TIDMWREN
RNS Number : 8837Z
Wren Extra Care Group PLC
21 January 2011
For release on 21 January 2011
Wren Extra Care Group Plc (WREN.L)
("Wren" or "the Group" or "the Company"),
Unaudited Second Interim Results
For the six months ended 31 July 2010
Following a change in accounting reference date to 31 December
Wren Extra Care Group Plc, the AIM listed provider of retirement
living, through a range of Extra Care and other services for the
independent and elderly announces unaudited interim results for
six-month period to 31 July 2010.
-- Appointment of LPA receivers to subsidiary company and major
trading partners
-- Removal of CEO and change of head and registered office for
cost saving purposes
-- Company entering negotiations with LPA receivers to secure
key assets
-- Pursuing of former CEO for material financial
irregularities
-- Significant asset write downs leading to net liabilities
Brian Nathan, Chairman of Wren Extra Care Group Plc,
commented:
On 5th October 2010, at the company's request, the Company's
shares were suspended pending clarification of its financial
situation. Also on 5th October 2010 LPA receivers were appointed to
Wren Estates Ltd, a subsidiary company of the Group.
The financial impact of the above actions has led the Company to
write down material and significant assets comprising goodwill,
inventories of property stocks as well as amounts due from key
trading partners. These total GBP11,885,486 and are fully detailed
in note 2."
Enquiries:
Wren Extra Care Group
plc
James Butterfield Tel: 01435 865443
Corporate Development www.wrenextracare.co.uk
Director
Shore Capital
Pascal Keane Tel: 020 7408 4090
WREN EXTRA CARE GROUP PLC
CHAIRMAN'S STATEMENT
HALF YEAR ENDED 31 JULY 2010
Trading Results
In the six months to 31 July 2010, the directors embarked upon a
fund raising exercise to develop the Warlingham Two scheme.
Unfortunately the Company was not able to raise sufficient funds to
fulfil the capital requirements to fund the build out and complete
the scheme. Consequently the fundraising was aborted.
On 5th October 2010 it was announced that following a request
from the Company, trading in the shares had been suspended pending
clarification of the Company's financial position. This was due to
a subsidiary of the Company earlier receiving notice demanding the
immediate repayment of all sums due to its main lender. The
resultant default under the Loan Agreements led the Company to
request the suspension of its ordinary shares. At the same time the
Board decided to terminate the service agreement and directorship
of Paul Treadaway (formerly CEO of the Company).
Later on 5th October 2010 it was announced that that receivers
had been appointed to Wren Estates Ltd, a subsidiary company within
the Group, pursuant to the Law of Property Act 1925("LPA" or "LPA
receivers" as appropriate). On 6th October 2010, it was further
announced that LPA receivers had been appointed to Warlingham
Developments Ltd ("WD") and Warlingham Developments Two Ltd
("WD2"). WD and WD2 are not Group companies but companies with
which Wren Estates Ltd has profit share arrangements. In both
instances the Group has fully co-operated with the LPA receivers
GVA Grimley Ltd ("Grimleys"). The Group has not as yet been
notified of the intentions of either of the LPA receivers or of
sums due to its main lender (the "Lender").
The directors of the Company are working with Grimleys in order
to assist with an orderly realisation of assets and to work closely
with the Lender. In this respect the directors are seeking at the
earliest opportunity to consider making an offer for certain of
these assets at the same time as a capital reorganisation of the
Group to attract fresh inward investment.
On 5th October 2010 certain financial irregularities have come
to light including cash withdrawals using the Company credit card
and charging of substantial personal expenditure to the Company.
These matters continue to be investigated and legal action may be
initiated if appropriate.
In addition, it has come to light that part of the development
site assembled by WD2 has been acquired in the name of the current
partner of the former director, Paul Treadaway, using funds
provided by WD. This is contrary to the Board's understanding that
WD2 was the owner of all elements of the development site.
WD2 was funded by both the Lender and by Wren Estates Ltd for
the purposes of acquiring and developing the entire site. The fact
that a piece of land is currently not registered in the name of the
Company nor W2 may create problems for both the Lender and for Wren
Estates Ltd, both of whom are looking to the sale of the
development site to fund the payment of monies owing by WD2.
The Directors have provided this information to the Lender and
will be seeking to ensure that any damage to Wren is minimised as
far as possible.
Given the appointment of LPA receivers the Board has now decided
to write down material and significant assets comprising goodwill,
inventories of property stocks as well as amounts due from WD and
WD2.These writedowns total GBP11,885,486 and are fully detailed in
note 2.
Therefore for the year ended 31 July 2010, I am extremely
disappointed to report a loss of GBP12,909,410 (2009: GBP1,076,093)
on revenues of GBPNil (2009: GBP90,740) and for the six months to
31 July a loss of GBP12,370,883 (2009, loss, GBP523,133).The group
currently has net liabilities of GBP4,875,821 and is currently
looking to re- structure its capital base going forward.
Year end change
In order to give greater transparency within the residential
sector the directors have decided to change the Group's accounting
reference date to 31st December.
Work-in-Progress & Land Bank
The appointment of the LPA receivers effectively wipes out the
value of options over any prospective schemes, save over those
relative to the WD2.
Bank Support
As I stated above Grimleys were appointed on behalf of the
Lender to realise cash on behalf of the lenders. The directors
continue to aid with this process.
Break up basis
As set out in the notes to the consolidated unaudited Interim
Statement, the Group's working capital facility and loan agreements
have been called upon. The Directors, after making appropriate
enquiries, as described in note 1 to these interim results, have
prepared these these interim statements on a break up basis.
Outlook and Prospects
The directors of Wren believe that the future lies in the shape
of smaller "vanilla " residential schemes and is currently in talks
with its lenders and existing investors in order to maximise the
Group's financial future.
Wren's challenge for the foreseeable future, having identified
several good sites, for which some already have the requisite
planning consent, is to complete the funding packages necessary to
acquire and build these schemes. Despite the challenges that 2011
may well hold, I look forward to securing adequate funding to
complete these schemes.
B Nathan - Chairman
21 January 2011
WREN EXTRA CARE GROUP PLC
CONDENSED CONSOLIDATED INCOME STATEMENT
For the six
months ended 31
July 2010 Six months Six months Year Year
Ended Ended Ended Ended
31 July 31 July 31 July 31 July
2010 2009 2010 2009
Unaudited Unaudited Unaudited Audited
GBP GBP GBP GBP
Continuing
operations
Revenue - 39,840 - 90,740
Cost of sales - (12) - (70,129)
Gross profit - 39,828 - 20,611
Administration
expenses Asset (407,077) (527,376) (885,583) (1,094,215)
write downs 2 (11,885,486) - (11,885,486) -
Loss from
operations (12,292,563) (487,548) (12,771,069) (1,073,604)
Investment
income 111,606 107,300 225,974
Finance cost (78,320) (147,191) (245,641) (228,463)
Loss before tax
from
continuing
operations (12,370,883) (523,133) (12,909,410) (1,076,093)
Income tax - - - -
Loss for the
period from
continuing
operations
after tax (and
total
comprehensive
income) (12,370,883) (523,133) (12,909,410) (1,076,093)
============== ============ ============== =============
All
attributable to
equity holders
of the parent
Loss per share
The weighted
number of
shares in
issue 52,422,387 52,422,397 52,422,387 49,672,387
Basic and
diluted 3 (23.39)p (1.00)p (24.63)p (2.17)p
WREN EXTRA CARE GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEET
31 July
31 July 2010 2009
Unaudited Audited
Note GBP GBP
Non-current assets
Goodwill 4 - 3,135,203
Investment property 6 210,000 230,000
Property plant & equipment 5 - 23,217
Trade & other receivables - 2,675,000
Total non-current assets 210,000 6,063,420
Current assets
-------------- -------------
Inventories 2,905,122 6,993,585
Trade & other receivables 37,396 1,798,861
Cash & cash equivalents - 1,438,825
Total current assets 2,942,518 10,231,271
Total assets 3,152,518 16,294,691
Current liabilities
-------------- -------------
Trade payables 288,218 224,734
Tax liabilities 80,028 131,356
Obligations under finance
leases - 7,809
Other payables 179,734 69,141
Bank overdrafts and loans 4,657,340 4,887,907
Total current liabilities 5,205,320 5,320,947
Non-current liabilities
-------------- -------------
Obligations under finance
leases - -
Convertible loan note 2,823,019 2,781,522
Total non - current liabilities 12 2,823,019 2,781,522
Total liabilities 8,028,339 8,102,469
(4,875,821) 8,192,222
Equity
============== =============
Issued share capital 7 5,242,238 5,242,238
Share premium account 3,492,648 3,650,480
Capital redemption reserve 98,028 98,028
Equity reserve 218,478 218,478
Retained earnings (13,927,213) (1,017,002)
Total equity attributable (4,875,821) 8,192,222
to equity holders of the
parent
============== =============
WREN EXTRA CARE GROUP PLC
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended
31 July 2010
Share Share Capital Equity Retained
Capital Premium Redemption Reserve Reserves Total
GBP GBP GBP GBP GBP GBP
Balance
at 1
February
2010 5,242,238 3,526,353 98,028 228,474 (1,556,330) 7,538,763
Net loss
for the
period - - - - (12,370,883) (12,370,883)
Equity
draw
down - - -
costs - (33,705) - (9,996) - (43,701)
Balance
at 31
July
2010 5,242,238 3,492,648 98,028 218,478 (13,927,213) (4,875,821)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months Six Six
ended 31 July 2010 months months Year Year
Ended Ended Ended Ended
31 July 31 July 31 July 31 July
2010 2009 2010 2009
Unaudited Unaudited Unaudited Audited
Note GBP GBP GBP GBP
Cash flows from
operations 9 (466,376) (529,214) (945,773) (2,088,509)
Interest paid on
loans and bank
overdrafts (68,241) - (138,341) (228,463)
Net cash generated
from operating
activities (534,617) (529,214) (1,084,114) (2.316,972)
----------- ----------- ------------- -------------
Investing activities
Interest received - - - 225,974
Interest paid on
hire purchase - - - -
Sales of tangible
assets - - - 103,909
Cash flows from
investing
activities - - - 329,883
Financing activities
Convertible loan
note - - 41,497 3,000,000
Other loans repaid - - - (94,624)
Loans repaid - - - -
Hire purchase
repayments - - (7,809) (156,829)
Share issue Equity
draw down costs - - (157,832) 1,099,116
Dividends paid - - - (52,420)
Cash flows from
financing
activities - - (124,114) 3,795,243
Net
(decrease)/increase
in cash and cash
equivalents (534,617) (529,214) (1,208,228) 1,808,154
Cash and cash
equivalents brought
forward 534,617 1,737,472 1,208,228 (599,926)
Cash and cash
equivalents carried
forward - 1,208,228 - 1,208,228
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
For the six months ended 31 July 2010
1. Accounting policies
These condensed interim financial statements are for the
six months ended 31 July 2010.They have been prepared in
accordance with the recognition and measurement principles
of International Financial Reporting Standards (IFRS) as
adopted by the European Union (EU) with effect from 27 March
2010.They do not include all of the information required
for full annual financial statements, and should be read
in conjunction with the consolidated financial statements
of the Group for the year ended 31 July 2009.
These condensed consolidated interim financial statements
have been approved for the issue by the Board of Directors
on 21 January 2011.
These financial statements have been prepared under the
historical cost convention, except for the revaluation of
certain properties and financial instruments.
As set out in the Chairman's statement on 5th October 2010
LPA receivers were appointed to Wren Estates Ltd, a subsidiary
company within the group. Also as previously announced on
6 October 2010 LPA receivers were appointed to Warlingham
Developments Ltd ("WD") and Warlingham Developments Two
Ltd ("WD2"), which are not group companies but companies
with which Wren Estates Ltd has profit share arrangements.
In both instances the Group has fully co-operated with the
LPA receivers GVA Grimley Ltd. The Group has not as yet
been notified of the intentions of either of the LPA receivers
or of sums due to its main lender, RBS (the "Lender").
The financial statements have been prepared on a break up
basis. This basis of preparation writes assets down to their
market values and accelerates the recognition of certain
liabilities and undertakings .The amounts are quantified
in note 2 to these results.
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
434 of the Companies Act 2006. The statutory accounts for
2009, which were prepared under International Accounting
Standards (IAS), have been delivered to the Registrar of
Companies. The auditors' opinion on these accounts was modified
and contained two emphasis of matter paragraphs relating
to goodwill and going concern. The audit report does not
contain a statement made under Section 498 of the Companies
Act 2006.
2. Asset Write downs
For the year to 31st July 2010 and the six months to 31st July
2010, the following assets have been written down to their
estimated realizable values given the appointment of LPA receivers
on behalf of the Group's main lender.
GBP
Goodwill written off 3,135,203
Fixed asset provisions 20,000
Write down in inventories 4,480,000
Provision against irrecoverable debtors 4,250,283
Total 11,885,486
------------
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
3. Loss per share
Basic loss per share
The calculation of basic loss per share for the years ended
31 July 2010 and 2009 and for the six months ended 31 July
2010 and 2009 have been determined as the net loss after tax
divided by the weighted average number of equity shares in
issue in the period.
6 Months 6 Months Year ended Year ended
ended 31 ended 31 31 July 31 July
July 2010 July 2009 2010 2009
GBP GBP GBP GBP
Net loss
attributable to
ordinary
shareholders (12,370,883) (523,133) (12,909,410) (1,076,093)
Number of
ordinary
shares
Issued ordinary
shares at the
beginning of the
period 52,422,387 52,422,387 52,422,387 40,422,387
Issue of shares in
the period - - - 12,000,000
Issued ordinary
shares at the end
of the period 52,422,387 52,422,387 52,422,387 52,422,387
-------------- ------------ -------------- -------------
Weighted
average
number of
ordinary
shares
Issued ordinary
shares at the
beginning of the
period 52,422,387 52,422,387 52,422,387 40,422,387
Issue of shares
part way through
the period - - - 9,672.387
Weighted average
number of ordinary
shares during the
period 52,422,387 52,422,387 52,422,387 49,672,387
-------------- ------------ -------------- -------------
Basic loss per
share (23.60)p (1.00)p (24.63)p (2.17)p
-------------- ------------ -------------- -------------
6 Months
6 Months ended 31 Year ended Year ended
Diluted loss ended 31 July 31 July 31 July
per share July 2010 20090 2010 2009
Diluted loss per
share at period
end (23.60)p (1.00)p (24.63)p (2.17)p
Loss 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 dilute loss per
share for out-of-the-money share option and there are no other
diluting future share issues, therefore diluted loss per share
is identical to the basis loss per share.
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
4. Goodwill
As set out in note 1 the accounts have been drawn up on a
break up basis and the movement in goodwill is as
follows:
Brought forward
1 February
Written off to GBP
profit and loss 3,135,203
Carried forward (3,135,203)
5. 31 July -
Fixtures,
fittings and Motor
equipment vehicles Total
Cost GBP GBP GBP
At 31 July 2009 36,592 46,136 82,728
Disposals in
the period (36,592) (46,136) (82,728)
--------------- ----------- -----------
At 31 July 2010 - - -
--------------- ----------- -----------
Depreciation
At 31 July 2009 28,396 31,115 59,511
Charge for the
period
Eliminated on 8,196 - (31,115) 8,196
disposals (36,592) (67,707)
--------------- ----------- -----------
At 31 July 2010 - - -
--------------- ----------- -----------
Net book values
At 31 July 2010 - - -
=============== =========== ===========
At 31 July 2009 8,196 15,021 23,217
=============== =========== ===========
Included above are assets held under finance leases or
hire purchase contracts as follows :
Motor
vehicles
GBP
Net book
values
At 31 July
2010 -
===============
At 31 July
2009 15,021
===============
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
5. Plant and equipment (cont'd)
6 months Year Year
Depreciation 6 months ended 31 ended 31 ended
charge for the ended 31 July July 31 July
period July 2010 2009 2010 2009
Six months to
31 January
2010 4,184 12,030 8,196 24,079
============ ========== ========== ==========
31 July 31 July
Investment Property 2010 2009
6. Fair Value GBP GBP
Balance bought
forward 230,000 230,000
Write off in year (20,000) -
Balance carried 210,000 230,000
forward
---------------- ---------------
Investment properties have been valued by the directors
on 31 July 2010 at fair value at an open market value basis.
An impairment charge has been made in the period of GBP20,000
(2009: GBPNil).
The property rental income earned by the group from its
investment property, which is leased out under an operating
lease, amounted to GBP5,400 (31 January 2009: GBP2,685,
31 July 2009: GBP10,800). Direct operating expenses arising
on the investment property in the period amounted to GBP3,310
(31 January 2009: GBP3,721, 31 July 2009 GBP9,500).
7. Share Capital 31 July 2010 31 July 2009
==== ================================= ============= =============
GBP GBP
==== ================================= ============= =============
Authorised
==== ================================= ============= =============
100,000,000 Ordinary shares of
10p each 10,000,000 10,000,000
====================================== ============= =============
Allotted, issued and fully paid
==== ================================= ============= =============
52,422,387 Ordinary shares of
10p each 5,242,238 5,242,238
====================================== ============= =============
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
8. Operating lease arrangements
The Group as a lessee
The total of future minimum lease payments under non cancellable
operating leases are as follows:
Land and Building Other
31 31 31
July July July 31 July
2010 2009 2010 2009
Expiry Date :
Less than one GBP GBP GBP GBP
year 33,210 33,210 1,565 1,565
In the second
to fifth years
inclusive 33,210 66,410 2,380 2,380
9. Cash flow statement
Reconciliation of operating loss to
operating cash flow
6 months Year Year
6 months ended 31 ended ended
ended 31 July 31 July 31 July
July 2010 2009 2010 2009
GBP GBP GBP GBP
Loss from operations (12,292,473) (524,421) (12,771,870) (1,073,604)
Depreciation
and loss of assets 5,853,420 31,277 5,853,420 67,088
Share option
costs - - - 92,088
Decrease/(Increase)
in work in progress 4,088,463 124,317 4,088,463 (61,425)
Decrease/(Increase)
in receivables 1,761,465 (271,116) 1,761,465 (763,447)
Increase/(Decrease)
in payables 122,749 110,729 122,749 (349,209)
Cash flows from
operating
activities (466,376) (529,214) (945,773) (2,088,509)
============== =========== ================ ==============
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
10. Share based payments - Equity-settled share option plans
The Group offers vested share options, without payment,
to senior employees. On 10 July 2008 the first such share
options were granted to three employees, to subscribe for
a total of 450,000 shares at a price of 16p. The options
are exercisable between 10 July 2011 and 10 July 2018.
The fair values of the options granted on 10 July 2008
under the share option scheme and expected to vest have
been calculated using the Black-Scholes option pricing
model. The following inputs were used in the calculation:
Share price at date of grant 16p
Expected volatility 53.54 %
Expected life 3 years
Risk free rate 4 %
Expected volatility was based on flotation on Plus Markets
(formally OFEX) in November 2001 to the date of the grant.
On 7 August 2008 share options were granted to the directors and
certain key employees to subscribe for a total of 3,732,238 shares
at a price of 15p. The share price at the date of the grant was
15p. The options are exercisable between 7 August 2009 and 7 August
2018.
The fair values of the options granted on 7 August 2008 under
the share option scheme and expected to vest have been calculated
using the Black-Scholes option pricing model. The following inputs
were used in the calculation:
Share price at date of grant 11.75p
Expected volatility 53.54%
Expected life 10 years
Risk free rate 4%
The option outstanding at 31 July 2010 had a weighted average
remaining contractual life of 8 years (time until options
expire). The group recognised total expenses of GBP64,000
(31 January 2010 GBP24,000, 31 July 2009: GBP82,354 31 January
2009 GBPNIL) in respect of the fair value of these options.
11 Transactions with Directors
During the period GBPNIL (31 January 2009 GBP15,000, 31
July 2009 GBP39,579) was paid to Haines Watts (of which
P Self is a partner) for the provision of consultancy services.
During the period GBP6,000 (31 January 2010 31 January 2009
GBP6,000 31 July 2009 GBP12,000) was charged by B Nathan
but not drawn and GBP6,000 (31 January 2010, GBP6,000 31
January 2009: Nil, 31 July 2009:GBP12,000) was charged by
but not drawn J Butterfield for their services as non-executive
directors in the period to 31 July 2010.
On 7 August 2008 certain directors were granted the following
share options:
B Nathan 100,000
P Treadaway 762,238
WREN EXTRA CARE GROUP PLC
NOTES TO THE INTERIM RESULTS
Transactions with Directors
11 (continued)
J Butterfield 1,320,000
P Self 500,000
Details of the terms of the options are shown
under note 10.
12 Convertible loan note
The convertible loan note was issued on 31 October 2008.
The note is convertible into ordinary shares of the company
at any time by the loan note holder between the date of
issue of the note and 31 October 2013. On issue, the loan
note was convertible at 30,000,000 Ordinary shares at 10p.
Interest of 5% per annum will be paid quarterly until the
settlement date.
The loan has been recognised at fair value, using the market
rate for a similar instrument of 7.5% for the purposes of
the valuation. The difference between the nominal value
of the loan and the fair value has been recognised directly
in profit or loss as a finance charge.
The fair value of the convertible loan note has been split
between a liability element and an equity component, to
represent the fair value of the embedded option to convert
the liability into equity of the group, as follows:
GBP
Nominal value of convertible loan notes issued 3,000,000
Equity component (303,441)
-----------
Liability component at date of issue 2,696,559
Deferred tax thereon 74,968
Interest component 51,492
-----------
Liability component at 31 July 2010 2,823,019
===========
13. Availability
Copies of the interim results will be available
to all shareholders at the registered office of
the Company, Cade Barn Old Heathfield East
Sussex TN21 8RL and at the Company's website:
www.wrenextracare.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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