RNS Number:9720M
Wren Homes Group PLC
30 November 2006
For release 30 November 2006
Wren Homes Group plc (WHG.L)
#5.8m Placing by J.M. Finn and Admission to AIM
Wren Homes Group plc, ("Wren"), the housing developer which has a strategy of
specialising in apartment developments for the 'active' retirement market, with
operations around the southern M25 corridor, announces that trading in its
ordinary shares has commenced on AIM today, following the publication of its
Admission document.
Highlights
*Move up to AIM from PLUS markets
*Placing by J.M. Finn, Broker and Nominated Adviser to the Company, of 8,333,333
new Ordinary shares of 10p each at a price of 36p per share with institutional
investors to finance expansion and fund more developments simultaneously
*Sale of 7,777,778 shares to investors by the founders Paul Treadaway and Peter
West, respectively Chief Executive and Chairman of the Company, through J.M.
Finn, representing 19.2% of the enlarged issued share capital, to enhance
liquidity of the Ordinary shares
*Following record results in the year ended 31 July 2006, the Company has
continued to trade strongly
*Copies of the Admission document are available free of charge from the
Company's registered office and the offices of JM Finn at Salisbury House,
London Wall, EC2M 5TA until 31 December 2006.
Paul Treadaway, Managing Director of Wren, commented:
"We are delighted with the strong level of support. Wren Homes intends to
concentrate on developing apartments for 'active' retired people, as opposed to
those requiring care. The Directors believe that the identified changes to the
UK's demographic pattern has and will
result in an increase in demand by the growing numbers of over sixties for
retirement apartments".
Enquiries
Wren Homes Group plc Paul Treadaway, Managing Director
Tel: 01372 742 244
JM Finn Clive Carver/Matthew Robinson/Charles Cunningham
Tel: 0207 628 9688
Adventis PR Peter Binns/Tarquin Edwards
Tel: 020 7034 4760 / 020 7034 4758
INTRODUCTION
Wren is an established housing developer that has a strategy of specialising in
apartment developments for the 'active' retirement market. In the year to 31
July 2006 Wren made a profit before tax of #1.716 million on turnover of #3.350
million.
Wren has now raised additional capital to finance its expansion, and transferred
to AIM from PLUS Markets. At the same time the two founding directors, who
between them owned over 86 per cent. of the Existing Ordinary Shares have sold
some of their holding pursuant to the Placing, representing 19.2 per cent. of
the Enlarged Issued Share Capital, to enhance liquidity of the Ordinary Shares.
WREN HOMES BUSINESS
History
Wren Estates Limited (Wren Estates), the principal trading company in the Group,
was founded in 1994 by Peter West and Paul Treadaway, both of whom have many
years experience in the house building industry, and who continue to serve as
Executive Chairman and Managing Director respectively.
Initially, Wren Estates concentrated on assembling sites for residential
development and, after obtaining planning permission, sold the sites on to house
builders. The strategy then, and still employed by Wren, is to identify
locations within an existing built-up area containing houses with very large
gardens. Wren approaches the owners of such properties and endeavours to obtain
options to purchase either some or all of the property, along with adjoining
properties, to create a site suitable for the erection of new houses or flats.
The price offered to the house owners may be greater than the existing use
market value, providing an incentive for a house owner to enter into the option
agreement. The options are only exercised by Wren after planning permission is
obtained.
In 1997, Wren decided to build residential properties on some of the sites it
had assembled with a view to obtaining the benefit of the house builder's profit
instead of simply selling on the sites. Since 2000, Wren has built and sold
approximately 36 houses, bungalows and flats in and around areas of Kent and
Surrey in or close to the borders of Greater London.
In 2001, Peter West and Paul Treadaway "reversed" their holding company, Wren
Homes plc, together with Wren Estates, into Sardis International plc ("Sardis"),
an OFEX traded shell company. Sardis (with which neither Peter West nor Paul
Treadaway were then connected) had encountered financial difficulties, which had
been resolved by its shareholders and creditors agreeing to a company
voluntarily arrangement. Following the reverse, Peter West and Paul Treadaway
became the majority holders of Sardis which was re-named Wren Homes Group plc.
The shares of the Company have been traded on OFEX (now PLUS Markets) since 2001
and will continue to be so traded until immediately prior to admission to AIM.
In 2004, following a Directors' review of the Group's strategy, it was decided
that the Group should endeavour to enter the "active retirement" homes market.
Since then, Wren has been instrumental in the development and completion of Wren
Court, Warlingham, Surrey, a property comprising 28 retirement apartments
further details of which are set out below ("Wren Court").
Strategy
The Group's strategy is:
* to concentrate on the housing market for the 'active' retired, whilst taking
advantage of more generalist residential development opportunities when they
present themselves;
*to keep business functions, which the Directors perceive to be key, in-house,
including land acquisition, quality control on building contracts and sales and
marketing of completed developments, whilst outsourcing other functions such as
planning, the design and build of developments and legal services;
*to expand the Group by further strengthening the in-house management team and
the financial resources available to the Group, in order to enable it to
undertake more developments simultaneously over a wider geographical area.
Retirement Housing Market
Wren has identified retirement housing as a niche in the property development
market. The UK has both a growing and an ageing population. One in six are now
aged 65 or over and the Office of National Statistics is projecting that the
percentage of older people is set to continue to rise during the first half of
this century.
The Directors believe that the identified changes to the UK's demographic
pattern has and will result in an increase in demand by the growing numbers of
over sixties for retirement apartments.
Wren Homes intends to concentrate on developing apartments for 'active' retired
people, as opposed to those requiring care. Purchasers of the apartments may be
those who have recently retired, whose children no longer live at home and who
might benefit from the release of capital provided by moving to smaller
accommodation.
Current and future development projects
Wren Homes has the following portfolio of residential work-in-progress ranging
from completed developments currently being marketed, through developments
currently under construction to projects over which options to buy are held.
Completed developments currently being marketed
Wren Court, Warlingham, Surrey
Wren Court at Warlingham was completed in September 2006. Having sold on the
land in 2005, Wren acted as developers on behalf of the land owner and has
contractually retained a substantial interest in the profits it believes will be
generated from the sale of the apartments.
As at the date of this document, the sale of 4 of the 28 retirement flats has
been completed, with offers received on a further 6. The completed scheme will
allow Wren to use it as a "show piece" for further retirement development
schemes. The average asking price of apartments for this scheme is around
#350,000.
Developments currently under construction or where construction is contracted
Wren is currently building, under an outsourced design and build contract, a
scheme of 8 traditional apartments in Kenley, Surrey with sales of the units
expected to commence in the Spring of 2007. The Directors anticipate that the
average asking price of these units will be around #360,000.
Construction of a further development in Warlingham, Surrey of 31 retirement
apartments and two bungalows is planned to begin early in 2007. Wren having
assigned the benefit of its options to acquire the land, is acting as developer
and has retained a substantial interest in the profit it believes will be
generated. Wren expects to commence marketing the apartments in the Summer of
2007.
Land over which options to buy are held
Wren holds options over land on a potential 12 sites which, if planning
permission was obtained, in the opinion of the directors, could lead to the
development of approximately 280 residential units, the majority of which could
be retirement homes.
The Directors believe that Wren's option approach to building a land bank should
enable it to construct increasing numbers of residential properties, especially
retirement homes, over the next few years.
Competition
There are a number of residential property development companies operating in
the same geographical areas as Wren Homes. Of those companies which specialise
in retirement housing, the Directors believe the largest to be McCarthy & Stone,
which was until recently listed on the London Stock Exchange. Other competitors
identified by the Directors as specialising in retirement homes include: Pegasus
Retirement Homes, English Courtyard, Churchill Retirement and Beechcroft Homes.
FINANCING PROPERTY DEVELOPMENT
The business of residential property development requires substantial sums to be
expended in purchasing land and then completing the construction of the
buildings before they can be sold. The Company has both an overdraft facility
with Bank of Scotland and specific advances have been received in connection
with specific development projects.
Whilst banks traditionally play a role in the financing of property development,
smaller companies such as Wren have traditionally had to have had recourse to
other funding sources to enable them to carry through developments.
In addition, the Company currently has a loan outstanding from an unrelated
private source, for #500,000, which will be repaid out of the proceeds of the
Placing.
In addition, the Company has, as mentioned above, entered into agreements under
which the Company having sold the land for the developments at the Wren Court,
Warlingham, Surrey and options over other land at Warlingham, Surrey is acting
as developer and has retained a substantial interest in the profit it believes
will be generated.
FINANCIAL INFORMATION
The financial information set out below has been extracted, without adjustment,
from the Accountants' Report set out in Part III of this document. Prospective
investors should read the entirety of this document and not rely on the
summarised information below.
Year ended 31 July
2004 2005 2006
#'000 #'000 #'000
Turnover 2,181 2,363 3,350
Gross Profit 289 1,591 2,152
(Loss)/Profit before taxation (176) 1,137 1,716
Net Assets 3,372 4,284 6,029
CURRENT TRADING AND PROSPECTS
In the period since the 31 July 2006 the Company has continued to trade
strongly.
DIRECTORS AND MANAGEMENT
Peter James West, Executive Chairman
Peter, aged 61 years, began to train as a surveyor but subsequently joined his
family's development company, Jack West & Sons Ltd., which he ran between 1964
and 1986 until deciding to specialize in land assembly and acquisition. He set
up the land department for, Alan De Maid plc, a major chain of estate agents, in
1986, then was appointed as a land buyer for Farrell Boland Plc between
1989-1991. He founded Wren Homes with Paul Treadaway in 1994.
Until 2005 Peter was a member of the board of Tonbridge and Malling Housing
Association and Honorary Treasurer and Chairman of the Finance Committee. The
association owns and manages over 6,500 housing units.
Paul Arthur Treadaway, Managing Director
Paul, aged 55, has over 25 years experience in residential construction and
development. Initially a site agent for Thorpe Bros. of Wimbledon, he worked his
way up to assume executive roles in a number of building and development
companies (including Taylor Woodrow 1980-1982 and Kent Homes 1982-1984) dealing
with private and social housing. In 1985 Paul founded and was appointed managing
Director of Farrell Boland Plc, a construction company specialising in public
sector building and refurbishment, and Finbury Ltd a residential house builder
(both of which failed during the severe 1989 recession). Paul founded Wren Homes
with Peter West in 1994
Philip Self ACA, Finance Director
Philip, aged 41, is a chartered accountant with nearly 20 years experience in
corporate accountancy, audit and tax. He was appointed Partner of Turpin,
Barker, Armstrong, a Surrey based accountancy practice in 1997, and in 2003
established a practice specialising in accountancy, business and tax advice for
owner managed businesses. Philip became Wren Homes Group's part time Finance
Director in January 2004.
Brian Kenneth Clark Nathan, Non-executive Director
Brian, aged 66, has more than 30 years experience as a company director. In 1971
Brian founded Brandon Hire, a power tool hire company which under his executive
chairmanship grew to 45 outlets in the UK and was sold to Wolseley Plc for #72
million in 2006. Brian has acted as advisor to, investor in or director of, a
large number of early stage start-up companies including estate agency and
property management businesses.
Other Senior Employees
Jason Quantrill, Land Manager
Jason joined Wren in 2002 as Land Manager. Previously, Jason worked in
residential estate agency from 1984 to 1996 with several companies including
Mann & Co, National Counties and Lancasters. In 1996 Jason helped set up
Sheridan Homes, a residential house builder, and worked as a director with
responsibility for site finding.
Gerald Richardson, Project Manager
Gerry joined Wren as Project Manager in 2000. He previously worked for a number
of construction companies and ran his own building company.
Jon Murphy, Sales Manager
Jon joined Wren as Sales Manager in 2005. Jon had previously worked for several
estate agents including Mann & Co., Ludlow Thompson and Chestertons
International. In 1999 Jon started his own estate agency company, JMG Ltd,
combining both sales and lettings which he sold in 2005.
REASONS FOR AND DETAILS OF THE PLACING
Under the Placing Agreement J M Finn has agreed, as agent for the Company and
the Selling Shareholders, to use reasonable endeavours to procure placees for
the Placing Shares.
The Placing of 16,111,111 Ordinary Shares at 36 pence per share comprises
8,333,333 new ordinary shares being issued by the Company and 7,777,778 Sale
Shares being sold by the Selling Shareholders. The aggregate proceeds of the
Placing will be approximately #5.8 million before expenses, of which #2.55
million net of expenses will be receivable by the Company. The Selling
Shareholders comprise Peter West (who is selling 3,888,889 Sale Shares) and Paul
Treadaway (who is selling 3,888,889 Sale Shares). The Selling Shareholders have
agreed to meet any liability to stamp duty or stamp duty reserve tax at the
basic rate arising on the sale of their Sale Shares in accordance with the terms
of the Placing Agreement. The Company will not receive any proceeds from the
placing of the Sale Shares. J M Finn had received conditional commitments from
institutional and other investors for 16,111,111 Placing Shares at the Placing
Price pursuant to the Placing.
The Placing Shares will rank pari passu with the existing Ordinary Shares
including the rights to all dividends and other distributions declared paid or
made after the date of issue. The Placing has not been underwritten.
The Placing is conditional, inter alia, upon Admission and the Placing Agreement
becoming unconditional and not being terminated in accordance with its terms.
USE OF PROCEEDS
The Company intends to apply the net proceeds from the issue of the Placing
Shares:
* to enable it to finance more developments simultaneously; and
* to repay a #500,000 loan.
DEALING RESTRICTIONS
At Admission, the Directors will own an aggregate of 20,074,390 Ordinary Shares,
representing approximately 49.7 per cent. of the Enlarged Issued Share Capital
of which Peter West and Paul Treadaway will own 9,990,013 Ordinary Shares each.
Each of the Directors has undertaken (save in certain limited circumstances) not
to dispose of any Ordinary Shares for a period of one year following Admission
and, for a further year, only to sell any Ordinary Shares on an orderly market
basis through the Company's broker.
CREST
CREST is a paperless settlement system enabling securities to be evidenced
otherwise than by acertificate and transferred otherwise than by a written
instrument in accordance with the CREST Regulations.
The Existing Ordinary Shares are eligible for CREST settlement. Accordingly,
following Admission, settlement of transactions in the Ordinary Shares may take
place within the CREST System if the relevant shareholder so wishes.
CREST is a voluntary system and Shareholders who wish to receive and retain
share certificates will be able to do so.
SHARE OPTION SCHEME
Following Admission, the Company will be giving consideration to the
introduction of a share option scheme for its employees and future employees
(but excluding Peter West and Paul Treadaway) in order to provide an incentive
for them and to retain their services. Further information on this proposal will
be notified to shareholders in due course. It is not expected that options will
be granted over more than 5 per cent of the Enlarged Issued Share Capital.
CORPORATE GOVERNANCE
The Directors intend to comply with such parts of the Combined Code of the
Principles of Good Governance and Code of Best Practice as is recommended by the
Quoted Companies Alliance as applicable to smaller quoted companies and so far
as is practicable for a company of this size.
The Directors have established an audit committee and remuneration committee:
The audit committee, which comprises Brian Nathan and Peter West, is responsible
for ensuring that the financial performance, position and prospects of the
Company are properly monitored and reported on and for meeting the auditors and
reviewing their reports relating to accounts and internal controls.
The remuneration committee, which also comprises Brian Nathan and Peter West,
will review the remuneration of executive Directors, determine the payment of
bonuses and the future allocation of share options.
The Directors intend to appoint an additional non-executive director who will be
appointed to both committees referred to above within three months of Admission.
DIVIDEND POLICY
It is the current intention of the Company to commence the payment of dividends
for the year ending 31 July 2007, subject to the availability of sufficient
distributable reserves and bearing in mind the financial resources then required
for the development of the Group.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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