RNS Number : 9273E
Inland Homes PLC
22 July 2016
 

22 July 2016

INLAND HOMES PLC

("Inland Homes" or the "Company")

TRADING UPDATE

 

Inland Homes (AIM: INL) provides the following update on trading ahead of its preliminary results for the 12 months ended 30 June 2016, which will be announced in September 2016.

 

Inland Homes is a housebuilder with a specialist expertise in the acquisition and regeneration of brownfield sites. Its focus is on South East England and the outer London Boroughs, where there is a shortage of an adequate, sustainable supply of land with planning consent and also of homes within an affordable price bracket. 

 

PLANNING CONSENTS

The Group has maintained a considerable focus on successfully piloting a large number of sites through the planning system.  We currently have planning applications submitted on 1,268 plots and are expecting 246 plots to receive consent over the coming weeks.  We also have a further 1,225 plots with planning permission or a resolution to grant permission in place subject to signing a Section 106 Agreement.

 

HOUSEBUILDING PROGRAMME

We currently have a forward order book of £23.4 million.  315 homes are currently under construction across eight sites and further schemes are expected to come on stream in the first half of the current financial year. 

 

In February 2016, we announced that the Company had appointed Gary Skinner as Group Managing Director, to establish and develop our capability to "self-deliver" our homes, rather than engaging main contractors on our schemes. This strategic decision was taken with a view to enabling the Company to have full control and more certainty over delivery, as well as allowing our homes to be built more competitively.

 

HOUSING DELIVERY AND SALES

The fundamentals of the market in which we operate remain strong, supported by the current low interest rate environment and the Government's Help to Buy Scheme, which assisted in 32% of our unit sales. The location of the Company's operations and the pricing level of its homes, with an average selling price of £339,000, means the business has continued to see a steady level of enquiries from potential purchasers. These fundamentals were unaffected by the uncertainty ahead of the UK Referendum on membership of the EU and purchaser appetite since the result has remained stable.

 

During the year, the Group secured 147 (2015: 248) legal completions. The reduction in the number of units sold is in part due to the delivery of a specific development in the previous year where there was a bulk sale of 59 units. Furthermore, during the year, a contractor engaged by Inland Homes on four of its development sites ran into financial difficulties and has entered into administration.  In response, Inland Homes, through its expanded development capabilities, has taken full control of the relevant sites and of all related construction activity that was formerly in the hands of the contractor.  This situation resulted in the delay of 23 legal completions which will now defer into the current financial year.

 

As a result of the reduced number of legal completions and further costs to be incurred to complete on the four development sites, the Group's profit before revaluation of investment properties and tax is expected to be marginally lower than the market consensus forecast of £15.9 million.

 

With delivery of the delayed units set for the new financial year and strong self-delivery capabilities in place, we remain confident in the outlook for this area of the business.

 

LAND SALES AND LAND BANK

Demand for the Group's consented residential plots remains strong with 425 plots sold in the year.

 

Inland Homes has continued to significantly grow its land bank in the South East of England and London's outer boroughs. Even after taking into account sales of consented plots and residential units, our land bank has grown by 16% since our half year end and stood at a record 6,552 plots by the financial year end.

 

Of particular note is the expansion of our strategic land bank, comprising sites which are next to existing settlements and are highly likely to get zoned for development because the local authority is short of a five year land supply. From a standing start two years ago, our strategic holding now totals 334 acres across 20 sites with the potential for 1,618 homes.  These sites are controlled by way of options and are therefore light on capital employed.  The option exercise prices represent discounts to market value of between 20% and 30%.

 

Post the period end, on 16 July 2016, Inland Homes announced that, together with a joint venture partner, it has contracted to purchase the former headquarters of Tesco plc in Cheshunt, Hertfordshire.  The c. 13 acre brownfield site is part of a planned new regeneration project called Cheshunt Lakeside, where the creation of a new urban village with approximately 1,000 homes and commercial space is expected.

 

OUTLOOK

With a focus on moving towards the "self-delivery" of our new homes and an increase in our high quality land bank, we are confident in our ability to continue to deliver significant further value for shareholders as we look to grow the business and continue to take advantage of the supportive market.

 

Stephen Wicks, CEO commented:

"We are confident that our underlying business is extremely robust and the demand for our high quality, lower cost homes remains strong. The appetite for our consented land is similarly unabated, while the size and quality of the land bank we are amassing has exceeded our targets. While we have been somewhat impacted in the short term by one of our contractors going into administration, against the current supportive market environment, we look to the future with considerable optimism."

 

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


Roger Clarke




FTI Consulting:

Tel: +44 (0)20 3727 1000

Dido Laurimore


Claire Turvey


 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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