Interim Results
Inland PLC
17 March 2008
For Immediate Release 17 March 2008
Inland PLC
('Inland' or the 'Company' or the 'Group')
Interim Results for the Six Months ended 31 December 2007
Inland, which specialises in buying brownfield sites and enhances their value by
obtaining planning permission, today announces interim results for the six
months ended 31 December 2007.
Financial highlights
O Turnover £0.17m (2006: £3.87m)
O Operating loss £(1.53)m (2006: profit £1.42m)
O Pre tax loss £(1.18)m (2006: profit £1.01m)
O Cash £11.7m (2006: £4.6m)
O Stocks and investment property £60.8m (2006: £27.1m)
O Net assets £59.4m (2006: £14.1m)
Operational highlights
O Demand for land with the 'right' planning consent remains strong
O Development pipeline now over 1,470 plots with a gross development value
of circa £361m
O Our associate company, Howarth continues to perform in line with our
expectations
O Planning application being prepared for our site at Poole
Stephen Wicks, Chief Executive of Inland commented:
'The last six months have been a very active period for Inland culminating in
the granting of planning permission on our major site in Farnborough for 399
residential plots and approximately 100,000 sq ft of commercial space. We also
concluded the acquisition of Poole Investments PLC which provides us with an
opportunity to achieve up to 500 residential plots and some commercial space. We
believe that the current slow down in the house building sector will present us
with some excellent land opportunities.
We therefore believe that the short to medium term outlook for Inland remains
positive as we continue to acquire high quality land stocks and produce planning
schemes specifically designed to meet the requirements of house builders.'
For further information please contact:
Inland Plc Tel: 01923 713 600
Stephen Wicks, Chief Executive
Nishith Malde, Finance Director
Buchanan Communications Tel: 020 7466 5000
Jeremy Garcia / Susanna Gale
Dawnay, Day Corporate Finance Limited Tel: 020 7509 4570
David Floyd / Alex Stanbury
CHAIRMAN'S STATEMENT
Introduction
It has been a very busy and highly productive six months for Inland. We have
continued to add to our land bank and expect the sale of a number of our land
assets to take place in the second half of the financial year. Our land team has
been extremely active submitting planning applications on a number of schemes.
Whilst this process continues to be challenging due to over complicated planning
legislation, we remain confident in maintaining our strong track record of
producing high quality development stock for house builders.
Inland continues to identify good land opportunities and the current land bank
that is owned, controlled or where offers have been agreed comprise of 24 sites
representing approximately 1,470 residential plots with a gross development
value of approximately £361m. The Group also has consents for commercial
development amounting to some 125,000 sq ft with a gross development value of
£15m.
Results
In line with our own internal budgets the Group did not dispose of any land
assets during the six months ended 31 December 2007. The Group showed a loss
before taxation for the period of £1.18m (2006: profit £1.01m). However,
conditional contracts have been exchanged subject to discharging a planning
condition for the sale of 24 residential plots, following a successful planning
application on our site at Hatfield for £3.65m. This leaves Inland with a listed
commercial building on this site comprising 13,000 sq ft, which will be placed
on the open market shortly. We anticipate a profit of approximately £900,000 on
the sale of the entire site. Terms have been agreed for the sale of our site in
Borehamwood which has planning consent for 14 residential plots.
We have gained planning consent in October 2007 at our major site in Farnborough
for 399 residential units and approximately 100,000 sq ft of commercial space.
We are now in the process of submitting a further planning application for 42
residential units to improve the overall residential density to 441 plots. We
anticipate there will be further opportunities to increase this in due course.
The main spine road through the site, which is being constructed by Segro plc at
their expense, is progressing well and once completed it will further enhance
the appeal and value of the site. The annual rental income from the site now
stands at £295,000. We are very pleased with the progress at Farnborough which
demonstrates the ability of the management team to identify large scale land
opportunities, obtain valuable planning permissions and create significant
shareholder value.
Since the last year end we have continued to increase our land bank and our
stocks and work in progress amounts to £52.0m (2006: £38.8m). In addition we
acquired Poole Investments plc which has an investment property that has been
reflected at a fair value of £8.8m. The increase in our land acquisition has
reduced our cash balances at 31 December 2007 to £11.7m.
Basic loss per share was 0.75p (2006: Earnings per share 1.49p). The Group did
not disclose a diluted loss per share as the share options issued to the
employees did not have a dilutive effect.
The increase in stocks and work in progress means that we now have 21 sites
owned and where purchase contracts have been unconditionally exchanged at 31
December 2007. These sites represent a gross development value of £345m with the
benefit of planning consent. Since 31 December 2007, the Group has also acquired
or agreed terms to purchase 3 sites which can accommodate 51 residential plots
with a gross development value of approximately £16m with the benefit of
planning consent. Planning applications have been submitted on a further 10
sites for 345 residential plots.
The acute shortage of land with planning consent is a continuing problem for
house builders and the sales referred to above demonstrates the demand for sites
in good locations with well thought through planning consent. In spite of the
current weakness in the housing market, the long term dynamics relating to the
supply and demand for housing remains unchanged, with the demand for land with
planning consent remaining strong in the areas in which we operate.
We believe that the current slowdown is presenting us with some excellent buying
opportunities and whilst planning remains very difficult the consents we obtain
are structured to meet the requirements of house builders with the right product
mix, location and the ability to effect an immediate start on site.
Planning
The UK planning system continues to languish in the dark ages when it comes to
facing the challenge of producing the required levels of housing stock. Planning
authorities remain understaffed and over worked and the over zealous drive by
government for house builders to provide greater quantities of social housing
will ensure demand in the long term will outstrip supply. With an increasing
amount of all new build earmarked for social housing, house builders are no
longer being incentivised to meet government targets.
Corporate activity and investments
The Group completed the acquisition of the remaining 10% of Poole on 3 January
2008 and our land team is progressing with plans for a mixed use scheme to
enhance the value of the site in Lower Hamworthy in Dorset. As we stated at the
time of the acquisition, this site represents an outstanding opportunity for
Inland to maximise the return on our investment, once a satisfactory planning
consent has been obtained.
On 19 December 2007, the Company announced that it owned 3.03% of M J Gleeson
PLC which is held as a strategic investment.
In January 2008 the Group also increased its investment in Howarth Homes PLC
('Howarth') by acquiring a further 5% of the issued share capital for a
consideration of £357,000. During the six months to 31 January 2008, Howarth
made a profit before tax of £1.09m and whilst, in line with other house
builders, trading conditions have become more challenging, the management team
at Howarth has been strengthened by the appointment of a new finance director,
technical director and a sales and marketing director. We have every confidence
that these additions to the Howarth management team, who have particular
experience in volume house building will be invaluable in helping the company
through its next period of growth. The company is currently operating from 7
sites with 135 units under construction and has forward sold £20.8m of the
current year's residential sales.
Outlook
Over the last few months some of the major house builders have stated that they
are not in the market to purchase land unless planning consents are in place.
This coupled with the recent tightening of the availability of credit in the
banking sector should provide Inland with good opportunities to acquire
additional brownfield development sites. We have already seen land opportunities
being brought back to us where higher bidders have failed to complete their
transactions. We are currently able to re-negotiate better terms than had
previously been proposed.
Market indicators would appear to suggest that further falls in interest rates
are in the pipeline. This should bring more stability to the housing market.
Whilst demand for new homes remains sluggish, the requirement for land with the
right planning consent remains strong. We have a strong balance sheet and remain
financially flexible and Inland has a real opportunity to take advantage of any
weakness in the marketplace as and when they arise.
We have a considerable number of planning applications in the pipeline and
believe that the Group's healthy balance sheet and strong land position together
with a highly experienced land team provides a positive outlook for the short to
medium term.
Terry Roydon
Chairman
CONSOLIDATED INCOME STATEMENT
6 months to 6 months to Year ended
31 December 31 December 30 June
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
Revenue 4 169 3,867 5,466
Cost of sales (7) (1,810) (2,603)
Gross profit 162 2,057 2,863
Administrative expenses (1,020) (640) (1,506)
Loss on investments (673) - -
Operating (loss)/profit (1,531) 1,417 1,357
Interest expense (30) (73) (107)
Notional interest expense (740) (513) (1,265)
Interest and similar income 1,087 198 963
(1,214) 1,029 948
Share of profit/(loss) of
associate 36 (19) 175
(Loss)/profit before (1,178) 1,010 1,123
taxation
Income tax 5 (41) (306) (328)
(Loss)/profit for the period (1,219) 704 795
(Loss)/earnings per share
Basic and diluted
(loss)/earnings per share in
pence 6 (0.75)p 1.49p 0.98p
CONSOLIDATED BALANCE SHEET
At 31 At 31 At 30
December December June
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
Notes £000 £000 £000
ASSETS
Non-current assets
Property, plant and equipment 7 8,867 59 65
Investments 8 7,572 1,006 4,156
Investment in associate 8 410 243 385
Deferred tax 6,434 159 393
23,283 1,467 4,999
Current assets
Inventories 51,975 27,119 38,791
Trade and other receivables 451 492 2,674
Loan to associate 240 2,270 2,000
Cash and cash equivalents 11,697 4,568 42,838
64,363 34,449 86,303
Total assets 87,646 35,916 91,302
EQUITY
Capital and reserves
attributable to the Company's
equity holders
Share capital 9 16,216 6,212 16,216
Share premium account 45,171 7,635 45,184
Retained earnings (756) 238 373
Other reserves (1,242) 6 -
Total equity 59,389 14,091 61,773
LIABILITIES
Current liabilities
Trade and other payables 1,447 321 740
Current tax liabilities 599 251 454
Deferred purchase consideration 11,861 4,957 9,202
Borrowings - 1,700 -
Total current liabilities 13,907 7,229 10,396
Non-current liabilities
Deferred purchase consideration 14,350 14,596 19,133
Total non-current liabilities 14,350 14,596 19,133
Total liabilities 28,257 21,825 29,529
Total equity and liabilities 87,646 35,916 91,302
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Other
capital premium earnings reserves Total
£000 £000 £000 £000 £000
At 30 June 2006 3,279 699 (466) - 3,512
Fair value adjustment in
respect of
available for sale financial
assets - - - 6 6
Net income recognised
directly in equity - - - 6 6
Profit attributable to
shareholders - - 704 - 704
Total recognised income and
expense - - 704 6 710
Issue of shares 2,933 6,936 - - 9,869
2,933 6,936 704 6 10,579
At 31 December 2006 6,212 7,635 238 6 14,091
Share based compensation - - 44 - 44
Fair value adjustment in
respect of
available for sale financial
assets - - - (6) (6)
Net income recognised
directly in equity - - 44 (6) 38
Profit attributable to
shareholders - - 91 - 91
Total recognised income and
expense - - 135 (6) 129
Issue of shares 10,004 40,407 - - 50,411
Issue expenses - (2,858) - - (2,858)
10,004 37,549 135 (6) 47,682
At 30 June 2007 16,216 45,184 373 - 61,773
Fair value adjustment in
respect of
available for sale financial
assets - - - (1,242) (1,242)
Share based compensation - - 90 - 90
Net income recognised
directly in equity - - 90 (1,242) (1,152)
Loss attributable to
shareholders - - (1,219) - (1,219)
Total recognised income and
expense - - (1,129) (1,242) (2,371)
Issue of shares - - - - -
Issue expenses - (13) - - (13)
- (13) (1,129) (1,242) (2,384)
At 31 December 2007 16,216 45,171 (756) (1,242) 59,389
CONSOLIDATED CASH FLOW STATEMENT
6 months to 6 months to Year ended
31 December 31 December 30 June 2007
2007 2006
(Unaudited) (Unaudited) (Audited)
Note £000 £000 £000
Cash flows from operating
activities
(Loss)/profit for
the period before
tax (1,178) 1,010 1,123
Adjustments for:
- depreciation 11 6 16
- share based
compensation 90 - 44
- fair value
adjustment for
listed investments 852 - -
- profit on
disposal of listed
investments (179) - -
- interest and
similar income (1,087) (198) (963)
- interest expense 770 586 1,372
- share of profit
of associate (36) 19 (175)
Changes in working capital
(excluding the effects of
acquisition):
- increase in
inventories (13,184) (26,772) (39,064)
- increase in trade
and other
receivables 4,424 (2,300) (4,212)
- increase in trade
and other payables (3,334) 20,444 29,522
Net cash outflow
from operating
activities (12,851) (7,205) (12,337)
Investing activities
Interest received 915 193 946
Dividends received 166 - 11
Purchases of
property, plant and
equipment (109) (29) (45)
Purchase of listed
investments (8,544) (186) (3,342)
Sale of listed
investments 3,168 - -
Acquisition of
subsidiary, net of
cash acquired 10 (10,638) - -
Net cash used in
investing
activities (15,042) (22) (2,430)
Financing activities
Interest paid (30) (64) (107)
Repayments of bank
borrowings (3,205) (525) (1,700)
New bank loans
raised - 1,700 1,175
Issue of shares
(net of expenses) (13) 9,869 57,422
Net cash from
financing
activities (3,248) 10,980 56,790
Net
(decrease)/increase
in cash and cash
equivalents (31,141) 3,753 42,023
Cash and cash
equivalents at
beginning of period 42,838 815 815
Cash and cash
equivalents at the
end of the period 11,697 4,568 42,838
1. Nature of operations and general information
The principal activity of the Company and its subsidiaries (together call the
Group) is to acquire residential and mixed use sites and seek planning consent
for development.
Inland PLC is the Group's ultimate parent company. It is incorporated and
domiciled in Great Britain. The address of Inland PLC's registered office, which
is also its principal place of business, is Trinity Court, Batchworth Island,
Church Street, Rickmansworth, Hertfordshire WD3 1RT.
Inland PLC's shares are listed on the Alternative Investment Market on the
London Stock Exchange.
This consolidated interim statement have been approved for issue by the Board of
Directors on 14 March 2008.
The financial information set out in this interim statement does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
Group's statutory financial statements for the year ended 30 June 2007 have been
filed with the Registrar of Companies and is available at www.inlandplc.com. The
auditor's report on those financial statements was unqualified and did not
contain any statement under Section 237(2) or Section 237(3) of the Companies
Act 1985.
2. Basis of preparation
This interim financial report has been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting.
The consolidated interim statement should be read in conjunction with the annual
financial statements for the year ended 30 June 2007, which have been prepared
in accordance with IFRS as adopted by the European Union.
3. Accounting policies
The accounting policies applied are consistent with those of the annual
financial statements for the year ended 30 June 2007, as described in those
annual financial statements. The following additional accounting policy has been
adopted upon the acquisition of Poole Investments PLC:
'The Group measures all of the investment property in accordance with IAS 16's
requirements for the cost model, other than those that meet the criteria to be
classified as held for sale (or are included as a disposal group that is
classified as held for resale).'
CONSOLIDATED INCOME STATEMENT
4. SEGMENT INFORMATION
Property Investment
trading property Total
£000 £000 £000
6 months to 31 December
2007
Revenue
Rental income 113 6 119
Management fees 50 - 50
Land sales - - -
--------- -------- --------
Total 163 6 169
--------- -------- --------
Operating (loss)/profit
Rental income 111 6 117
Management fees 50 - 50
Land sales (1,698) - (1,698)
--------- -------- --------
Total (1,537) 6 (1,531)
--------- -------- --------
6 months to 31 December
2006
Revenue
Rental income 162 - 162
Management fees 300 - 300
Land sales 3,405 - 3,405
--------- -------- --------
Total 3,867 - 3,867
--------- -------- --------
Operating profit
Rental income 162 - 162
Management fees 300 - 300
Land sales 955 - 955
--------- -------- --------
Total 1,417 - 1,417
--------- -------- --------
Year ended 30 June 2007
Revenue
Rental income 268 - 268
Management fees 323 - 323
Land sales 4,875 - 4,875
--------- -------- --------
Total 5,466 - 5,466
--------- -------- --------
Operating profit
Rental income 263 - 263
Management fees 323 - 323
Land sales 771 - 771
--------- -------- --------
Total 1,357 - 1,357
--------- -------- --------
5. INCOME TAX
6 months to 6 months to Year ended
31 December 31 December 30 June
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Corporation tax
charge 156 251 507
Deferred tax credit (505) 55 (179)
Deferred tax asset written off after
initial recognition in
respect of the
acquisition of Poole
Investments PLC 390 - -
---------- ---------- ----------
41 306 328
========== ========== ==========
6. (LOSS)/EARNINGS PER SHARE
Basic and diluted
Basic and diluted (loss)/earnings per share is calculated by dividing the (loss)
/profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the period.
6 months to 6 months to Year ended
31 December 31 December 30 June
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
(Loss)/profit attributable to
equity holders of the Company (1,219) 704 795
Weighted average number of
ordinary shares in issue 162,150 47,258 80,944
Dilutive effect of options treated
as exercisable at the period end
(thousands) - - (96)
162,150 47,258 80,848
Basic and diluted (loss)/earnings
per share in pence (0.75)p 1.49p 0.98p
7. PROPERTY, PLANT & EQUIPMENT
Investment Motor Fixtures Office Total
property Vehicles & fittings equipment
£000 £000 £000 £000 £000
Cost
At 1 July 2007 - 27 29 31 87
Additions 83 17 6 3 109
Acquired upon acquisition
of subsidiary 8,704 - - - 8,704
At 31 December 2007 8,787 44 35 34 8,900
Depreciation
At 1 July 2007 - 4 6 12 22
Depreciation charge - 3 4 4 11
At 31 December 2007 - 7 10 16 33
Net book value
At 31 December 2007 8,787 37 25 18 8,867
At 30 June 2007 - 23 23 19 65
8. INVESTMENTS
Associate Listed Equity in Loans Total
investments convertible
loans
£000 £000 £000 £000 £000
At 1 July 2007 385 3,341 39 776 4,156
Additions - 8,544 - - 8,544
Transfer to investment in
subsidiary - (51) - - (51)
Disposals - (2,989) - - (2,989)
Fair value adjustment - (2,094) - - (2,094)
Notional interest - - - 6 6
adjustment
Share of profit of 25 - - - -
associate
At 31 December 2007 410 6,751 39 782 7,572
9. SHARE CAPITAL
6 months to 6 months to Year ended
31 December 31 December 30 June
2007 2006 2007
(Unaudited) (Unaudited) (Audited)
Shares in issue
Shares in issue at start of period 162,150,059 32,792,866 32,792,866
Shares issued - 29,329,193 129,357,193
Shares in issue at end of period 162,150,059 62,122,059 162,150,059
10. ACQUISITION OF SUBSIDIARY
During the period, the Group acquired the share capital of Poole Investments PLC.
£000
Purchase consideration:
- Shares purchased 11,097
- direct costs relating to the
acquisition 214
---------
11,311
=========
The assets and liabilities arising from the acquisition are as follows:
Acquiree's Provisional
book value fair value
£000 £000
Investment property 6,524 8,704
Debtors 144 144
Cash and cash equivalents 18 18
Creditors & other payables (572) (572)
Loans (3,205) (3,205)
---------- ---------
2,909 5,089
Deferred tax (tax losses in
subsidiary) - 6,222
---------- ---------
Net identifiable assets 2,909 11,311
acquired ========== =========
£000
Outflow of cash to acquire business, net of cash acquired:
Cash consideration 11,311
Cash paid in previous period (51)
Cash consideration and direct costs
outstanding at 31 December 2007 (604)
---------
10,656
Cash and cash equivalents in
subsidiary acquired (18)
---------
Cash outflow on acquisition 10,638
=========
INDEPENDENT REVIEW REPORT TO INLAND 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 2007 which comprises the consolidated income statement, the
consolidated balance sheet, the consolidated statement of changes in equity, the
consolidated cash flow statement and notes 1 to 10 to the consolidated interim
statement. We have read the other information contained in the half yearly
financial report which comprises only the chairman's statement and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained
in ISRE (UK and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review work has been
undertaken so that we might state to the Company those matters we are required
to state to them in a review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone
other than the company, for our review work, for this report, or for the
conclusion we have formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors.
As disclosed in Note 2, the annual financial statements of the Group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting,' as adopted by the European Union.
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.
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 Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 December 2007 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union.
Grant Thornton UK LLP
Chartered accountants
London Thames Valley Office
Slough
14 March 2008
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