | value of the goodwill, there are uncertainties as to the assumption |
| | used in the calculation and to the performance of the business and |
| | developments due to the current economic environment. |
| | Amortisation charge |
| | In accordance with IFRS, the goodwill arising on consolidation has not |
| | been amortised since the opening balance sheet date for IFRS |
| | implementation of 1 August 2005. |
| | |
+----+------------------------------------------------------------+------------+
Wren Homes Group Plc
Notes to the Consolidated Financial Statements
For the year ended 31 July 2008
+----+------------------------------------+------------+------------+------------+
| 7 | Post balance sheet events | | | |
| | | | | |
+----+------------------------------------+------------+------------+------------+
| | The following events have taken place since the balance sheet date |
+----+---------------------------------------------------------------------------+
| | | | | |
+----+------------------------------------+------------+------------+------------+
| a) | Issue of 10p ordinary share | | | |
| | | | | |
+----+------------------------------------+------------+------------+------------+
| | Date | Number | Issue | Proceeds |
| | | | price | |
+----+------------------------------------+------------+------------+------------+
| | 31 August 2008 | 1,500,000 | 10p | 150,000 |
+----+------------------------------------+------------+------------+------------+
| | 31 October 2008 | 10,000,000 | 10p | 1,000,000 |
+----+------------------------------------+------------+------------+------------+
| | 03 November 2008 | 500,000 | 11p | 55,000 |
+----+------------------------------------+------------+------------+------------+
| | | | | |
+----+------------------------------------+------------+------------+------------+
| b) | Convertible loan note | | | |
| | | | | |
+----+------------------------------------+------------+------------+------------+
| | On 31 October 2008 a GBP3,000,000 convertible loan note was issued. The |
| | loan is for five years and bears interest at 5 % and can be converted at |
| | any time prior to repayment by the holder. |
+----+---------------------------------------------------------------------------+
| | | | | |
+----+------------------------------------+------------+------------+------------+
| c) | Share options | | | |
| | | | | |
+----+------------------------------------+------------+------------+------------+
| | On 7 August 2008 share options were granted to the directors and certain |
| | key employees to subscribe for a total 3,000,000 shares at a price of |
| | 15p. The share price at the date of the grant was 15p The options are |
| | exercisable between 7 August 2008 and 7 August 2018. |
| | The 10,000,000 shares granted on 31 October 2008 were granted to D |
| | Wainford and the 500,000 shares granted on the 3 November 2008 were a |
| | share conversion by P Treadaway. |
| | The convertible loan note of GBP3,000,000 was issued to D Wainford. |
| | |
+----+------------------------------------+------------+------------+------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Wren (See LSE:WREN) (LSE:WHG)
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Wren (See LSE:WREN) (LSE:WHG)
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