RNS Number : 5006A
Inland PLC
09 October 2009
 


9 October 2009





Inland PLC

("Inland" or the "Company" or the "Group")

Unaudited preliminary results for the year ended 30 June 2009

Inland which specialises in the acquisition of brownfield sites and seeks to enhance their value by obtaining planning permission today announces preliminary results for the year ended 30 June 2009.


Financial highlights

  • Revenue £5.22m (2008: £11.01m)

  • Operating loss before exceptional costs £3.93m (2008: operating profit £0.71m)

  • Exceptional costs before tax £5.22m (2008: £4.78m)

  • Pretax loss £10.47m (2008: £4.19m)

  • Inventories £41.66m (2008: £47.68m)

  • Net asset value per share 24.90p (2008: 32.88p)


Operational highlights

  • 25 plots sold in the year

  • Acquired RAF West Drayton with joint venture partner

  • Land bank owned (including West Drayton) has potential for over 2,000 homes and substantial     commercial development

  • Deferred payments either completed or renegotiated

  • Current annual rental income of £726,000

  • Overheads reduced by 8.3%

  • Small pilot scheme of potential build out of some of the land bank ready for sales launch

  • Further equity raised from shareholders


Stephen Wicks, Chief Executive of Inland commented: 


"Over the last 12 months Inland has been under pressure due to falling property prices, lack of bank funding, a weak land market and commitments to make deferred land payments on transactions that were agreed in entirely different market conditions.


Notwithstanding these constraints we have managed to trade through extremely difficult circumstances by renegotiating a number of key contracts and achieving a flow of small land sales, increasing our rental income and reducing our overheads. We are now in a better position to progress, particularly as market conditions start to improve.


These are the worst results in our Group's short trading history and I am determined that they will not be repeated.


We own or control one of the most attractive landbanks in the southeast of England and are currently reviewing how best to achieve the greatest return on these assets for our shareholders."

For further information please contact:

Inland Plc

Stephen WicksChief Executive

Nishith Malde, Finance Director



Tel: 01494 762 450


KBC Peel Hunt Ltd

Julian Blunt - Corporate Finance

Nicholas Marren - Corporate Broking

Marianne Woods - Corporate Broking

Tel: 020 7418 8900


CHAIRMAN'S STATEMENT


Introduction


These results come on the back of a vicious downturn in both the general economic climate and the housebuilding industry unlike any other in recent history. The effect on the housing market has been further exacerbated due to the severe constraints in the availability of credit. 


The results for the year ended 30 June 2009 show an operating loss before exceptional costs of £3.93million (2008: £0.71 million) and a loss before tax of £10.47 million (2008: £4.19 million). In line with others in the sector, it has been necessary to make a substantial writedown in the carrying value of our land bank of £3.78m (2008: £4.78m). In addition, in the interests of prudence the Board has decided to make a full provision amounting to £1.43 million against the carrying value of our associate company which like many other housebuilders has also been significantly affected by the current downturn in the sector. We have also written off a significant amount of the deferred tax asset due to the fall in value of our site in Poole.


Operations


The year has been one where we have concentrated on preserving cash and as a consequence we did not acquire any new sites in our own right. Our focus has been in securing planning consents on the sites in our land bank many of which have now been obtained on appeal. I am pleased to report that during the year we obtained residential planning consents on 11 sites for 296 plots and 100,000 sq ft of commercial space. The varied and attractive nature of our land portfolio has meant that although there was a general view that no-one was buying land with planning consent, we managed to sell 5 sites and 2 properties during the year generating £4.51m of cashflow through the most difficult times that the industry has had to face, albeit that a number of the sales were achieved at values below those that had been originally anticipated.  


As reported in the interim statement, the master planning process on our joint venture RAF West Drayton has progressed well and we anticipate submitting a planning application within the next few weeks for approximately 775 residential units and 65,000 sq ft of commercial space that will include a primary healthcare centre, a pharmacy and an 80 bed care home. The joint venture agreement with our partner has been varied whereby in the event of a change of control of Inland PLC prior to receipt of planning consent, our partner will be entitled, at any time during the period of 60 business days following the date of the change of control, to terminate the joint venture. In return for agreeing to this variation Inland has the ability to charge management fees to the joint venture company of up to £2.5 million.  To date Inland's investment in the project amounts to £250,000.


Our current land portfolio comprises approximately 2,080 residential plots and 290,000 sq ft of commercial space. Consent has been secured on 690 residential plots. The Board believes that on a fully consented basis the residential element of our land portfolio would have a gross development value of £420m, including West Drayton.


Inland's original objective was to obtain planning consent on the sites it acquired before selling them to housebuilders at a profit, having added significant value through the planning process. In the current climate, in order to maximise the value from some of our sites the Board is exploring the prospect of building out some of the sites either as principals or by way of joint ventures. As part of this evaluation the Board has selected two sites and accordingly we have developed our site in Byfleet, Surrey as principals and the marketing campaign for the 14 two bedroom apartments will be launched shortly.  The construction of this project has been substantially funded by way of senior debt provided by a merchant bank and secured on the development.  We have also commenced construction of a showhouse complex at Queensgate, Farnborough where Inland will develop part of the 370 consented plots, again by utilising senior debt finance secured against the development. In recent weeks there has been a noticeable increase in interest from housebuilders in our land bank and the Board still expects to sell certain of our sites to generate cash where we receive offers that match our expectations.


The Board notes that in recent weeks, a number of the major housebuilders have announced fund raisings in order to facilitate further investment in their respective businesses including land purchases.  


Financial summary


During the year ended 30 June 2009, the Group generated Revenue of £5.22 million of which £4.51 million was achieved by way of land sales and £0.71 million from rental and other income. The current annualised rental income amounts to £726,000 including £72,000 at RAF West Drayton. Overheads have been strictly controlled and were reduced by £184,000 over the previous year.


As referred to above, due to deteriorating market conditions, we have made a write down of £3.80 million in the carrying value of our land portfolio and we have taken a full provision against the carrying value of our investment in associate of £1.43 million as an exceptional cost.


The Board do not recommend the payment of a dividend.


Net assets at 30 June 2009 stood at £40.4 million (2008: £53.32 million) representing 24.9p per share at that date. Bank borrowings at the year end amounted to £6.57 million equating to gearing of 16.3%.  The Group's revolving credit facility of £10m with the Royal Bank of Scotland expires on 15 December 2009 and initial discussions have already commenced with the bank and the Board has a reasonable expectation for the facility to be renewed A number of our sites were purchased on deferred consideration terms and we successfully renegotiated the terms on four sites so that the payments were managed in line with our cash flow. As at the date of this report the outstanding deferred considerations amounts to £9.50 million of which £3.5 million is due in the current financial year and the balance in the following financial year.  


During July 2009, under the authority granted at the last annual general meeting, the Board issued 12,665,000 shares at 10p per share raising further equity of £1.27 million.


Outlook


There are some signs that whilst weak, the market is stabilising and our immediate task will be to capitalise on the value of our substantial and well located land bank. We are now in a position to move the business forward from an appropriate base and if current conditions persist we do not envisage further write downs of our land bank being required. The Board remains cautiously optimistic that provided conditions do not deteriorate further that an early return to profitability will now be achieved.







Terry Roydon

Chairman



INLAND PLC


GROUP INCOME STATEMENT


FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________    

   










2009

Before

exceptional

costs

2009

Exceptional

costs

(note 1)




2009



2008

Before

exceptional

costs

2008

Exceptional

costs

(note 1)




2008





(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

(Audited)

(Audited)


Note

£000

£000

£000

£000

£000

£000









Revenue


 5,219

-

5,219

11,006

-

11,006

Cost of sales


(5,434)

(3,798)

(9,232)

(6,565)

(4,783)

(11,348)

Gross loss


(215)

(3,798)

(4,013)

4,441

(4,783)

(342)

Administrative expenses


(2,024)

-

(2,024)

(2,208)

-

(2,208)

Loss on investments


(1,689)

-

(1,689)

(1,525)

-

(1,525)

Operating loss


(3,928)

(3,798)

(7,726)

708

(4,783)

(4,075)

Finance cost - Interest expense


(491)

-

(491)

(103)

-

(103)

Finance cost - Notional interest


(847)

-

(847)

(1,455)

-

(1,455)

Finance income Interest receivable and similar income



247

-

247

1,427

-

1,427



(5,019)

(3,798)

(8,817)

577

(4,783)

(4,206)

Share of (loss)/profit of associate


(224)

-

(224)

17

-

17

Impairment of investment in associate


-

(1,426)

(1,426)

-

-

-

Loss before tax


(5,243)

(5,224)

(10,467)

594

(4,783)

(4,189)

Income tax 

2

137

(2,360)

(2,223)

317

-

317

Loss for the year


(5,106)

(7,584)

(12,690)

911

(4,783)

(3,872)









Attributable to:








Equity holders of the Company




(12,690)



(3,872)









Loss per share for loss attributable to the equity holders of the Company during the year 








- basic 

3



(7.83)p



(2.39)p





INLAND PLC 


GROUP STATEMENT OF COMPREHENSIVE INCOME


FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________





2009

2008



£000

£000





Loss for the year


(12,690)

(3,872)





Other comprehensive income:




Loss on available-for-sale financial assets


(409)

(4,397)

Other comprehensive income for the year, net of tax


(409)

(4,397)

Total comprehensive income for the year


(13,099)

(8,269)




INLAND PLC 


GROUP STATEMENT OF FINANCIAL POSITION


FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________






2009

2008


Note

£000

£000

ASSETS




Non-current assets




Investment property


8,801

8,801

Property, plant and equipment


81

87

Investments


250

825

Investment in associate


-

756

Available-for-sale financial assets


-

3,064

Deferred tax

4

4,456

6,741



13,588

20,274

Current assets




Inventories


41,656

47,683

Trade and other receivables


3,698

4,752

Loan to associate


2,000

475

Listed investments held for trading (carried at fair value through profit and loss)



471


842

Cash and cash equivalents


72

4,600



47,897

58,352

Total assets


61,485

78,626





EQUITY




Capital and reserves attributable to the Company's equity holders




Share capital


16,216

16,216

Share premium account


45,184

45,184

Treasury shares


(366)

(366)

Retained earnings


(15,848)

(3,317)

Other reserves


(4,806)

(4,397)

Total equity


40,380

53,320





LIABILITIES








Current liabilities




Bank loans and overdrafts


6,566

-

Trade and other payables


1,923

2,697

Other financial liabilities

5

7,975

14,040

Total current liabilities


16,464

16,737





Non-current liabilities




Other financial liabilities

5

4,641

8,569

Total non-current liabilities


4,641

8,569

Total liabilities


21,105

25,306

Total equity and liabilities


61,485

78,626




INLAND PLC 


GROUP STATEMENT OF CHANGES IN EQUITY


FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________






Share

Share

Treasury

Retained

Other



capital

premium

shares

earnings

reserves

Total


£000

£000

£000

£000

£000

£000








At 30 June 2007

16,216

45,184

-

373

-

61,773








Share based payment

-

-

-

182

-

182

Purchase of own shares

-

-

(366)

-

-

(366)

Transactions with owners

-

-

(366)

182

-

(184)

Loss attributable to shareholders

-

-

-

(3,872)

-

(3,872)

Other comprehensive income:







Fair value adjustment in respect of

available for sale financial assets

-

-

-

-

(4,397)

(4,397)

Total comprehensive income for the year

-

-

-

-

(4,397)

(4,397)








At 30 June 2008

16,216

45,184

(366)

(3,317)

(4,397)

53,320



Share based payment

-

-

-

159

-

159

Transactions with owners

-

-

-

159

-

159

Loss attributable to shareholders

-

-

-

(12,690)

-

(12,690)

Other comprehensive income:







Fair value adjustment in respect of

available for sale financial assets

-

-

-

-

(409)

(409)


-

-

-

-

(409)

(409)















At 30 June 2009

16,216

45,184

(366)

(15,848)

(4,806)

40,380


INLAND PLC 


GROUP STATEMENT OF CASH FLOW


FOR THE YEAR ENDED 30 JUNE 2009

__________________________________________________________________________







2009



2008




£000

£000





Cash flows from operating activities




Loss for the year before tax


(10,467)

(4,189)

Adjustments for:




- depreciation 


34

25

- share based compensation


159

182

- fair value adjustment for listed investments


513

1,863

- profit on disposal of tangible fixed assets


(1)

-

- loss/(profit) on disposal of listed investments


1,176

(338)

- interest expense


1,338

1,558

- interest and similar income


(247)

(1,427)

- Share of profit of associate


223

(17)

- Impairment of investment in associate


1,426

-

- Tax received/(paid)


206

(454)

Changes in working capital (excluding the effects of acquisition):




decrease/(increase) in inventories


6,027

(8,892)

decrease in trade and other receivables


(634)

(202)

- increase in trade and other payables


(11,644)

(5,807)

Net cash outflow from operating activities


(11,891)

(17,698)

Cash flow from investing activities




Interest received


179

1,115

Dividends received


19

302

Sale of tangible fixed assets


12

-

Purchases of property, plant and equipment


(39)

(133)

Equity investment in associate


-

(359)

Convertible loan stock in associate


-

-

Purchase of investments


(422)

(15,396)

Purchase of own shares


-

(366)

Sale of investments


1,511

8,859

Acquisition of subsidiary, net of cash acquired


-

(11,267)

Net cash used in investing activities


1,260

(17,245)

Cash flow from financing activities




Interest paid


(463)

(91)

Bank loans repaid


-

(3,204)

Net cash from financing activities


(463)

(3,295)

Net decrease in cash and cash equivalents


(11,094)

(38,238)

Net cash and cash equivalents at beginning of period


4,600

42,838

Net cash and cash equivalents at the end of the period


(6,494)

4,600



Cash and cash equivalents


72

4,600

Bank loans and overdraft


(6,566)

-



(6,494)

4,600





INLAND PLC 


NOTES TO THE PRELIMINARY ANNOUNCEMENT


FOR THE YEAR ENDED 30 JUNE 2009

__________________________________________________________________________


1.    EXCEPTIONAL COSTS

The Group conducted a review of the net realisable value of its land bank in view of the deterioration in the UK housing market. Where the estimated future net realisable value of the site is less than its carrying value within the balance sheet, the Group has impaired the land value. This has resulted in an impairment of £3.798m (2008: £4.783m).

Due to the current downturn in the housing market, our associate company, Howarth has suffered significant losses and the Directors have taken the view that the carrying value of the investment in Howarth, both by way of equity and convertible loan has been permanently impaired and have therefore provided £1.426m (2008: nil) against this investment.

Upon the acquisition of Poole Investments PLC, the fair value of the consideration was allocated to the assets in the appropriate category. One of these categories was deferred tax of £6.23m. As a result of the substantial fall in the housing market the anticipated taxable profit has reduced significantly and accordingly £2.36m of deferred tax has been written off as an exceptional cost.


2.    Income tax 



2009


2008


£000

£000




Corporation tax charge

-

5

Adjustments in respect of prior year

-

(206)

Tax credit on associate's loss

(62)

-

Deferred tax charge/(credit)

2,285

(571)

Deferred tax asset written off after initial recognition in respect of Poole Investments PLC


-


400

Change in tax rate

-

55


2,223

(317)


The tax on the Group's profit before tax differs from the theoretical amount that would arise using the tax rate applicable to profits of the consolidated companies as follows:



2009


2008


£000

£000




Loss before tax

(10,467)

(4,189)




Loss on ordinary activities multiplied by the standard rate of corporation tax in the UK of 28% (200829.5%)


(2,931)


(1,236)

Expenses not deductible for tax purposes

19

7

Non utilisation of tax losses

2,775

442

Change in rate of tax

-

55

Other differences

-

17

Initial recognition of Poole Investments PLC

-

400

Previous losses no longer expected to be utilised

2,360

-

Losses carried back

-

204

Adjustment in respect of prior periods

-

(206)




Tax charge/(credit)

2,223

(317)




3.    LOSS  per share

The loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.




2009


2008




Loss attributable to equity holders of the Company (£'000)

(12,690)

(3,872)




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

162,150

162,150




Basic loss per share in pence

(7.83)p

(2.39)p






4.    deferred tax

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



£000



At 1 July 2008

6,741

Income statement credit 

(2,285)

At 30 June 2009

4,456



The movement in deferred tax assets is as follows:



Accelerated tax





depreciation
£000

Losses
£000

Other

£000

Total
£000






At 1 July 2008

(3)

5,936

808

6,741

Previous losses no longer recognised

-

(2,360)

-

 (2,360)

Charged/(credited) to income statement

(1)

8

68

75

At 30 June 2009

(4)

3,584

876

4,456


The deferred tax asset is recoverable as follows:


    

2009

£000

2008
£000


    


Deferred tax asset to be recovered after 12 months

4,456

6,741


4,456

6,741


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 did not recognise deferred income tax assets of £8,223,000 (2008: £2,527,000) that can be carried forward against future taxable income.

  

5.    Other financial liabilities



2009

£000

2008

£000




Deferred purchase consideration on inventories falling due within one year

7,975

14,040


Deferred purchase consideration on inventories falling due



between one and two years

4,641

4,179

between two and three years

-

4,390


4,641

8,569


The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Flexibility is achieved by bank loans and overdraft facilities.


A first charge on property included within inventories has been granted to some of the vendors.



6.    PUBLICATION OF NON STATUTORY ACCOUNTS


The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.


The Group Income Statement, the Group Statement of Comprehensive Income, the Group Statement of Financial Position at 30 June 2009, the Group Statement of Changes in Equity and the Group Statement of Cash Flow and associated notes for the year then ended have been extracted from the Group's financial statements. Those financial statements have not yet been delivered to the Registrar, nor have the auditors reported on them.




This information is provided by RNS
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