RNS Number : 7361E
Oakdene Homes PLC
30 September 2008
CHAIRMAN'S STATEMENT
Introduction
In common with most housebuilders Oakdene has suffered from the effects of the turmoil in global markets which has led to a shortage of
mortgage availability and a general lack of buyer confidence. This has resulted in very challenging market conditions and against this
background we report a downturn in turnover and profits.
Results and dividend
Turnover for the first six months to 30 June 2008 was �11.05m (2007 restated: �18.88m) and profit before tax and exceptional charges was
�0.65m (2007 restated: �1.50m). Basic earnings per share on this basis were 0.8p (2007 restated: 3.0p).
The directors have decided that there will be no interim dividend this year (2007: 1.25p).
Change of accounting policy
The purchasers involved in two contracts for trade sales the profits of which were included in our December 2006 and 2007 accounts have
failed to complete and the purchasers have forfeited their deposits. In the course of finalising these interim results the Board has
therefore decided to adopt a more prudent policy with regard to completions. This requires the restatement of the 2006 and 2007 accounts and
the net effect is to reduce profit after tax in the year ended 31 December 2006 by �3.1 million and to reduce the profit after tax in the
year ended 31 December 2007 by �3.4 million. This change in policy means that in future all transactions will only be recognized as complete
when the cash proceeds have been received. This has always been the policy for residential purchases by private individuals. The comparative
figures for June 2007 and December 2007 have been restated to reflect this change.
Exceptional costs
In the opinion of the Directors the total market value of the land that we own is considerably in excess of the historic cost shown in
the Balance Sheet particularly on our larger sites where we have been successful in obtaining significant planning gains. Whilst we have
prudently written down the value of a number of our smaller sites accounting standards do not allow us to recognize any increase in value of
the larger sites in the Balance Sheet where we still believe we have a considerable capital surplus. The total of these required impairments
on the smaller sites is �6.995m and this has been shown in the Income Statement as an exceptional cost.
Review of operations
The emphasis in the first half of 2008 has become more and more focused on generating cash and reducing costs as much as possible. As
was announced in May 2008 planning permission was received for another 337 units at our flagship Newhaven development but construction work
will not commence until market conditions improve other than necessary preliminary work. Construction has recently completed at our Reigate
and Edenbridge sites and the speed of construction work has been slowed down at our Redhill, Penshurst and Isle of Wight sites. We will not
commence development of any new sites in the near future. In addition, we have reviewed all our overhead expenditure and made significant
savings. Unfortunately savings in overheads usually means reductions in staffing levels and we have reduced staff by approximately one third
by way of natural wastage and redundancies.
Sales at all our sites have been affected by current market conditions but we are continuing to sell, albeit at a slower rate than we
would wish, and at lower net prices.
Bank Support
As a result of the fall in profits, the Company, like many other housebuilders in these very difficult market conditions, is closely
monitoring bank borrowings and covenants. The Company is in breach of its covenants with its lenders and is currently relying on a temporary
facility. Discussions around future banking terms are ongoing with our bankers. We are extremely grateful for their help and support to
date and we are seeking to reach agreement on future support shortly.
Outlook
Although in recent weeks we have seen a welcome increase in reservation rates and a reduction in cancellations, it is too early to
predict whether this is a sign of an upturn in the market or whether it is entirely due to normal seasonal factors.
The primary objective of the Board is to reduce our borrowings and gearing by concentrating on selling residential units and sites and
restricting expenditure as much as possible. As mentioned above we believe we have a very significant asset value that can be developed and
our main duty is to protect this asset value for shareholders. This policy will take precedence over the achievement of short term profits.
The directors and staff have endured a very difficult period and I thank them for the dedication and determination that they have
shown.
Philip Stephens
Chairman
30 September 2008
Income statement for the 6 months ended the 30th June 2008
30-Jun-08 30-Jun-07 31-Dec-07
Before Exceptional Unaudited Unaudited Audited
exceptiona items Restated Restated
l items
�'000 �'000 �'000 �'000 �'000
Revenue 11,047 18,881 28,519
11,047 -
Cost of sales (12,130) (15,431) (23,517)
(8,025) (4,105)
Amortisation of fair value (3,205) (21) (36)
adjustment on WIP
(315) (2,890)
Gross profit (4,288) 3,429 4,966
2,707 (6,995)
Administrative expenses (1,833) (1,717) (3,771)
(1,833) -
Profit from operations (6,121) 1,712 1,195
874 (6,995)
Finance cost (228) - (228) (206) (604)
(Loss) / Profit before tax (6,349) 1,506 591
646 (6,995)
Tax (288) 1,232 944 (449) 364
(Loss) / Profit for the period (5,405) 1,057 955
from continuing operations
after tax
358 (5,763)
All attributable to equity
holders of the parent
Earnings per share
The weighted number of shares 42,532 35,089 38,169
in issue ('000)
42,532
Basic (12.7p) 3.0p 2.5p
0.8p
Diluted 0.8p (12.7p) 2.9p 2.4p
30-Jun-08 unaudited 30-Jun-07 unaudited 31-Dec-07 audited
Assets Restated Restated
�'000 �'000 �'000
Non-current assets
Goodwill
18,460 18,579 18,461
Other intangible assets 102 120 111
Investments 2 2 1
Property plant and equipment 1,208 19,772 1,326 20,027 1,292 19,865
Current assets
98,586 77,805
Inventories 96,911
Security deposit 5,250 5,250 5,250
Trade & other receivables 13,675 17,750 11,943
Tax repayable 819 - -
Cash and cash equivalents 63 118,393 167 100,972 77 114,181
120,999 134,046
Total assets 138,165
Current liabilities
Trade & other payables 6,204 4,177 4,044
Tax liabilities - 1,420 807
Loan notes 1,100 1,100 1,100
Bank overdrafts and loans 6,169 13,473 18,618 25,315 7,574 13,525
Non-current liabilities
Bank loans 75,582 43,674 69,135
- 43,674 3,306 72,441
Derivative financial 2,048
instruments
77,630
52,010 48,080
Net assets 47,062
Equity
Issued share capital 502 412 412
Reserves 43,970 39,828 39,810
Hedging reserve (2,048) - (3,306)
Accumulated profits 4,638 11,770 11,164
Total equity attributable to
equity holders of the parent 47,062 52,010 48,080
Oakdene Homes plc
Balance sheet as at 30 June 2008
Oakdene Homes plc
Cash flow statement for the 6 months ended the 30th June 2008
30-Jun-08 unaudited 30-Jun-07 unaudited 31-Dec-07 audited
Restated Restated
Cash generated by operations (7,265) (17,067) (31,205)
Income Taxes Paid (677) (820) (153)
Interest paid
(228) (206) (604)
Dividends Paid (1,133) (903) (1,418)
Net cash from operating (9,303) (18,996) (33,380)
activities
Investing activities
Purchases of current assets - - -
- - -
Acquisition of subsidiary
(116)
(3) (34)
Purchases of non-current
assets
(3) (34) (116)
Net cash used in investing
activities
Cash flows from financing
activities
4,250 14,770
Shares issued for cash 14,770
Increase in borrowings 5,042 16,600 16,857
Borrowings repaid - (14,119) -
Net cash used in financing 9,292 17,251 31,627
activities
Net change in cash and cash (14) (1,779) (1,869)
equivalent
1,946
Cash and cash equivalents 77 1,946
brought forward
Cash and cash equivalents 63 167 77
carried forward
NOTES
1. 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, prior to and excluding the restatement discussed in this financial information, 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.
2. Statement of changes in shareholders' equity for the six months ended 30 June 2008.
30-Jun-08 30-Jun-07 31-Dec-07
unaudited unaudited Audited
Restated Restated
�'000 �'000 �'000
Profit attributable to equity (5,405) 1,057 955
shareholders
Dividends (1,130) (903) (1,418)
Net proceeds of equity share 4,250 14,783 14,769
issue
Equity share options issued 9 10 16
Hedging reserve 1,258 - (3,306)
(1,018) 14,947 11,016
Opening shareholders' equity 48,080 37,064 37,064
Closing shareholders' equity 47,062 52,011 48,080
3. The accounting policy in respect of revenue recognition has been changed such that sales of construction sites and trade sales
of completed units are recognized on completion of the sale rather than on exchange of contracts. All other policies used for
the preparation of the Interim Financial Statement follow the same accounting policies and methods of computation as applied in
the most recent Annual Financial Statements. The effect of this change of policy is as follows :
31 December 2006
Restatement of sales (14,500)
Restatement of cost of sales 10,092
Restatement of tax 1,322
Total restatement (3,086)
Shareholders' funds as previously reported 40,150
Restated shareholders' funds 37,064
30 June 2007
Restatement of sales 2,010
Restatement of cost of sales (2,765)
Restatement of tax 227
Total restatement (528)
Profit before tax as previously reported 1,585
Restated profit after tax 1,057
31 December 2007
Restatement of sales (7,689)
Restatement of cost of sales 2,799
Restatement of tax 1,467
Total restatement (3,423)
Profit before tax as previously reported 4,378
Restated profit after tax 955
4. The following shares have been issued during the period :-
04 June 2008 share placing 8,987,108
5. The directors are of the opinion that there has been no impairment to the goodwill.
6. Exceptional costs are impairments to the carrying value of inventories. Each development site has been reviewed using current
market values and an impairment made where necessary. The total of the impairments has been charged to the Income Statement. Part of the
impairment relates to the fair value adjustment made at the time of the acquisition of certain subsidiaries and this has been shown
separately in the Income Statement. No allowance has been made where the review identified a market value in excess of the carrying value.
7. The financial statements have been prepared on a going concern basis. However the Company is in breach of its covenants with its
lenders and is currently relying on a temporary facility. Discussions around future banking terms are ongoing with its bankers. If the Group
is unable to agree amended terms the lenders would be able to request early repayment of all outstanding borrowings. In the absence of other
funding alternatives the Group would be unable to repay the borrowings and therefore there is some uncertainty about the ability of the
Group to continue as a going concern.
The directors believe that the discussions with its lenders will be successfully resolved and are confident that the Group will have
adequate financial resources to continue its operations for the foreseeable future. That being the case they continue to prepare the
financial statements on a going concern basis.
8. Copies of the interim results will be sent to all shareholders and will also be available at the registered office of the Company,
Oakdene House, 34 Bell Street, Reigate, Surrey, RH2 7SL.
INDEPENDENT REVIEW REPORT TO OAKDENE HOMES PLC
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six
months ended 30 June 2008 which comprises the Income Statement, Balance Sheet, Cash-flow Statement and related explanatory notes. We have
read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for
preparing the half-yearly financial report in accordance with the AIM Rules For Companies.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial
report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union and the AIM Rules For Companies.
Emphasis of matter - Going Concern
Without qualifying our conclusion, we draw attention to note 7 to the condensed financial statements, which show that the Company is in
breach of its covenants with its lenders and is currently relying on a temporary facility. Discussions around future banking terms are
ongoing with its bankers. This position indicates the existence of a material uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern.
UHY Hacker Young LLP
Chartered Accountants
Quadrant House
17 Thomas More Street
Thomas More Square
London
E1W 1YW 30 September 2008
This information is provided by RNS
The company news service from the London Stock Exchange
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