Print   



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

	Before  exceptional items	Exceptional  items	30-Jun-08 Unaudited	30-Jun-07 Unaudited Restated	31-Dec-07 Audited Restated
	£'000	£'000	£'000	£'000	£'000
Revenue	11,047	-	11,047	18,881	28,519
Cost of sales	(8,025)	(4,105)	(12,130)	(15,431)	(23,517)
Amortisation of fair value adjustment on WIP	(315)	(2,890)	(3,205)	(21)	(36)
Gross profit	2,707	(6,995)	(4,288)	3,429	4,966
Administrative expenses	(1,833)	-	(1,833)	(1,717)	(3,771)
Profit from operations	874	(6,995)	(6,121)	1,712	1,195
Finance cost	(228)	-	(228)	(206)	(604)
(Loss) / Profit before tax	646	(6,995)	(6,349)	1,506	591
Tax	(288)	1,232	944	(449)	364
(Loss) / Profit for the period from continuing operations after tax	358	(5,763)	(5,405)	1,057	955
All attributable to equity holders of the parent
Earnings per share
The weighted number of shares in issue ('000)	42,532		42,532	35,089	38,169
Basic	0.8p		(12.7p)	3.0p	2.5p
Diluted	0.8p		(12.7p)	2.9p	2.4p

Assets	30-Jun-08 unaudited		30-Jun-07 unaudited Restated		31-Dec-07 audited 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
Inventories	98,586		77,805		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
Total assets		138,165		120,999		134,046
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
Derivative financial instruments	2,048	77,630	-	43,674	3,306	72,441
Net assets		47,062		52,010		48,080
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 Restated		31-Dec-07 audited 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 activities		(9,303)		(18,996)		(33,380)
Investing activities
Purchases of current assets	-		-		-
Acquisition of subsidiary   Purchases of non-current assets	-   (3)		-   (34)		-      (116)
Net cash used in investing activities		(3)		(34)		(116)
Cash flows from financing activities
Shares issued for cash	4,250		14,770		14,770
Increase in borrowings	5,042		16,600		16,857
Borrowings repaid	-		(14,119)		-
Net cash used in financing activities		9,292		17,251		31,627
Net change in cash and cash equivalent		(14)		(1,779)		(1,869)
Cash and cash equivalents brought forward		77		1,946		1,946
Cash and cash equivalents carried forward		63		167		77

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 unaudited		30-Jun-07 unaudited Restated		31-Dec-07 Audited Restated
	£'000		£'000		£'000
Profit attributable to equity shareholders	(5,405)		1,057		955
Dividends	(1,130)		(903)		(1,418)
Net proceeds of equity share issue	4,250		14,783		14,769
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

ENDIR FKKKKPBKDNCN