RNS Number : 1584J
Inland Homes PLC
28 March 2018
 

28 March 2018

 

Inland Homes Plc

(the 'Company' or the 'Group')

Interim results for the six months ended 31 December 2017

 

 Continued scaling of housebuilding business and demand for consented plots driving strong financial performance

 

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 interim results for the six months to 31 December 2017.

 

Highlights

·     13.6% increase in Net Asset Value to £134.7 million (2016 restated: £118.6 million)

·      EPRA NAV up 5.2% to 92.78p (2016 restated: 88.16p)

·      Adjusted EPRA NAV up 5.7% to 97.63p (2016 restated: 92.34p)

·      Profit before tax of £5.37 million (2016 restated: £4.95 million)

·      30% increase in interim dividend to 0.65p (2016: 0.5p) per share.

 

Investment in in-house construction operations delivering diversified revenue streams and record output

·      Sale of 338 residential plots and completion of the sale of 96 private homes, at an average sales price of £322,000 (FY 2016: £306,000), generating profits of £7.4 million (2016: £5.7 million) and an 87.9% increase in revenues to £61.2 million (2016: £32.6 million)

·      Current forward order book of £38.9 million (2016: £31.8 million)

·      A record 560 private homes under construction with an anticipated gross development value of £144.4 million

·      Construction contracts in place to deliver 220 homes across three sites for the increasingly important partnership housing business, Inland Partnerships, with a total contract value of over £43 million

·      Construction underway at major schemes:

239 private homes at Lily's Walk and 40 private homes at Castle House, both in High Wycombe, achieving forward sales of £5.5 million and £5.0 million respectively

Development of the first phase of 72 homes at Chapel Riverside

·     Expansion of the land bank to 7,372 plots (2016: 7,151), with an anticipated gross development value in excess of £2.2 billion, including 2,218 plots with planning consent (2016: 2,440), demonstrating Inland's ongoing market-leading planning and remediation expertise:

Outline planning application submitted for 350 homes at flagship 100 acre site at Wilton Park in Beaconsfield

o  Post-period end (March 28) planning application submitted for 1,853 homes and in excess of 18,000 sqm of commercial space at Cheshunt Lakeside, a major South East UK regeneration scheme.

 

Supportive government measures, strong buyer demand and favorable macro-factors underpinning market buoyancy

·     Government initiatives, notably Help to Buy, maintaining demand from buyers for our homes in South and South East England, with sales rates being sustained at good levels given our price point

·     Housing associations and other residential landlords such as PRS funds or Local Authorities increasingly targeting  residential investment and development through strategic partnerships.

 

 

Stephen Wicks, Chief Executive at Inland Homes, commented:

 

"This is an encouraging set of results, delivering NAV, profit and revenue growth, and ultimately validating the significant investment we have made in our housebuilding operations over the past twelve plus months. We expect further benefits to be seen as we improve the gross margin on our new developments and continue to bring in sector specialists to support our ambitious growth targets. Furthermore, our ability to deliver a high quality, turnkey offering is allowing us to identify and partner with a range of different stakeholders via our increasingly important Inland Partnerships business, as well as through Joint Ventures.

 

"Despite some near term headwinds, the overall outlook for the sector remains favorable, especially at the price point at which we operate, and as a business we believe we are in a strong position to continue delivering long term value for our shareholders."  

 

Enquiries:

 

Inland Homes plc:

Tel: 44 (0) 1494 762450

Stephen Wicks, Chief Executive

 

Nishith Malde, Finance Director

 

Paul Brett, Land Director

 

 

 

Panmure Gordon (UK) Limited

Tel: 44 (0) 20 7886 2500

Dominic Morley

Erik Anderson

 

 

 

FTI Consulting:

Tel: 44 (0) 20 3727 1000

Dido Laurimore

 

Claire Turvey

Richard Gotla

 

 

 

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

                                                                                               

This has been an encouraging first half, as we continue to scale up our housebuilding operations and expand our partnership housing division, where we deliver homes for housing associations and other residential landlords such as PRS funds or Local Authorities. As the number of homes we build in-house continues to grow, there will be a rebalancing of our income streams with less reliance on land sales to other housebuilders and a growing focus on disposals to buyers from whom we can then secure the build package.

 

REULTS AND PERFORMANCE

Revenue for the period increased by 87.9% to £61.2 million (2016: £32.6 million) derived predominantly from the sale of 338 building plots (2016: 177 plots) generating revenues of £20.3 million and completion of the sale of 96 private homes (2016: 87 private homes) resulting in revenues of £31.0 million (2016: £27.5 million).  The average sales price of our residential units was £322,000 (2016: £319,000), remaining firmly in a part of the market that continues to see strong demand driven by the government initiatives to help first time buyers get onto the housing ladder- 61% of our private sales used the Help to Buy scheme. 

 

Our current forward order book for the sale of private homes stands at £38.9million (2016: £31.8 million) with 70 homes reserved since 1 January 2018.   

 

We have invested heavily in our construction division and believe we have recruited some of the best people in the sector. This expertise is now enabling us to build the majority of our homes utilising the resource of our "in house" team and the benefits of this are starting to come through.  Whilst our housebuilding margins are still lower than the sector average, primarily as a legacy of our former reliance on main contractors to build our homes, we expect to see material improvements in gross margin on new developments.  It also provides the platform for our partnership housing business where we are currently on three sites delivering 220 homes with total contract values of over £43 million. Contract income for the period was £5.2 million (2016: £1.8 million) and we are in advanced discussions with a view to securing further partnership contracts during the remainder of this financial year.

 

During the period we commenced the construction of 239 private homes at Lily's Walk and 40 private homes at Castle House, both in High Wycombe, achieving forward sales of £5.5 million and £5.0 million respectively.  We also commenced development of the first phase of 72 homes at Chapel Riverside, where we have a Development Agreement with Southampton City Council to build 457 new homes and 60,000 sq ft of commercial space. We have secured a development facility of £11.5 million from the Homes and Communities Agency for this project. 

 

At the half year end we had 560 private homes under construction with an anticipated gross development value of £144.4 million and a further 220 homes for partnership housing with future contract income of £37.6 million.

 

Construction of 43 homes at our joint venture project in Gardiners Lane, Basildon is well advanced with 22 of the 30 private homes sold as at 31 December 2017 realising a sum of £8.4 million.  We have two more joint venture developments at Europa Way, Ipswich and Bucknalls Lane, Garston with anticipated revenues of £45.0 million with work beginning on these sites imminently.

 

The Group achieved a profit before tax and before revaluation of investment properties of £5.37 million (2016 restated: £4.95 million.

 

The EPRA net asset value and the adjusted EPRA net asset value of the Group at 31 December 2017 were 92.78p (2016 restated: 88.16p) and 97.63p (2016 restated: 92.34p) per ordinary share respectively and have been determined as follows:

 

As at 31 December 2017

As at 31 December 2016 (restated)

 

EPRA

Adjusted EPRA*

EPRA

Adjusted EPRA*

Shares in issue (000)

 

201,026

 

201,026

 

201,972

 

201,972

Dilutive effect of options (000)

 

1,870

 

-

 

1,926

 

-

Dilutive effect of deferred bonus shares (000)

 

1,627

 

-

 

1,627

 

-

Dilutive effect of treasury shares (000)

 

1,000

 

-

 

-

 

-

Dilutive effect of Growth Shares (000)

 

6,000

 

-

 

6,000

 

-

 

 

211,565

 

201,026

 

211,525

 

201,972

 

£000

Pence per share

£000

Pence per share

£000

Pence per share

£000

Pence per share

Net asset value

134,727

63.69p

134,727

67.02p

118,609

56.07p

118,609

58.73p

Unrealised value within projects

58,193

27.51p

58,193

28.95p

67,091

31.72p

67,091

33.22p

Reverse deferred tax liability on investment property

3,345

1.58p

3,345

1.66p

787

0.37p

787

0.39p

EPRA net asset value

196,265

92.78p

196,265

97.63p

186,487

88.16p

186,487

92.34p

Deferred tax on uplift at 19%

 

(5.23)p

 

(5.50)p

 

(6.03)p

 

(6.31)p

EPRA net asset value after deferred tax

 

87.54p

 

92.13p

 

82.13p

 

86.03p

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

 

 

LAND PORTFOLIO AND PLANNING

We continue to expand our high-quality land portfolio that now has a development pipeline of 7,372 homes with an anticipated gross development value in excess of £2.2 billion.

 

The outline planning application for 350 homes at our flagship 100 acre site at Wilton Park in Beaconsfield was submitted in September 2017. We are continuing our negotiations with the local authority which are progressing very well. The site is producing gross annual rental income of £1.6 million via residential and commercial lettings.

 

The Group has also exchanged contracts to acquire additional land at Cheshunt Lakeside, Hertfordshire where our joint venture either owns or controls 1,317 plots.   Representing Inland's largest development to date, the outline masterplan planning application for 1,853 plots and 18,000 sqm of commercial and retail space has been submitted and we are excited about the huge potential of this regeneration scheme.

 

The current land bank comprises as follows:

 

Plots without planning consent

Plots with planning consent or resolutions to grant planning consent

Total plots

Owned under development

-

576

576

Owned or contracted

553

1,103

1,656

Managed or held within joint ventures under development

-

21

21

Managed or held within joint ventures

976

551

1,527

Managed or held within joint ventures terms agreed

341

-

341

Land controlled

423

77

500

Strategic land owned or controlled

2,221

-

2,221

Strategic land terms agreed

530

-

530

Total

5,044

2,328

7,372

 

 

We currently have planning applications submitted on 2,312 plots across five sites and are in pre-application talks with planning authorities on six strategic sites for 451 plots and planning applications are expected to be submitted shortly on all these sites.  The Group continues to focus on strategic land and has successfully secured options over 29 sites for approximately 2,750 plots.

 

 

DIVIDEND

Reflecting the Group's progress, the Board is pleased to have increased the interim dividend by 30% to 0.65p (2016: 0.5p) per share. The dividend will be paid on 29 June 2018 to shareholders on the register at the close of business on 8 June 2018. The ex-dividend date is 7 June 2018.

 

OUR PEOPLE

The Inland team is a vital cog in the delivery of our ambitious growth plans.  I should like to thank all members of staff for their efforts in integrating within their respective teams and across the various disciplines during the expansion of our construction division.  I should also like to take this opportunity to thank Paul Brett, our Land Director who has decided to leave the Group with effect from 16 April 2018, for his part in the growth of the Company since its incorporation.  I am pleased that Paul will continue to work for the Group as a consultant, particularly in relation to the ongoing planning application processes at our key sites at Wilton Park and Cheshunt Lakeside.

 

OUTLOOK

With the Government committed to building 300,000 new homes per annum in the UK, there are several measures in place supporting the housebuilding sector in the drive to deliver more homes, particularly at the price point at which we operate. Whilst the sector continues to be hindered by local planning difficulties and higher construction costs, we are optimistic that overall conditions for housebuilders to meet the demand for new homes will continue to be largely favourable.

 

With our lower priced high-quality homes and strengthening construction capability, together with a significant land bank, Inland is in a strong position to capitalise on the current favourable market conditions. We have identified and are delivering on clear operational priorities for 2018 that will transform the business and have made positive progress towards achieving this.

 

Terry Roydon

Chairman

 

 

Group income statement

for the six months ended 31 December 2017

 

 

Six months ended

Six months ended

Year ended

 

 

31 December

31 December

30 June

 

 

2017

2016

2017

 

 

(unaudited)

(unaudited/restated)

(audited)

 

Note

£000

£000

£000

Revenue

 

61,211

32,569

90,727

Cost of sales

 

(49,833)

(25,707)

(71,226)

Gross profit

6

11,378

6,862

19,501

Administrative expenses

 

(4,961)

(4,045)

(7,565)

Gain on sale of subsidiary

 

33

6,021

              5,988

Gain on sale of joint venture

 

                       8

                     -

6,965

Loss on Investments

 

                       -

                     -

(1)

Revaluation of investment properties

 

                       -

(33)

1,466

Operating profit

 

6,458

8,805

26,354

Finance cost - interest expense

 

(1,976)

(3,762)

(6,998)

Finance income - interest receivable and similar income

 

354

143

458

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

 

4,836

5,186

19,814

Share of profit/(loss) of associates

10

80

(113)

(238)

Share of profit/(loss) of joint ventures

 10 

455

(121)

13

Profit before tax

 

5,371

4,952

19,589

Income tax

7

(954)

(1,197)

(3,810)

Total profit and comprehensive income for the period

 

4,417

3,755

15,779

Attributable to:

 

 

 

 

- Shareholders of the Company

 

4,417

3,755

15,779

- Non-controlling interests

 

                       -

                       -

                       -

Earnings per share

 

 

 

 

- basic earnings per share in pence

8

2.19p

1.86p

7.82p

- diluted earnings per share in pence

8

2.08p

1.78p

7.46p

 

 

 

Group statement of financial position

at 31 December 2017

 

 

 As at 31 December

As at 31 December

As at 30 June

 

 

2017

2016

2017

 

 

(unaudited)

(unaudited/restated)

(audited)

 

Note

£000

£000

£000

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Investment properties

9

53,570

52,076

53,558

Property, plant and equipment

 

957

563

688

Investment in associate

10

                        1,330

-

1,125

Loans to associate due in more than one year

12

5,981

2,027

5,763

Investment in joint ventures

10

627

1,156

164

Receivables due in more than one year

12

5,931

55

5,830

Total non-current assets

 

68,396

55,877  

67,128

Current assets

 

 

 

 

Inventories

 

137,113

148,147

139,898

Trade and other receivables

12

20,617

14,695

22,491

Amounts due from associate

12

-

2,600

                         -

Amounts due from joint ventures

12

19,830

18,880

18,267

Listed investments carried at fair value through profit and loss

 

-

1

                         -

Cash and cash equivalents

 

24,787

17,576

26,459

Total current assets

 

202,347

201,899

207,115

Total assets

 

270,743

257,776

274,243

EQUITY

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

 

Share capital

13

20,366

20,360

20,366

Share premium account

 

34,336

34,328

34,336

Employee Benefit Trust

 

(1,078)

(1,067)

(1,078)

Treasury reserve

 

(609)

                         -

                         -

Special reserve

 

6,059

6,059

6,059

Retained earnings

 

75,653

58,929

70,867

Total equity attributable to shareholders of the Company

 

134,727

118,609

130,550

Non-controlling interests

 

                           -

-

               -

Total equity

 

134,727

118,609

130,550

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Bank loans and overdrafts

 

16,085

1,793

                         -

Trade and other payables

14

12,000

15,151

20,537

Corporation tax

14

3,539

5,004

6,532

Other financial liabilities

15

23,775

22,115

20,130

Total current liabilities

 

55,399

44,063

47,199

Non-current liabilities

 

 

 

 

Zero dividend preference shares

15

17,864

16,745

17,291

Bank loans due in more than one year

 

49,133

60,172

63,227

Other loans due in more than one year

 

11,558

17,227

               13,950

Deferred Tax

14

                            2,062

                       960

2,026

Total non-current liabilities

 

80,617

95,104

96,494

Total equity and liabilities

 

270,743

257,776

274,243

 

Group statement of changes in equity

for the six months ended 31 December 2017

 

 

 

Employee

 

 

 

 

 

Share

Share

benefit

Special

Retained

 

Total

 

capital

premium

trust reserve

reserve

earnings

Treasury Shares

Equity

 

£000

£000

£000

£000

£000

£000

£000

At 30 June 2016 (audited)

20,281

34,033

(713)

6,059

56,687

          -

116,347

Share based payment

           -

           -

          -

           -

319

          -

319

Issue of ordinary shares

79

295

          -

          -

          -

             -

          374

Dividend payment

           -

           -

           -

           -

(1,832)

          -

(1,832)

Purchase of own shares for deferred bonus plan

           -

         -

(354)

          -

           -

          -

(354)

Transactions with owners

          79

          295

(354)

           -

(1,513)

          -

(1,493)

Total comprehensive income

           -

            -

            -

            -

3,755

          -

3,755

Total changes in equity

          79

          295

(354)

            -

2,242

          -

       2,262

At 31 December 2016 (unaudited/restated)

20,360

34,328

(1,067)

6,059

58,929

          -

118,609

           -

            -

           -

           -

932

          -

932

6

           8

           -

           -

           -

          -

14

           -

           -

           -

           -

(1,018)

          -

(1,018)

          -

           -

           (11)

           -

           -

          -

(11)

Transactions with owners

           6

           8

        (11)

            -

(86)

          -

(83)

Total comprehensive income

             -

             -

             -

             -

12,024

          -

12,024

Total changes in equity

            6

            8

        (11)

             -

11,938

          -

11,941

At 30 June 2017 (audited)

20,366

34,336

(1,078)

6,059

70,867

          -

130,550

          -

         -

           -

           -

231

          -

231

          -

          -

          -

          -

138

          -

          138

Purchase of own shares

          -

          -

          -

          -

          -

(609)

(609)

Transactions with owners

-

-

      -

            -

369

(609)

(240)

Total comprehensive income

            -

           -

             -

             -

4,417

-

4,417

Total changes in equity

            -

            -

          -

          -

4,786

(609)

4,177

At 31 December 2017 (unaudited)

20,366

34,336

(1,078)

6,059

75,653

(609)

134,727

 

 

Group statement of cash flows 

for the six months ended 31 December 2017

 

 

Six months ended

Six months ended

Year ended

 

 

31 December

31 December

30 June

 

 

2017

2016

2017

 

 

(unaudited)

(unaudited/restated)

(audited)

 

Note

£000

£000

£000

Cash flows from operating activities

 

 

 

 

Profit for the period before tax

 

5,371

4,952

19,589

Adjustments for:

 

 

 

 

- depreciation

 

135

112

242

- share-based compensation

 

231

319

1,251

- revaluation of investment properties

 

-

33

(1,466)

- gain on disposal of subsidiary

 

(33)

(6,020)

                 (5,988)

- gain on disposal of joint venture

 

(8)

-

(6,965)

- interest expense

 

1,976

3,762

6,998

- interest and similar income

 

(354)

(143)

(458)

- share of (profit)/loss of joint ventures

 

(455)

121

(13)

- share of (profit)/loss of associate

 

(80)

113

238

- corporation tax payments

 

(918)

(3,869)

(3,576)

Changes in working capital:

 

 

 

 

- increase in inventories

 

(4,686)

(17,881)

(6,926)

-(increase)/ decrease in trade and other receivables

 

(2,505)

9,547

6,120

- decrease in trade and other payables

 

(8,471)

(8,107)

(7,438)

Net cash (outflow)/inflow from operating activities

 

(9,797)

(17,061)

1,608

Cash flow from investing activities

 

 

 

 

Interest received

 

263

-

344

Purchases of property, plant and equipment

 

(88)

(168)

(450)

Sale of property, plant and equipment

 

                           -

                         -

-

Purchases of investment property

9

(12)

(432)

(387)

Acquisition of subsidiaries

 

                           -

                         -

-

Loans provided to associate

 

(126)

(1,087)

(2,478)

Investment in associate

10

                           -

-

(125)

Amounts repaid by associate

 

-

772

                     1,072

Proceeds from sale of investment

 

-

-

1

Proceeds from disposal of subsidiary

 

12,177

5,750

                     5,750

Loans provided to joint ventures

 

(1,534)

(8,680)

(10,854)

Investment in joint ventures

10

(8)

(61)

(46)

Net cash inflow/(outflow) from investing activities

 

10,672

(3,906)

(7,173)

Cash flow from financing activities

 

 

 

 

Interest paid

 

(1,421)

(2,267)

(4,450)

Repayment of borrowings

 

(4,145)

(8,713)

(48,714)

New loans

 

3,628

32,780

71,291

Net proceeds on issue of ordinary shares

 

-

374

                        389

Equity dividends paid to ordinary shareholders

 

                           -

-

(2,850)

Purchase of own shares

 

(609)

(354)

(365)

Net cash (outflow)/inflow from financing activities

 

(2,547)

21,820

15,301

Net (decrease)/increase in cash and cash equivalents

 

(1,672)

853

9,736

Net cash and cash equivalents at beginning of period

 

26,459

16,723

16,723

Net cash and cash equivalents at the end of period

 

24,787

17,576

26,459

 

Notes to the half-yearly financial report

for the six months ended 31 December 2017

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 2018.

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 2017 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 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as issued by the International Accounting Standards Board.

3. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2017.

 

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 an increase in 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 policy for inventories the Directors are required to determine  the net realisable value of inventories by assessing 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 (note 7)

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 investment properties (note 9)

The fair value of materially completed investment property is determined by independent valuation experts 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.

(d) 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.

Capitalisation of borrowing costs

The Group capitalises borrowing costs where there is a qualifying asset. The Directors must assess each site held within inventories each year in order to judge whether or not the site is a qualifying asset. In prior years all borrowing costs were expensed to the Group Income Statement however this year the Wilton Park Development and the Cheshunt joint venture were, in the opinion of the Directors, judged to be qualifying assets in line with the requirements of IAS 23 Borrowing Costs. This is due to the long term, complex nature of these developments which will take several years  before parts of these site can be sold or developed. For other sites the Group expenses borrowing costs due to the quantity and repetitive nature of the process adopted. In many cases such developments may take longer than 12 months.The Directors are therefore required to exercise judgement as to whether or not a site represents a qualifying asset.   

Investment in joint ventures

The Group's joint venture investment in Project Helix Holdco Limited (Project Helix) is not in equal share (the Group owns 20% of the share capital of Project Helix) however the Group has joint control over the activities of the company with the other parties due to its entitlement to veto any decisions. In addition, the Group and the other parties to the agreement only have rights to the net assets of the company through the terms of the contractual arrangements. Within Project Helix there is a ratchet mechanism which depends on the amount of profit each development contributes to the joint venture. Therefore, this entity is classified as a joint venture and is accounted for using the equity method.

The Group's joint venture investments in Bucknalls Developments Limited (Bucknalls), Gardiners Park LLP (Gardiners Park), Europa Park LLP 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. It has significant influence over that entity but does not have joint control. Therefore 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, investment properties and management fees. 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  2016 (unaudited/restated)

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

669

     1,509

           -

          541

58

32,569

Cost of sales

(239)

(21,983)

(2,063)

(60)

(1,280)

-

        (76)

       (6)

(25,707)

Gross profit

240

5,501

(234)

609

    229

           -

         465

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)

609

     229

     -

432

(3,993)

8,805

Finance (cost)/income

(2,034)

(527)

-

-

-

143

(513)

(688)

(3,619)

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

4,227

4,974

(234)

609

229

            143

(81)

(4,681)

5,186

Share of loss of associate

-

-

-

 

 

(113)

-

-

(113)

Share of loss of joint venture

-

-

-

 

 

(121)

-

-

(121)

Profit/(loss) before tax

4,227

4,974

(234)

609

       229

            (91)

(81)

(4,681)

4,952

Income tax

(845)

(995)

47

(122)

      (46)

          18

           16

730

(1,197)

Total profit/(loss) for the 6 months

3,382

3,979

(187)

487

      183

           (73)

(65)

(3,951)

3,755

 

 

 

 

 

 

 

 

 

 

 

Six months ended 30 June 2017  (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

21,905

30,287

1,283

29

1,114

-

1,177

2,363

58,158

Cost of sales

(15,990)

(27,056)

(1,298)

-

(1,131)

-

(143)

99

(45,519)

Gross profit

5,915

3,231

(15)

29

(17)

-

1,034

2,462

12,639

Administrative expenses

-

-

-

-

-

-

-

(3,520)

(3,520)

Gain on sale of subsidiary

(33)

-

-

-

-

-

-

-

(33)

Gain on sale of joint venture

-

-

-

-

-

6,965

-

-

6,965

Provision for doubtful debt

-

-

-

-

-

-

-

-

-

Revaluation of investment properties

-

-

-

-

-

-

1,499

-

1,499

Operating profit/(loss)

5,882

3,231

(15)

29

(17)

              6,965

2,533

(1,058)

17,550

Finance (cost)/income

(1,476)

(249)

-

-

-

292

(212)

(690)

(2,335)

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

4,406

2,982

(15)

29

(17)

7,257

2,321

(1,748)

15,215

Share of loss of associate

-

-

-

-

-

(125)

-

-

(125)

Share of loss of joint ventures

-

-

-

-

-

134

-

-

134

Profit/(loss) before tax

4,406

2,982

(15)

29

(17)

7,266

2,321

(1,748)

15,224

Income tax

(800)

(517)

-

(6)

6

22

(1,581)

(324)

(3,200)

Total profit/(loss) for the 6 months

3,606

2,465

(15)

23

(11)

7,288

740

(2,072)

12,024

Total profit/(loss) for year ended 30 June 2017 (audited)

6,988

6,444

(202)

     510

172

7,215

675

(6,023)

15,779

 

 

 

 

 

 

 

 

 

 

Six months ended 31 December 2017 (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

20,285

31,025

5,245

366

1,389

-

655

2,246

61,211

Cost of sales

(16,407)

(27,486)

(4,508)

-

(1,257)

-

(175)

-

(49,833)

Gross profit

3,878

3,539

737

366

132

-

480

             2,246

11,378

Administrative expenses

-

-

-

-

-

-

-

(4,961)

(4,961)

Gain on sale of subsidiary

-

-

-

-

-

-

-

                           33

    33

Gain in sale of joint venture

-

-

-

-

-

8

-

-

      8

Revaluation of investment properties

-

-

-

-

-

-

-

-

-

Operating profit/(loss)

3,878

3,539

737

366

132

8

480

(2,682)

6,458

Finance (cost)/income

(926)

(281)

-

-

-

-

(12)

(403)

(1,622)

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

2,952

3,258

737

366

132

8

468

(3,085)

4,836

Share of income of associate

-

-

-

-

-

80

-

-

 80

Share of income of joint ventures

-

-

-

-

-

455

-

-

455

Profit/(loss) before tax

2,952

3,258

737

366

132

543

468

(3,085)

5,371

Income tax

(553)

(619)

(140)

(70)

(25)

(103)

(89)

645

(954)

Total profit/(loss) for the 6 months

2,399

2,639

597

296

107

440

379

(2,440)

4,417

 

31 December 2016 (unaudited/restated)

Land      £000

House building £000

Contracting & Partnership Housing £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

Investment in associate

      -

      -

              -

   -

-

             -

        -

-

Loans to associate due in more than one year

      -

      -

              -

   -

2,027

   -

       -

2,027

Investment in joint ventures

      -

      -

              -

   -

1,156

   -

       -

                      1,156

Loans to joint ventures due in more than one year

      -

      -

              -

   -

-

   -

       -

-

Receivables due in more than one year

      -

55

              -

    -

               -

             -

        -

55

Total non-current assets

         -

55

             -

   -

3,183

52,076

563

55,877

Current assets

 

 

 

 

 

 

 

 

Inventories

104,752

43,395

            -

   -

              -

            -

        -

148,147

Trade and other receivables

10,625

156

364

 185

              -

82

3,283

14,695

Amount due from associate

-

-

-

-

2,600

-

-

2,600

Amount due from joint venture

-

-

-

-

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

115,377

43,551

364

185

21,481

82

20,859

201,899

Total assets

115,377

43,606

364

 185

24,664

52,158

21,422

257,776

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

      -

      -

             -

   -

              -

             -

58,929

58,929

Total equity attributable to shareholders of the Company

      -

      -

             -

   -

              -

             -

118,609

118,609

Non-controlling interests

      -

      -

             -

   -

              -

             -

-

-

Total equity

      -

      -

             -

   -

              -

             -

118,609

118,609

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Bank loans and overdrafts

      105

1,688

      -

  -

      -

-

      -

1,793

Other loans

-

-

      -

  -

  -

            -

       -

 

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

17,227

   -

             -

  -

             -

           -

       -

17,227

Deferred Tax

-

-

-

-

-

960

-

960

Total non-current liabilities

34,043

17,179

            -

  -

             -

     27,137

16,745

95,104

Total equity and liabilities

62,726

22,451

-

  -

            132

27,451

145,016

257,776

 

30 June 2017 (audited)

Land      £000

House building £000

Contracting & Partnership Housing £000

Hotel      £000

 Investments £000

 Investment properties £000

Other   £000

Total

ASSETS

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Investment properties

       -

     -

         -

 

      -

53,558

  -

53,558

Property, plant and equipment

      -

      -

             -

   -

              -

             -

688

688

Investment in associate

    -

      -

            -

  -

1,125

          -

   -

1,125

Loans to associate due in more than one year

     -

       -

             -

   -

5,763

           -

      -

5,763

Investment in joint ventures

   -

     -

           -

   -

164

          -

   -

164

Receivables due in more than one year

   -

     31

             -

  -

         5,799

          -

-

5,830

Total non-current assets

     -

31

          -

 

12,851

53,558

688

67,128

Current assets

 

 

 

 

 

 

 

 

Inventories

85,131

51,873

2,894

-

       -

    -

-

139,898

Trade and other receivables

13,931

1,297

1,499

 262

5,000

36

466

22,491

Amounts due from associate

-

        -

            -

 -

-

            -

      -

-

Amounts due from joint ventures

-

        -

            -

 -

18,267

            -

      -

18,267

Listed investments carried at fair value through profit and loss

-

        -

            -

 -

-

            -

      -

-

Cash and cash equivalents

-

        -

            -

 -

               -

            -

26,459

26,459

Total current assets

99,062

53,170

4,393

262

23,267

36

26,925

207,115

Total assets

99,062

53,170

4,393

262

36,118

53,594

27,613

274,243

EQUITY

 

 

 

 

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

 

 

Share capital

      -

      -

             -

   -

              -

             -

20,366

20,366

Share premium account

      -

      -

             -

   -

              -

             -

34,336

34,336

Employee benefit trust

      -

      -

             -

   -

              -

             -

(1,078)

(1,078)

Special reserve

      -

      -

             -

   -

              -

             -

6,059

6,059

Retained earnings

      -

      -

             -

   -

              -

             -

70,867

70,867

Total equity attributable to shareholders of the Company

      -

      -

             -

   -

              -

             -

130,550

130,550

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

          

Bank loans and overdrafts

-

-

-

-

-

-

      -

-

Other loans

-

-

-

-

-

-

-

-

Trade and other payables

6,682

7,458

1,556

512

1,201

333

2,795

20,537

Corporation tax

-

-

-

-

-

-

6,532

6,532

Other financial liabilities

20,130

-

-

-

-

-

-

20,130

Total current liabilities

26,812

7,458

1,556

512

1,201

333

9,327

47,199

Non-current liabilities

 

 

 

 

 

 

 

 

Zero Dividend Preference shares

-

-

-

-

-

-

17,291

17,291

Bank loans due in more than one year

17,068

19,863

-

-

-

26,296

-

63,227

Payables due in more than one year

13,950

-

-

-

-

-

-

13,950

Deferred tax due in more than one year

-

(607)

-

-

(85)

3,344

(626)

2,026

Total non-current liabilities

31,018

19,256

-

-

(85)

26,640

16,665

96,494

Total equity and liabilities

57,830

26,714

1,556

512

1,116

29,973

156,542

274,243

 

 

31 December 2017 (unaudited)

Land      £000

House building £000

Contracting & Partnership Housing £000

Hotel      £000

 Investments £000

 Investment properties £000

Other   £000

Total

ASSETS

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Investment properties

-

-

-

-

-

53,570

-

53,570

Property, plant and equipment

-

-

-

-

-

-

957

957

Loans to associate due in more than one year

-

-

-

-

5,981

-

-

5,981

Investment in associate

-

-

-

-

1,330

-

-

1,330

Investment in joint ventures

-

-

-

-

627

-

-

627

Receivables due in more than one year

-

5,931

-

-

-

-

-

5,931

Total non-current assets

-

5,931

-

-

7,938

53,570

957

68,396

Current assets

 

 

 

 

 

 

 

 

Inventories

92,929

44,054

130

-

-

-

-

137,113

Trade and other receivables

4,780

123

-

268

               -     

14

15,432

20,617

Amounts due from associate

-

-

-

-

-

-

-

-

Amounts due from joint ventures

-

-

-

-

19,830

-

-

19,830

Listed investments carried at fair value through profit and loss

-

-

-

-

-

-

-

-

Cash and cash equivalents

-

-

-

-

-

-

24,787

24,787

Total current assets

97,709

44,177

130

268

19,830

14

40,219

202,347

Total assets

97,709

50,108

130

268

27,768

53,584

41,176

270,743

EQUITY

 

 

 

 

 

 

 

 

Capital and reserves attributable to the Company's equity holders

 

 

 

 

 

Share capital

      -

      -

             -

   -

              -

             -

20,366

20,366

Share premium account

      -

      -

             -

   -

              -

             -

34,336

34,336

Employee benefit trust

      -

      -

             -

   -

              -

             -

(1,078)

(1,078)

Treasury Reserve

      -

      -

             -

   -

              -

             -

(609)

(609)

Special reserve

      -

      -

             -

   -

              -

             -

6,059

6,059

Retained earnings

      -

      -

             -

   -

              -

             -

75,653

75,653

Total equity attributable to shareholders of the Company

      -

      -

             -

   -

              -

             -

134,727

134,727

LIABILITIES

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Bank loans and overdrafts

-

85

-

-

-

16,000

-

16,085

Trade and other payables

3,217

5,584

465

-

1

451

2,282

12,000

Corporation tax

-

-

-

-

-

-

3,539

3,539

Other financial liabilities

23,775

-

-

-

-

-

-

23,775

Total current liabilities

26,992

5,669

      465

       -

1

16,451

5,821

55,399

Non-current liabilities

 

 

 

 

 

 

 

 

Zero Dividend Preference shares

-

-

-

-

-

-

17,864

17,864

Bank loans due in more than one year

2,283

18,110

-

-

-

28,740

-          

49,133

Other loans due in more than one year

-

11,558

-

-

-

-

-

11,558

Deferred tax due in more than one year

-

-

-

-

-

2,062

-

2,062

Total non-current liabilities

2,283

29,668

-

-

-

30,802

17,864

80,617

Total equity and liabilities

29,275

35,337

465

-

1

47,253

158,412

270,743

 

7. Income tax

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2017

2016

2017

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Current tax charge

906

1,197

2,744

Deferred tax charge

48

-

1,066

 

954

1,197

3,810

 

 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

 

2017

2016

2017

 

(unaudited)

(unaudited/restated)

(audited)

 

£000

£000

£000

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

4,417

3,755

15,779

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

134,727

118,609

130,550

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

201,875

201,785

201,875

Dilutive effect of options (000s)

1,870

1,926

1,882

Dilutive effect shares held in EBT (000s)

1,627

1,627

1,627

Dilutive effect shares held in Treasury (000s)

1,000

-

-

Dilutive effect of growth shares (000s)

6,000

6,000

6,000

 

212,372

211,338

211,384

Basic earnings per share in pence

2.19p

1.86p

7.82p

Diluted earnings per share in pence

2.08p

1.78p

7.46p

Shares in issue (000s)

202,027

201,972

202,027

Net asset value per share in pence

66.69p

58.73p

64.62p

Diluted net asset value per share in pence

63.39p

56.07p

61.72p

On 16 December 2016 the Group's Employee Benefit Trust (EBT) purchased 600,000 shares in Inland Homes plc and a further 1,020,340 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 and 1,000,000 treasury shares purchased in the period have been deducted from the weighted average number of ordinary shares in issue and also from the shares in issue at the period end.

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 2016

45,458

1,268

5,350

52,076

Additions

16

-

-

16

Fair value adjustment

1,466

-

-

1,466

At 30 June 2017

46,940

1,268

5,350

53,558

Additions

12

-

-

12

At 31 December 2017

46,952

1,268

5,350

53,570

10. Investments

 

Joint

 

 

 

ventures

Associate

Total

 

£000

£000

£000

Cost or fair value at 31 December 2016 (unaudited)

1,156

-

1,156

Additions

                           105

1,250

1,355

Transfer to loans to joint ventures

-

-

-

Disposal of interest in joint venture

(1,110)

-

(1,110)

Share of loss after tax

13

(125)

(112)

At 30 June 2017 (audited)

164

1,125

1,289

Additions

-

125

125

Gain on sale of joint venture

8

-

8

Share of gain after tax

455

80

535

At 31 December 2017 (unaudited)

627

1,330

1,957

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. During the year ended 30 June 2017 planning consent for 400 residential units and commercial space was achieved. As at 30 June 2017, the Group sold its interest in Aston Clint S.A.R.L. for £8.3 million, generating a gain of £7.0 million. During the period to 31 December 2017 an additional gain on the sale of the joint venture was recognised which related to costs associated with the disposal.

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. During the period the Group acquired 2 of the sites from the joint venture by way of share purchase and these companies are now consolidated into the results of the Group. Along with the Group's capital investment of £nil, £3.1 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 £4.6 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 2017, which is accounted for as an Investment in Joint Ventures. Funds of £10.5 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 £nil (after recognising the Group's share of losses) as at 31 December 2017, which is accounted for as an Investment in Joint Ventures. Funds of £0.9 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 December 2017, the Group entered a joint venture with the Anderson Group to develop the site known as Europa Way, Ipswich with 94 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. Funds of £0.7 million have 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. Europa 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 2017, the Group had made a capital investment of £1.25 million and had provided loans of £3.2 million which are accounted for as Loans to Associate within Non-Current Assets in the Group Statement of Financial Position. There is a debtor of £2.7 million (including VAT) in relation to land sold on deferred terms in Amounts due from Associate within Non - Current Assets, as disclosed in the accounts for the year ended 30 June 2017. This is secured by way of legal charge over the sites. 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.

Disposal of Subsidiaries

During the period to 31 December 2017 an additional gain on the sale of the subsidiary was recognised in the Group Income Statement which related to costs associated with the disposal of Inland New Homes Limited which was disposed in December 2016.

During the period to 31 December 2017 the Group disposed of one of its subsidiaries Uxbridge Homes Developments Limited. There was no gain or loss on the sale of the company.

 

11. Deferred tax

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

 

£000

At 31 December 2016 (restated)

(960)

Income statement credit

(1,066)

At 30 June 2017

(2,026)

Income statement credit

(36)

At 31 December 2017

(2,062)

 

 

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 2016 (restated)

4,606

(6,691)

102

539

484

(960)

(Charged)/credited to income statement

(1,410)

152

(78)

87

          183

(1,066)

At 30 June 2017

3,196

(6,539)

24

626

667

(2,026)

Charged/(credited) to income statement

-

-

        (80)

44

-

(36)

At 31 December 2017

3,196

(6,539)

(56)

670

667

(2,062)

 

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.

12. Trade and other receivables, joint ventures and associates

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2017

2016

2017

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Trade receivables

5,530

62

3,444

Prepayments and accrued income

1,376

851

1,262

Amounts due from associate

-

2,600

-

Amounts due from joint ventures

19,830

18,880

18,267

Other receivables falling due within one year

13,711

13,782

17,785

Loans to associate due in more than one year

5,981

2,027

5,763

Other receivables falling due after more than one year

5,931

55

5,830

 

52,359

38,257

52,351

At 31 December 2017 the Group had provided loans of £3.1 million to Project Helix, as shown in note 10.

At 31 December 2017 the Group had provided loans of £4.6 million to Bucknalls Developments Limited, as shown in note 10.

At 31 December 2017 the Group had provided loans of £10.5 million to Cheshunt Lakeside Developments Limited, as shown in note 10.

At 31 December 2017 the Group had provided loans of £0.9 million to Gardiners Park LLP, as shown in note 10.

At 31 December 2017 the Group had provided loans of £0.7 million to Europa Park LLP, as shown in note 10.

At 31 December 2016 the Group had provided loans of £3.2 million and a debtor relating to transactions of £2.7 million to Troy Homes Limited, 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

 

2017

2016

2017

 

(unaudited)

(unaudited/restated)

(audited)

 

No.

No.

No.

Shares in issue - total voting shares

 

 

 

At start of period

202,026,932

201,771,932

201,771,932

New shares issued

-

               800,000

            855,000

Shares purchased by EBT

-

(600,000)

(600,000)

Shares purchased by Treasury

(1,000,000)

-

-

At end of period

201,026,932

201,971,932

202,026,932

 

The Group's Employee Benefit Trust purchased 643,216 shares on 29 October 2014, 383,850 shares on 20 December 2015 and a further 600,000 on 16 December 2016 in Inland Homes plc under the terms of the Long Term Incentive Plan. These have been deducted from shares in issue at the start and end of the period. The total ordinary shares in issue at the 31 December 2017 was 203,654,432 (31 December 16: 203,609,432)

 

14. Trade and other payables and corporation tax

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2017

2016

2017

 

(unaudited)

(unaudited/restated)

(audited)

 

£000

£000

£000

Trade payables

5,219

5,199

7,255

Other creditors

2,747

6,714

6,296

Social security, other taxes and VAT

1,289

566

1,767

Corporation tax

3,539

5,004

6,532

Accruals and deferred income

2,745

2,672

5,519

Deferred tax due in more than one year

2,062

960

2,026

 

17,601

21,115

29,095

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

15. Other financial liabilities and zero dividend preference shares

 

Six months ended

Six months ended

Year ended

 

31 December

31 December

30 June

 

2017

2016

2017

 

(unaudited)

(unaudited)

(audited)

 

£000

£000

£000

Purchase consideration on inventories falling due within one year

23,775

22,115

20,130

Zero dividend preference shares falling due after more than one year

17,864

16,745

17,291

 

41,639

38,860

37,421

 

 16. 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 2017 were published.

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

 

 17. Prior Period Adjustments

 

During the year ended 30 June 2017 the Directors reviewed properties held within inventories and are now of the opinion that given the complexity and the nature of the developments at Wilton Park and Cheshunt it is more appropriate to capitalize interest in accordance with IAS 23 Borrowing Costs in relation to the properties at Wilton Park and in the Cheshunt joint venture. A prior period adjustment of £0.6 million has also been made to recognise an additional deferred tax liability relating to the revaluation gains on investment properties following a review of the Groups capital losses available for set off against future capital gains that were erroneously calculated in the prior year. The financial impact of these adjustments is shown below:-

 

 

 

As previously stated

Adjustments

Restated

 

2016

 

2016

2016

 

(unaudited)

Tax

Capitalisation of interest

 

 

£000.

£000

£000.

£000.

Group Income Statement

 

 

 

 

- net Interest

(4,349)

-

587

(3,762)

- profit before tax

4,365

-

587

4,952

- income Tax

(915)

(282)

-

(1,197)

- profit after tax

3,450

(282)

587

3,755

 

 

 

 

 

Earnings per share

 

 

 

 

- basic earnings per share in pence

1.71

(0.14)

0.29

1.86

- diluted earnings per share in pence

1.62

(0.12)

0.28

1.78

 

 

 

 

 

Group Statement of Financial Position

 

 

 

 

- deferred tax asset due in more than one year

620

(620)

-

-

- total non current assets

56,497

(620)

-

55,877

- inventories

145,946

-

2,201

148,147

- total current assets

199,698

-

2,201

201,899

- retained earnings

58,308

(1,580)

2,201

58,929

- total equity attributable to shareholders

58,308

(1,580)

2,201

58,929

- deferred tax liability due in more than one year

-

960

-

960

- total non current liabilities

94,144

960

-

95,104

- total equity and liabilities

256,195

(620)

2,201

257,776

 

 

 

 

 

Group Statement of Cash Flows

 

 

 

 

- profit for the year before tax

4,365

-

587

4,952

- interest expense

4,349

-

(587)

3,762

 

 

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 2017 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 17.

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 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 2017 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

London

27 March 2018

 

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

 


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