TIDMINL
RNS Number : 8193Q
Inland Homes PLC
01 November 2021
1 November 2021
Inland Homes plc
("Inland Homes", "Group" or "Company")
Trading Update
Inland Homes plc (AIM: INL), the brownfield site developer,
housebuilder and regeneration specialist focused on the South and
South East of England, today announces a trading update for the
year ended 30 September 2021, ahead of its Preliminary Results
which are expected to be announced in January 2022.
The Group has made significant progress this year in the
delivery of its strategic priorities, namely reducing net debt and
extending the maturity of the Group's borrowing facilities,
maximising the value of land, growing its capital light asset
management division and sustaining the high demand from its target
first-time buyer market for high-quality homes.
Highlights
-- The Group finished the second half of the year strongly. The
Group's trading performance for the year ended 30 September 2021 is
expected to be in line with market expectations
-- Significant 20 per cent reduction in net debt to GBP118.0m (30 September 2020: GBP148.2m)
-- Record turnover of approximately GBP195m for this financial
year (30 September 2020: GBP124m)
-- Strong performances from the Group's land and asset management divisions
-- Reflecting the strong demand for Inland's high quality
affordably priced homes, turnover for the housebuilding division
has more than doubled to approximately GBP56.5m (30 September 2020:
GBP23.8m)
-- 216 private home completions at an average selling price of
GBP262,000 (30 September 2020: 96 private homes at an average
selling price of GBP240,000)
-- Income from the Group's partnership housing division is
substantially ahead of the previous year (30 September 2020:
GBP51.8m). The Group's forward order book for partnership housing
increased by 56 per cent to GBP164.7m (30 September 2020:
GBP105.8m)
-- Significant progress within the asset management division,
including two separate land sales on behalf of the project
investors at the former Homebase site in Walthamstow
-- Planning consent achieved for 1,317 plots across three sites,
including 583 units at the former Homebase, Walthamstow and
approximately 700 units at Gardiners Park Village, Basildon
-- Strong sales performance with 383 residential home
completions (216 in the Group and 167 in joint ventures) and a net
weekly reservation rate per active site of 1.05 over the year (30
September 2020: 226, 0.69)
-- Sustainability continues to be a key focus for the Group, and
the development of an Environment, Social and Governance Framework
that brings together high-level commitments alongside targets to
reach net zero is a core priority.
Stephen Wicks, Chief Executive, commented:
"The Group has made significant progress in delivering its key
strategic objectives. Net debt has decreased substantially and we
continue to look for opportunities to deliver value from our
considerable landbank.
"We continue to see sustained demand from investors, build to
rent operators, registered providers and private house buyers for
our land, the new homes we build and the Group's planning and
building expertise.
"We look forward to reporting further progress on our strategic
priorities in the year ahead."
Financial and operational highlights
The Group finished the second half of the financial year
strongly, with record turnover for the year under review of
approximately GBP195m (30 September 2020: GBP124m). The land
division, which is the heart of the Group's business, performed
well and the Preliminary results will reflect the sale of the first
two phases at Inland Homes' flagship development at Wilton Park,
Beaconsfield.
Our asset management business continues to produce excellent
results and whilst management fees were slightly lower than the
comparative period (30 September 2020: fees GBP24.4m), this part of
the business contributed extremely healthy gross margins. Revenue
from our partnership housing contracts will be substantially ahead
of last year (30 September 2020: GBP51.8m) and turnover from our
housebuilding activities, reflecting the strong demand for the
Group's high quality affordably priced homes, has more than doubled
year-on-year to approximately GBP56.5m (30 September 2020:
GBP23.8m).
Further decrease in net debt
The reduction of net debt has been a priority and the Group is
therefore pleased to report that as at 30 September 2021, net debt
had fallen to GBP118.0m (30 September 2020: GBP148.2m). The 20 per
cent year-on-year reduction has been driven by the sale of
residential plots, private home sales predominantly from our large,
flatted developments and the first sales of the existing
residential properties at Wilton Park, formerly occupied by MOD
service personnel.
The reduction in net debt has meant that our net borrowing costs
are lower than last year (30 September 2020: GBP8.1m) and central
overheads are substantially lower than last year (30 September
2021: GBP12.6m). As a result, the Group's trading performance for
the year ended 30 September 2021 is expected to be in line with
market expectations.
Land portfolio
Inland's flagship development at Wilton Park, Beaconsfield is
initially set to provide 304 new homes and related community
facilities. The results for the land division highlighted above
reflect the sale of Phases II and III, comprising a total of 90
plots during the year. The Group recently announced the granting of
planning consent, subject to the signing of a Section 106
agreement, at its 54-acre site at Gardiners Park Village, Basildon.
The consent enables the delivery of up to 700 new homes, together
with 25,000 square metres of commercial space, a new school and
community facilities. More than 30 per cent of the new homes will
be much needed affordable housing, which is being delivered in
partnership with Homes England. The estimated gross development of
the site is in excess of GBP200m and construction of the first
phase of 74 new homes will commence 2022.
During the year, Inland Homes concluded the sale of a
105-bedroom hotel at its Wessex Hotel site in Bournemouth to Aviva
for GBP13.2m. In addition, the Group has also constructed 94
apartments at this renowned seaside destination and at the year-end
date, 64 sales had been completed.
Progress continues at the Group's joint venture development at
Cheshunt Lakeside, which will transform the site and has a
masterplan consent for 1,725 new homes, new commercial space, other
related community amenities and a new school. Discussions continue
with a number of interested parties for the sale of the next phase
of 205 plots.
The Group has built a land portfolio that presents opportunities
in the short, medium and long term. It consists of 10,055 plots (30
September 2020: 11,045 plots), of which 3,689 have planning consent
(30 September 2020: 2,470). 3,736 plots are within the strategic
land portfolio of longer-term opportunities (30 September 2020:
2,795), the majority of which are held by way of discount to market
value options.
During the current financial year, the Group achieved planning
consent on 1,592 plots (2020: 112) and sold 111 plots (2020: 107
plots).
Asset management
Investors in projects within the Group's asset management
division benefit from Inland Homes' expertise and experience in
identifying and securing attractive, viable sites and achieving
planning consent on these. The capital light nature of this funding
model, together with the management fees earned at various
milestones of the project (including the successful gaining of
planning permission), enable the Group to generate attractive and
significant returns.
The asset management activity benefits Inland Homes in a number
of ways: it optimises the planning expertise within the Group; it
significantly reduces the capital investment, and it enables Inland
Homes to earn management fees as the various defined milestones are
achieved. The capital required for these projects is sourced from
external investors, who earn a priority return on the capital
invested normally on a fixed coupon basis. One of the principal
risks for the Group with these projects is delays to the
anticipated timetable. Typically, these transactions are structured
so that any debt incurred is generally non-recourse to the
Group.
The Group currently has six active projects within its asset
management division. These have the potential to deliver 3,270 new
homes (30 September 2020: 3,100). Inland Homes have submitted a
planning application on the 36-acre site Cavalry Barracks in
Hounslow, which is one of the largest brownfield sites in London,
with an estimated gross development value of GBP600m. Planning
permission is currently expected in early 2022. Planning consent
was achieved for 583 homes at the Group's former Homebase site in
Walthamstow in April 2021. Following site demolition and other
preparatory works, construction has just started on the project,
which is expected to be completed in 2025. The Group recently
announced the sale of 228 plots to the charitable housing
association, Newlon Housing Trust for a consideration of GBP22.5m.
The houses on these plots will be built by the Group, the contract
value being GBP42.4m. As at 30 September 2021 the Group has earned
a total of approximately GBP20.0m in fees for the services it has
provided on this project.
In addition, the Group has also exchanged contracts for the sale
of 355 residential plots (173 completed and 182 due to complete by
September 2022) at the same site to the Sigma Capital Group, the
leading provider of build-to-rent housing. Inland Partnerships has
secured the contract to build these homes, in what is the largest
partnership housing contract secured by the Group to date, with a
value of GBP88.9m.
The Group has also recently announced a resolution to grant
planning permission, subject to the signing of a section 106
agreement, for a mixed-use scheme of 380 new homes, including 103
affordable new homes and 930 square metres of commercial space, in
Dagenham Dock. This strategically important site in the Borough,
which lies adjacent to Dagenham docks, will provide a new gateway
to the area and act as a catalyst for the regeneration of south
Dagenham.
Partnership housing contract income
There has been a substantial increase in the Group's partnership
housing contract income, driven by the demand from affordable
housing providers and build-to rent operators. The number of
partnership homes under construction amounted to 1,257 (30
September 2020: 1,302).
Inland Homes has a contract with Clarion Housing Group for the
construction of 325 residential units at Merrielands in Dagenham.
Handover of 63 of the completed units is due to take place
shortly.
Inland Homes continues to proactively work towards improving its
commercial delivery and operational efficiency to push up its
margins. As previously reported, unforeseen costs, cost inflation
and extended construction periods will continue to affect margins
in this division in the coming year.
The Group's forward order book for partnership housing increased
to GBP164.7m (30 September 2020: GBP105.8m), with Inland
Partnerships securing two build contracts at Walthamstow, totalling
GBP 131.1m.
Housebuilding
The Group achieved significantly more private home completions
during the year than the comparative period, 216 in aggregate
(2020: 96), at an average selling price of GBP262,000 (2020:
GBP240,000). A further 167 private home sales (2020:130) were sold
across sites held with our joint venture partners. Together, the
weekly net reservation rate per active sales outlet was 1.05 for
the year (2020: 0.69). The margins on this segment have also been
affected by unforeseen costs, cost inflation and extended
construction periods partly due to delays in delivery of materials
and shortage of labour supply.
The Group continues to deliver on its strategic objectives:
Reduction of net debt
The decisive action taken by the Group to reduce costs and
preserve cash during the year have been effective and net debt at
30 September 2021 amounted to GBP118m (30 September 2020:
GBP148.2m), a 20 per cent reduction.
Optimising the returns from its valuable land bank
Inland Homes' land bank is the foundation of the business. The
Group looks to achieve a balanced return over the short, medium and
long term.
At 30 September 2021, the gross development value of the
portfolio was GBP3.0bn (30 September 2020: GBP3.1bn).
Growing the capital light asset management business
In recent years we have been expanding our asset management
division, where typically much of the capital for the project is
sourced from external investors. The Group enters into a planning
and management services agreement which typically requires the
procurement of a relevant site, obtaining planning consent using
our considerable experience in this field, and proposing a plan for
the disposal of the site, normally once planning permission has
been secured. As the projects are capital light (where our skills
and expertise are the service), the schemes can generate
significant and attractive returns.
Maximising the value of the land we own or control
The decision to sell, develop or partner with third parties is
based on a site-by-site assessment of which activity will deliver
the best returns, subject to the overriding cash requirements of
the Group.
As at 30 September 2021, the Group has 1,547 units under
construction (30 September 1,717). Of these, 1,257 (30 September
2020: 1,302) are being built on behalf of affordable housing
providers and built to rent operators through Inland
Partnerships.
Delivering homes which meet the market's needs
Our high-quality, award-winning homes remain in reach of our
target first time buyer market, with high demand sustained across
the reporting period. In the year, the Group received a number of
prestigious industry awards including 'Private Developer of the
Year' at the First Time Buyer Readers' Awards, the WhatHouse? Gold
Award for Best Regeneration scheme, and 'Best UK Mixed Use
Development' at the International Property Awards. The Group
completed 383 homes (including joint ventures) at an average
selling price of GBP260,000.
Dividends
One of the key strategic objectives of the Group is to reduce
net gearing. The Board will look to resume the payment of dividends
once this objective has been achieved.
Environmental, Social and Governance
Inland Homes is committed to ensuring that our land,
housebuilding and partnership housing activities leave a positive
and lasting legacy. As specialists in brownfield site regeneration,
the Group has a proud history of adding value and applying our
expertise in land remediation to allow the Group to take derelict
land and regenerate it for the construction of new homes and the
creation of new communities.
As a responsible business and against the broader backdrop of an
escalating global climate crisis, we continue to build on our
sustainability credentials and embed ESG in every aspect of what we
do. The Group's ESG Framework combines targets, metrics and
ambitions in each area, demonstrating our commitment to growing the
business responsibly and mapping our journey to net zero carbon
emissions.
Outlook
The Group continues to work on initiatives to reduce net gearing
and to crystalise value from its land bank to drive returns for
shareholders.
The fundamental shortage of new homes in the South and South
East of England continues and the interest from financial
institutions in the build to rent market remains strong. Having
delivered a significant reduction in debt and implemented measures
to improve margins across the Group's housebuilding activities,
Inland Homes is well placed.
Enquiries
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
Instinctif Partners Tel: +44 (0)20 7457
Tim McCall 2020
Galyna Kulachek
Bryn Woodward
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018
("MAR").
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 and
South East 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
Hugg Homes - www.hugghomes.co.uk
Rosewood Housing - www.rosewoodhousing.co.uk
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