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RNS
Inland Homes PLC  -  INL   

Half-year Report

Released 07:00 28-Mar-2017

RNS Number : 6698A
Inland Homes PLC
28 March 2017
 

 

28 March 2017

 

Inland Homes Plc

(the 'Company' or the 'Group')

Interim results for the six months ended 31 December 2016

 

Positive momentum and strategic repositioning ahead of key completions in second half

 

Inland Homes Plc (AIM: INL), the leading brownfield regeneration specialist and housebuilder with a focus on the South and South East of England, today announces its results for the six months to 31 December 2016.

 

Highlights

 

Delivery of NAV growth and dividend rise reflecting confidence

 

31 Dec 2016

31 Dec 2015

EPRA NAV

87.05p

80.64p

Adjusted EPRA NAV

92.03p

84.38p

EPRA performance measures show unrealised value within the Group's land bank

 

 

 

 

 

·      10.3% increase in net asset value to £118 million (2015: £107 million)

·      Group revenue for the period of £32.6 million (2015: £55.1 million) and PBT £4.4 million (2015: £21.4 million), with the majority of profits due to be realised in the second half of the financial year due to the timing of the construction of Inland's sites and of planned land sales

·      Annualised rental income of £2.3 million

·      Transformed net current asset position with 98% (2015: 20%) of debt falling due after more than one year and at substantially lower rates of interest

·      25% rise in interim dividend to 0.5 pence (2015: 0.4 pence) per share, reflecting the Board's confidence in the expected performance in the second half of the current financial year

 

Operational and strategic momentum positioning the business for future growth

·      Expansion of land bank to a record 7,151 plots (2015: 5,672), including 2,440 plots with planning consent (2015: 1,146)

·      Development milestones achieved across multiple schemes, setting clear path for the future profit generation:

Phase one of Meridian Waterside, Southampton, 32 of 54 homes exchanged or reserved, reflecting  sales rate of 1.4 units per week at  values ahead of budget

Full planning permission received for 239 homes at Lily's Walk, the major regeneration scheme in High Wycombe town centre with a GDV of £75 million

Resolution to grant consent on 457 residential units and 64,000 sq ft of commercial space at Chapel Riverside in a joint venture with Southampton City Council

·      Sales of homes steady at 101 homes (2015: 105) with forward sales remaining robust with a current forward order book of £31.8 million (2015: £20.9 million)

·      Sale of 177 residential plots generating a profit of £6.3 million (including £6.0 million disclosed as a gain on the sale of a subsidiary company in the Group Income Statement) (2015: £6.3 million)

·      Gross margin from the sale of private homes at 20.0% (2015: 24.1%), with the previously reported contractor failure and the resulting final cost of homes accounting for the reduction from the same period last year

·      Investment in Group's in-house building operations responsible for delivery of 226 units of the 389 units currently under construction

 

Housing market remains strong in the areas that the Company operates

·      Demand remains strong from buyers for our homes in South and South East England with sales rates being sustained at good levels

·      Appetite for land with planning consent remains buoyant

·      Government initiatives, including the recent Housing White Paper, are contributing to strengthening confidence among funders and housebuilders to take on higher density projects, and demonstrate the ongoing relevance of Inland's expertise at navigating challenging plots of land through the planning system

 

 

Stephen Wicks, Chief Executive at Inland Homes commented:

 

"These results reflect another period of strategic growth for the business which has seen us meet a number of important operational and development milestones. Our business is in robust shape with demand remaining high for our homes, with forward sales growing substantially on a like for like basis, and for the expertise that the Company offers to joint venture parties, as proven by the recently received resolution to grant planning permission for 457 units at Chapel Riverside in Southampton, our first jv with a local authority. The investment in our in-house building operations is starting to show good results and will ensure certainty of delivery as well improved margins on home sales. This repositioning, combined with key completions due in the second half of the financial year means that we remain positive on the outcome for the full year."    

 

Enquiries:

 

Inland Homes plc:

Tel: +44 (0) 1494 762450

Stephen Wicks, Chief Executive

 

Nishith Malde, Finance Director

 

Paul Brett, Land Director

 

 

 

Stifel Nicolaus Europe Limited (Nominated Adviser):

Tel: +44 (0) 20 7710 7600

David Arch

 

 

 

FTI Consulting:

Tel: +44 (0)20 3727 1000

Dido Laurimore

 

Claire Turvey

Polly Warrack

 

 

 

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

I am pleased to provide an overview of the results for the half year ended 31 December 2016 and also to outline how we are well-positioned to continue delivering value for our shareholders.

 

The residential property market during the second half of 2016 and the start of 2017 has remained buoyant in the lower cost but good quality end of the sector where we have positioned ourselves. The focus for Inland Homes during the half year has been:

 

·      To grow our in-house construction capabilities as our ambition to increase our housebuilding output continues to take shape 

·      To increase the size of our land bank

·      To increase the proportion of consented plots within our land bank.

 

As stated at the time of the full year results, we expect to realise the majority of our profits and revenue in the second half of the year, due to the timing on a number of our construction sites coupled with the completion of planned land sales. Demand for both completed units and consented land has remained robust throughout the period and into the start of 2017 and this, coupled with a strengthened balance sheet, means we remain positive on the outcome for the full year.

 

The Group's balance sheet has also been strengthened with net current assets having increased substantially due to the majority of our borrowings now falling due after more than one year.

 

OPERATIONAL HIGHLIGHTS

During the period, sales of new homes remained strong. The Group sold 101 homes (2015: 105) (including 14 for Housing Association equivalent units (2015: 12)) at an average sales price of £319,000 per private unit (2015: £325,000).  Forward sales remain robust, with a current forward order book of £31.8 million (2015: £20.9 million). The Group also sold 177 residential plots generating a profit of £6.3 million (including £6.0 million disclosed as a gain on the sale of a subsidiary company in the Group Income Statement) (2015: £6.3 million).

 

A key highlight was the launch of the first phase of Meridian Waterside, one of our major regeneration schemes in Southampton which will deliver a total of 351 homes over the next few years. To date, we have either exchanged or reserved 32 of the 54 units in the first phase, reflecting a healthy sales rate of 1.4 units per week and at values ahead of budget.

 

As previously announced, Lily's Walk, the major regeneration scheme in High Wycombe town centre with a gross development value of approximately £75 million, now has full planning consent for the construction of 239 homes. I am pleased to report that we have reached terms with our partners to enable us to commence the development of this site as part of our housebuilding programme. Construction will commence shortly, with an "off plan" sales launch for the first phase anticipated in July 2017.

 

A resolution to grant planning consent has also been received for 457 homes together with 64,000 sq ft of commercial space at Chapel Riverside, Southampton, in our joint venture with Southampton City Council.

 

At Wilton Park, our flagship development of over 100 acres in Beaconsfield, Buckinghamshire, we have completed the first section of the new estate road. Negotiations continue with the local authority on the final details of our planning application, which we expect to submit shortly, for the development of more than 300 homes.  

 

In order to further increase levels of certainty on delivery, whilst simultaneously reducing construction costs, we have invested heavily in our in-house building operations and, of the 389 units across nine sites that the Group currently has under construction, 226 will be delivered by our in-house construction team rather than by using main contractors.

 

FINANCIAL HIGHLIGHTS

Revenue for the Group was £32.6 million (2015: £55.1 million) including £27.5 million (2015: £30.3 million) from the sale of 87 residential units (2015: 93).

 

The gross margin from the sale of residential units reduced to 20.0% (2015: 24.1%), reflecting the final cost of homes that had to be completed after a contractor failure. Going forward, the Board is confident that improved margins will be achieved as our in-house building operations continue to gather momentum and produce tangible results.

 

The EPRA net asset value and the adjusted EPRA net asset value of the Group at 31 December 2016 were 87.05p (2015: 80.64p) and 92.03p (2015: 84.38p) per ordinary share respectively and have been determined as follows:

 

 

 

As at 31 December 2016

As at 31 December 2015

 

EPRA

Adjusted EPRA*

EPRA

Adjusted EPRA*

Shares in issue (000)

 

201,972

 

201,972

 

201,779

 

201,779

Dilutive effect of options (000)

 

1,926

 

-

 

2,343

 

-

Dilutive effect of deferred bonus shares (000)

 

1,627

 

-

 

1,027

 

-

Dilutive effect of Growth Shares (000)

 

8,000

 

-

 

6,000

 

-

 

 

213,525

 

201,972

 

211,149

 

201,779

 

£000

Pence per share

£000

Pence per share

£000

Pence  per share

£000

Pence  per share

Net asset value

117,989

55.26p

117,989

58.42p

107,066

50.71p

107,066

53.06p

Unrealised value within projects

67,091

31.42p

67,091

33.22p

63,200

29.93p

63,200

31.32p

Reverse deferred tax liability on investment property

787

0.37p

787

0.39p

-

-

-

-

EPRA net asset value

185,867

87.05p

185,867

92.03p

170,266

80.64p

170,266

84.38p

Deferred tax on uplift at 19%

 

(5.97)p

 

(6.31)p

 

(5.69)p

 

(5.95)p

EPRA net asset value after deferred tax

 

81.08p

 

85.72p

 

74.95p

 

78.43p

*EPRA NAV adjusted to exclude the dilutive effect of the options, deferred bonus shares and Growth Shares.

 

Reflecting our confidence in the performance expected in the second half of the current financial year, the Board has increased the interim dividend by 25% to 0.5p (2015: 0.4p) per share. The dividend will be paid on 23 June 2017 to shareholders on the register at the close of business on 2 June 2017. The ex-dividend date is 1 June 2017.

 

Our investment in skilled and experienced staff continues to grow and remains a priority as we further invest in the Group's housebuilding activities. This has resulted in an increase in overheads to £4 million for the six months ended 31 December 2016 (2015: £3.6 million). As noted above, we expect that this will enable us to benefit from a higher margin on our housebuilding activities going forward.

 

The gross rental income from commercial and residential assets increased to £1.2 million (2015: £0.9 million), of which £509,000 was derived from the existing residential portfolio at Wilton Park in Beaconsfield. The Group's rental income is anticipated to increase further, with annualised income currently running at the rate of £2.3 million.

 

The Group's net current assets have been significantly improved with 98% (2015: 20%) of our debt falling due after more than one year. In achieving this transformation, the Group has managed to secure debt at substantially lower rates of interest than previously. During the period we refinanced the Wilton Park site with a five year facility at a significantly lower interest rate.

 

LAND AND PLANNING

There has been a strong focus on securing further strategic land options during the period. A considerable amount of success has been achieved in this area with a total of 19 sites under option where the potential exists for approximately 2,100 plots. The current land bank remains at an all-time high and is set out below:

 

Plots without planning consent

Plots with planning consent or resolutions to grant planning consent

Total plots

Owned under development

-

346

346

Owned or contracted

842

829

1,671

Managed or held within joint ventures under development

-

43

43

Managed or held within joint ventures

1,325

1,222

2,547

Managed or held within joint ventures terms agreed

250

-

250

Land controlled

200

-

200

Strategic land controlled

1,994

-

1,994

Strategic land terms agreed

100

-

100

Total

4,711

2,440

7,151

 

We currently have planning applications submitted for 866 plots across eight sites, with positive decisions expected on 411 of those by the end of June 2017. We are in pre-application discussions with planning authorities on a further 1,344 plots across five sites  where applications for 424 plots will be submitted shortly.

 

JOINT VENTURES

During the period we entered into a 50/50 joint venture with The Anderson Group to develop 43 homes at Gardiners Park, Basildon, Essex. This is the first phase of potentially a much larger project where Inland already has some freehold and leasehold interests.

 

On 23 March 2017, the joint venture with land owners on our Garston, Hertfordshire project gained a resolution to grant consent for 100 homes and construction is expected to commence in the new financial year.

 

As recently announced, a resolution to grant consent has also been achieved for 457 homes together with 64,000 sq ft of commercial space at Chapel Riverside, Southampton, in our joint venture with Southampton City Council, with pre-construction archaeological works already underway. Collaborating with local authorities is a strategic priority for us, enabling the regeneration of brownfield land owned by local authorities to meet the shortage in housing needs.  

 

A masterplan is being prepared for approximately 1,900 homes on 25 acres of which we own 13 acres in our major joint venture with a financial partner on the former Tesco headquarters at Cheshunt, Hertfordshire. Further land is being assembled at this location and our masterplan is being prepared in collaboration with the local authority.

 

INVESTMENT IN TROY HOMES

At 31 December 2016, our investment in and loans to our associate company, Troy Homes Limited (Troy), amounted to £2.0 million (2015: £0.8 million) after deducting the Group's share of losses. The Group increased its commitment to invest in the share capital of Troy to £1.5 million, of which £250,000 has been called up. The Group has also increased its commitment to provide loan notes to £3.0 million of which £2.0 million was drawn down at 31 December 2016. There was a debtor of £2.6 million (2015: £nil) outstanding at 31 December 2016 in relation to two sites which were sold to Troy during the year ended 30 June 2016.  Troy currently has 28 units under construction across three sites and a further 82 plots across seven sites in its land bank.

 

OUTLOOK

Against a backdrop of a slowing prime residential market in London, demand remains strong for our lower cost homes in outer London and Home Counties locations, with sales rates being sustained at good levels. The recent housing White Paper demonstrated the Government's commitment to meeting the demand for new homes and Inland is well positioned to be a beneficiary of the proposed new measures, from expedited planning consents through to the commitment for more building on brownfield land and the boost from modular construction.

 

Furthermore, the difficulty of getting onto the housing ladder remains acute and with around 45% of our private sales during the period utilising the "Help to Buy" scheme, we continue to benefit from the market for homes in our price point.

 

The demand for land with planning consent in our areas of operation continues to be strong, with an increasing level of activity being seen from Housing Associations in particular.

 

Our record land bank at the period end of 7,151 plots is a healthy combination of owned and joint ventured consented and unconsented land and we are confident that our specialist and proven planning capabilities will deliver a record number of consented plots during 2017.

 

The business has both a strong pipeline of land and a growing development programme, which will only accelerate as our in-house capabilities mature and, as such, we believe we are well placed to deliver shareholder value.

 

Terry Roydon

Chairman

Group income statement

for the six months ended 31 December 2016

 

 

Six months ended

Six months ended

Year ended

 

 

31 December

31 December

30 June

 

 

2016

2015

2016

 

 

(unaudited)

(unaudited)

(audited)

 

Note

£000

£000

£000

Revenue

 

32,569

55,148

101,910

Cost of sales

 

(25,707)

(40,556)

(72,329)

Gross profit

6

6,862

14,592

29,581

Administrative expenses

 

(4,045)

(3,559)

(6,297)

Gain on sale of subsidiary

 

6,021

                     -

               -

Profit on sale of PPE

 

                       -

                     -

9

Provision for doubtful debt

 

                       -

                     -

(1,106)

Revaluation of investment properties

 

(33)

13,969

18,015

Operating profit

 

8,805

25,002

40,202

Finance cost - interest expense

 

(4,349)

(3,641)

(7,425)

Finance income - interest receivable and similar income

 

143

96

477

Profit before tax and share of profits from associates and joint ventures

 

4,599

21,457

33,254

Share of loss of associates

 

(113)

                     -

(138)

Share of loss of joint ventures

 

(121)

                     -

(232)

Profit before tax

 

4,365

21,457

32,884

Income tax

7

(915)

(1,486)

(3,543)

Total profit and comprehensive income for the period

 

3,450

19,971

29,341

Attributable to:

 

 

 

 

- Shareholders of the Company

 

3,450

20,289

28,742

- Non-controlling interests

 

                       -

(318)

599

Earnings per share

 

 

 

 

- basic earnings per share in pence

8

1.71p

10.04p

14.23p

- diluted earnings per share in pence

8

1.62p

9.59p

13.47p

 

 

Group statement of financial position

at 31 December 2016

 

 

 As at 31 December

As at 31 December

As at 30 June

 

 

2016

2015

2016

 

 

(unaudited)

(unaudited)

(audited)

 

Note

£000

£000

£000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Investment properties

9

52,076

48,093

51,705

Property, plant and equipment

 

563

429

480

Investment in associate

10

                            -

250

113

Loans to associate due in more than one year

12

2,027

500

894

Investment in joint ventures

10

1,156

1,722

1,216

Loans to joint ventures due in more than one year

12

                             -

5,580

               -

Receivables due in more than one year

12

55

55

55

Deferred tax

11

620

42

338

Total non-current assets

 

56,497

56,671

54,801

Current assets

 

 

 

 

Inventories

 

145,946

129,711

146,825

Trade and other receivables

12

14,695

7,364

6,816

Amounts due from associate

12

2,600

                         -

3,372

Amounts due from joint ventures

12

18,880

                         -

10,103

Listed investments carried at fair value through profit and loss

 

1

1

1

Cash and cash equivalents

 

17,576

16,617

16,723

Total current assets

 

199,698

153,693

183,840

Total assets

 

256,195

210,364

238,641

EQUITY

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

Share capital

13

20,360

20,281

20,281

Share premium account

 

34,328

34,033

34,033

Employee Benefit Trust

 

(1,067)

(713)

(713)

Special reserve

 

6,059

6,059

6,059

Retained earnings

 

58,309

47,406

56,372

Total equity attributable to shareholders of the Company

 

117,989

107,066

116,032

Non-controlling interests

14

                           -

(46)

               -

Total equity

 

117,989

107,020

116,032

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Bank loans and overdrafts

 

1,793

25,900

19,010

Other loans

 

                          -

31,104

21,135

Trade and other payables

15

15,151

9,394

18,656

Corporation tax

15

5,004

5,607

7,618

Other financial liabilities

16

22,115

4,157

22,369

Total current liabilities

 

44,063

76,162

88,788

Non-current liabilities

 

 

 

 

Zero dividend preference shares

16

16,745

14,163

14,607

Other financial liabilities

16

                            -

13,019

               -

Bank loans due in more than one year

 

60,172

                         -

16,535

Other loans due in more than one year

 

17,226

                         -

               -

Payables due in more than one year

15 

                            -

                         -

2,679

Total non-current liabilities

 

94,143

27,182

33,821

Total equity and liabilities

 

256,195

210,364

238,641

 

Group statement of changes in equity

for the six months ended 31 December 2016

 

 

 

Employee

 

 

 

Non-

 

 

Share

Share

benefit

Special

Retained

 

controlling

Total

 

capital

premium

trust reserve

reserve

earnings

Total

interests

Equity

 

£0

£0

£0

£0

£0

£0

£0

£0

At 30 June 2015 (audited)

20,281

34,033

(382)

6,059

28,806

88,797

272

89,069

Share based payment

           -

           -

          -

           -

331

331

           -

331

Dividend payment

           -

           -

           -

           -

(2,020)

(2,020)

            -

(2,020)

Purchase of own shares for deferred bonus plan

           -

         -

(331)

          -

           -

(331)

          -

(331)

Transactions with owners

          -

           -

(331)

           -

(1,689)

(2,020)

            -

(2,020)

Total comprehensive income

           -

            -

            -

            -

20,289

20,289

(318)

19,971

Total changes in equity

           -

           -

(331)

            -

18,600

18,269

(318)

17,951

At 31 December 2015 (unaudited)

20,281

34,033

(713)

6,059

47,406

107,066

(46)

107,020

Share-based payment

           -

            -

           -

           -

334

334

            -

334

Dividend payment

          -

           -

           -

           -

(812)

(812)

            -

(812)

Transactions with owners

           -

           -

            -

            -

(478)

(478)

            -

(478)

Non-controlling interests acquired during the period

             -

              -

              -

              -

871

871

(871)

              -

Surplus arising on acquisition of non-controlling interests

           -

            -

            -

            -

120

120

            -

120

Total comprehensive income

             -

             -

             -

             -

8,453

8,453

917

9,370

Total changes in equity

            -

            -

            -

             -

8,966

8,966

46

9,012

At 30 June 2016 (audited)

20,281

34,033

(713)

6,059

56,372

116,032

            -

116,032

Share based payment

          -

         -

           -

           -

319

319

            -

319

Dividend payment

           -

            -

            -

            -

(1,832)

(1,832)

             -

(1,832)

Issue of ordinary shares

79

295

           -

           -

            -

374

            -

374

Purchase of own shares for deferred bonus plan

           -

             -

(354)

             -

             -

(354)

             -

(354)

Transactions with owners

79

295

(354)

            -

(1,513)

(1,493)

            -

(1,493)

Total comprehensive income

            -

           -

             -

             -

3,450

3,450

            -

3,450

Total changes in equity

79

295

(354)

          -

1,937

1,957

             -

1,957

At 31 December 2016 (unaudited)

20,360

34,328

(1,067)

6,059

58,309

117,989

            -

117,989

 

 

Group statement of cash flows 

for the six months ended 31 December 2016

 

 

Six months ended

Six months ended

Year ended

 

 

31 December

31 December

30 June

 

 

2016

2015

2016

 

 

(unaudited)

(unaudited)

(audited)

 

Note

£000

£000

£000

Cash flows from operating activities

 

 

 

 

Profit for the period before tax

 

4,365

21,457

32,884

Adjustments for:

 

 

 

 

- depreciation

 

112

87

179

- profit on disposal of property, plant and equipment

 

                           -

                         -

(9)

- share-based compensation

 

319

331

665

- revaluation of investment properties

 

33

(13,969)

(18,015)

- gain on disposal of subsidiary

 

(6,020)

                         -

                          -

- interest expense

 

4,349

3,641

7,425

- interest and similar income

 

(143)

(96)

(477)

- share of loss of joint ventures

 

121

                         -

232

- share of loss of associate

 

113

                         -

138

- corporation tax payments

 

(3,869)

(1,719)

(2,158)

Changes in working capital:

 

 

 

 

- increase in inventories

 

(15, 680)

(8,680)

(16,797)

- decrease in trade and other receivables

 

8,927

731

669

- decrease in trade and other payables

 

(9,688)

(11,450)

(2,781)

Net cash (outflow)/inflow from operating activities

 

(17,061)

(9,667)

1,955

Cash flow from investing activities

 

 

 

 

Purchases of property, plant and equipment

 

(168)

(184)

(329)

Sale of property, plant and equipment

 

                           -

                         -

12

Purchases of investment property

9

(432)

(124)

(1,021)

Acquisition of subsidiaries

 

                           -

                         -

(804)

Loans provided to associate

12

(1,087)

(500)

(4,266)

Investment in associate

10

                           -

(250)

(251)

Amounts repaid by associate

12

772

                         -

                          -

Proceeds from disposal of subsidiary

 

5,750

                         -

                          -

Loans provided to joint ventures

12

(8,680)

(2,334)

(5,810)

Investment in joint ventures

10

(61)

(234)

(202)

Net cash outflow from investing activities

 

(3,906)

(3,626)

(12,671)

Cash flow from financing activities

 

 

 

 

Interest paid

 

(2,267)

(3,614)

(5,203)

Repayment of borrowings

 

(8,713)

(24,861)

(28,417)

New loans

 

32,780

37,948

42,845

Net proceeds on issue of ordinary shares

 

374

                         -

                          -

Equity dividends paid to ordinary shareholders

 

                           -

(609)

(2,832)

Purchase of own shares for deferred bonus plan

 

(354)

(331)

(331)

Net cash inflow from financing activities

 

21,820

8,533

6,062

Net increase/(decrease) in cash and cash equivalents

 

853

(4,760)

(4,654)

Net cash and cash equivalents at beginning of period

 

16,723

21,377

21,377

Net cash and cash equivalents at the end of period

 

17,576

16,617

16,723

 

Notes to the half-yearly financial report

for the six months ended 31 December 2016

1. Nature of operations and general information

The principal activity of the Company and its subsidiaries (together called the Group) is to acquire residential and mixed use sites and seek planning consent for development. The Group also develops a number of plots for private sale.

Inland Homes plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of Inland Homes plc's registered office, which is also its principal place of business, is Decimal Place, Chiltern Avenue, Amersham, Buckinghamshire HP6 5FG.

Inland Homes plc's shares are quoted on AIM, a market operated by the London Stock Exchange. This consolidated half-yearly financial report has been approved for issue by the Board of Directors on 27 March 2017.

The financial information set out in this half-yearly financial report does not constitute statutory accounts as defined in Sections 434(3) and 435(3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 June 2016 have been filed with the Registrar of Companies and are available at www.inlandhomes.co.uk. The auditor's report on those financial statements was unqualified and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

2. Basis of preparation

This consolidated half-yearly financial report has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The consolidated half-yearly financial report should be read in conjunction with the annual financial statements for the year ended 30 June 2016, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

3. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2016.

 

4. Going concern

The Board has reviewed the performance for the current period and forecasts for the future period together with the available financial resources. It has also considered the risks and uncertainties, including credit risk and liquidity. 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 demand for consented land in the areas in which it operates. The Group has significant forward sales of residential units and is in discussions for the sale of some of the 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 12 months from signing this half-yearly financial report. The Directors therefore consider it appropriate to prepare the financial statements on the going concern basis.

5. Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(a) Valuation of inventories

In applying the Group's accounting policy for the valuation of inventories the Directors are required to assess the expected selling price and costs to sell each of the plots or units that constitute the Group's land bank and work in progress. Cost includes the cost of acquisition of sites, the cost of infrastructure and construction works, and legal and professional fees incurred during development prior to sale. Estimation of the selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land.

Whilst the Directors exercise due care and attention to make reasonable estimates, taking into account all available information in estimating the future selling price, the estimates will, in all likelihood, differ from the actual selling prices achieved in future periods and these differences may, in certain circumstances, be very significant. The critical judgement in respect of receipt of planning consent (see below) further increases the level of estimation uncertainty in this area.

(b) Income taxes

The Group recognises tax/deferred tax assets and liabilities for anticipated tax based on estimates of when the tax/deferred tax will be paid or recovered. When the final outcome of these matters is different from the amounts initially recorded, such differences impact the period in which the determination is made. Critical accounting estimates relate to the profit forecasts used to determine the extent to which deferred tax assets are recognised from available losses and the period over which they are estimated.

(c) Fair value of derivatives and other financial instruments

The fair value of instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and makes assumptions that are mainly based on market conditions existing.

(d) Fair value of investment properties

The fair value of materially completed investment property is determined by the Directors using the open market value of existing use method, subject to current leases and restrictions, as this has been assessed currently as the best use of these assets. Investment properties awaiting construction are valued by the Directors using an appraisal system; critical accounting estimates relate to the forecasts prepared in order to assess the carrying value.

(e) Discounting on deferred consideration of inventories and acquisition of shares

The Group discounts deferred consideration using the discounted cash flow method; the Group considers that the cost of debt capital is the most appropriate discount rate and this is a significant estimate.

Critical judgements in applying the entity's accounting policies

Inventories

The Group values inventories at the lower of cost and net realisable value. The net realisable value is based on the judgement of the probability that planning consent will be granted for each site. The Group believes that, based on the Directors' experience, planning consent will be given. If planning consent was not achieved, then a provision may be required against inventories.

Consolidation of Drayton Garden Village Limited (DGVL)

In December 2008, the Group entered into an Option and Development Services Agreement (the Agreement) with DGVL. This company was consolidated in prior years as the Directors had considered the requirements of IFRS 10 and believed the Group had control over DGVL from the date it entered into this agreement even though it did not own the share capital. During the year ended 30 June 2016, the Group acquired the share capital of DGVL.

Consolidation of Bucks Developments Ltd (BDL) and Wilton Park Developments Ltd (WPDL)

In December 2014, the Group entered into an Option with WPDL. These companies were consolidated in the prior year as the Directors had considered the requirements of IFRS 10 and believed the Group had control over BDL & WPDL from the date it entered into this agreement even though it did not own the share capital. During the year ended 30 June 2016, the Group acquired the share capital of BDL. BDL wholly owns the share capital of WPDL.

Investment in joint ventures

The Group's joint venture investments in Aston Clinton S.A.R.L and Project Helix Holdco Limited (Project Helix) are not in equal share (the Group owns 10% of the share capital of Aston Clinton S.A.R.L. and 20% of the share capital of Project Helix) however the Group has joint control over the activities of the companies with the other parties due to its entitlement to veto any decisions. In addition, the Group and the other parties to the agreements only have rights to the net assets of these companies through the terms of the contractual arrangements. Within Aston Clinton S.A.R.L the Group is entitled to 50% of the net assets and within Project Helix there is a ratchet mechanism which depends on the amount of profit each development contributes to the joint venture. Therefore, these entities are classified as joint ventures and are accounted for using the equity method.

The Group's joint venture investments in Bucknalls Developments Limited (Bucknalls), Gardiners Park LLP (Gardiners Park) and Cheshunt Lakeside Developments Limited (Cheshunt) are 50/50 joint ventures and the Group has joint control over the activities of the companies with the other parties and has an entitlement to veto any decisions. The Group and the other parties to the agreements only have rights to the net assets of these companies through the terms of the contractual arrangements. Within these joint ventures the Group is entitled to 50% of the net assets. Therefore, these entities are classified as joint ventures and are accounted for using the equity method.

Investment in associates

The Group has a 25% investment in Troy Homes Limited. The investment is classified as an associate and is accounted for using the equity method.

 

6. Income and segmental analysis

The Group generates income by way of land sales. It also generates income from housebuilding, contracting, rental income, hotel income, investments and investment properties. These operating segments are monitored and strategic decisions are made on the basis of segment operating results. The segmental analysis of operations is as follows:

 

Segmental analysis by activity

 

 

 

 

 

 

 

 

 

 

Six months ended 31 December  2015 (unaudited)

Land sales £000

House building £000

Contract income £000

Rental income £000

Hotel income £000

 Investments £000

 Investment properties £000

Other   £000

Total

Revenue

21,611

30,254

2,220

892

     -

           -

          -

171

55,148

Cost of sales

(15,312)

(22,966)

(2,115)

(163)

-

-

          -

        -

(40,556)

Gross profit

6,299

7,288

105

729

    -

           -

          -

171

14,592

Administrative expenses

        -

       -

        -

-

-

            -

-

(3,559)

(3,559)

Revaluation of investment properties

-

-

-

-

-

-

13,969

-

13,969

Operating profit/(loss)

6,299

7,288

105

729

     -

     -

13,969

(3,388)

25,002

Finance (cost)/income

(2,774)

(311)

-

-

-

-

(533)

73

(3,545)

Profit/(loss) before tax and share of profits from associate and joint ventures

3,525

6,977

105

729

-

            -

13,436

(3,315)

21,457

Profit/(loss) before tax

3,525

6,977

105

729

       -

            -

13,436

(3,315)

21,457

Income tax

(731)

(1,448)

(22)

(151)

      -

          -

           -

866

(1,486)

Total profit/(loss) for the 6 months

2,794

5,529

83

578

      -

           -

13,436

(2,449)

19,971

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 June 2016  (unaudited)

Land sales £000

House building £000

Contract income £000

Rental income £000

Hotel income £000

 Investments £000

 Investment properties £000

Other   £000

Total

Revenue

21,700

21,204

716

1,197

1,704

-

-

241

46,762

Cost of sales

(10,917)

(17,237)

(1,550)

(245)

(1,696)

-

-

(128)

(31,773)

Gross profit

10,783

3,967

(834)

952

8

-

-

113

14,989

Administrative expenses

-

-

-

-

-

-

-

(2,738)

(2,738)

Profit on sale of fixed assets

-

-

-

-

-

-

-

9

9

Provision for doubtful debt

-

-

-

-

-

-

-

(1,106)

(1,106)

Revaluation of investment properties

-

-

-

-

-

-

4,046

-

4,046

Operating profit/(loss)

10,783

3,967

(834)

952

8

              -

4,046

(3,722)

15,200

Finance (cost)/income

(1,482)

(935)

-

-

-

392

(464)

(914)

(3,403)

Profit/(loss) before tax and share of profits from associate and joint ventures

9,301

3,032

(834)

952

8

392

3,582

(4,636)

11,797

Share of loss of associate

-

-

-

-

-

(138)

-

-

(138)

Share of loss of joint ventures

-

-

-

-

-

(232)

-

-

(232)

Profit/(loss) before tax

9,301

3,032

(834)

952

8

22

3,582

(4,636)

11,427

Income tax

(1,834)

(554)

168

(185)

(2)

(4)

(787)

1,141

(2,057)

Total profit/(loss) for the 6 months

7,467

2,478

(666)

767

6

18

2,795

(3,495)

9,370

Total profit/(loss) for year ended 30 June 2016 (audited)

10,261

8,007

(583)

1,345

6

18

16,231

(5,944)

29,341

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended 31 December 2016 (unaudited)

Land sales £000

House building £000

Contract income £000

Rental income £000

Hotel income £000

 Investments £000

 Investment properties £000

Other   £000

Total

Revenue

479

27,484

1,829

1,210

1,509

-

-

58

32,569

Cost of sales

(239)

(21,983)

(2,063)

(136)

(1,280)

-

-

(6)

(25,707)

Gross profit

240

5,501

(234)

1,074

229

-

-

52

6,862

Administrative expenses

-

-

-

-

-

-

-

(4,045)

(4,045)

Gain on sale of subsidiary

6,021

-

-

-

-

-

-

-

6,021

Revaluation of investment properties

-

-

-

-

-

-

(33)

-

(33)

Operating profit/(loss)

6,261

5,501

(234)

1,074

229

-

(33)

(3,993)

8,805

Finance (cost)/income

(2,426)

(527)

-

-

-

143

(708)

(688)

(4,206)

Profit/(loss) before tax and share of profits from associate and joint ventures

3,835

4,974

(234)

1,074

229

143

(741)

(4,681)

4,599

Share of loss of associate

-

-

-

-

-

(113)

-

-

(113)

Share of loss of joint ventures

-

-

-

-

-

(121)

-

-

(121)

Profit/(loss) before tax

3,835

4,974

(234)

1,074

229

(91)

(741)

(4,681)

4,365

Income tax

(766)

(995)

47

(215)

(46)

18

148

894

(915)

Total profit/(loss) for the 6 months

3,069

3,979

(187)

859

183

(73)

(593)

(3,787)

3,450

 

 

31 December 2015 (unaudited)

Land      £000

House building £000

Contracting £000

Hotel      £000

 Investments £000

 Investment properties £000

Other   £000

Total

ASSETS

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Investment properties

      -

      -

            -

   -

              -

48,093

        -

48,093

Property, plant and equipment

    -

       -

              -

   -

               -

            -

429

429

Investment in associate

      -

      -

              -

   -

250

             -

        -

250

Loans to associate due in more than one year

      -

      -

              -

   -

500

   -

       -

500

Investment in joint ventures

      -

      -

              -

   -

1,722

   -

       -

1,722

Loans to joint ventures due in more than one year

      -

      -

              -

   -

5,580

   -

       -

5,580

Receivables due in more than one year

      -

55

              -

    -

               -

             -

        -

55

Deferred tax due in more than one year

       -

      -

             -

    -

               -

             -

42

42

Total non-current assets

      -

55

             -

   -

8,052

48,093

471

56,671

Current assets

 

 

 

 

 

 

 

 

Inventories

107,218

22,493

            -

   -

              -

            -

        -

129,711

Trade and other receivables

1,447

254

276

    -

              -

125

5,262

7,364

Listed investments carried at fair value through profit and loss

        -

          -

                 -

       -

1

                -

           -

1

Cash and cash equivalents

       -

       -

              -

    -

               -

             -

16,617

16,617

Total current assets

108,665

22,747

276

   -

1

125

21,879

153,693

Total assets

108,665

22,802

276

   -

8,053

48,218

22,350

210,364

EQUITY

 

 

 

 

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

 

 

Share capital

      -

      -

             -

   -

              -

             -

20,281

20,281

Share premium account

      -

      -

             -

   -

              -

             -

34,033

34,033

Employee benefit trust

      -

      -

             -

   -

              -

             -

(713)

(713)

Special reserve

      -

      -

             -

   -

              -

             -

6,059

6,059

Retained earnings

      -

      -

             -

   -

              -

             -

47,406

47,406

Total equity attributable to shareholders of the Company

      -

      -

             -

   -

              -

             -

107,066

107,066

Non-controlling interests

      -

      -

             -

   -

              -

             -

(46)

(46)

Total equity

      -

      -

             -

   -

              -

             -

107,020

107,020

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Bank loans and overdrafts

      -

9,921

      -

  -

      -

15,979

      -

25,900

Other loans

24,552

6,552

      -

  -

  -

            -

       -

31,104

Trade and other payables

2,149

2,527

1,116

 -

              -

28

3,574

9,394

Corporation tax

      -

      -

             -

   -

              -

             -

5,607

5,607

Other financial liabilities

4,157

      -

      -

 

   -

          -

        -

4,157

Total current liabilities

30,858

19,000

1,116

 -

             -

16,007

9,181

76,162

Non-current liabilities

 

 

 

 

 

 

 

 

Zero Dividend Preference shares

      -

      -

             -

   -

              -

             -

14,163

14,163

Other financial liabilities

13,019

   -

             -

  -

             -

           -

       -

13,019

Total non-current liabilities

13,019

     -

            -

  -

             -

           -

14,163

27,182

Total equity and liabilities

43,877

19,000

1,116

  -

              -

16,007

130,364

210,364

 

 

 

30 June 2016 (audited)

Land      £000

House building £000

Contracting £000

Hotel      £000

 Investments £000

 Investment properties £000

Other   £000

Total

ASSETS

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Investment properties

       -

     -

         -

 

      -

51,705

  -

51,705

Property, plant and equipment

      -

      -

             -

   -

              -

             -

480

480

Investment in associate

    -

      -

            -

  -

113

          -

   -

113

Loans to associate due in more than one year

     -

       -

             -

   -

894

           -

      -

894

Investment in joint ventures

   -

     -

           -

   -

1,216

          -

   -

1,216

Receivables due in more than one year

   -

55

             -

  -

              -

          -

-

55

Deferred tax due in more than one year

463

21

      -

 

102

(787)

539

338

Total non-current assets

463

76

          -

 

2,325

50,918

1,019

54,801

Current assets

 

 

 

 

 

 

 

 

Inventories

99,073

47,661

75

16

       -

    -

-

146,825

Trade and other receivables

3,420

162

440

172

402

3

2,217

6,816

Amounts due from associate

-

        -

            -

 -

3,372

            -

      -

3,372

Amounts due from joint ventures

-

        -

            -

 -

10,103

            -

      -

10,103

Listed investments carried at fair value through profit and loss

-

        -

            -

 -

1

            -

      -

1

Cash and cash equivalents

-

        -

            -

 -

               -

            -

16,723

16,723

Total current assets

102,493

47,823

515

188

13,878

3

18,940

183,840

Total assets

102,956

47,899

515

188

16,203

50,921

19,959

238,641

EQUITY

 

 

 

 

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

 

 

Share capital

      -

      -

             -

   -

              -

             -

20,281

20,281

Share premium account

      -

      -

             -

   -

              -

             -

34,033

34,033

Employee benefit trust

      -

      -

             -

   -

              -

             -

(713)

(713)

Special reserve

      -

      -

             -

   -

              -

             -

6,059

6,059

Retained earnings

      -

      -

             -

   -

              -

             -

56,372

56,372

Total equity attributable to shareholders of the Company

      -

      -

             -

   -

              -

             -

116,032

116,032

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

          

Bank loans and overdrafts

105

-

-

-

-

18,905

      -

19,010

Other loans

21,135

-

-

-

-

-

-

21,135

Trade and other payables

11,824

3,412

-

508

215

446

2,251

18,656

Corporation tax

-

-

-

-

-

-

7,618

7,618

Other financial liabilities

22,369

-

-

-

-

-

-

22,369

Total current liabilities

55,433

3,412

-

508

215

19,351

9,869

88,788

Non-current liabilities

 

 

 

 

 

 

 

 

Zero Dividend Preference shares

-

-

-

-

-

-

14,607

14,607

Bank loans due in more than one year

859

15,676

-

-

-

-

-

16,535

Payables due in more than one year

2,679

-

-

-

-

-

-

2,679

Total non-current liabilities

3,538

15,676

-

-

-

-

14,607

33,821

Total equity and liabilities

58,971

19,088

-

508

215

19,351

140,508

238,641

 

 

31 December 2016 (unaudited)

Land      £000

House building £000

Contracting £000

Hotel      £000

 Investments £000

 Investment properties £000

Other   £000

Total

ASSETS

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Investment properties

-

-

-

-

-

52,076

-

52,076

Property, plant and equipment

-

-

-

-

-

-

563

563

Loans to associate due in more than one year

-

-

-

-

2,027

-

-

2,027

Investment in joint ventures

-

-

-

-

1,156

-

-

1,156

Receivables due in more than one year

-

55

-

-

-

-

-

55

Deferred tax due in more than one year

599

14

-

-

185

(787)

609

620

Total non-current assets

599

69

-

-

3,368

51,289

1,172

56,497

Current assets

 

 

 

 

 

 

 

 

Inventories

102,551

43,395

-

-

-

-

-

145,946

Trade and other receivables

10,625

156

364

185

                  -

82

3,283

14,695

Amounts due from associate

-

-

-

-

2,600

-

-

2,600

Amounts due from joint ventures

-

-

-

-

18,880

-

-

18,880

Listed investments carried at fair value through profit and loss

-

-

-

-

1

-

-

1

Cash and cash equivalents

-

-

-

-

-

-

17,576

17,576

Total current assets

113,176

43,551

364

185

21,481

82

20,859

199,698

Total assets

113,775

43,620

364

185

24,849

51,371

22,031

256,195

EQUITY

 

 

 

 

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

 

 

Share capital

      -

      -

             -

   -

              -

             -

20,360

20,360

Share premium account

      -

      -

             -

   -

              -

             -

34,328

34,328

Employee benefit trust

      -

      -

             -

   -

              -

             -

(1,067)

(1,067)

Special reserve

      -

      -

             -

   -

              -

             -

6,059

6,059

Retained earnings

      -

      -

             -

   -

              -

             -

58,309

58,309

Total equity attributable to shareholders of the Company

      -

      -

             -

   -

              -

             -

117,989

117,989

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Bank loans and overdrafts

105

1,688

-

-

-

-

-

1,793

Trade and other payables

6,463

3,584

-

-

132

314

4,658

15,151

Corporation tax

-

-

-

-

-

-

5,004

5,004

Other financial liabilities

22,115

-

-

-

-

-

-

22,115

Total current liabilities

28,683

5,272

                 -

       -

132

314

9,662

44,063

Non-current liabilities

 

 

 

 

 

 

 

 

Zero Dividend Preference shares

-

-

-

-

-

-

16,745

16,745

Bank loans due in more than one year

16,816

17,179

-

-

-

26,177

-          

60,172

Other loans due in more than one year

17,226

-

-

-

-

-

-

17,226

Total non-current liabilities

34,042

17,179

-

-

-

26,177

16,745

94,143

Total equity and liabilities

62,725

22,451

-

-

132

26,491

144,396

256,195

 

7. Income tax

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2016

2015

2016

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Current tax charge

1,196

980

3,333

Deferred tax charge

(281)

506

210

 

915

1,486

3,543

 

8. Earnings and net asset value per share

Basic and diluted EPS

Basic and diluted earnings per share has been calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2016

2015

2016

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Profit attributable to equity holders of the Company (£000)

3,450

20,289

28,742

Net assets attributable to equity holders of the company (£000)

117,989

107,066

116,032

Weighted average number of ordinary shares in issue (000s)

201,785

202,136

201,957

Dilutive effect of options (000s)

1,926

2,343

2,413

Dilutive effect shares held in EBT (000s)

1,627

1,027

1,027

Dilutive effect of growth shares (000s)

8,000

6,000

8,000

 

213,338

211,506

213,397

Basic earnings per share in pence

1.71p

10.04p

14.23p

Diluted earnings per share in pence

1.62p

9.59p

13.47p

Shares in issue (000s)

201,972

201,779

201,779

Net asset value per share in pence

58.42p

53.06p

57.50p

Diluted net asset value per share in pence

55.26p

50.71p

54.42p

On 16 December 2016 the Group's Employee Benefit Trust (EBT) purchased 600,000 shares in Inland Homes plc under the terms of the Long Term Incentive Plan. These shares, along with the 1,027,066 shares purchased by the EBT in prior years have been deducted from the weighted average number of ordinary shares in issue and also from the shares in issue at the period end.

The diluted EPS and net asset value per share for the six months ended 31 December 2015 has been restated due to a change in the assumptions with regards to the contingently issuable shares and the inclusion of the shares held in the EBT. This has resulted in an increase of 0.19p per share for the diluted EPS.

 

9. Investment properties

 

Residential properties

Commercial Property

 

 

Level 3

Level 3

Level 3

Total

 

£000

£000

£000

£000

Cost or fair value

 

 

 

 

At 31 December 2015

40,000

93

8,000

48,093

Additions

136

761

-

897

Transfer from/(to) inventories

1,319

-

(2,650)

(1,331)

Fair value adjustment

3,935

111

-

4,046

At 30 June 2016

45,390

965

5,350

51,705

Additions

68

336

-

404

Fair value adjustment

-

(33)

-

(33)

At 31 December 2016

45,458

1,268

5,350

52,076

 

10. Investments

 

Joint

 

 

 

ventures

Associate

Total

 

£000

£000

£000

Cost or fair value at 31 December 2015

1,722

250

1,972

Additions

                           -

1

1

Transfer to loans to joint ventures

(242)

-

(242)

Share of loss after tax

(264)

(138)

(402)

At 30 June 2016

1,216

113

1,329

Additions

61

-

61

Share of loss after tax

(121)

(113)

(234)

At 31 December 2016

1,156

-

1,156

In November 2014, the Group acquired a 10% interest in Aston Clinton S.A.R.L (Lux) whose purpose is to acquire a site near Aylesbury, Buckinghamshire and obtain planning permission. The site has the potential for 400 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. The Group has made a capital investment of £1.1 million, which is accounted for as an Investment in Joint Ventures. The Group has also provided loans of £2.6 million as at the balance sheet date, and this is accounted for as Amounts due from Joint Ventures within Current Assets in the Group Statement of Financial Position. This investment is accounted for using the equity method and further details of this can be found in Critical Judgements in note 5. Aston Clinton S.A.R.L. is based in Luxembourg and their accounts are prepared under Luxembourg GAAP (Lux GAAP). £40,000 (to date: £618,000) recognised as an operating expense under Lux GAAP in the Statement of Comprehensive Income has been reclassified as inventories in current assets in order to bring the accounts into line with IFRSs. Similarly, £6.8 million held as fixed assets under Lux GAAP has been reclassified as inventories in current assets.

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. Under the terms of the joint venture, the Group owns 20% of the share capital and is obliged to fund 20% of the costs of the sites acquired by the joint venture. A 'waterfall' calculation determines the amount of profit to be received by the Group, using performance hurdles. Along with the Group's capital investment of £nil, £4.8 million of loans have been provided, which is accounted for as Amounts due from Joint Ventures within Current Assets in the Group Statement of Financial Position. This investment is accounted for using the equity method and further details of this can be found in Critical Judgements in note 5. Project Helix Holdco Ltd is based at the Company's registered office.

In December 2015, the Group entered into a joint venture with two individuals to purchase land, obtain planning permission and develop approximately 100 homes in Garston, Hertfordshire. 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. Along with the Group's capital investment of £nil, loans of £2.7 million have been provided which are accounted for as Amounts due from Joint Ventures within Current Assets in the Group Statement of Financial Position. This investment is accounted for using the equity method and further details of this can be found in Critical Judgements in note 5. Bucknalls Developments Ltd is based at the Company's registered office.

In June 2016, the Group entered into a joint venture whose purpose is to acquire a site in Cheshunt, Hertfordshire, obtain planning permission and ultimately sell the land. The site has the potential for 1,900 residential plots across 25 acres, of which the joint venture currently owns 13. 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. The Group has made a capital investment of £33,000 as at 31 December 2016, which is accounted for as an Investment in Joint Ventures. Funds of £7.1 million have also been advanced and are accounted for as Amounts due from Joint Ventures on the Group Statement of Financial Position. This investment is accounted for using the equity method and further details of this can be found in Critical Judgements in note 5. Cheshunt Lakeside Developments Ltd is based at the Company's registered office.

In November 2016, the Group entered a joint venture with the Anderson Group 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. The Group has made a capital investment of £32,000 as at 31 December 2016, which is accounted for as an Investment in Joint Ventures. Funds of £1.7 million have also been forwarded and are accounted for as Amounts due from Joint Ventures on the Group Statement of Financial Position. This investment is accounted for using the equity method and further details of this can be found in Critical Judgements in note 5. Gardiners Park LLP is based at Springfield Lodge, Colchester Road, Chelmsford, Essex, CM2 5PW.

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. At 31 December 2016, the Group had made a capital investment of £nil and had provided loans of £2.0 million which are accounted for as Loans to Associate within Non-Current Assets in the Group Statement of Financial Position. The Group has subscribed to a further £1 million of loan notes and £1.25 million of share capital which are payable when called for by the board of Troy. There is a debtor of £2.6 million (including VAT) in relation to land sold on deferred terms in Amounts due from Associate within Current Assets, as disclosed in the accounts for the year ended 30 June 2016. This investment is accounted for using the equity method, further details of which can be found in Critical Judgements in note 5. Troy is based at 10-14 Accommodation Road, London, NW11 8ED.

 

11. Deferred tax

The net movement on the deferred tax account is as follows:

 

£000

At 31 December 2015

42

Income statement credit

296

At 30 June 2016

338

Income statement credit

282

At 31 December 2016

620

 

 

The movement in deferred tax assets is as follows:

 

Capital losses

 

 

 

Notional

 

 

recognised on

 

 

Share

interest on

 

 

revaluation

Revaluation

 

based

deferred

 

 

gain

gain

Other

compensation

consideration

Total

 

£000

£000

£000

£000

£000

£000

At 31 December 2015

5,591

(5,591)

(789)

472

359

42

(Charged)/credited to income statement

(474)

(313)

891

67

125

296

At 30 June 2016

5,117

(5,904)

102

539

484

338

Credited to income statement

7

-

82

64

129

282

At 31 December 2016

5,124

(5,904)

184

603

613

620

 

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group has capital losses amounting to £10,702,000 (2015: £10,814,000) that have not been recognised as the Directors consider the realisation of the losses is not expected to crystallise in the foreseeable future.

12. Trade and other receivables, joint ventures and associates

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2016

2015

2016

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Trade receivables

62

204

3,506

Prepayments and accrued income

851

988

895

Amounts due from associate

2,600

                             -

3,372

Amounts due from joint ventures

18,880

                             -

10,103

Other receivables falling due within one year

13,782

6,172

2,415

Loans to associate due in more than one year

2,027

500

894

Loans to joint ventures due in more than one year

-

5,580

-

Other receivables falling due after more than one year

55

55

55

 

38,257

13,499

21,240

At 31 December 2016 the Group had provided loans of £2.6 million to Aston Clinton S.a.r.l (Lux), a company in which it holds a 10% equity interest, as shown in note 10.

At 31 December 2016 the Group had provided loans of £4.8 million to its joint venture with CPC, as shown in note 10.

At 31 December 2016 the Group had provided loans of £2.7 million to its joint venture in Garston, Hertfordshire, as shown in note 10.

At 31 December 2016 the Group had provided loans of £7.1 million to its joint venture in Cheshunt, Hertfordshire, as shown in note 10.

At 31 December 2016 the Group had provided loans of £1.7 million to its joint venture in Basildon, Essex, as shown in note 10.

At 31 December 2016 the Group had provided loans of £2.0 million and a debtor relating to transactions of £2.6 million to Troy, a company in which it holds a 25% equity interest, as shown in note 10.

All of the Group's trade and other receivables have been reviewed for indicators of impairment.

13. Share capital

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2016

2015

2016

 

(unaudited)

(unaudited)

(audited)

 

No.

No.

No.

Shares in issue

 

 

 

Shares in issue at start of period

201,772,366

202,156,216

202,156,216

New shares issued

800,000

                        -

                      -

Shares purchased by EBT

(600,000)

(377,500)

(383,850)

Shares in issue at end of period

201,972,366

201,778,716

201,772,366

 

14. Non-controlling interests (minority interests)

 

WPDL

DGVL

Total

 

£000

£000

£000

At 31 December 2015

982

(936)

46

Non-controlling interests in the net result of subsidiaries

(482)

(435)

(917)

Purchase of non-controlling interests' share of subsidiaries

(500)

1,371

871

At 30 June 2016

               -

               -

               -

Non-controlling interests in the net result of subsidiaries

               -

               -

               -

At 31 December 2016

               -

               -

               -

 

 

15. Trade and other payables and corporation tax

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2016

2015

2016

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Trade payables

5,199

2,520

3,871

Other creditors

6,714

3,396

4,687

Social security, other taxes and VAT

566

-

3,770

Corporation tax

5,004

5,607

7,618

Provisions

-

-

943

Accruals and deferred income

2,672

3,478

5,385

Other creditors falling due in more than one year

-

-

2,679

 

20,155

15,001

28,953

The carrying value of trade and other payables is considered a reasonable approximation of fair value.

16. Other financial liabilities and zero dividend preference shares

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2016

2015

2016

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Purchase consideration on inventories falling due within one year

22,115

4,157

22,369

Purchase consideration on inventories falling due after more than one year

-

13,019

-

Zero dividend preference shares falling due after more than one year

16,745

14,163

14,607

 

38,860

31,339

36,976

 

 

17. Contingencies

 

During the year ended 30 June 2016, one of the Group's principal contractors ("the contractor") experienced significant financial difficulties and was put into Administration. The Group has made a claim to the contractor's Administrators for £7.2m in relation to amounts it believes it is owed by the contractor. A counter proposal for £11.6m has been received from the Administrators for various unexplained reasons, based on discussions with the contractor. The Administrators have not provided any evidence to support the contractor's claims and the Group will be vigorously defending any claims from the contractor as it believes that contractually they have no merit. This position remains unchanged since the accounts for the year ended 30 June 2016 were published.

No provisions have been made in these financial statements in respect of this contingent liability.

 

18. Copies of our half-yearly financial report can be viewed and downloaded from our website at www.inlandhomes.co.uk. Copies are also available on request by writing to the Company Secretary at the Registered Office of Inland Homes plc.

INDEPENDENT REVIEW REPORT TO INLAND HOMES PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2016 which comprises the Group Income Statement, Group Statement of Financial Position, Group Statement of Changes in Equity, Group Statement of Cash Flows and Notes 1 to 18.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2016 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

 

 

 

BDO LLP

Chartered Accountants and Registered Auditors

Location

United Kingdom

27 March 2016

 

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 


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Half-year Report - RNS