TIDMINL
RNS Number : 5097B
Inland Homes PLC
31 January 2020
31 January 2020
Inland Homes plc
(the 'Company' or the 'Group')
Audited results for the 15-month period ended 30 September
2019
A year of major progress
Significant increase in value of land portfolio
Inland Homes plc (AIM: INL), a leading housebuilder, partnership
housing developer and regeneration specialist, today announces its
audited results for the 15-month period ended 30 September
2019.
Stephen Wicks, Chief Executive at Inland Homes, commented:
"This has been a period of major progress, with strong momentum
across the Group. We now have our largest ever land bank,
controlling more plots with planning-permission than at any other
time, as well as seeing a continued expansion in the number of
homes and partnership homes we are building.
"At Inland, we operate a simple and adaptable model focused on
maximising the value of land: we acquire land, either directly or
on behalf of investors, in areas of high demand in the South and
South-East of England, add significant value by securing planning
permissions and then generate further value through a mix of
selling, building or providing turnkey solutions for partners.
"With the Group growing in scale and reputation, we now have all
the elements in place to maximise the value of our owned and
managed land portfolio in the short, medium and long term.
Reflecting our confidence for the future, the Board is declaring a
second interim dividend of 2.25p."
Financial highlights for the 15-month period*
-- EPRA NAV up 13.2% to GBP233.9m (30 June 2018: GBP206.7m)
-- EPRA NAV per share 113.69p per share (30 June 2018:102.28p)
-- Revenue at GBP147.9m (30 June 2018: GBP147.4m)
-- Gross profit at GBP32.5m (30 June 2018: GBP31.8m)
-- Gross margin up to 22.0% (28 June 2018: 21.6%)
-- Profit before taxation at GBP25.0m (30 June 2018: GBP19.3m)
-- Net debt at GBP152.3m (30 June 2018: GBP79.7m), predominantly
due to the increase in the land bank and work in progress; this is
expected to fall as a number of realisations are achieved
-- EPRA net gearing of 65.1% (30 June 2018: 38.6%)
-- Second interim dividend of 2.25p per share, which together
with the first interim dividend of 0.85p, makes a total dividend of
3.10p per share (30 June 2018: 2.20p)
*2018 data is for a 12-month period
Operational highlights:
-- Further acquisitions of high-quality sites - total land
holdings at record 7,796 plots (30 June 2018: 6,870) with an
anticipated gross development value (GDV) of GBP2.4bn
-- Planning consent achieved at Wilton Park and Cheshunt
Lakeside to deliver more than 1,500 homes driving a creditable
increase in EPRA NAV:
o Planning consent granted for Inland's flagship 100-acre site,
Wilton Park, Beaconsfield, Buckinghamshire with an estimated GDV of
GBP288m
o Planning consent granted for Inland's largest-ever scheme,
Cheshunt Lakeside, Cheshunt, Hertfordshire, with an estimated GDV
of GBP429m
-- Planning submission on a further major scheme on behalf of
landowner at Hillingdon Gardens, formerly known as Master Brewer
Hotel, with potential to deliver more than 500 homes
-- Private Housing: 202 completions (30 June 2018: 275) as
expected, reflecting the significant number of large-scale
apartment schemes currently under construction. Continued strong
demand with 892 homes under construction and a forward orderbook of
GBP39.3m
-- Partnership Housing: Revenues from partnership housing
increased by 422% to GBP62.6m (30 June 2018: GBP12.0m)
Exceptionally strong demand from housing associations underpins
continued strong growth with 921 homes currently under construction
(30 June 2018: 220)
-- Land sales: 577 plots sold excluding joint ventures (30 June 2018: 837 plots)
-- Hugg Homes: The Group's temporary modular housing venture
made good progress with 54 units now let, producing gross revenues
of approximately GBP500,000 per annum and other projects in the
pipeline
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 2020
Mark Garraway
James Gray
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
Chairman's Statement
Inland Homes plc "Inland Homes" has adopted a diversified and
adaptable business model that is reaping rewards for our
stakeholders. The Group is progressing on its growth trajectory and
building momentum. We have developed a reputation as experts in
identifying the right land opportunities and in having the skills
to secure planning permission on what are primarily complex
brownfield sites.
While this entrepreneurial outlook remains a key part of our
culture, our evolving strategy and diversification now provide us
with the flexibility to realise more value from the land bank. Our
business plan includes the provision of planning and management
services, the sale of land where we have achieved planning consent,
as well as forward sales of homes and construction contracts.
Operations
We have continued to grow while investing in high-quality staff
and systems, at the same time as improving the quality of our
building work and increasing the satisfaction of our customers and
partners.
Revenue for the period was GBP147.9m (year ended 30 June 2018:
GBP147.4m), in line with the Directors' expectations, and the land
bank sits at a record 7,796 plots, of which 2,956 (38%) have
planning permission.
Achieving planning consent for our 100-acre flagship scheme,
Wilton Park, Buckinghamshire, and for our largest-ever scheme, at
Cheshunt Lakeside, Hertfordshire, are significant milestones and
achievements for the Group, together adding consent for more than
1,500 homes. These two consents have led to a respectable increase
in the EPRA value of the Group's assets and provide a significantly
improved pipeline for our business activities.
The Group's flexible model enables it to maximise market
opportunities. A growing part of the Group's business is now
providing planning and management services to investors in the
property sector. During the period management fees increased by
675% to GBP18.6m (year ended 30 June 2018: GBP2.4m). This activity
is an attractive proposition to the Group, with significantly
reduced equity and debt exposure and strong operating margins.
Results and dividend
The Group achieved profit before tax of GBP25.0m for the period
(year ended 30 June 2018: GBP19.3m). The EPRA net asset value per
share has increased, from 102.28p to 113.69p per share, while net
asset value per share has increased from 70.46p to 78.84p.
Net gearing increased to 93.9% in the period (30 June 2018:
56.0%) due to the increase in the Group's land bank and work in
progress. Net debt is expected to fall in the year ahead due to
sales receipts from large-scale apartment developments, securing
land by way of discount to market value options, acquiring sites
within our land asset management activity and expanding the Group's
partnership housing activity.
With a substantial number of highly sustainable sites suitable
for rental housing, we expect to secure build-to-rent opportunities
in the new financial year. As we evaluate this opportunity and
consider the best way to develop the sites at Wilton Park and
Cheshunt Lakeside, we continue to consider actively our funding
options including equity and further joint ventures with a view to
maximising returns for shareholders.
In recognition of the Group's continued growth and its planning
consent achievements, the Board has declared the payment of a
second interim dividend of 2.25p per share. This, together with the
first interim dividend of 0.85p (2018: 0.65p) per share already
paid, will make total dividends of 3.10p (2018: 2.20p) per share.
As a result, there will be no proposed final dividend for the
15-month period ended 30 September 2019.
Governance
A key function of the Board is to ensure good corporate
governance at all times. The Board is fully committed to upholding
the principles of good governance as set out in its chosen
governance code, the Quoted Companies Alliances (QCA) Corporate
Governance Code, and you will see further details on how we achieve
this in the pages that follow.
We were pleased to announce the appointment of Kat Worth (ACG)
as Group Company Secretary, effective from 5 March 2019. Kat has
held a number of roles within the public and private sectors and
before joining Inland Homes was Group Company Secretary to a large
housing association based in London. There, her remit included
acting as the Lead Officer for the Remuneration and Nominations
committees, ensuring compliance with the provisions of the UK
Corporate Governance Code and the FRC's guidance on board
effectiveness. With Inland Homes adopting the QCA Code in 2018, Kat
is playing a valuable role in ensuring the Group's ongoing
compliance with the Code's requirements. There were no changes to
the Non-executive Board members during this period.
Market trends
The lack of suitable housing in our target markets continues to
result in sustained demand for the houses and apartments we build.
However, we need focused and positive dialogue between the
Government and industry in the face of ongoing political and
regulatory uncertainty.
If the Government is to achieve its goal of building 300,000 new
homes a year by the mid-2020s, the planning process needs further
attention. Housebuilders spend an enormous amount of time and money
obtaining consents and on clearing reserved matters within an
outline planning consent. An extension or alternative to the
existing Help to Buy scheme, due to end in 2023, will also be
essential to keep the market moving.
Outlook
Having secured planning consent at Wilton Park and Cheshunt
Lakeside, with a record number of homes under construction (both
for private sale and on behalf of partners) and increased market
confidence following the general election, Inland Homes has all the
components in place to deliver even more success and shareholder
value in the year ahead.
We have some very lucrative land opportunities in the pipeline
which we are seeking to acquire with a capital light structure, in
which the bulk of the capital is provided by investors. This will
increasingly be a strategic focus for the Group.
Terry Roydon
Chairman
30 January 2020
Chief Executive review
This year, Inland Homes reached new heights for our land
acquisition, construction and partnership activities. In line with
our strategic priorities, we now have our largest-ever land bank;
we own more plots with planning permission than at any time before;
and have continued our year-on-year increase in the number of homes
and partnership homes we are building.
Additionally, our agile business model is enabling us to seize
new market opportunities, with increased demand for our asset
management services, where we use our expertise and skills to
secure planning permission on behalf of third parties.
Year highlights
Land
The gross development value of our entire land bank is now
GBP2.4bn and its size has grown from 6,870 plots to a record 7,796
plots; 2,956 with planning consent.
This reporting period we achieved two significant planning
consent milestones, with permission granted for both our flagship
100-acre site at Wilton Park in Beaconsfield, Buckinghamshire and
for our largest-ever development, at Cheshunt Lakeside in Cheshunt,
Hertfordshire.
Wilton Park has an estimated gross development value of GBP288m.
We have secured an initial consent for 304 new homes plus 46
retained Service Family Accommodation dwellings and 1,730sqm of
commercial space. There is also a draft allocation for further
development on the site which, if adopted, could provide a further
250 homes and 18,500sqm of commercial space.
The Cheshunt Lakeside masterplan for 1,725 homes and 19,000sqm
of commercial space will be one of the largest brownfield
developments in the south-east. The Group owns and controls 1,253
plots on this site, with as estimated gross development value of
GBP429m.
Achieving these consents follows several years of extensive
consultation and maintains our unbroken track record in obtaining
planning approvals on complex brownfield sites. Together, these two
sites deliver consent for more than 1,500 new homes and have
resulted in a considerable increase to our EPRA value of the
Group's assets.
Demand for consented housebuilding land remains strong, with 577
plots sold in the period.
Build and partner
With the self-build and partnership arms of our Group growing in
scale and reputation, in line with our strategic priorities, we
have key pieces in place to fully maximise the value of this land
across the short, medium and long term.
We now have 1,813 homes under construction across 12 schemes,
five of which are partnership schemes. In total, 921 of the homes
under construction are being built on behalf of partners; a 319%
increase on the previous reporting period.
Having in-house construction capability gives greater control
over a project and our costs. We can buy materials and employ
subcontractors directly, build higher quality homes more
efficiently, and offer customers a first-class service. Since
appointing Gary Skinner as Group Managing Director in 2016, we have
invested extensively in systems and personnel, and this is now
starting to pay off.
Strategy
Identifying the right land opportunities is still the key to our
success. Our ability to identify, purchase and secure planning
approvals on complex sites enables us to maximise each site's
potential, whether that is by selling, building or partnership
activities.
The uncertainty over Brexit has caused considerable caution with
first-time buyers. However, there remains a shortage of housing
across the UK, property values and demand in the south and
southeast, where we operate, remain healthy, and we are already
seeing increased market confidence following the General
Election.
While the shortage of housing continues to underpin our
overarching strategy, we have refined our strategic priorities to
ensure we maximise current market opportunities and reduce risk as
follows:
-- Continue the key activity of identifying the right sites and securing planning;
-- Increase the size of our strategic land bank where residential development is expected;
-- Continue policy of selling appropriate plots when we have secured planning permission;
-- Increase the number of homes built through partnership schemes; and
-- Build private homes which meet the needs of the market.
Our strategic land bank of non-brownfield sites now makes up
3,523 of our 7,796 plots. These strategic sites have the potential
for approximately 3,018 houses and 505 apartments. We hold these
sites on 'discount to market value' options, which we are only
required to exercise after we obtain planning consent, providing
medium-term opportunities without significant capital investment.
We will either sell these sites to other developers or feed them
into our own growing housebuilding operations.
In line with our strategic priorities, we have also more than
quadrupled our partnership activities this reporting period, to
meet the exceptionally high demand from housing associations. These
schemes reduce our exposure to any softening of the market. We
realise an immediate cash injection from the land sale and
recognise revenue and cash through monthly payments of certified
work done for our customers. We see partnerships with housing
associations and local authorities as our biggest growth
opportunity.
Hugg Homes
Since launching last year, we have grown our temporary modular
housing business, Hugg Homes, with 22 units tenanted in Southampton
(six to Southampton Council) and 32 to Broxbourne Council. These 54
tenanted homes produce a gross rental income of about GBP500,000 a
year.
Hugg Homes helps us realise additional value from land while it
is going through the planning process. The modular units support
local authorities and others in meeting short-term housing needs
with a quality that ranks favorably against other options. With
local authorities spending nearly GBP1bn a year on temporary
accommodation in 2017-18, there is huge potential for market
growth.
Rosewood Housing
Our subsidiary, Rosewood Housing, was registered as provider of
social housing in August 2018. This reporting period we finalised
its second deal, in September 2019, for the affordable housing at a
new homes development in Tring.
Outlook
Our agile business model enables us to respond to the
opportunities the market presents.
With the requirement for affordable homes being a priority for
government and local authorities, there is exceptionally strong
demand from housing associations for projects where we can provide
both the land and construction service. With our track record of
creating high-quality homes on time and budget, we are in a strong
position to make the most of this increased demand. We are aiming
to increase our share of this growing market and have created a
land bank to achieve this objective.
We have some very lucrative land acquisition opportunities which
we are seeking to engage in a 'capital light' structure, while our
net borrowings reduce to improve our balance sheet. Specifically,
we are now targeting pro-development London Boroughs, such as
Barking and Dagenham, Waltham Forest and Hounslow. We believe we
are in an excellent position to grow the partnership housing
business significantly with the land bank we are creating.
In recent months and in the year ahead, our focus will be on
acquiring land where we act as asset managers on behalf of third
parties. We have a 100% success rate in securing planning consent
on brownfield sites and have established a reputation for
delivering on behalf of these stakeholders. This activity is light
on our capital and at reduced risk to the Group while still
providing enhanced financial contributions to Inland Homes. This
reflects the expertise added by the Group in the management
process.
With a substantial number of highly sustainable sites suitable
for rental housing, we also expect to secure sales to build-to-rent
operators in the current financial year. As we evaluate this
opportunity and consider the best way to develop our sites at
Wilton Park and Cheshunt Lakeside, we are actively exploring our
funding options.
Stephen Wicks
Chief Executive Officer
30 January 2020
Group Finance Director's review
Key financial highlights:
-- EPRA net assets: GBP233.9m as at 30 September 2019, a 13.2%
increase from GBP206.7 million at 30 June 2018
-- EPRA net assets per share as at 30 September 2019: 113.69p (30 June 2018: 102.28p)
-- Revenue for the 15-month period to 30 September 2019:
GBP147.9m (year to 30 June 2018: GBP147.4m)
-- Profit before tax for the 15-month period to 30 September
2019: GBP25.0m (year to 30 June 2018: GBP19.3m)
-- Net gearing as at 30 September 2019: 93.9% (30 June 2018: 56.0%)
-- Net gearing on EPRA NAV basis as at 30 September 2019: 65.1% (30 June 2018: 38.6%)
-- Second interim dividend for the 15-month period to 30
September 2019: 2.25p per share (year to 30 June 2018: final
dividend 1.55p per share)
Introduction
On 6 June 2019, the Group changed its accounting reference date
from 30 June to 30 September so that its reporting timetable was
more closely aligned to value recognition and the operational
cycles of the business. Consequently, the current period presented
is 15 months and the comparative information is for 12 months
throughout this report.
Over the past 15 months, the Group has made significant and
tangible progress across its key performance segments which include
its land activities, the provision of planning and management
services to investors, private housebuilding and partnership
housing activities.
During the 15-month period to 30 September 2019, the Group has
continued to create substantial shareholder value from increasing
its land portfolio and adding value through planning, as well as
expanding both its private housebuilding and partnership housing
programmes.
Operational performance
Revenue for the period to 30 September 2019 was GBP147.9m (year
ended 30 June 2018: GBP147.4m). The small increase is due to lower
revenues being generated from the sale of residential plots and a
reduced number of private homes being completed during the period.
This is due to the nature of our construction programme on a number
of our large-scale apartment developments, where legal completions
can only be achieved on handover of completed blocks.
The Group sold 532 plots excluding joint ventures (year ended 30
June 2018: 837 plots) for GBP29.2m (year ended 30 June 2018:
GBP59.3m) and 130 private homes, excluding joint ventures and sale
of reversionary freeholds (year ended 30 June 2018: 242 private
homes) for GBP32.5m (year ended 30 June 2018: GBP70.2m).
The average selling price of our homes was GBP250,000 (year
ended 30 June 2018: GBP293,000). The reduction is due to a change
of mix of houses and apartments sold as well as the locations of
the homes sold. Our net reservation rate per active outlet during
the period was 0.73 (year ended 30 June 2018: 1.34).
The housing market has seen a marked improvement since the
decisive outcome of the general election. Despite the nature of the
eventual Brexit deal, the sales expectation indicators point
towards a more upbeat trend in the housing market.
The Government's Help to Buy initiative continues to be a
significant factor in the market with 65% (year ended 30 June 2018:
58%) of our homes sold (including joint ventures) using this
scheme. Our forward sales of homes reserved and exchanged at 30
September 2019 amounted GBP26.0m. In addition, we have forward sold
a hotel under construction at our development in Bournemouth for
GBP13.3m.
Revenue from our partnership housing programme increased to
GBP62.6m (year ended 30 June 2018: GBP12.0m). The Group has created
a platform to use its land bank to grow this part of the business
quite significantly as it balances exposure to market risk and
provides regular cash flow, requires no debt and deploys a limited
amount of equity.
A growing part of the Group's business is procuring sites and
providing planning and management services to investors in the
property sector. The Group typically enters into a planning and
management services agreement with the investors which includes
procuring the opportunity to acquire brownfield land, adding value
by managing the planning process and proposing a disposal plan for
the consented site. This activity enables Inland Homes to earn
substantial fees with a significantly reduced injection of equity
and debt exposure. This part of the business will generate
significant operating margins for the Group as a result of the
minimal direct costs attributable to this activity. It also assists
in the expansion of our partnership housing activity as the land
can be sold to housing associations with a construction contract
for Inland Homes. Management fees increased to GBP18.6m (year ended
30 June 2018: GBP2.4m) during the period.
The Group's gross margin improved to 22.0% (year ended 30 June
2018: 21.6%) and its operating margin increased substantially to
22.1% from 15.9%, predominantly due to the sale of our beneficial
interest in Cheshunt Lakeside Developments Limited (CLDL) explained
further below. Profit before tax was GBP25.0m (year ended 30 June
2018: GBP19.3m).
Administrative expenses have increased from GBP9.4m to GBP15.7m
and this predominantly reflects investment made in our staff, with
the average number of employees increasing from 93 to 138, and
total employee numbers increasing from 105 as at 30 June 2018 to
161 on 30 September 2019. As stated above, the expansion in our
overhead base has set us up to meet our strategic growth
objectives.
The Group had a put and call option arrangement to purchase its
50% joint venture partner's share in CLDL, a company that owns the
former Tesco's headquarters site in Cheshunt, Hertfordshire.
Certain conditions were attached to the option which needed to be
met in order for either side of the option to be exercised. Taking
into account the Group's present ability to exercise the option,
the Group considered that together the 50% direct holding and the
put and call option gave the Group control over the company from 6
June 2019, and consequently consolidated 100% of CLDL from this
date. On 22 September 2019, the Group exercised its option and the
related liability of GBP13.7m is included within other creditors as
at the period end date and was settled on 25 October 2019. On 30
September 2019 the Group also entered into a contract with a third
party to transfer its 50% beneficial interest in the company. The
gain recognised on disposal was GBP12.6m.
Finance costs
The Group's finance costs comprise mainly of interest on land
and development finance, non-utilisation fees, interest rolled up
on the Zero Dividend Preference shares (ZDPs) and amortisation of
arrangement fees. Interest on development funding is capitalised
where required by IAS 23.
Total finance costs increased from GBP6.2m to GBP10.7m; a
reflection of increased borrowings to fund the rise in work in
progress from GBP136.2m to GBP192.4m and financing CLDL to repay
GBP15m of the loan of GBP16.8m from our former joint venture
partner. Interest on bank and non-bank borrowings amounted to
GBP7.5m (year ended 30 June 2018: GBP4.4m), amortised loan
arrangement and other fees was GBP1.7m (year ended 30 June 2018:
GBP0.7m) and the finance cost relating to the ZDPs was GBP1.5m
(year ended 30 June 2018: GBP1.1m).
The funding costs capitalised into work in progress was GBP1.3m
(year ended 30 June 2018: GBP1.1m).
Taxation
The Group is domiciled in the United Kingdom and does not make
use of any tax structure that is not domiciled in the United
Kingdom.
The total tax charge of GBP0.4m combines a current taxation
charge of GBP1.1m and a deferred tax credit of GBP0.7m and
represents an effective rate of 1.6% of the profit before tax. The
current corporation tax rate is 19% and the principal difference
arises due to the gain on disposal of our 50% beneficial interest
in CLDL being exempt from corporation tax, an over provision in
prior periods and a deferred tax credit arising due to capital
losses brought forward.
Earnings per share and dividends
Basic earnings per share increased to 11.79p (year ended 30 June
2018: 7.64p) signifying the increase in operating profit during the
period. The weighted average number of shares in issue during the
period was 205.3m (year ended 30 June 2018: 201.6m).
Based on the strong results for the period ended 30 September
2019, the Board has declared a second interim dividend of 2.25p per
ordinary share. Together with the first interim dividend of 0.85p
paid on 3 July 2019, this makes a total dividend of 3.10p for the
period (year ended 30 June 2018: 2.20p). A final dividend for the
period ended 30 September 2019 will not be proposed. The second
interim dividend is expected to be paid on 12 June 2020 to those
shareholders on the register at the close of business on 21
February 2020. The ex-dividend date is 20 February 2020.
Total shareholder return
Inland Homes plc's share price has increased 31.1% over the past
27 months (from 60.25p per share at 30 June 2017 to 79.00p per
share at 30 September 2019) and 17.0% over the 15 months to 30
September 2019 (from 67.50p per share at 30 June 2018 to 79.00p per
share at 30 September 2019). Combined with dividends paid during
the period of 2.4p per share, the share price movement has resulted
in a total shareholder return of 20.6% for the 15-month period to
30 September 2019.
This compares to a 19.4% fall in the FTSE AIM All Share
index.
Balance sheet
Net assets at 30 September 2019 were GBP162.2m (30 June 2018:
GBP142.4m), an increase of 13.9%, mainly due to retained earnings.
This equates to net assets per share of 78.84p (30 June 2018:
75.3p). The EPRA net asset value per share at 30 September 2019 was
113.69p (30 June 2018: 102.28p). The EPRA NAV per share increased
during the period due to the profit after tax for the period end
the planning consents received for the Group's two major projects
at Wilton Park in Beaconsfield, Buckinghamshire and Cheshunt
Lakeside in Cheshunt, Hertfordshire.
Net asset value and net asset value per share (unaudited)
The calculation of EPRA net asset value is set out below:
Net asset Net asset
value value per
per share share
At 30
September At 30 June
2019 2018
'000 '000
------------------------------------------------------- ---------- -----------
Shares in issue Less shares held
in: 207,366 204,551
* EBT
(1,627) (1,627)
- (825)
* Treasury
------------------------------------------------------- ---------- -----------
For use in basic measures 205,739 202,099
Dilutive effect of:
- share options 2,018 1,837
- deferred bonus shares 1,527 1,823
- growth shares 2,285 5,100
------------------------------------------------------- ---------- -----------
For use in diluted measures 211,569 210,859
------------------------------------------------------- ---------- -----------
Undiluted Undiluted
GBPm p p
------------------------------------ ----------------- ---------- -----------
At 30 September 2019
Net assets attributable
to equity shareholders Adjustment
for: 162.2 78.84 76.67
Revaluation of projects
Deferred tax on investment
property revaluation 69.7
2.0
------------------------------------ ----------------- ---------- -----------
EPRA net asset value 233.9 113.69 110.55
Adjustment for:
Deferred tax on investment
property revaluation Deferred
tax on project revaluation (2.0)
(11.8)
------------------------------------ ----------------- ---------- -----------
EPRA triple net asset value 220.1 106.98 104.03
------------------------------------ ----------------- ---------- -----------
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
------------------------------------ ----------------- ---------- -----------
The Directors are required to make an assessment of the fair
value of its trading properties when determining EPRA NAV. For
undeveloped sites (both owned and options) a residual valuation is
carried out to determine the anticipated value of the site with
planning. This is then subject to a discount ranging between 0% and
80% to reflect the planning prognosis of the relevant site.
There is not a ready market for sites where construction has
commenced. The Directors have therefore assumed that fair value
equates to carrying value for such sites unless the site is
forecast to make a margin in excess of 16% in which case a fair
value adjustment is made to demonstrate the residual land value
uplift.
As at 30 September 2019, the Group's investment properties
comprised principally of existing residential properties at Wilton
Park. The Board intends to sell some these properties in the open
market. Hence, GBP4.7m has been transferred to Assets Held for Sale
within current assets and land valued at GBP6.3m has been
transferred to work in progress.
Investment in joint ventures has increased from GBP0.4m to
GBP8.0m, primarily due to the net effect of the deemed exercise of
our call option to acquire our former joint venture partner's share
in CLDL and the transfer of our 50% beneficial interest in the
company as explained above. Similarly, other receivables due after
more than one year of GBP21.8m have increased from GBP11.0m,
predominantly as a result of the transfer of our 50% beneficial
interest in CLDL on deferred terms.
Inventories are the most significant part of the Group's net
assets and increased from GBP136.2m to GBP192.4m. This has been
driven by the growth in the land bank from 6,870 plots to 7,796
plots as well as an increase in work in progress on large-scale
apartment developments under construction.
The Group is owed GBP32.8m from CLDL which represents the major
part of amounts due from joint ventures. The site at Cheshunt
Lakeside secured planning consent for 1,253 residential plots and
52,797sqft of commercial and educational space during the period
and the joint venture has commenced pre-construction works in
preparation of the development of the site.
Net debt and borrowings
The Group funds its activities through a combination of equity
and debt. Due to the increase in our land bank, work in progress
and financing CLDL to repay GBP15.0m of our former joint venture
partner's loan, net debt has risen to GBP152.3m, (year ended 30
June 2018: GBP79.7m) representing net gearing of 93.9% (year ended
30 June 2018: 56.0%). Net gearing based on EPRA net assets of
GBP233.9m (year ended 30 June 2018: GBP206.7m) equates to 65.1%
(year ended 30 June 2018: 38.6%). Our cash balances at 30 September
2019 stood at GBP10.9m (year ended 30 June 2018: GBP40.4m).
In March 2019, we agreed a revolving credit facility of GBP65.0m
(including an accordion of
GBP20.0m) for a term of four years, secured against some of our
developments under construction. As at the end of the period, we
had drawn down GBP30.2m of this facility leaving potential headroom
of GBP34.8m. In August 2018, we extended the maturity date of
GBP18.4m ZDP shares by five years to 10 April 2024 and during the
period ended 30 September 2019 we issued a further 3,987,000 ZDP
shares raising a gross sum of GBP6.2m. The Group also has a secured
revolving credit facility of GBP17.2m from a Fund to finance sites
with and without planning consent. This facility, which was fully
drawn at 30 September 2019, expires in August 2020 and having had
discussions with the Fund, it is the Board's intention to renew the
facility.
A revolving facility of GBP11.5m from Homes England is funding
our development of 457 homes and 64,000sqft of commercial space at
Chapel Riverside in Southampton. Phases one and two of this
development have been completed with construction on phase three
well underway. As at 30 September 2019, we had drawn down GBP7.3m
of this facility.
A GBP24.0m revolving cash flow facility was in place to fund the
construction of 239 homes at Lily's Walk in High Wycombe. During
the period ended 30 September 2019, we completed the sale of 18
homes with forward sales of GBP6.7m at the development. GBP23.6m of
the facility had been drawn down at the period end.
Of the Group's total borrowing facilities of GBP183.8m, 26%
expire within one year from the balance sheet date.
In December 2019, the Group renewed a land facility of GBP26.75m
secured against its site at Wilton Park in Beaconsfield for a
period of 12 months with stepped reductions to suit our plans.
On 30 January 2020, the Group arranged a new debt facility to be
available from May 2020 with a term of 12 months from drawdown.
This gives the Group increased flexibility if required and
safeguards the Group against any delays in land sales.
The Group remains within the development and corporate covenants
stated within its borrowing facilities and maintains excellent
relationships with its lenders.
The sale of the large-scale apartment developments as well as
engaging in new land opportunities with partners; securing discount
to market value options on strategic sites and expanding the
partnership housing activity will lead to a reduction in the
Group's net borrowings over the next 12 months. This will enable
Inland Homes to grow with a reduced level of risk and less of its
own equity being utilised.
Nishith Malde
Group Finance Director
30 January 2020
Group income statement
for the 15-month period ended 30 September 2019
Continuing operations
Note Fifteen Year ended
months 30 June
to 30 2018
September GBPm
2019
GBPm
------------------------------------------------------- ---- --------------- ------------------
Revenue 6 147.9 147.4
Cost of sales 6 (115.4) (115.6)
------------------------------------------------------- ---- --------------- ------------------
Gross profit 32.5 31.8
Administrative expenses 6 (15.7) (9.4)
Gain on sale of subsidiary 20 - 0.1
Gain on sale of joint venture interest 20 12.6 -
Share of profit of joint ventures 20 2.0 1.0
Share of profit of associate 20 0.2 -
Revaluation of investment property 15 1.1 -
------------------------------------------------------- ---- --------------- ------------------
Operating profit 32.7 23.5
Finance cost - interest expense 10 (9.4) (5.1)
Finance income - interest receivable and similar
income 11 1.7 0.9
------------------------------------------------------- ---- --------------- ------------------
Profit before tax 25.0 19.3
Tax charge 12 (0.4) (3.9)
------------------------------------------------------- ---- --------------- ------------------
Total profit for the period/ year 24.6 15.4
------------------------------------------------------------- --------------- ------------------
Other comprehensive income:
Revaluation of quoted investments 17 (0.4) -
Total profit and comprehensive income for the period/
year 24.2 15.4
------------------------------------------------------- ---- --------------- ------------------
Earnings per share for profit attributable to the
equity holders of the Company during the period/year
- basic 13 11.79p 7.64p
- diluted 13 11.47p 7.30p
------------------------------------------------------- ---- --------------- ------------------
The accompanying notes form part of this preliminary
announcement.
Statements of financial position
Group Company
Note 30 September 30 June 30 September 30 June
2019 2018 2019 2018
GBPm GBPm GBPm GBPm
ASSETS
Non-current assets
Investment properties 15 49.3 52.8 - -
Property, plant and equipment 16 6.3 1.3 - -
Intangible assets 19 0.3 -
Investments in quoted companies 17 1.1 0.2 - -
Investment in subsidiaries 20 - - 12.5 12.5
Investment in joint ventures 20 8.0 0.4 - -
Amounts due from joint ventures 20 1.0 1.0 - -
Investment in associate 20 1.3 1.1 - -
Amounts due from associate 20 - 3.0 - -
Other receivables 23 21.8 11.0 - -
Deferred tax 21 - - 0.8 0.7
------------------------------------------- ---- ------------ ------- ------------ --------------
Total non-current assets 89.1 70.8 13.3 13.2
------------------------------------------- ---- ------------ ------- ------------ --------------
Current assets
Inventories 22 192.4 136.2 - -
Trade and other receivables 23 45.4 30.4 40.2 37.1
Assets held for sale 18 4.7 - - -
Corporation tax - - - 0.5
Amounts due from associate 20 3.3 2.8 - -
Amounts due from joint ventures 20 34.8 19.0 - -
Cash and cash equivalents 24 10.9 40.4 7.1 18.3
------------------------------------------- ---- ------------ ------- ------------ --------------
Total current assets 291.5 228.8 47.3 55.9
------------------------------------------- ---- ------------ ------- ------------ --------------
Total assets 380.6 299.6 60.6 69.1
------------------------------------------- ---- ------------ ------- ------------ --------------
EQUITY
Capital and reserves attributable to
the Company's equity holders
Share capital 25 20.7 20.5 20.7 20.5
Share premium account 26 36.4 34.8 36.4 34.8
Employee benefit trust 26 (1.1) (1.1) (1.1) (1.1)
Treasury reserve 26 - (0.5) - (0.5)
Special reserve 26 1.1 6.1 1.1 6.1
Retained earnings 26 105.1 82.6 2.9 8.2
------------------------------------------- ---- ------------ ------- ------------ --------------
Total equity attributable to shareholders
of the Company 162.2 142.4 60.0 68.0
------------------------------------------- ---- ------------ ------- ------------ --------------
LIABILITIES
Current liabilities
Bank loans and overdrafts 28 48.0 26.0 - -
Zero Dividend Preference shares - 18.4 - -
Trade and other payables 27 47.7 24.9 0.6 1.1
Corporation tax 2.2 6.6 - -
Other financial liabilities 30 4.1 3.7 - -
------------------------------------------- ---- ------------ ------- ------------ --------------
Total current liabilities 102.0 79.6 0.6 1.1
------------------------------------------- ---- ------------ ------- ------------ --------------
Non-current liabilities
Bank loans 28 82.1 41.4 - -
Other loans 28 7.2 34.3 - -
Zero Dividend Preference shares 28 25.9 - - -
Deferred tax 21 1.2 1.9 - -
------------------------------------------- ---- ------------ ------- ------------ --------------
Total non-current liabilities 116.4 77.6 - -
------------------------------------------- ---- ------------ ------- ------------ --------------
Total equity and liabilities 380.6 299.6 60.6 69.1
------------------------------------------- ---- ------------ ------- ------------ --------------
Retained earnings for the Company includes a loss after tax for
the period of GBP3.4m (year ended 30 June 2018: profit after tax of
GBP7.5m).
The Company has taken advantage of the exemption allowed under
Section 408 of the Companies Act 2006 and has not presented its own
profit and loss account in this preliminary announcement.
Statements of changes in equity
for the 15-month period ended 30 September 2019
Employee
Share Share Benefit Special Treasury Retained
capital premium Trust reserve reserve earnings Total
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
Group Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
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 9 - - - - - 0.6 0.6
Dividend payment 14 - - - - - (3.7) (3.7)
Issue of ordinary shares 25 0.1 0.5 - - - (0.6) -
Purchase of own shares 25 - - - - (0.6) - (0.6)
Exercise of share options 25 - - - - 0.1 - 0.1
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
At 30 June 2018 20.5 34.8 (1.1) 6.1 (0.5) 82.6 142.4
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
Transitional IFRS 15
adjustment 5 - - - - - 0.2 0.2
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
At 30 June 2018 - restated 20.5 34.8 (1.1) 6.1 (0.5) 82.8 142.6
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
Total profit for the period - - - - - 24.6 24.6
Other comprehensive income 17 - - - - - (0.4) (0.4)
Transactions with owners:
Share-based payments 9 - - - - - 0.3 0.3
Dividend payment 14 - - - (5.0) - - (5.0)
Issue of ordinary shares 25 0.2 1.6 - - - (1.8) -
Purchase of own shares 25 - - - - (0.1) - (0.1)
Exercise of share options 25 - - - - 0.6 (0.4) 0.2
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
At 30 September 2019 20.7 36.4 (1.1) 1.1 - 105.1 162.2
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
Company
At 30 June 2017 20.4 34.3 (1.1) 6.1 - 4.4 64.1
Total comprehensive income
for the year - - - - - 7.5 7.5
Transactions with owners:
Share-based payments 9 - - - - - 0.6 0.6
Dividend payment 14 - - - - - (3.7) (3.7)
Issue of ordinary shares 25 0.1 0.5 - - - (0.6) -
Purchase of own shares 25 - - - - (0.6) - (0.6)
Exercise of share options 25 - - - - 0.1 - 0.1
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
At 30 June 2018 20.5 34.8 (1.1) 6.1 (0.5) 8.2 68.0
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
Total comprehensive loss
for the period - - - - - (3.4) (3.4)
Transactions with owners:
Share-based payments 9 - - - - - 0.3 0.3
Dividend payment 14 - - - (5.0) - - (5.0)
Issue of ordinary shares 25 0.2 1.6 - - - (1.8) -
Purchase of own shares 25 - - - - (0.1) - (0.1)
Exercise of share options 25 - - - - 0.6 (0.4) 0.2
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
At 30 September 2019 20.7 36.4 (1.1) 1.1 - 2.9 60.0
---------------------------- ---- ------------- ------------- -------- --------- -------- -------------- -----
The accompanying notes form part of this preliminary
announcement.
Group statement of cash flows
for the 15-month period ended 30 September 2019
Fifteen months
to Year ended
30 September 30 June
Note 2019 2018
Cash flow from operating activities
Profit for the period/ year before tax 25.0 19.3
Adjustments for:
- depreciation 16 0.7 0.3
- share-based payments 8 0.3 0.8
- revaluation of investment property 15 (1.1) -
- gain on disposal of subsidiary - (0.1)
- interest expense 10 9.4 5.1
- interest receivable and similar income 11 (1.7) (0.9)
- gain on sale of joint venture interest 20 (12.6) -
- IFRS 15 opening adjustment 0.2 -
- share of profit of joint ventures 20 (2.0) (1.0)
- share of profits of associates 20 (0.2) -
Corporation tax payments (5.6) (4.0)
Change in working capital:
- increase in inventories (50.8) (3.2)
- increase in trade and other receivables (7.9) (17.8)
- increase/(decrease) in trade and other payables 7.9 (12.8)
- increase in other financial liabilities 0.4 -
- increase in trading balance due to joint ventures 20 4.1 -
------------------------------------------------------ ---- -------------- ----------
Net cash outflow from operating activities (33.9) (14.3)
------------------------------------------------------ ---- -------------- ----------
Cash flow from investing activities
Interest received 11 1.0 0.8
Purchases of property, plant and equipment 16 (5.4) (0.9)
Purchases of intangible assets 19 (0.3) -
Purchases of investment property (1.5) (0.2)
Purchases of quoted investments 17 - (0.2)
Proceeds from sale of subsidiary - 13.4
Loans provided to joint ventures 20 (19.9) (7.6)
Amounts repaid by joint ventures - 5.9
Distribution of profits from joint venture 20 1.0 0.8
Amounts repaid by associate 20 2.6 -
------------------------------------------------------ ---- -------------- ----------
Net cash (outflow)/inflow from investing activities (22.5) 12.0
------------------------------------------------------ ---- -------------- ----------
Cash flow from financing activities
Interest paid (7.0) (3.8)
Repayment of borrowings (20.0) (6.3)
New loans 52.6 30.6
Issue of zero dividend preference shares 6.2 -
Equity dividends paid to ordinary shareholders 14 (5.0) (3.7)
Exercise of share options 0.1 -
Purchase of own shares - (0.6)
------------------------------------------------------ ---- -------------- ----------
Net cash inflow from financing activities 26.9 16.2
------------------------------------------------------ ---- -------------- ----------
Net (decrease)/increase in cash and cash equivalents (29.5) 13.9
Net cash and cash equivalents at beginning of
period/year 40.4 26.5
------------------------------------------------------ ---- -------------- ----------
Net cash and cash equivalents at end of
period/year 24 10.9 40.4
------------------------------------------------------ ---- -------------- ----------
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END
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