TIDMINL
RNS Number : 3283B
Inland Homes PLC
20 September 2018
20 September 2018
Inland Homes Plc
(the 'Company' or the 'Group')
Preliminary results for the year ended 30 June 2018
Record plot sales and homes delivered underpins strong financial
performance, as robust demand for new, lower priced homes continues
in the South and South East
Inland Homes Plc (AIM: INL), the leading brownfield developer,
housebuilder and partnership housing company with a focus on the
South and South East of England, today announces its preliminary
results for the year to 30 June 2018.
Financial highlights
-- EPRA NAV per share (undiluted) up 6.3% to 102.28p (2017: 96.22p)
-- 9.0% increase in net asset value to GBP142.4m (2017: GBP130.6m)
-- Profit before tax of GBP19.3m (2017: GBP18.1m, before a revaluation uplift of GBP1.5m)
-- 29.2% increase in proposed final dividend to 1.55p (2017: 1.2p) per share.
Continued operational scale supporting record output and
increasingly diverse revenue streams
-- Maintained healthy land bank at 6,870 plots (2017: 6,776),
with an anticipated gross development value of GBP2.1 billion,
including 1,714 plots with planning consent or resolution to grant
(2017: 2,105)
-- A record 837 residential plots sold (2017: 780) and
completion of 275 open market homes (2017: 188), at an average
sales price of GBP293,000 (2017: GBP306,000) and 79 partnership
home equivalents, generating revenues of GBP147.4m (2017:
GBP90.7m), an increase of 62.5%. The number of open market homes to
be completed in the current financial year is expected to be lower
than in the previous period, due to the cyclical nature of the
construction programme. However, the number of partnership home
equivalents is expected to increase
-- Private housing forward order book of GBP19.7m (2017: GBP19.9m)
-- Significant Partnership housing business growth delivered a
287% increase in contracted income from GBP3.1m to GBP12.0m, with a
construction order book of approximately GBP100m, reflecting demand
from local authorities and housing associations for a turnkey
product that can support government-set targets. Highlights
included:
o A GBP65m contract secured with A2 Dominion, a top ten housing
association, for the delivery of 357 high quality, one-to-five
storey homes
-- Largest ever planning application submitted for 1,853 homes
and in excess of 18,000 sqm of commercial space at Cheshunt
Lakeside, a major South East UK regeneration scheme
-- 682 homes under construction, including 220 partnership
housing units, on course to meet target of delivering 1,000 homes
per year by 2021
-- Supporting the evolving operations and maturing of the
business, staff numbers increased to 105, up from 74 last year
-- Appointment of two experienced Non-Executive Directors, Laure
Duhot and Brian Johnson to the Board
-- Post-period registration as a provider of social housing will
see Company develop, hold and manage Section 106 homes, comprising
a blend of shared ownership and social housing units for rent.
Favourable market dynamics including chronic undersupply of
suitable housing in the Group's target markets and political
support for first time buyers
-- Demand for consented and unconsented land within the London
suburbs, home counties and the South East remains strong amongst
the major housebuilders, local authorities and housing
associations
-- Strong levels of employment, wage growth and relatively low
interest rates supporting existing and prospective home owners
-- Government initiatives, including the Help to Buy Scheme and
recently announced Homes England and Barclays partnership
demonstrate public sector appetite for increased delivery.
Stephen Wicks, Chief Executive at Inland Homes, commented:
"This has been another strong year for the Group, both
operationally, with our activity delivering healthy growth in
revenues, profit and net asset value, as well as strategically as
we continue to pivot the business towards a more robust,
diversified and adaptable model. Furthermore, our margins on new
developments for open market sale are expected to increase as the
expansion in our in-house build capacity results in additional
buying power and general efficiencies within the supply chain.
Revenues are being generated from housebuilding, brownfield site
regeneration, land sales, partnerships with housing associations,
whilst at the same time we are growing our exposure to the Private
Rented Sector and social housing.
"Despite potential political and regulatory headwinds, the
overall health of the sector is positive, particularly the part of
the market in which we operate and where we believe there will
continue to be ongoing support for the products that we are
offering. Our priority is to build on the strong financial
performance during the period and, with a significantly enlarged,
highly qualified team in place, we believe we are now in a position
to effectively manage this increasingly broad range of activity and
to meet our growth ambitions for Inland Homes."
Enquires:
Inland Homes plc: Tel: +44 (0) 1494 762450
Stephen Wicks, Chief Executive
-------------------------
Nishith Malde, Finance Director
-------------------------
Gary Skinner, Managing Director
-------------------------
Panmure Gordon (UK) Limited Tel: +44 (0) 20 7886
2500
-------------------------
Dominic Morley
-------------------------
Erik Anderson
-------------------------
FTI Consulting: Tel: +44 (0) 20 3727
1000
-------------------------
Dido Laurimore
-------------------------
Richard Gotla
-------------------------
Claire Turvey
-------------------------
Notes to Editors:
Incorporated in the UK in 2005, Inland Homes plc is an AIM
listed specialist housebuilder and brownfield developer, dedicated
to achieving excellence in sustainability and design.
Inland Homes acquires brownfield land in the South and
South-East of England principally for residentially led development
schemes. The business then enhances the land value by obtaining
planning permission, before building open market and affordable
homes or selling surplus consented land to other developers to
generate cash.
The Company is committed to extensive public and community
consultation in order to ensure that, where possible, local
community needs and objectives are met.
Inland's aim is to create sustainable communities and homes
which set a benchmark for all future developments in the South of
England. The Company is always looking for brownfield sites without
planning permission for future development.
For further information, please visit the Inland Homes website
at www.inlandhomes.co.uk
Chairman's statement
Overview
This has been another strong year for the Group, both
operationally, our activity delivering healthy growth in revenues,
profit and net asset value, as well as strategically as we continue
to pivot the business towards a more robust, diversified and
adaptable model. Revenues are being generated from housebuilding,
brownfield site regeneration, land sales, partnerships with housing
associations, whilst at the same time we are growing our exposure
to the Private Rented Sector and social housing. Our priority is to
build on the strong financial performance during the period and,
with a significantly enlarged, highly qualified team in place, we
believe we are now in a position to effectively manage this
increasingly broad range of activity and to meet our growth
ambitions for Inland Homes.
Revenue increased to GBP147.4m (2017: GBP90.7m) with the
completion of 275 open market homes (2017: 188) and 79 partnership
equivalents (2017: 37) as well as the sale of a record number of
837 building plots (2017: 780). Despite these sales and the use of
plots for our own developments, we were still able to increase the
size of the land bank to 6,870 plots (2017: 6,776) which
demonstrates the scale of the underlying activity levels.
Results and dividend
The Group achieved a profit before revaluation gains and tax of
GBP19.3m (2017: GBP18.1m), an increase of 6.6%. The undiluted EPRA
net asset value per share has increased by 6.3%, from 96.22p to
102.28p per share, while net asset value per share has increased by
9.0% to 70.46p (2017: 64.62p). In August 2018, we extended the
maturity of the zero dividend preference shares from 10 April 2019
to 10 April 2024. We are also in discussions with a number of banks
to increase our revolving credit facility to support our expanding
house building operations.
On the back of another strong set of results and the continued
progress being made by the Group, the Board has recommended an
increase in the payment of a final dividend by 29.2% from 1.20p to
1.55p per share subject to shareholder approval at the Annual
General Meeting to be held on 27 November 2018. This together with
the interim dividend of 0.65p (2017: 0.50p) per share equates to a
total dividend of 2.20p (2017: 1.70p) per share, an increase of
29.4%.
Operations
Following a considerable and carefully executed recruitment
programme, we now have a high quality and scalable construction
business in place. At the same time, the land team has also been
strengthened and is well placed to manage the significant number of
pipeline opportunities ahead of us.
Our in-house construction team is increasingly focused on the
delivery of partnership housing, where we can provide turnkey
developments for housing associations, other public bodies and
operators in the private rental sector. Our order book currently
stands at circa GBP100m.
In March, we submitted our largest planning application to date,
for 1,853 homes at Cheshunt Lakeside, the former Tesco
headquarters. It is the major brownfield site in Broxbourne Borough
and we are working very closely with the Council to ensure early
delivery. We are anticipating a resolution to grant planning
permission before the end of the year.
The planning application at our flagship scheme at Wilton Park,
Beaconsfield has now been submitted for over a year. Although
progress has been slower than we would have anticipated we remain
in active dialogue with the local authority on the 100-acre site,
which it has allocated for development. Whilst we are confident
that we will achieve the necessary permissions, we are considering
the options open to us over the coming months. In the meantime, the
site continues to produce rental income of approximately GBP1.5m
per annum.
Corporate Governance
With effect from 28 September 2018, all AIM companies are
required to adopt a recognised corporate governance code and to
make additional corporate governance related disclosures on their
websites. I am pleased to announce that the Company has adopted the
Quoted Companies Alliance's Corporate Governance Code (QCA Code).
Notwithstanding that the requirement to adopt a recognised code
came into force after the date to which the Group's financial
statements have been prepared, we have prepared the relevant
sections of our accounts as if the requirement to adopt that code
had been in force during the financial year ended 30 June 2018.
The Board
During the year we welcomed Laure Duhot and Brian Johnson to the
Board as new non-executive Directors. Laure brings over 30 years of
senior executive level experience in the investment banking and
property sectors, specialising in alternative real estate assets
and Brian brings a wealth of sector expertise having held senior
management and non-executive positions within the housing, social
care and commercial sectors.
In another change to our Non-executive Board, we are pleased to
announce the appointment of Simon Bennett as Senior Independent
Director effective from 13 September 2018. Simon has been an
independent Non- executive Director since March 2007 and has
chaired the Remuneration Committee since that date.
We were also pleased to add Gary Skinner to the Board as
Managing Director in April 2018. Gary was previously Director of
Operations at Willmott Dixon Housing, a privately-owned contracting
and interior fit-out group, where he was responsible for the
delivery of up to 1,000 homes per annum. Since joining the Group,
in February 2016, Gary has had a tremendous impact and has been an
integral part of our growth, having led the formation and expansion
of our construction operations.
As announced in February 2018, Paul Brett, our Land Director
since 2011, decided to leave the Group to pursue his own interests
and he stepped down from Board with effect from 16 April 2018 but
will remain as a consultant to the Group, supporting, in
particular, the ongoing planning application processes at its
significant development opportunities at Wilton Park in
Beaconsfield and Cheshunt Lakeside in Hertfordshire. On behalf of
the Board, I should like to thank Paul for his contribution to the
Group since its formation and wish him well in his new
endeavours.
Outlook
Despite wider market uncertainty, we continue to see robust
demand for our products, whether it be consented land or affordably
priced homes. Whilst prices have softened slightly in the Greater
London area and the industry awaits further clarity on the long
term future of the Help to Buy scheme, we are well positioned
through our increasingly diverse revenue streams to benefit from
the fundamental lack of suitable housing in our target markets. We
have delivered significant progress this year and strong financial
metrics and now have a platform in place that provides excellent
visibility over our future growth ambitions.
Terry Roydon
Chairman
Chief Executive's review
We have had yet another very good year of further growth which
has once again generated solid financial results, as management
continues with the implementation of our expansion strategy and the
diversification of the Group's revenue streams.
Over the last three years, we have built a highly accomplished
construction division, now comprising 79 employees, which has the
ability and experience to take on the most complex brownfield
projects. Our core skillset at Inland Homes has always been the
ability to source attractive land opportunities and secure planning
permissions from challenging sites, for which key management has a
successful, 25 year unbroken track record. By adding the building
operations to our existing land platform, we have created a winning
formula for the delivery of our new homes and, importantly, the
capability to provide "turnkey" land and building partnerships to
Housing Associations, PRS funds and local authorities. This element
of our business is gathering momentum and we have circa GBP100m of
Housing Association contracts in place for the delivery of over 500
affordable homes over the next five years. The total number of
units under construction, including both private and partnership
homes, at the year end was over 680, a record for the Group.
Inland Homes has always taken an entrepreneurial approach to the
growth of the business and we have a history of looking at things
differently, focusing our efforts on finding and creating new
opportunities where they seldom existed before. We have an
outstanding track record over the last decade of managing schemes
through the complex UK planning process and of tackling challenging
sites, where our expertise can be deployed to the benefit of the
wider community.
Our strategy
With this in mind, my job as Chief Executive of the Group is to
execute the strategy formulated by the Board and to deliver it
effectively, ultimately generating value for our shareholders. This
time last year, I stated that our Group strategy continues to focus
on the following four strategic goals:
-- Increasing the size of our strategic land bank, including
brownfield sites where residential development is expected; the
tactical acquisition of sites which unlock future potential; and
locations which will become key housebuilding terrain in the
future.
-- Adding value to our land bank by navigating what are often
complex sites through the planning system, requiring a unique
skillset, and selling them to other developers, realising
attractive short-term margins and generating cash to fund our
operations.
-- Maximising the value from our land bank through housing
development and direct sales, as well as providing housebuilding
services to other landowners.
-- Ensuring a strong and flexible balance sheet by maintaining
borrowings at a manageable level through a focus on cash management
and with a maturity profile appropriate to our potential future
cash flows.
In a changing environment it is important that the strategy
evolves to take account of wider economic factors as well as
specific industry issues, including affordability and efficient
delivery, which are at the forefront of our thinking. Against this
backdrop, the key components of our strategy include:
NEW HOMES FOR SALE
Maintain our focus on providing affordably priced (average sales
price of GBP293,000), high quality homes, in those locations in the
South and South East of England.
PLOT SALES
Continue our policy of selling consented plots to third parties
to generate cash and profitability, with a bias towards sales where
our building division can secure the construction contract.
PARTNERSHIP HOUSING
Delivery of homes for housing associations where contract income
will provide a regular positive cash flow and a contribution
towards profit.
LAND ACQUISITION
Grow our land bank year-on-year through a mix of unconditional
brownfield purchases and strategic land options.
RENTAL INCOME
Improve the short term letting income from our residential and
commercial assets whilst sites are going through the planning
process.
Strategy evolution in action
In line with our efforts to consistently evolve our strategy
against this changing market backdrop, we have two new embryonic
businesses, established this year following significant research
and viability assessments, that we believe will support our
ambitions for sustainable growth.
ROSEWOOD HOUSING
As announced on 22 August 2018, Rosewood Housing, a wholly owned
subsidiary of Inland Homes has been registered as a for profit
provider of social housing by Homes England, the Regulator of
Social Housing, following a two year qualification period. This
registration opens up the opportunity for Rosewood to develop, hold
and manage certain section 106 homes, comprising a mix of rented
and shared ownership units that need to remain within the regulated
sector whilst owned by a Registered Provider.
In particular, the Company expects to generate visible and
attractive income from the "staircasing" of shared ownership homes,
whereby residents can buy further shares in their property once
they have lived in it for a certain period of time.
Once we have achieved critical mass in this specialist
sub-sector, it may be appropriate for us to partner with an
institutional investor to help deliver further portfolio growth.
This activity will be highly complementary to our develop-to-sell
strategy and will leverage the capabilities of our rapidly growing
in house construction division.
HUGG HOMES
Based on current trends more than 100,000 homeless families in
England will be living in temporary accommodation soon. Since 2010,
the number has grown by 61% and in 2016 alone local authority spend
on this form of housing - which is often in unsuitable and cramped
bed and breakfast or hostel accommodation, with no stability - was
a cost to the tax payer of GBP845m, with many councils having to
subsidise the accommodation beyond the local housing allowance.
Inland Homes has been working on a new modular housing product
for some time, www.hugghomes.co.uk, based on a concept that
provides high quality modular homes, offering a flexible and
responsive solution to the housing shortage through bespoke
temporary accommodation that is focused on sustainability and a
commitment to design and manufacturing excellence.
Hugg Homes is based on a principle of using land that would be
otherwise inactive during the planning process, enabling "pop up"
developments in key locations. It will give local authorities the
agility to react quickly to emerging temporary local housing
requirements and ensure that vacant land is efficiently utilised in
support of social needs.
The first temporary consents have been secured in Southampton,
Hampshire and Cheshunt, Hertfordshire for a total of 76 units with
the first installation expected to be complete and occupied by the
end of this calendar year.
The units will be let to local authorities for a three to five
year period and the Company has an agreement with an experienced
manufacturer that has the capacity to service our requirements. The
Hugg units have an estimated 60 year lifespan and at the end of
each lease period are transportable on a lorry to a new suitable
location.
We believe this new business will provide an additional
significant and reliable income stream to our Group, whilst
providing good quality homes for people in need at a significant
saving to the taxpayer. They will be particularly attractive to
local authorities where estate regeneration is taking place and
where residents can be temporarily relocated within their own
communities while works are completed.
Ongoing projects
The Portfolio Review will provide a detailed account of many of
our projects, but I would like to comment on two key projects in
particular:
WILTON PARK, BEACONSFIELD, BUCKINGHAMSHIRE
Despite our 100% record in securing permissions, unfortunately
the UK planning system continues to present challenges to us in
certain instances.
The 100 acre site at Wilton Park, described by Savills as "the
best residential development opportunity in Southern England" has
an allocation for 350 homes and 2,100 sqm of commercial space. We
have now owned the site for over five years, guiding the project
through to an adopted planning brief and a subsequent planning
application, which has now been submitted for over a year.
Developers are required to build Affordable Housing, as defined by
local authority policy - in this case 40% of all homes built -
unless it can be demonstrated through a Financial Viability
Assessment (FVA) that it would not be viable to do so. While our
FVA, which demonstrated that the delivery of the decreed 40%
Affordable Housing at Wilton Park would be unviable due to heavy
infrastructure costs, was signed off by a source approved by the
council, the council has refused to accept the findings. It
subsequently commissioned a further viability assessment which took
six months to prepare and came to a similar conclusion, which,
frustratingly, the council is again refusing to accept.
Inland Homes is making every effort to engage with the Council
to resolve this matter to everyone's satisfaction and discussions
are continuing. Such delays caused by arguments over the level of
affordable housing are one of the biggest causes of delays in the
delivery of new homes in the UK; the battle continues!
CHESHUNT LAKESIDE, HERTFORDSHIRE
This is the largest project in the Inland portfolio where a
planning application has been submitted for a new community of
1,853 homes and 200,000 sqft of commercial space, comprising a
significant part of the former Tesco headquarters in Cheshunt,
Hertfordshire together with other land we have assembled on this
large scale brownfield opportunity. The local authority at
Broxbourne are very supportive of our proposals and we are
anticipating an early approval.
This development will provide some significant project delivery
opportunities to work on, alongside major PRS funds and housing
associations as well as private sales. This scheme is held in a
joint venture where there is an ability to buy out our partners,
which is the current intention.
Outlook
Underpinning our overall strategy is the ongoing chronic
shortage of housing across the UK, at various price points, and
whilst this situation remains, we are confident that housebuilders
like ourselves, as well as other stakeholders who are committed to
solving this problem, will continue to be supported in their
activities. We anticipate that any changes to the Help-to-Buy
scheme come 2021 will impact those who are not first-time buyers
and those looking at properties towards the higher end of the
bracket and we'd expect the favorable borrowing environment to
persist for the foreseeable future. Whilst the Greater London
property market continues to be impacted by wider political
uncertainty, values and demand in the Home Counties remains robust,
supported by improving infrastructure investment and evidence of
wage growth returning in the UK economy.
Conclusion
2018 has been another busy year for Inland and we have made
considerable strides which, importantly, are reflected in our full
year results. I firmly believe that the component parts of this
business are well balanced and provide a cohesive strategy for
continuing and sustainable growth in the more uncertain environment
over the short to medium term. Whilst there are challenges, we see
great opportunities for us at Inland going forward.
Finally, I would like to extend my heartfelt thanks to the
entire team at Inland Homes, without which the building of such a
dynamic and successful business would not have been remotely
possible.
Stephen Wicks
Chief Executive
Portfolio review
It has been another successful and very active year for the
Group with growth across all areas of the business in line with our
strategic plan. Revenue, homes delivered and under construction,
land plot sales and our land bank have all increased.
Land bank
The Group operates across a diverse land portfolio from town
centre developments to major regeneration projects as well as some
redevelopment of land located in the greenbelt. This requires a
highly experienced and knowledgeable land and planning team and the
team we now have in place ensures that we continue to be able to
negotiate the complex landscape and deliver consented land both for
sale and for our own construction activity.
We sold 837 land plots in the year, comprising 480 plots to
private housebuilders, and 357 plots to Housing Associations.
Despite these disposals and the 275 house sales in the year our
land bank still increased from 6,776 at 30 June 2017 to 6,870 plots
at the year end.
We are continuing to see strong demand on our land sales and
where appropriate we are targeting these sales to the major housing
associations and where our partnership housing team can secure the
related build contract as part of the transaction. Demand for
consented and unconsented land within the London suburbs, home
counties and the South East remains strong amongst the major
housebuilders particularly given the decline of the London housing
market. The planning system continues to be the single biggest
factor prohibiting housing delivery due to sustained lack of
investment in the public sector planning departments, this has
resulted in an increase in both planning costs and timetable to
achieve planning consents. During the current financial year Inland
will continue to focus on growing the land bank through the
acquisition of brownfield sites and options over greenfield sites
in strategic locations throughout the South East. In line with
recent years, the pattern of land sales is likely to result in the
profits for the year to 30 June 2019 being heavily weighted to the
second half.
Construction and Sales
An increasingly core business activity is our private house
building and partnership homes activities. We completed on 275 open
market completions (including joint ventures), an increase of 46%
from 188 last year and increased the partnership housing equivalent
units from 37 to 79, an increase of 114%.
The average sales price of our residential units was GBP293,000
(2017: GBP306,000), and we continue to see significant demand from
first time buyers. Help to Buy has been a major influence, with 58%
of our sales utilising the government scheme. The abolition of SDLT
for First Time Buyers on homes of up to GBP300,000 has also
benefitted our sales, with 61% of our buyers purchasing under this
price point. A combination of the two schemes and tailored
incentive packages from Inland Homes has proven effective, with an
increase in visitors and reservations at various sales events.
Customer demand for our good quality, affordably priced homes
remains strong and the average sales rate per active site during
the second half of the year was 1.34 units.
As previously stated, we are committed to improving our
housebuilding margins which we believe will come primarily through
scale. Already the increase in the volume of units we are
constructing has enabled us to negotiate group deals at discount
rates, including rebates, with national material suppliers, driving
down our build costs, and alleviating the upward pressure on
construction costs.
We believe we now have in place a construction team that can
help us deliver on our stated target of building 1,000 homes a
year, having added a number of highly skilled people to the team
from across the industry. Our staff numbers have increased to 105
at 30 June 2018 from 74 last year. Career progression, long term
incentivisation and a good working environment, should ensure that
we maintain the quality and strengths of the team going
forward.
Validating our partnership housing strategy, we secured our
largest build contract to date with A2 Dominion, one of the UK's
biggest housing associations. We sold our site at Church Road,
Ashford in Middlesex for GBP29.7m and simultaneously signed a
GBP65m construction contract for delivery of 357 houses and
apartments. Together with our contracts at Alperton and Witley
Gardens, Southall our partnership housing order book currently
stands at approximately GBP100m for the delivery of over 500
affordable homes over five years.
We currently have 13 sites under construction which are diverse
in both location and type of build. At the year end there were 682
homes under construction (including 220 partnership housing units)
compared to 427 last year with 82 reserved or exchanged
representing forward sales of GBP19.7m. We anticipate a slight drop
off in the number of open market completions next year due to the
build cycle of our sites. In line with the increasing demand from
housing associations who have been tasked by the Government to
increase the number of homes within their portfolios, we are
targeting the delivery of 200 partnership housing units during the
current year, resulting in an overall increase in total
completions.
Sites under construction
Meridian Waterside, Southampton
This brownfield regeneration of the former Meridian television
studios is adjacent to the River Itchen in Southampton. The
development comprises of 350, one, two and three bedroom new build
apartments plus 5,415 sqft of commercial space. Phases one and two
were of traditional construction and comprised 96 homes. The final
private sale completions in phase two were achieved in June 2018.
The remaining 254 apartments in phases three and four are concrete
frame construction up to 10 storeys high and piling commenced in
August 2018. Completion is expected during 2021.
Chapel Riverside, Southampton
This riverside regeneration site is being delivered by way of a
Development Agreement with Southampton City Council. It comprises
of 457, one, two and three bedroom new build apartments plus 64,000
sqft of commercial space. In addition to the construction of the
dwellings, there is a high element of civil infrastructure
investment required. This includes the construction of a 210 metre
long sea wall and the relocation of three water settlement tanks.
This project is a lightweight steel frame construction, the first
phase will complete in October 2018 with 36 private sale and 27 PRS
completions achieved for the year to 30 June 2018. This is a six
year development which is expected to complete by 2024.
Chapel Riverside, Southampton has added greatly to our
accomplishments on the South Coast, selling out the first phase in
just 17 weeks, with an average reservation rate of 2.63 per week.
There has been a strong demand in the Southampton area. We have
achieved 160 legal completions for the region this year and won the
'Regeneration Project of the Year' award for Meridian Waterside, at
the prestigious South Coast Property Awards.
Lily's Walk, High Wycombe
This brownfield regeneration site on a former gas works in the
heart of High Wycombe with sloping terrain presented a range of
challenges to overcome. The project comprises 239, one and two
bedroom new build apartments plus 15,800 sqft of commercial space
and a Town Centre relief road. This four year project is a concrete
frame construction with the first completions due in June 2019.
Abbey Wharf, Alperton
This is a brownfield regeneration of a former light industrial
site adjacent to the Grand Union Canal in Alperton, near Wembley in
North West London. A partnership contract was secured with Clarion
Housing association for GBP30.0m during the year for the
construction of 135, one and two bedroom apartments. This project
is concrete frame construction and is due to complete in September
2020.
Church Road, Ashford
The former Brooklands College in the town centre in Ashford,
close to Heathrow Airport, will be developed into 357 homes (one
and two bedroom apartments and three bedroom houses) plus 6,700
sqft of commercial space and 4,700 sqft of educational space. After
receiving planning permission in December 2017 we purchased our
joint venture partner's 80% interest in March 2018. In June 2018 we
sold the site to A2 Dominion for GBP29.7m and simultaneously signed
a GBP65.1m construction contract for this concrete frame build
project. Construction commenced in July 2018 and phased completion
is forecast for between 2020 and 2023.
Wessex Hotel, Bournemouth
The Wessex Hotel site was previously an operating hotel and is
within walking distance of Bournemouth town centre on the south
coast and will comprise 88 apartments (one and two bedroom) in two
blocks together with a new 105 bed hotel where we have entered into
a 25 year pre-let with Whitbread for a Premier Inn. This project is
light weight steel frame construction over a concrete basement
carpark. Construction commences in September 2018 with completion
expected in the first quarter of 2021.
Bucknalls Lane, Garston
This green belt release site between Watford and Hemel Hempstead
comprises 100 two, three and four bedroom houses and one and two
bedroom apartments. This project is in a 50:50 joint venture with
the existing land owners and Inland Homes. Construction commenced
in May 2018 with the show home opening in Autumn 2018 and first
completions expected in Spring 2019.
Europa Way, Ipswich
This is a former light industrial site in Ipswich where we
secured planning for 94 two, three and four bedroom houses and one
and two bedroom apartments. The site was transferred into a 50:50
joint venture with the Anderson Group who are constructing the
development and with Inland Homes undertaking the sales and
marketing function. The project commenced in February 2018 with the
show home opening in October 2018 and first completions due in
January 2019.
Planning and future pipeline
During the year ended 30 June 2018 new planning approvals and
resolutions to grant planning approval had been received for 594
residential units.
Detailed accounts of the key projects, Wilton Park, Beaconsfield
and Cheshunt Lakeside, Hertfordshire are set out in the Chief
Executive's review.
Gardiners Lane, Basildon
A designated for development site, this is also a joint venture
with the Anderson Group on a site in Basildon with the partners
having the same responsibilities as at Europa Way outlined above.
Phase one comprised of 43 two, three and four bedroom houses and
one and two bedroom apartments. This phase is now complete and the
joint venture is in the process of purchasing phase two where
planning has been procured for 33 homes. Construction is expected
to commence in November 2018
Strategic land
We continued to strengthen our land bank during the year to
ensure that our pipeline of prospective projects extends well into
the future. We acquired options over 90 acres of strategic land
across eight different locations which has the potential for 771
plots and we now have 24 options covering approximately 380 acres
of potential development land secured at attractive discounts to
market value.
Finance Director's review
The Group generated record revenues of GBP147.4m (2017:
GBP90.7m) with profit before tax of GBP19.3m (2017: GBP18.1m),
being an increase of 6.6% (excluding revaluation gains) over the
previous year. The Group's revenues are derived principally from
the following activities:
-- Trading parcels of land to other housebuilders
-- Disposal of parcels of land to Registered Providers or PRS
operators as part of our Partnership Housing business
-- Private homes built by the Group for open market sale
Group income statement
The rise in revenues has resulted predominantly from the
increase in our housebuilding activities and disposals of land
parcels to both developers and Registered Providers. The Group sold
837 plots (2017: 780 plots) for GBP59.3m (2017: GBP49.4m) as
follows:
2018
2017
Plots GBPm Plots GBPm
Land assets sold directly 837 59.3 207 22.4
Disposal of interest in joint venture - - 400 11.0
Land sold by corporate disposal 1 1.2 173 16.0
Total plot sale revenues 838 60.5 780 49.4
The Group's revenues continue to grow with substantial sales
being generated from its land trading activity. This is
increasingly being supported by partnership housing that involves
the sale of land followed by a construction contract to build the
homes. Partnership housing has led to a surge in contract income by
287%, from GBP3.1m to GBP12.0m. The Group recognises the revenue on
construction contracts based on the proportion of the contract
completed. As a typical construction contract has a build programme
of more than 12 months, this includes revenue from construction
contracts that were entered into in previous years and continued
during the financial year ended 30 June 2018 as well as new
contracts exchanged during the year. A key focus of the Group's
strategy is to grow its partnership housing business and as at the
year end the construction order book under this activity amounted
to GBP98.0m which will be delivered over the next five years. This
activity enables the Group to recognise revenue and profitability
much earlier compared to the sale of homes on the open market to
private purchasers. It also de-risks part of the Group's operations
and reduces net borrowings.
We completed the sale of 275 private homes during the financial
year (2017: 188 homes) at an average price of GBP293,000 (2017:
GBP306,000) producing revenues of GBP70.2m (2017: GBP57.7m).
Gross profit was GBP31.8m (2017: GBP19.5m) representing a total
margin of 21.6% (2017: 21.5%). The gross profit from land sales was
GBP18.3m (2017: GBP19.2m) including the disposal of our interest in
a joint venture and land sold via a corporate disposal)
representing a margin of 30.2% (2017: 38.9%). The gross profit from
private house building was GBP7.7m (2017: GBP8.7m) delivering a
11.0% margin (2017: 15.1%). As stated in my previous year's report
the lower margin is due to an increase in site wide costs on
certain large project and continued additional remedial costs on
some historic projects. Our margins on new developments for open
market sale are expected to increase as the expansion in the
Group's in-house build capacity results in additional buying power
and general efficiencies within the supply chain. The gross profit
from construction contracts was GBP1.8m (2017: loss of GBP0.3m)
representing a margin of 15.0% (2017: loss of 9.7%). We expect a
minimum margin of 10% on partnership housing construction
contracts. This is in addition to the margin made on the related
land disposal which varies from site to site.
Our average number of employees has increased by 58% from 59 to
93 during the year as the Group has expanded its in-house
construction capabilities to self-deliver most of our sites and
increase its operational capacity for growth. This investment into
the Group's growth and expertise has inevitably led to a rise in
our administrative costs by 22.1% from GBP7.7m to GBP9.4m
representing 6.4% of revenues.
Gross finance costs reduced by 23.5% from GBP8.1m to GBP6.2m
partly due to notional interest of GBP1.4m charged in the previous
year that has not been incurred this year. It also reflected a
general reduction in some of our funding costs in spite of gross
borrowings having increased from GBP94.5m to GBP120.1m. Included
within finance costs is GBP1.1m (2017: GBP1.1m) in respect of the
coupon on zero dividend preference ("ZDP") shares. The Group
capitalised GBP1.1m (2017: GBP1.1m) of finance costs within the
carrying value of the Wilton Park site in accordance with IAS 23
Borrowing Costs, as it is constructed over a significant period of
time and is complex in nature.
Tax Charge
The total tax charge of GBP3.9m represents 20.2% of the profit
before tax. The current corporation tax rate is 19% and the small
difference arises due to the disallowance of the interest accrued
on the zero dividend preference shares together with other
expenditure disallowed for tax purposes.
Earnings per share and dividend
Basic earnings per share reduced by 2.3% to 7.64p (2017: 7.82p)
per share while the basic earnings per share excluding revaluation
gains has increased by 7.8% from 7.09p to 7.64p.
The Company continues to maintain a progressive dividend policy
having already increased the interim dividend by 30% to 0.65p
(2017: 0.50p) per share that was paid on 29 June 2018. The Board
has recommended a final dividend of 1.55p (2017: 1.20p) per share
giving a total increase of 29.4% over the previous year and
delivering a yield of 3.3% based on the share price at the
financial year end of 67.5p. The proposed final dividend will be
paid on 25 January 2019 to shareholders on the register at the
close of business on 28 December 2018. The ex-dividend date is 27
December 2018.
Group balance sheet
Net assets of the Group have increased to GBP142.4m at 30 June
2018 from GBP130.6m, principally due to retained earnings for the
financial year net of the dividends paid in January and June 2018.
This translates to net assets of 70.46p per share (2017: 64.62p).
The undiluted EPRA net asset value per share at the year end was
102.28p (2017: 96.22p).
Joint ventures
The investment period within the Project Helix joint venture
with CPC Group Limited came to an end in December 2017. After
planning consent was received for the joint venture's land at
Church Road site in Ashford, Middlesex the Group purchased the
remaining interest.
We are a 50% partner in Cheshunt Lakeside Developments Limited
where we injected a further GBP5.3m by way of loans to fund the
acquisition of further parcels of land, work in progress and
finance costs.
The Group has a 50% interest in Bucknalls Developments Limited
which secured detailed planning consent in March 2018 on the site
at Bucknalls Lane, Garston. We have increased our loans to the
joint venture by GBP1.2m to GBP5.6m to fund the initial
construction costs. Shortly after the year end we secured senior
debt funding for the development of 100 homes on the site.
We also have a 50% interest in two joint ventures with Constable
Homes Limited, one of which was the development of 43 homes at
Gardiners Park, Basildon where 33 homes were sold by the year ended
30 June 2018 generating a profit of GBP1.6m. Our investment in this
venture has been fully repaid. The other is at Europa Way, Ipswich
where construction is now under way for 94 homes funded by a senior
debt facility.
Other assets
Inventories comprise largely of sites (with and without
planning), professional fees incurred in the planning process and
option fees for strategic sites. The carrying value of inventories
have remained relatively static in comparison to the previous year
due to new opportunities being focused on options over strategic
sites which are light on capital.
Trade and other receivables stand at GBP41.4m (2017: GBP28.1m)
with approximately GBP24.9m being outstanding in relation to land
transactions of which GBP11.0m is due after more than one year.
Net debt and borrowings
Our cash balances at the year end stood at GBP40.4m (2017:
GBP26.5m) with net debt at GBP79.7m (GBP68.0m). As expected net
debt has increased due to the expansion in the Group's house
building for open market sale and represents net gearing of 56.0%
(2017: 52.1%) on net assets of GBP142.4m (2017: GBP130.6m) or 38.6%
(2017: 35.0%) on EPRA net assets of GBP206.7m (2017:
GBP194.4m).
We have undrawn committed bank facilities at the year end of
GBP32.1m (2017: GBP11.2m). Although GBP44.4m of our borrowings fall
due within one year, in August 2018 we extended the maturity date
of GBP18.4m ZDP shares by five years to 10 April 2024. In addition,
we issued a further 1,000,000 ZDP shares at 150.8p per share
raising a gross sum of GBP1.5m. The gross redemption yield will
reduce from 7.3% per annum to 5.25% per annum as from 10 April
2019.
Inland Homes has a revolving credit facility of GBP20.0m from
Barclays to fund construction costs relating to the development of
private homes for open market sale. As at the year end, the Group
had drawn GBP13.8m of this facility. The Group also has a revolving
credit facility of GBP17.2m from a Fund to finance sites with and
without planning consent, that falls due for repayment in August
2020. This facility was fully drawn down at the year end.
During the year we secured a facility for GBP6.6m from Homes
England for infrastructure and development costs in respect of 450
homes at our site, Chapel Riverside in Southampton. As at 30 June
2018, a substantial part of Phase 1, comprising 72 units had been
built and sold and consequently the full facility was available to
fund ongoing costs.
We have a revolving cashflow facility of GBP24.0m to finance the
construction of 239 homes at Lily's Walk in High Wycombe. The Group
had drawn down GBP10.7m of this facility at the year end.
The Group is also in advance negotiations and has received
strong indications that its borrowing facilities of GBP26m expiring
in December 2018 will be extended by another 12 months.
Inland Homes is in a solid financial position with a good spread
of borrowing facilities to fund both land purchases and
construction costs for the delivery of its strategic growth plans.
This will be complimented by the expansion of its partnership
housing activity which obviates the need for equity or debt and
assists in reducing the Group's gearing levels.
GROUP INCOME STATEMENT FOR THE YEARED 30 JUNE
2018
2018 2017
Continuing operations Note GBPm GBPm
Revenue 2 147.4 90.7
Cost of sales 2 (115.6) (71.2)
Gross profit 31.8 19.5
Administrative expenses (9.4) (7.7)
Gain on sale of subsidiary 7 0.1 6.0
Gain on sale of joint venture 7 - 7.0
Share of loss of associates 7 - (0.2)
Share of profit of joint ventures 7 1.0 -
Revaluation of investment properties 6 - 1.5
Operating profit 23.5 26.1
Finance cost - interest expense (5.1) (7.0)
Finance income - interest receivable and similar
income 0.9 0.5
Profit before tax 19.3 19.6
Tax charge 3 (3.9) (3.8)
Total profit and comprehensive income for the year 15.4 15.8
---------------------------------------------------- ----- -------- -------
Earnings per share for profit attributable to the
equity holders of the Company during the year
- basic 4 7.64p 7.82p
- diluted 4 7.30p 7.46p
---------------------------------------------------- ----- -------- -------
GROUP STATEMENT OF FINANCIAL POSITION AT 30
JUNE 2018
2018 2017
Note GBPm GBPm
ASSETS
Non-current assets
Investment properties 6 52.8 53.6
Property, plant and equipment 1.3 0.7
Investments 0.2 -
Investment in joint ventures 7 0.4 0.2
Amounts due from joint ventures 7 1.0 -
Investment in associates 7 1.1 1.1
Amounts due from associate 7 3.0 5.8
Other receivables 10 11.0 5.7
Total non-current assets 70.8 67.1
-------------------------------------------------------------- ----- ------ ------
Current assets
Inventories 9 136.2 139.9
Trade and other receivables 10 30.4 22.4
Amounts due from associate 7 2.8 -
Amounts due from joint ventures 7 19.0 18.3
Cash and cash equivalents 40.4 26.5
Total current assets 228.8 207.1
-------------------------------------------------------------- ----- ------ ------
Total assets 299.6 274.2
-------------------------------------------------------------- ----- ------ ------
EQUITY
Capital and reserves attributable to the Company's
equity holders
Share capital 11 20.5 20.4
Share premium account 12 34.8 34.3
Employee benefit trust 12 (1.1) (1.1)
Treasury reserve 12 (0.5) -
Special reserve 12 6.1 6.1
Retained earnings 12 82.6 70.9
Total equity attributable to shareholders
of the Company 142.4 130.6
-------------------------------------------------------------- ----- ------ ------
LIABILITIES
Current liabilities
Bank loans and overdrafts 14 26.0 -
Zero Dividend Preference shares 14 18.4 -
Trade and other payables 13 24.9 20.5
Corporation tax 6.6 6.5
Other financial liabilities 15 3.7 20.1
Total current liabilities 79.6 47.1
-------------------------------------------------------------- ----- ------ ------
Non-current liabilities
Zero Dividend Preference shares 14 - 17.3
Bank loans 14 41.4 63.2
Other loans 14 34.3 14.0
Deferred tax due in more than one year 8 1.9 2.0
Total non-current liabilities 77.6 96.5
-------------------------------------------------------------- ----- ------ ------
Total equity and liabilities 299.6 274.2
-------------------------------------------------------------- ----- ------ ------
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEARED 30 JUNE
2018
Employee
Share Share Benefit Special Treasury Retained
capital premium Trust reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 30 June 2016 20.3 34.0 (0.7) 6.1 - 56.6 116.3
Total comprehensive income
for the year - - - - - 15.8 15.8
Transactions with owners
Share-based payments - - - - - 1.3 1.3
Dividend payment - - - - - (2.8) (2.8)
Issue of ordinary shares 0.1 0.3 - - - - 0.4
Purchase of own shares
for deferred bonus plan - - (0.4) - - - (0.4)
At 30 June 2017 20.4 34.3 (1.1) 6.1 - 70.9 130.6
---------------------------- --------- --------- --------- --------- --------- ---------- ------
Total comprehensive income
for the year - - - - - 15.4 15.4
Transactions with owners
Share-based payments - - - - - 0.6 0.6
Dividend payment - - - - - (3.7) (3.7)
Issue of ordinary shares 0.1 0.5 - - - (0.6) -
Purchase of own shares - - - - (0.6) - (0.6)
Issue of share options - - - - 0.1 - 0.1
At 30 June 2018 20.5 34.8 (1.1) 6.1 (0.5) 82.6 142.4
---------------------------- --------- --------- --------- --------- --------- ---------- ------
GROUP STATEMENT OF CASH FLOWS FOR THE YEARED 30 JUNE 2018
2018 2017
GBPm GBPm
Cash flow from operating activities
Profit for the year before tax 19.3 19.6
Adjustments for:
- depreciation 0.3 0.3
- share-based payments 0.8 1.3
- revaluation of investment properties - (1.5)
- gain on disposal of subsidiary (0.1) (6.0)
- gain on disposal of joint venture - (7.0)
- interest expense 5.1 7.0
- interest and similar income (0.9) (0.5)
- share of profit of joint ventures (1.0) -
- share of loss of associates - 0.2
Corporation tax payments (4.0) (3.6)
Change in working capital:
- increase in inventories (3.2) (6.9)
- decrease in trade and other receivables (17.8) 6.1
- decrease in trade and other payables (12.8) (7.4)
Net cash (outflow)/inflow from operating activities (14.3) 1.6
--------------------------------------------------------- ------- -------
Cash flow from investing activities
Interest received 0.8 0.3
Purchases of property, plant and equipment (0.9) (0.5)
Purchases of investment property (0.2) (0.4)
Purchase of investment (0.2) -
Proceeds from sale of subsidiary 13.4 5.8
Loans provided to joint ventures (7.6) (10.8)
Amounts repaid by joint ventures 5.9 -
Distribution of profits from joint venture 0.8 -
Loans provided to associate - (2.5)
Amounts repaid by associate - 1.1
Investment in associate - (0.1)
Net cash inflow/(outflow) from investing activities 12.0 (7.1)
--------------------------------------------------------- ------- -------
Cash flow from financing activities
Interest paid (3.8) (4.5)
Repayment of borrowings (6.3) (48.7)
New loans 30.6 71.3
Net proceeds on issue of ordinary shares - 0.4
Equity dividends paid to ordinary shareholders (3.7) (2.8)
Purchase of own shares for Long Term Incentive Plan (0.6) (0.4)
Net cash inflow from financing activities 16.2 15.3
--------------------------------------------------------- ------- -------
Net increase in cash and cash equivalents 13.9 9.7
Net cash and cash equivalents at beginning of year 26.5 16.7
Net cash and cash equivalents at end of year 40.4 26.5
--------------------------------------------------------- ------- -------
NOTES TO THE GROUP PRELIMINARY ANNOUNCEMENT FOR THE YEARED 30
JUNE 2018
1. BASIS OF PREPARATION
The financial information does not constitute the Group's
statutory accounts for either the year ended 30 June 2018 or the
year ended 30 June 2017, but is derived from those accounts.
Statutory accounts for the year ended 30 June 2017 have been
delivered to the Registrar of Companies and those for the period
ended 30 June 2018 will be delivered following the Company's Annual
General Meeting. The Auditor's report on both the 2017 and 2018
accounts was unmodified, did not include a reference to any matters
to which the Auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under
section 498 of the Companies Act 2006.
The financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the
European Union (IFRS), IFRS IC interpretations and with those parts
of the Companies Act 2006 applicable to companies reporting under
IFRS. The financial statements have been prepared under the
historical cost convention as modified by the revaluation of
investment properties and financial assets and liabilities held for
trading.
Going concern
The Board has reviewed the performance for the current year and
forecasts for the future period. It has also considered the risks
and uncertainties, including credit risk and liquidity risk. The
Directors have considered the present economic climate, the state
of the housing market and the current demand for land with planning
consent. The Group has continued to see an increase in demand for
consented land in the areas in which it operates. The Group has
significant forward sales of residential units as well as a
substantial order book for its Partnership homes and is in
discussions for the sale of some land within its projects and
expects to make sufficient disposals in the foreseeable future to
ensure it has adequate working capital for its requirements. The
Directors are satisfied that the Group will generate sufficient
cash to meet its liabilities as and when they fall due for a period
of at least 12 months from the date of signing these financial
statements. At 30 June 2018, the Group had GBP44.4m of borrowing
facilities expiring within one year. Included within this figure
was GBP18.4m relating to the Group's ZDP borrowings, the maturity
of which was extended to April 2024 shortly after the year end. The
balance of GBP26m relates to loans where we are in advance
negotiations with the bank and have received strong indications
that the facility will be extended by a further 12 months to expire
in December 2019. The Directors therefore consider it appropriate
to prepare the financial statements on the going concern basis.
CHANGES IN ACCOUNTING POLICIES
The accounting policies used by the Group in these condensed
financial statements are consistent with those applied in the
Group's financial statements for the year to 30 June 2017, as
amended to reflect the adoption of new standards, amendments and
interpretations which became effective in the year as shown
below.
New standards adopted during the year
The following standards, amendments and interpretations endorsed
by the EU were effective for the first time for the Group's 30 June
2018 year end and had no material impact on the financial
statements. The adoption of IAS 7 has resulted in an additional
note for the reconciliation of net debt and is note 14 in the
financial statements.
IAS 7 (amended) - Statement of Cash Flows;
IAS 12 (amended) - Income Taxes;
IFRS 12 - Disclosure of Interests in Other Entities
Standards in issue but not yet effective
The following new standards, amendments and interpretations to
existing standards were in issue at the date of approval of these
financial statements but are not yet effective for the current
accounting year and have not been adopted early. Based on the
Group's current circumstances the Directors do not anticipate that
their adoption in future periods will have a material impact on the
financial statements of the Group.
IAS 40 (amended) - Transfers of Investment Property
IFRS 2 (amended) - Share Based Payments;
IFRS 4 (amended) - Insurance Contracts;
IFRS 17 - Insurance Contracts;
IFRIC 22 - Foreign Currency Transactions and Advance
Consideration;
IFRIC 23 Uncertainty over Income Tax Treatments; and
Annual improvements to IFRSs (2014 - 2016 cycle).
Amendments to IAS 28: Long-term interests in Associates and
Joint Ventures1
Annual Improvements to IFRSs (2015-2017 Cycle)(1)
Amendments to IAS 19: Plan Amendment, Curtailment or
Settlement(1)
Amendments to References to the Conceptual Framework in IFRS
Standards(1)
(1) Standards and amendments not yet endorsed by the EU.
In addition to the above, IFRS 9 Financial Instruments and IFRS
15 Revenue from Contracts with Customers have been endorsed by the
EU and will be effective for the first time for the Group's year
end ending 30 June 2019. IFRS 16 Leases has also been endorsed and
will be effective for the Group's year end ending 30 June 2020.
IFRS 9 Financial Instruments
This standard applies to classification and measurement of
financial assets and financial liabilities, impairment provisioning
and hedge accounting. Management's assessment of IFRS 9 determined
that the main area of potential impact was impairment provisioning
on trade receivables for the Group and balances due from
subsidiaries for the Company. In both cases, this was due to the
requirement to use a forward-looking expected credit loss model.
The Group does not presently hold any complex financial
instruments. Given that inter group balances are eliminated on
consolidation and does not affect group results, no material
impairment allowance adjustments are expected. Having substantially
completed our assessment, it is considered that the introduction of
IFRS 9 is not expected to have a material impact on the results or
cash flows of either the Group or the Company. Presentation changes
are expected given the additional disclosure requirements under
IFRS 9.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 combines a number of previous standards, setting out a
five-step model for the recognition of revenue and establishing
principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of
revenue. The standard is applicable to land sales, house sales,
contract income, management fees and hotel income but excludes
rental income, which is within the scope of IFRS 16.
The Group has substantially completed its assessment of the
impact of IFRS 15 on its financial statements and has identified no
material adjustments to date that will be required as a result of
the implementation of IFRS 15. Currently the Group recognises
revenue at the fair value of the consideration received and
receivable in respect of the sale of housing and land on legal
completion. This standard is not expected to effect the statement
of cashflows nor does the Group expect the implementation of this
standard to have a material impact on profit.
IFRS 15 introduces a substantial change to presentations and
disclosures. IFRS 15 requires separate presentation of contract
assets and contract liabilities. This will result in some
reclassifications as of 1 July 2017 in relation to advance payments
and deferred revenue which are currently included in other balance
sheet line items. Other presentation changes are limited to
additional disclosure requirements under IFRS 15 only.
IFRS 16 Leases
This standard does not substantially affect the accounting for
rental income earned by the Group as lessor. The main impact of the
standard is the removal of the distinction between operating and
finance leases for lessees, which will result in almost all leases
being recognised on the balance sheet. This will therefore have a
presentational impact on the financial statements when the Group
enters into a new office lease next year, details of which are yet
to be finalised.
SIGNIFICANT JUDGEMENTS, KEY ASSUMPTIONS AND ESTIMATES
Some of the significant accounting policies require management
to make difficult, subjective or complex judgments or estimates.
The following is a summary of those policies which management
consider critical because of the level of complexity, judgment or
estimation involved in their application and their impact on the
financial statements.
Key sources of estimation uncertainty
- Valuation of inventories
- Income taxes
- Fair value of investment properties
- Discounting on deferred consideration of inventories, disposal
of joint ventures and acquisition of shares
Significant judgments
- Time of likely repayments of amounts due from joint ventures
and associate
- Likelihood of achieving planning
- Capitalisation of borrowing costs
- Investment in joint ventures
- Investment in associates
A full explanation of these policies is included in the 2018
financial statements.
2. SEGMENTAL INFORMATION
In accordance with IFRS 8, information is disclosed to enable
users of financial statements to evaluate the nature and financial
effects of the business activities in which the Group engages.
In identifying its operating segments, management differentiates
between land sales, housebuilding, contract income, rental income,
hotel income, investments, investment properties, management fees
and other income. These segments are based on the information
reported to the chief operating decision maker (which in the
Group's case is the Operating Board comprising the three Executive
Directors and four senior managers) and represent the activities
which generate significant revenues, profits and use of resources
within the Group. These operating segments are monitored and
strategic decisions are made on the basis of segment operating
results.
Segmental analysis by activity
Land House Contract Rental Investment Management
sales building income income properties fees Other Total
2018 GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 59.3 70.2 12.0 0.7 1.3 2.4 1.5 147.4
Cost of sales (41.0) (62.5) (10.2) (0.1) (0.3) - (1.5) (115.6)
Gross profit 18.3 7.7 1.8 0.6 1.0 2.4 - 31.8
Administrative
expenses - - - - - - (9.4) (9.4)
Share of profit
of joint ventures - 0.8 - 0.2 - - - 1.0
Gain on sale of
subsidiary - - - - 0.1 - - 0.1
Operating profit/(loss) 18.3 8.5 1.8 0.8 1.1 2.4 (9.4) 23.5
Net finance cost (1.6) (0.9) - - (1.2) - (0.5) (4.2)
Profit/(loss)
before tax 16.7 7.6 1.8 0.8 (0.1) 2.4 (9.9) 19.3
Tax (charge)/credit (3.1) (0.5) (0.1) - (0.1) (0.2) 0.1 (3.9)
Total profit/(loss)
for the year 13.6 7.1 1.7 0.8 (0.2) 2.2 (9.8) 15.4
------------------------- ------- ---------- --------- -------- ------------ ----------- ------ --------
2017
Revenue 22.4 57.7 3.1 1.3 1.1 2.5 2.6 90.7
Cost of sales (16.2) (49.0) (3.4) (0.1) (0.2) - (2.3) (71.2)
Gross profit/(loss) 6.2 8.7 (0.3) 1.2 0.9 2.5 0.3 19.5
Administrative
expenses - - - - - - (7.7) (7.7)
Gain on sale of
subsidiary 6.0 - - - - - - 6.0
Gain on sale of
joint venture 7.0 - - - - - - 7.0
Share of loss
of associates - (0.2) - - - - - (0.2)
Revaluation of
investment properties - - - - 1.5 - - 1.5
Operating profit/(loss) 19.2 8.5 (0.3) 1.2 2.4 2.5 (7.4) 26.1
Net finance cost (3.5) (0.8) - - (0.9) - (1.3) (6.5)
Profit/(loss)
before tax 15.7 7.7 (0.3) 1.2 1.5 2.5 (8.7) 19.6
Tax (charge)/credit (3.0) (1.5) 0.1 (0.2) (1.3) - 2.1 (3.8)
------------------------- ------- ---------- --------- -------- ------------ ----------- ------ --------
Total profit/(loss)
for the year 12.7 6.2 (0.2) 1.0 0.2 2.5 (6.6) 15.8
------------------------- ------- ---------- --------- -------- ------------ ----------- ------ --------
Included within the 'Land sales' segment are land sales to
housing associations which include construction works to 'Golden
Brick'. The construction works to completion are included in the
'Contract income' segment.
Included with the 'Housebuilding' segment are the sales of
freehold reversions and customers' extras that arise as a
by-product of house building activity.
Items included within 'Other' above do not produce significant
income streams and are therefore not monitored separately by the
Board, but as a group.
During the year, one land sale transaction (2017: None) with a
customer accounted for more than 10% of revenue and amounted to
GBP29.7m.
House Contract Investment
Land building Income properties Other Total
2018 GBPm GBPm GBPm GBPm GBPm GBPm
ASSETS
Non-current assets
Investment properties - - - 52.8 - 52.8
Property, plant and
equipment - - - - 1.3 1.3
Investments - - - - 0.2 0.2
Investment in joint
ventures - 0.4 - - - 0.4
Amounts due from joint
ventures - 1.0 - - - 1.0
Investment in associate - 1.1 - - - 1.1
Amounts due from associate - 3.0 - - - 3.0
Other receivables 11.0 - - - - 11.0
Total non-current
assets 11.0 5.5 - 52.8 1.5 70.8
------------------------------------ ------ ---------- --------- ------------ ------ ------
Current assets
Inventories 85.0 51.2 - - - 136.2
Trade and other receivables 13.9 6.3 8.2 1.3 0.7 30.4
Amounts due from associate - 2.8 - - - 2.8
Amounts due from joint
ventures - 19.0 - - - 19.0
Cash and cash equivalents - - - - 40.4 40.4
Total current assets 98.9 79.3 8.2 1.3 41.1 228.8
------------------------------------ ------ ---------- --------- ------------ ------ ------
Total assets 109.9 84.8 8.2 54.1 42.6 299.6
------------------------------------ ------ ---------- --------- ------------ ------ ------
EQUITY
Share capital - - - - 20.5 20.5
Share premium account - - - - 34.8 34.8
Employee benefit trust - - - - (1.1) (1.1)
Treasury reserve - - - - (0.5) (0.5)
Special reserve - - - - 6.1 6.1
Retained earnings - - - - 82.6 82.6
Total equity - - - - 142.4 142.4
------------------------------------ ------ ---------- --------- ------------ ------ ------
LIABILITIES
Current liabilities
Bank loans and overdrafts 26.0 - - - - 26.0
Zero Dividend Preference
shares - - - - 18.4 18.4
Trade and other payables 3.1 11.3 2.9 0.4 7.2 24.9
Corporation tax - - - - 6.6 6.6
Other financial liabilities 3.7 - - - - 3.7
Total current liabilities 32.8 11.3 2.9 0.4 32.2 79.6
------------------------------------ ------ ---------- --------- ------------ ------ ------
Non-current liabilities
Bank loans 1.1 13.8 - 26.5 - 41.4
Other loans 17.2 17.1 - - - 34.3
Deferred tax - - - 1.9 - 1.9
Total non-current
liabilities 18.3 30.9 - 28.4 - 77.6
------------------------------------ ------ ---------- --------- ------------ ------ ------
Total equity and liabilities 51.1 42.2 2.9 28.8 174.6 299.6
------------------------------------ ------ ---------- --------- ------------ ------ ------
House Contract Investment
Land building income properties Other Total
2017 GBPm GBPm GBPm GBPm GBPm GBPm
ASSETS
Non-current assets
Investment properties - - - 53.6 - 53.6
Property, plant and
equipment - - - - 0.7 0.7
Investment in joint
ventures - 0.2 - - - 0.2
Investment in associate - 1.1 - - - 1.1
Amounts due from associates - 5.8 - - - 5.8
Other receivables 5.7 - - - - 5.7
Total non-current
assets 5.7 7.1 - 53.6 0.7 67.1
------------------------------------ ------ ---------- --------- ------------ ------ ------
Current assets
Inventories 85.1 51.9 2.9 - - 139.9
Trade and other receivables 18.9 1.3 1.5 - 0.7 22.4
Amounts due from joint
ventures - 18.3 - - - 18.3
Amounts due from associates - - - - - -
Cash and cash equivalents - - - - 26.5 26.5
Total current assets 104.0 71.5 4.4 - 27.2 207.1
------------------------------------ ------ ---------- --------- ------------ ------ ------
Total assets 109.7 78.6 4.4 53.6 27.9 274.2
------------------------------------ ------ ---------- --------- ------------ ------ ------
EQUITY
Share capital - - - - 20.4 20.4
Share premium account - - - - 34.3 34.3
Employee benefit trust - - - - (1.1) (1.1)
Special reserve - - - - 6.1 6.1
Retained earnings - - - - 70.9 70.9
Total equity attributable
to shareholders of
the Company - - - - 130.6 130.6
------------------------------------ ------ ---------- --------- ------------ ------ ------
LIABILITIES
Current liabilities
Trade and other payables 7.9 7.5 1.5 0.3 3.3 20.5
Corporation tax - - - - 6.5 6.5
Other financial liabilities 20.1 - - - - 20.1
Total current liabilities 28.0 7.5 1.5 0.3 9.8 47.1
------------------------------------ ------ ---------- --------- ------------ ------ ------
Non-current liabilities
Zero Dividend Preference
shares - - - - 17.3 17.3
Bank loans due in
more than one year 17.0 19.9 - 26.3 - 63.2
Other loans due in
more than one year 14.0 - - - - 14.0
Deferred tax due in
more than one year (0.1) (0.6) - 3.3 (0.6) 2.0
Total non-current
liabilities 30.9 19.3 - 29.6 16.7 96.5
------------------------------------ ------ ---------- --------- ------------ ------ ------
Total equity and liabilities 58.9 26.8 1.5 29.9 157.1 274.2
------------------------------------ ------ ---------- --------- ------------ ------ ------
(1) Included within land inventories above is GBP6.8m (2017:
GBP5.7m) relating to the hotel.
All assets and revenues arose solely in the United Kingdom.
3. TAX CHARGE
2018 2017
GBPm GBPm
--------------------- ------ -----
Current tax charge 4.0 2.7
Deferred tax charge (0.1) 1.1
Total 3.9 3.8
--------------------- ------ -----
The tax on the Group's profit before tax differs from the theoretical amount that
would arise using the tax rate applicable to profit on the Group companies as follows:
2018 2017
GBPm GBPm
------------------------------------------------------------------------ --------- --------
Profit before tax 19.3 19.6
------------------------------------------------------------------------- --------- --------
Expected tax charge based on the standard
rate of corporation tax in the UK of 19.0%
(2017: 19.0%) 3.7 3.7
Expenses not deductible for tax purposes 0.1 -
ZDP interest not deductible for tax purposes 0.2 0.2
Adjustments to tax charge in respect of previous
periods - 0.1
Capital losses (0.1)
Timing differences - (0.2)
Release deferred tax asset on disposal of
joint venture - 0.1
Deferred tax liability on investment properties - 1.3
Tax losses utilised - (1.4)
Tax charge 3.9 3.8
------------------------------------------------------------------------- --------- --------
4. EARNINGS AND NET ASSET VALUE PER SHARE
Number of shares
Earnings per share Net asset value per share
Weighted average At 30 June
2018 2017 2018 2017
'000 '000 '000 '000
Shares in issue 204,551 203,654
Less shares held in:
- EBT(1) (1,627) (1,627)
- Treasury(2) (825) -
--------------- -----------
For use in basic measures 201,621 201,875 202,099 202,027
Dilutive effect of:
- share options 1,844 1,882 1,837 1,912
- deferred bonus shares 1,763 1,627 1,823 1,627
- growth shares(3) 5,790 6,000 5,100 6,000
For use in diluted measure 211,018 211,384 210,859 211,566
------------------------------------------------ ------------- --------- --------------- -----------
(1) The Group's Employee Benefit Trust (EBT) purchased 650,000 shares on 29 October
2014, 377,500 shares on 20 December 2015 and a further 600,000 shares on 16 December
2016 in Inland Homes plc under the terms of the Long Term Incentive Plan. These
total 1,627,500 and have been deducted from the weighted average number of ordinary
shares in issue and also from the shares in issue at the year end.
(2) In several transactions in October and November 2017, the Group purchased 1,000,000
of its own shares to be held in treasury. On 18 January 2018, 175,000 shares were
transferred from the treasury reserve to satisfy employee share options exercised
within the terms of the Company's share option plan.
(3) Amounts included for the growth shares are those where the performance conditions
have been satisfied. on 6 April 2018, 896,689 growth shares were exercised. As
a result, the Group issued 896,689 shares to satisfy an obligation under the LTIP
scheme. In addition, 3,311 growth shares lapsed on the same date.
Basic and diluted EPS
2018 2017
--------------------------------------------------------------- --------- --------------- -----------
Profit attributable to equity holders of the
Company (GBPm) 15.4 15.8
Earnings per share 7.64p 7.82p
Diluted earnings per share 7.30p 7.46p
--------------------------------------------------------------- --------- --------------- -----------
Net asset value and net asset value per share
--------------------------------------------------------------- --------- --------------- -----------
Undiluted Diluted
GBPm p p
--------------------------------------------------------------- --------- --------------- -----------
At 30 June 2018
Net assets attributable to equity shareholders 142.4 70.46 67.53
Adjustment for:
Revaluation of projects 61.0
Deferred tax on investment property revaluation 3.3
--------------------------------------------------------------- --------- --------------- -----------
EPRA net asset value 206.7 102.28 98.03
Adjustment for:
Deferred tax on investment property revaluation (3.3)
Deferred tax on project revaluation (11.6)
--------------------------------------------------------------- --------- --------------- -----------
EPRA triple net asset value 191.8 94.91 90.97
--------------------------------------------------------------- --------- --------------- -----------
At 30 June 2017
Net assets attributable to equity shareholders 130.6 64.62 61.72
Adjustment for:
Revaluation of projects 60.5
Deferred tax on investment property revaluation 3.3
--------------------------------------------------------------- --------- --------------- -----------
EPRA net asset value 194.4 96.22 91.88
Adjustment for:
Deferred tax on investment property revaluation (3.3)
Deferred tax on project revaluation (11.5)
--------------------------------------------------------------- --------- --------------- -----------
EPRA triple net asset value 179.6 88.90 84.89
--------------------------------------------------------------- --------- --------------- -----------
5. DIVIDS
Dividend per share 2018 2017
Payment date p GBPm GBPm
---------------------------- ------------------- ------------------- ----- -----
Current year
2018 final dividend 25 January 2019 1.55 - -
2018 interim dividend 29 June 2018 0.65 1.3 -
---------------------------- ------------------- ------------------- ----- -----
Distribution of current
year profit 2.20 1.3 -
------------------------------------------------- ------------------- ----- -----
Prior year
2017 final dividend 26 January 2018 1.20 2.4 -
2017 interim dividend 23 June 2017 0.50 - 1.0
Distribution of prior
year profit 1.70 2.4 1.0
------------------------------------------------- ------------------- ----- -----
2016 final dividend 27 January 2017 0.90 - 1.8
---------------------------- ------------------- ------------------- ----- -----
Dividends as reported in the Group statement
of changes in equity 3.7 2.8
------------------------------------------------- ------------------- ----- -----
Dividends are not paid on the shares owned by the Employee Benefit Trust.
6. INVESTMENT PROPERTIES
Commercial Residential Development
properties properties land Total
GBPm GBPm GBPm GBPm
Fair value
At 30 June 2016 1.0 45.4 5.3 51.7
Additions 0.3 0.1 - 0.4
Fair value adjustment - 1.5 - 1.5
At 30 June 2017 1.3 47.0 5.3 53.6
Additions - 0.5 - 0.5
Transfer from inventories 1.2 - - 1.2
Disposals (2.5) - - (2.5)
At 30 June 2018 - 47.5 5.3 52.8
---------------------------- ------------ ------------ ------------ ------
Valuation techniques and sensitivity
- Commercial properties
At 30 June 2017, the Group's commercial property consisted of a
property at Leighton Buzzard which was carried at fair value
established by the Directors using a rental yield of 5.5%. The
annual rent used in this calculation was the subject of a lease
with the Co-op. Costs to complete were deducted from the fair value
along with a suitable developer's margin. The property was disposed
of during the year to 30 June 2018.
- Residential properties
The Group's residential investment properties were valued by the
Directors on the basis of 'open market value'. In arriving at their
view of open market value the Directors had regard to the
following; the accommodation offered, the square footage and the
condition of each property. They then considered the above in light
of the local market and prices achieved in recent transaction in
consultation with a local property agent.
- Development land
The Group's development property is carried at fair value which
has been established by the Directors using an internal appraisal
model based on the 'residual method'. The inputs for this model are
the market value of units to be constructed in accordance with the
planning permission, the costs of any housebuilding,
infrastructure, local authority fees and professional fees. The
market value of the units has been assumed to be at a similar level
to the prices obtained by the Group on earlier phases of the same
development for similar property types. Housebuilding and
infrastructure costs have been forecast using costs incurred by the
Group on this or other similar developments with an allowance for
cost increases. Local authority fees were agreed at the time of the
signing of the planning permission and are therefore known costs.
Professional fees are input using costs incurred on similar
projects and finance holding costs are the Group's cost of debt
capital. Using a profit margin of 20% this generated a land value
for the remaining site of GBP5.3m (2017: GBP5.3m). The Directors
are of the opinion that developing the site reflects the highest
and best use of this asset.
These techniques use significant unobservable inputs such that
the fair value measurement of investment properties has been
classified as Level 3 in the fair value hierarchy as set out by
IFRS 13: Fair Value Measurement. There were no transfers between
Levels 1 and 2 or between 2 and 3 in the fair value hierarchy
during the year ended 30 June 2018 (2017: None).
Sensitivity analysis Increase/(decrease)
2018 2017
Variable Variation GBPm GBPm
Fair value
Commercial properties House prices +5% n/a 0.1
-5% n/a (0.1)
Residential properties Rental values +5% 2.4 2.4
-5% (2.4) (2.4)
Development land House prices +5% 1.6 1.6
-5% (1.3) (1.3)
Development costs +5% (1.1) (1.1)
-5% 0.9 0.9
-------------------------------------------- ---------- ---------- ----------
Income and expense
During the year ended 30 June 2018 GBP1.3m (2017: GBP1.1m)
rental and ancilliary income from investment properties was
recognised in the Group Income Statement. Direct operating
expenses, including repairs and maintenance, arising from
investment property that generated rental income amounted to
GBP0.3m (2017: GBP0.2m). The Group did not incur any direct
operating expenses arising from investment properties that did not
generate rental income (2017: GBPnil).
Restrictions and obligations
At 30 June 2018 there were no restrictions on the realisability
of investment property or the remittance of income and proceeds of
disposal (2017: None). There are no obligations to construct or
develop the Group's residential or development land investment
property (2017: None).
7. INVESTMENTS
At 30 June 2018, the Company, directly or indirectly, held
equity of the following entities:
Holding
and voting
Company name Principal activity rights(1)
Subsidiary undertakings
Basildon United Football, Sports & Leisure Limited Sports club 100%
Brooklands Helix Developments Limited Real estate development 100%
Bucks Developments Limited Real estate development 100%
Chapel Riverside Developments Limited Real estate development 100%
Drayton Developments Limited Real estate development 100%
Drayton Garden Village Limited Real estate development 100%
Exeter Road (Bournemouth) Limited Real estate development 100%
High Wycombe Developments Limited Real estate development 100%
High Wycombe Developments Limited Real estate development 100%
Letting or operating of
Hugg Homes Limited real estate 100%
Letting or operating of
Hugg Housing Limited real estate 100%
Inland Limited Real estate development 100%
Inland (Southern) Limited Real estate development 100%
Inland (STB) Limited Provision of finance 100%
Inland Finance Limited Real estate development 100%
Inland Helix Limited Real estate development 100%
Inland Homes (Essex) Limited Real estate development 100%
Inland Homes 2013 Limited Holding company 100%
Inland Homes Developments Limited Real estate development 100%
Inland Housing Limited Real estate development 100%
Inland Partnerships Limited Construction 100%
Inland Property Limited Real estate investment 100%
Inland Property Finance Limited Provision of finance 100%
Inland ZDP plc Provision of finance 100%
Leighton Developments Limited* Real estate development 100%
Poole Investments Limited Real estate investment 100%
Rosewood Housing Limited Real estate development 100%
Wessex Hotel Developments Limited Real estate development 100%
Wilton Park Developments Limited Real estate development 100%
Interests in joint ventures
10 Ant South Limited Real estate investment 50%
Bucknalls Developments Limited Real estate development 50%
Cheshunt Lakeside Developments Limited Real estate development 50%
Europa Park LLP Real estate development 50%
Gardiners Park LLP Real estate development 50%
Project Helix Holdco Limited Holding company 20%
Interests in associates
Troy Homes Limited Real estate development 25%
---------------------------------------------------- -------------------------- ------------
(1) All holdings are of ordinary shares
Inland Homes 2013 Limited is the only direct subsidiary of the
Company. All others are indirect holdings. All of the above
entities are incorporated and domiciled in England & Wales. In
addition, all entities are registered at Decimal Place, Chiltern
Avenue, Amersham, Buckinghamshire, HP6 5FG, with the exception
of:
- Europa Park LLP and Gardiners Park LLP which are registered at
Springfield Lodge, Colchester Road, Chelmsford, Essex, CM2 5PW
- Troy Homes Limited which is registered at 10-14 Accommodation
Road, London, NW11 8ED
The joint ventures and associates listed above are accounted for
using the equity method. Further details can be found in Critical
Judgements in note 3 and below.
There are no restrictions on the ability of the Parent Company
or its subsidiaries to transfer cash or other assets to or from
other entities in the Group.
Disposal of subsidiaries
During the year to 30 June 2018, the Group disposed of two of
its subsidiaries Uxbridge Homes Developments Limited and Inland
Commercial Limited. During the year to 30 June 2017, Inland Homes
2013 Limited disposed of its 100% owned subsidiary, Inland New
Homes Limited. There was a gain of GBP0.1m on the sale of these
subsidiaries. A management fee of GBP6.0m was charged by Inland Ltd
to Inland New Homes Ltd prior to the sale for GBP1 resulting in a
gain of GBP6.0m which was recognised in the Group Income
Statement.
Investment in joint ventures
Aston Cheshunt Investment
Clinton Project Bucknalls Lakeside Europa Gardiners in
S.A.R.L. Helix Develop-ments Develop-ments Park Park Total associates Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------- ---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
Cost
At 30 June
2016 1.0 - - 0.2 - - 1.2 0.1 1.3
------------- ---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
Additions 0.3 - - - - - 0.3 1.2 1.5
Transfer to
loans
to joint
ventures (0.2) - - - - - (0.2) - (0.2)
Disposal of
interest
in joint
venture (1.1) - - - - - (1.1) - (1.1)
Share of
loss after
tax - - - - - - - (0.2) (0.2)
---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
Movement
during
the year (1.0) - - - - - (1.0) 1.0 -
------------- ---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
At 30 June
2017 - - - 0.2 - - 0.2 1.1 1.3
------------- ---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
Share of
profit
after tax - - - 0.2 - 0.8 1.0 - 1.0
Receipts
from joint
ventures - - - - - (0.8) (0.8) - (0.8)
Movement
during
the year - - - 0.2 - - 0.2 - 0.2
------------- ---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
At 30 June
2018 - - - 0.4 - - 0.4 1.1 1.5
------------- ---------- -------- -------------- -------------- ------- ---------- ------ ------------ ------
Amounts due from associate
2018 2017
GBPm GBPm
--------------------------- ----- -----
Due in less than one year
Other receivables 2.8 -
Due in more than one year
Loans 3.0 3.0
Other receivables - 2.8
----------------------------- ----- -----
3.0 5.8
5.8 5.8
--------------------------- ----- -----
Amounts due from joint ventures
2018 2017
GBPm GBPm
------------------------------------ ----- -----
Due in less than one year
Project Helix - 4.9
Bucknalls Developments Ltd 5.6 4.4
Cheshunt Lakeside Developments Ltd 13.4 8.1
Gardiners Park LLP - 0.9
------------------------------------ ----- -----
19.0 18.3
Due in more than one year
Europa Park LLP 1.0 -
20.0 18.3
------------------------------------ ----- -----
INTERESTS IN JOINT VENTURES
Aston Clinton S.A.R.L.
In November 2014, the Group acquired a 10% interest in Aston
Clinton S.A.R.L (Lux) whose purpose was to acquire a site near
Aylesbury, Buckinghamshire, and obtain planning permission. During
the year ended 30 June 2017, following the achievement of planning
consent for 400 residential units and commercial space was
achieved, the Group sold its interest in Aston Clinton S.A.R.L. for
GBP8.3m, generating a gain of GBP7.0m which was recognised in the
Group Income Statement. Aston Clinton S.A.R.L. is based in
Luxembourg.
Summarised statement of total comprehensive income
2018 2017
GBPm GBPm
---------------------------- ------ ------
Revenue - -
Interest income - -
Interest charge - (0.3)
Income tax expense - -
---------------------------- ------ ------
Total comprehensive income - (0.3)
------------------------------ ---- ------
Project Helix Group
In December 2014, the Group entered into a joint venture with
CPC Group Ltd (CPC) to purchase land, obtain planning permission
and ultimately sell the land. During the year, Project Helix Holdco
Limited's interests in its subsidiary undertakings, High Wycombe
Developments Ltd, High Wycombe Developments No. 2 Ltd and
Brooklands Helix Developments Ltd were purchased by the Group.
Project Helix Group will be liquidated shortly.
Summarised statement of financial position
2018 2017
GBPm GBPm
------------------------------------------------- ---- ---- ------- ------
Current assets
Cash and cash equivalents - -
Other current assets - 24.3
Total current assets - 24.3
------------------------------------------------------------- ------- ------
Current liabilities
Financial liabilities (excluding trade payables
and provisions) - 0.6
Other current liabilities - 24.0
Total current liabilities - 24.6
------------------------------------------------------------- ------- ------
Net liabilities - (0.3)
------------------------------------------------------------- ------- ------
Reporting entity's share - (0.1)
Investment cost - 0.1
------------------------------------------------------------- ------- ------
Carrying amount at year end - -
------------------------------------------------- ---- ---- ------- ------
Summarised statement of total comprehensive
income
2018 2017
GBPm GBPm
------------------------------------------------- ---- ---- ------- ------
Revenue - 0.2
Operating expenses - (0.1)
Total comprehensive income - 0.1
------------------------------------------------------------- ------- ------
Bucknalls Developments Ltd
In December 2015, the Group entered into a joint venture with
two individuals to purchase land, obtain planning permission and
develop the homes in Garston, Hertfordshire. During the year ended
30 June 2017 outline planning consent was obtained for 100
residential units. Under the terms of the joint venture, the Group
owns 50% of the share capital, is obliged to fund 50% of the costs
of the site and is entitled to receive a management fee and 50% of
the returns.
Summarised statement of financial position
2018 2017
GBPm GBPm
----------------------------------------------------- ------ -----
Current assets
Cash and cash equivalents 0.1 -
Other current assets 9.5 8.4
Total current assets 9.6 8.4
------------------------------------------------------- ------ -----
Current liabilities
Financial liabilities (excluding trade payables and
provisions) 9.9 8.3
Other current liabilities 0.3 0.1
Total current liabilities 10.2 8.4
------------------------------------------------------- ------ -----
Net liabilities (0.6) -
------------------------------------------------------- ------ -----
Reporting entity's share (0.3) -
Losses restricted to nil 0.3 -
------------------------------------------------------- ------ -----
Carrying amount at year end - -
------------------------------------------------------- ------ -----
Summarised statement of total comprehensive income
2018 2017
GBPm GBPm
----------------------------------------------------- ------ -----
Revenue - -
Operating expenses - -
Interest (0.3) -
------------------------------------------------------- ------ -----
Total comprehensive income (0.3) -
------------------------------------------------------- ------ -----
Cheshunt Lakeside Developments Ltd (formerly Inland (Stonegate)
Ltd)
In June 2016, the Group entered into a joint venture whose
purpose was to acquire a site in Cheshunt, Hertfordshire, obtain
planning permission and ultimately sell the land. The site has the
potential for 1,500 residential plots. Under the terms of the joint
venture agreement, the Group has an obligation to fund 50% of the
costs of the site and is entitled to receive 50% of the net
returns.
Summarised statement of financial position
2018 2017
GBPm GBPm
------------------------------------------------------ ---------- -----
Current assets
Cash and cash equivalents 0.3 0.2
Other current assets 57.5 39.4
Total current assets 57.8 39.6
------------------------------------------------------ ---------- -----
Current liabilities
Financial liabilities (excluding trade payables and
provisions) 56.6 22.7
Other current liabilities 0.6 16.7
Total current liabilities 57.2 39.4
------------------------------------------------------ ---------- -----
Net assets 0.6 0.2
------------------------------------------------------ ---------- -----
Reporting entity's share 0.3 0.1
Investment cost 0.1 0.1
------------------------------------------------------ ---------- -----
Carrying amount at year end 0.4 0.2
------------------------------------------------------ ---------- -----
Summarised statement of total comprehensive
income
2018 2017
GBPm GBPm
------------------------------------------------------ ---------- -----
Revenue 0.7 0.2
Operating expenses (0.3) -
Interest - -
Income tax expense - -
------------------------------------------------------ ---------- -----
Total comprehensive income 0.4 0.2
------------------------------------------------------ ---------- -----
Europa Park LLP
In December 2017, the Group entered into a joint venture which
acquired a site in Ipswich, Suffolk from the Group which has
planning permission for 94 residential plots. Under the terms of
the joint venture agreement, the Group has an obligation to fund
50% of the costs of the site and is entitled to receive 50% of the
net returns.
Summarised statement of financial position
2018 2017
GBPm GBPm
-------------------------------------------------- ------ ----- -------
Current assets
Cash and cash equivalents 0.1 -
Other current assets 2.7 -
Total current assets 2.8 -
-------------------------------------------------- ------ ----- -------
Current liabilities
Financial liabilities (excluding trade payables
and provisions) -
Partners loans 1.9 -
Other current liabilities 0.9 -
Total current liabilities 2.8 -
-------------------------------------------------- ------ ----- -------
Net assets - -
-------------------------------------------------- ------ ----- -------
Reporting entity's share - -
Investment cost - -
-------------------------------------------------- ------ ----- -------
Carrying amount at year end - -
-------------------------------------------------- ------ ----- -------
Summarised statement of total comprehensive
income
2018 2017
GBPm GBPm
-------------------------------------------------- ------ ----- -------
Revenue - -
Operating expenses - -
Interest - -
Income tax expense - -
-------------------------------------------------- ------ ----- -------
Total comprehensive income - -
-------------------------------------------------- ------ ----- -------
Gardiners Park LLP
In November 2016, the Group entered a joint venture with
Constable Homes Limited to develop a site in Basildon, Essex with
30 private and 13 Housing Association units. Under the terms of the
joint venture agreement, the Group has an obligation to fund 50% of
the costs of the site and is entitled to receive 50% of the net
returns.
Summarised statement of financial position
2018 2017
GBPm GBPm
-------------------------------------------------- -------- ------ ------
Current assets
Cash and cash equivalents 0.4 0.3
Other current assets 0.9 5.9
Total current assets 1.3 6.2
-------------------------------------------------- -------- ------ ------
Current liabilities
Financial liabilities (excluding trade payables
and provisions) - 3.4
Partners loans - 1.8
Other current liabilities 1.3 1.1
Total current liabilities 1.3 6.3
-------------------------------------------------- -------- ------ ------
Net assets - (0.1)
-------------------------------------------------- -------- ------ ------
Reporting entity's share - -
Investment cost - -
-------------------------------------------------- -------- ------ ------
Carrying amount at year end - -
-------------------------------------------------- -------- ------ ------
Summarised statement of total comprehensive
income
2018 2017
GBPm GBPm
-------------------------------------------------- -------- ------ ------
Revenue 11.0 0.9
Operating expenses (9.3) (0.9)
Interest (0.1) (0.1)
Income tax expense - -
-------------------------------------------------- -------- ------ ------
Total comprehensive income 1.6 (0.1)
-------------------------------------------------- -------- ------ ------
INTERESTS IN ASSOCIATES
Troy Homes Ltd
In October 2015 the Group acquired 25% of Troy Homes Ltd (Troy),
a new premium housebuilder, and is entitled to 25% of the net
returns.
Summarised statement of financial position
2018 2017
GBPm GBPm
------------------------------------------------- ------- ------
Non-current assets
Tangible assets 0.1 0.1
------- ------
Total non- current assets 0.1 0.1
--------------------------------------------------- ------- ------
Current assets
Cash and cash equivalents 3.1 0.6
Other current assets 29.3 26.1
Total current assets 32.4 26.7
--------------------------------------------------- ------- ------
Total assets 32.5 26.8
--------------------------------------------------- ------- ------
Current liabilities
Financial liabilities (excluding trade payables
and provisions) 14.1 10.4
Other current liabilities 5.5 3.4
Total current liabilities 19.6 13.8
--------------------------------------------------- ------- ------
Non-current liabilities
Financial liabilities (excluding trade payables
and provisions) 9.2 9.5
Total non-current liabilities 9.2 9.5
--------------------------------------------------- ------- ------
Total liabilities 28.8 23.3
--------------------------------------------------- ------- ------
Net assets 3.7 3.5
--------------------------------------------------- ------- ------
Reporting entity's share 0.9 0.9
Investment cost 0.2 0.2
--------------------------------------------------- ------- ------
Carrying amount at year end 1.1 1.1
--------------------------------------------------- ------- ------
Summarised statement of total comprehensive
income
2018 2017
GBPm GBPm
------------------------------------------------- ------- ------
Revenue 14.2 1.0
Operating expenses (12.9) (1.9)
Interest (1.4) (0.8)
Income tax 0.3 0.3
--------------------------------------------------- ------- ------
Total comprehensive income/(expense) 0.2 (1.4)
--------------------------------------------------- ------- ------
8. DEFERRED TAX
Capital losses
recognised Notional
on interest on
Revaluation revaluation Share-based deferred
gain gain Compensation consideration Total
GBPm GBPm GBPm GBPm GBPm
----------------------- ------------ --------------- -------------- --------------- ------
At 1 July 2017 6.5 (3.2) (0.6) (0.7) 2.0
Charged/(credited) to
income statement (0.5) 0.5 (0.1) - (0.1)
At 30 June 2018 6.0 (2.7) (0.7) (0.7) 1.9
----------------------- ------------ --------------- -------------- --------------- ------
9. INVENTORIES
2017 2016
GBPm GBPm
------------------------------------ -------- -------
At 1 July 139.9 148.4
Additions 107.8 58.0
Capitalisation of finance costs 1.1 1.1
Capitalisation of employee costs 3.0 1.4
Charged to income statement (113.7) (68.6)
Transferred to investment property (1.2) -
Impairment (0.7) (0.4)
At 30 June 136.2 139.9
------------------------------------ -------- -------
Certain of the inventories are secured against the Group's
borrowings.
10. TRADE AND OTHER RECEIVABLES
2018 2017
GBPm GBPm
------------------------------------------------------- ----- -----
Trade receivables 16.1 3.4
Prepayments and accrued income 0.4 1.3
Other receivables 13.9 17.7
------------------------------------------------------- ----- -----
Trade and other receivables due in less than one year 30.4 22.4
Other receivables due in more than one year 11.0 5.7
41.4 28.1
------------------------------------------------------- ----- -----
The carrying value of trade and other receivables is considered
a reasonable approximation of fair value. During the year an amount
of GBP0.5m (2017: GBPnil) was written off in relation to a
contractor which went into administration in 2016 (for more details
see note 13). No other trade receivables are considered to be
impaired and there were no unimpaired trade receivables past due at
the reporting date.
Other receivables
2018 2017
GBPm GBPm
--------------------------------------------- ----- -----
Due in less than one year
Prepayments and accrued income 1.3 10.7
Other receivables 5.0 5.0
Corporation tax debtor 5.0 -
Other receivables due in more than one year 2.6 2.0
--------------------------------------------- ----- -----
13.9 17.7
--------------------------------------------- ----- -----
Due in more than one year
Sale of subsidiary 4.7 -
Sale of interest in joint venture 5.7 5.7
Other 0.6 -
11.0 5.7
--------------------------------------------- ----- -----
Within other receivables is GBP0.6m (2017: GBP0.4m) relating to
retentions receivable from construction contracting clients. Within
prepayments and accrued income is GBP2.9m (2017: GBP1.0m) relating
to income accrued on a construction contract.
11. SHARE CAPITAL
The movement in the number of shares in issue is shown in the
table below:
10p ordinary shares 10p deferred shares
Number GBPm Number GBPm
------------------------ --------------- ----- ------------ --------
At 30 June 2016 202,799,432 20.3 9,980 -
Issued on exercise of
share options 855,000 0.1 - -
Issued for cash during
the year - - - -
------------------------ --------------- ----- ------------ --------
At 30 June 2017 203,654,432 20.4 9,980 -
Issued on exercise of
LTIP 896,689 0.1 - -
At 30 June 2018 204,551,121 20.5 9,980 -
------------------------ --------------- ----- ------------ --------
Employee Benefit Trust
At 30 June 2016 1,027,500 (0.7)
Purchase of own shares
for deferred bonus plan 600,000 (0.4)
-------------------------- ---------- ------
At 30 June 2017 and 30
June 2018 1,627,500 (1.1)
-------------------------- ---------- ------
Treasury reserve
At 30 June 2016 and 30
June 2017 - -
Purchase of own shares 1,000,000 (0.6)
Exercise of share options (175,000) 0.1
At 30 June 2018 825,000 (0.5)
--------------------------- ---------- ------
Total voting shares(1)
At 30 June 2016 201,771,932
At 30 June 2017 202,026,932
At 30 June 2018 202,098,621
------------------------ ------------
(1) Ordinary shares in issue less shares held in the Employee
Benefit Trust and the Treasury reserve
Ordinary shares
Except for the shares held in the Employee Benefit Trust and the
Treasury (see note 12) reserve each share has the right to one vote
and is entitled to participate in any distribution made by the
Company, including the right to receive a dividend.
Deferred shares
Deferred shares shall not confer the right to be paid a dividend
or to receive notice of or attend or vote at a general meeting. On
a winding-up, after the distribution of the first GBP10.0m of the
assets of the Company, the holders of the deferred shares (if any)
shall be entitled to receive an amount equal to the nominal value
of such deferred shares pro rata to their respective holdings.
12. RESERVES
The following describes the nature and purpose of each reserve
within shareholders' equity
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value less
directly attributable issue costs.
Employee Benefit This represents the purchase of the Company's own shares and are
Trust deducted from total equity until they are issued to employees under
the Deferred Bonus Plan. At 30 June 2018, this reserve holds 1,627,500
shares (2017: 1,627,500 shares).
Special reserve A resolution was passed at the AGM in November 2011 for the capitalisation
of the Parent Company's reserves to allow for the possibility of
distributions in the future and this was put in the Special Reserve,
which is a distributable reserve. A copy of this resolution is available
from Companies House.
Treasury reserve This represents the purchase of the Company's own shares and are
deducted from total equity until they are issued to employees under
the share option plan. At 30 June 2018, this reserve holds 825,000
shares (2017: None).
Retained earnings Cumulative net gains and losses recognised in the Group income statement
together with other items such as dividends and share-based payments.
13. TRADE AND OTHER PAYABLES
2018 2017
GBPm GBPm
--------------------------------- ----- -----
Trade payables 8.5 7.2
Other creditors 3.1 6.3
Sales and social security taxes 6.4 1.8
Accruals and deferred income 6.9 5.2
24.9 20.5
--------------------------------- ----- -----
The carrying value of trade and other payables is considered to
be a reasonable approximation of fair value. Within trade payables
is GBP0.7m relating to amounts payable in relation to construction
contracts.
The contingencies note of last year's financial statements
included disclosure relating to a claim and counter-claim with
respect to one of the Group's contractors which went into
Administration during the year ended 30 June 2016. Included within
other creditors of GBP3.1m at 30 June 2018 is a provision for
GBP275,000 for the final agreed settlement with the Administrators
in relation to these claims.
14. NET DEBT
1 to 2 2 to 3 4 to 5
< 1 year years years 3 to 4 years years > 5 years Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
At 30 June 2018
Secured bank loans 26.0 13.8 - 27.6 - - 67.4
Other secured loans - 17.2 10.5 - - 6.6 34.3
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
Borrowings 26.0 31.0 10.5 27.6 - 6.6 101.7
ZDP shares 18.4 - - - - - 18.4
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
Gross debt 44.4 31.0 10.5 27.6 - 6.6 120.1
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
Cash and cash equivalents (40.4)
Net debt 79.7
-------
At 30 June 2017
Secured bank loans - 16.0 19.9 - 27.3 - 63.2
Other secured loans - - 14.0 - - - 14.0
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
Borrowings - 16.0 33.9 - 27.3 - 77.2
ZDP shares - 17.3 - - - - 17.3
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
Gross debt - 33.3 33.9 - 27.3 - 94.5
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
Cash and cash equivalents (26.5)
Net debt - 68.0
-------
Undrawn committed
bank facilities
At 30 June 2018 - 13.9 13.3 - - 4.9 32.1
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
At 30 June 2017 - - 11.2 - - - 11.2
--------------------------- --------- ------- ------- ------------- ------- ---------- -------
At 30 June 2018, the bank loans were secured over GBP47.1m
(2017: GBP53.6m) of investment property and GBP16.6m (2017:
GBP18.5m) of inventories. The other loans were secured over GBP5.3m
(2017: GBPnil) of investment property and GBP50.9m (2017: GBP40.0m)
of inventories. The ZDP shares were secured against inventories of
GBP4.1m (2017: GBP4.1m) and loans to joint ventures of GBP18.9m
(2017: GBP12.5m). No property, plant or equipment are pledged as
security.
Net gearing 2018 2017
GBPm GBPm
------------- ------ ------
Net debt 79.7 68.0
--------------- ------ ------
Net assets
IFRS 142.4 130.6
EPRA 206.7 194.4
--------------- ------ ------
Net gearing
IFRS 56.0% 52.1%
EPRA 38.6% 35.0%
--------------- ------ ------
Zero Dividend Preference (ZDP) shares
The ZDP shares carry no entitlement to any dividends or other
distributions or to participate in the revenue or any other profits
of the Company. The ZDP shareholders have no right to receive
notice of, or to attend or vote at, any general meeting of the
company except in those circumstances set out in the Inland ZDP
plc's Articles of Association, which would be likely to affect
their rights or general interests. At 30 June 2018, there were
12,444,200 ZDP shares in issue (2017: 11,313,200). An explanation
of the fair value of the ZDP shares is included in note 26. The
maturity of the ZDP shares was extended in August 2018 and will now
be repaid on or before 10 April 2024. In addition, a further
1,000,000 ZDP shares were issued. More details on the continuation
and extension are included in note 16.
15. OTHER FINANCIAL LIABILITIES
Other financial liabilities of GBP3.7m (2017: GBP20.1m) relates
to purchase consideration on inventories falling due within one
year.
16. POST BALANCE SHEET EVENTS
ZDP refinancing
On 13 August 2018, the life of the Group's existing ZDP shares
was extended to 10 April 2024. Additionally, a further 1,000,000
ZDP shares were issued for gross proceeds of GBP1.5m. Following
this issue, the number of ZDP shares in issue was 13,444,200
shares.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAPNNFDSPEFF
(END) Dow Jones Newswires
September 20, 2018 02:01 ET (06:01 GMT)
Inland Homes (LSE:INL)
Historical Stock Chart
From Apr 2024 to May 2024
Inland Homes (LSE:INL)
Historical Stock Chart
From May 2023 to May 2024