Nishith Malde
The term of the Group's borrowing facilities has been improved with 100% of total borrowings being repayable after one year, and 53.5% repayable between three and five years."

Nishith Malde, Group Finance Director

Gearing on EPRA net assets


(2016 restated*: 29.3%)

Revenue by segment

Revenue By Segment

Land sales




Fees & other


Inland Homes has achieved another year of strong results, achieving growth in recurring profits before tax of 15.3% and in adjusted EPRA NAV per share of 4.2%. The Group's strength in acquiring land well and successfully taking it through the planning process coupled with land disposals and housebuilding activity have all contributed towards producing these results.

The business has five significant revenue streams as follows:

  • Land disposals
  • Sale of private homes
  • Construction contracts
  • Hotel income
  • Rental and other income

A commentary on these revenue streams is set out below.

Group Income Statement

Revenue for the year ended 30 June 2017 was £90.7 million (2016: £101.9 million). This figure excludes two land sales which have been shown as a gain on sale of subsidiary or joint venture, rather than flowing through revenue and gross margin. If these transactions had been direct land sales, revenue would have been in the region of £117.7 million.

The Group sold 780 residential plots (2016: 425 plots) of which 400 plots were at a joint venture site in Aylesbury, Buckinghamshire and 173 plots related to our site in Alperton, Greater London which was a corporate disposal. The balance of 207 plots generated revenue of £22.4 million (2016: £43.3 million).

Inland Homes legally completed 188 open market units (2016: 147) during the financial year, generating revenues of £57.8 million (2016: £51.5 million). The average selling price for a private unit was £306,000 (2016: £337,000).

During the latter part of the financial year the Group entered into three major construction contracts with Housing Associations on land sold by Inland Homes, for a total sum of £41.5 million. One of these contracts was in respect of 28 affordable homes to be provided under a s106 agreement on the last phase of our site at Queensgate, Farnborough where the land was sold for £1.9 million followed by a construction contract for £3.1 million. In addition, the Group entered into construction contracts for a sum of £38.4 million with two Housing Associations in respect of 192 private homes, the land for which was sold to them for a total sum of £24.1 million. The Group recognised revenues of £1.0 million under these contracts and will continue to recognise revenue under contract accounting on a percentage of completion basis throughout the construction programme.

Looking forward, the Group intends to increase this type of activity which will result in an increased proportion of its revenue and corresponding profit to be recognised on a percentage of completion basis over the life of the development in comparison to recognition of revenue and profit on private unit completions at the point of legal completion. This activity will also enable the Group to realise revenue and profitability earlier by selling parcels of consented land, the proceeds from which will reduce net borrowings. The Group will also benefit from these forward funded construction contracts by providing additional development profits without the need to engage in development loans, related expenditure to procure funding and sales and marketing costs. A further advantage is that the Group will have a higher level of forward orders which will protect it against any potential future downturn in the housing market. As a result, the Group is prepared to accept a reduced net margin on such transactions.

Rental income increased to £2.4 million (2016: £2.1 million) with a significant increase in the corresponding operating profit of £2.1 million (2016: £1.7 million). The Group received revenues of £2.6 million (2016: £1.7 million) in operating the Wessex Hotel in Bournemouth where it has recently received planning consent for 88 residential units and a new 46,000 sq ft hotel with associated car parking facilities. Although the net contribution towards operating profit from this revenue stream is relatively small, it saves costs in respect of security, rates, insurance and maintenance whilst taking the site though the planning process.

Gross profit was £19.5 million (2016: £29.6 million), however as explained above, two land sales were shown as gains on sale of subsidiary and joint venture where the profit was £13.0 million. The gross margin on housebuilding was 15.1% (2016: 21.9%). The reduction is due to an increase in unforeseen site wide costs on certain projects and additional remedial costs on certain historic projects. The gross margin from land disposals (including the sale of subsidiary and joint venture) was 38.7% (2016: 39.4%). Contract income showed a gross loss because the Group incurred significant remedial costs as well as liquidated ascertained damages on two construction contracts from Housing Associations that were sub contracted to a contractor that failed last year. Excluding these contracts, construction contract margin was 17.8%.

In line with the strategic decision to increase our in-house construction capabilities, our head count has increased from 39 to 74 over the course of one year. During the year, head office staff increased by 15 and consequently administrative expenses increased by 20.1% from £6.3 million to £7.6 million.

Our associate company, Troy Homes Limited, is in its second operating year and, as expected, further losses were incurred during the start-up phase. The Group has therefore made a provision of £238,000 and the carrying value is now £1.1 million. Troy is expected to make a profit during its financial year ending 31 March 2018.

Finance costs increased marginally by 6.4% to £7.0 million (2016 restated*: £6.6 million). Actual interest charges on borrowings remained static at £4.7 million. This reflects the lower average cost of debt being incurred by the Group, especially when its borrowings have increased from £71.3 million to £94.5 million. Also included in finance costs is notional interest of £1.4 million (2016 restated*: £1.1 million) being the discount applied on deferred consideration on some of the Group's land acquisitions and disposals. The Group has capitalised interest of £1.1 million (2016 restated*: £0.8 million) within inventories as required by IAS 23. Interest cover, expressed as the ratio of operating profit (excluding revaluation gains) to net finance costs (excluding notional interest on deferred consideration) was 4.8 times (2016 restated*: 4.4 times).

Gross profit by segment

Gross Profit

Land sales




Fees & other


Investment property

Investment Property



Development land

Asset by segment

Asset By Segment



Contract & Partnership Housing


Investment Properties



The total tax charge of £3.8 million represents 19.5% of the profit before tax. The corporation tax rate is 19% and the small difference has arisen due to tax losses available for relief and a deferred tax liability on part of the revaluation gain on investment properties. A prior year adjustment of £1.3 million has been made to recognise an additional deferred tax liability relating to the revaluation gains on investment properties due to sufficient capital losses not being available. See note 29 for further information.

Earnings Per Share and Dividends

Basic earnings per share decreased by 44.2% to 7.82p (2016 restated*: 14.01p) per share while basic earnings per share excluding revaluation gains increased by 39.3% to 7.09p (2016 restated*: 5.09p). The Company paid an interim dividend of 0.5p (2016: 0.4p) per share on 23 June 2017 and the Board has recommended a final dividend of 1.2p (2016: 0.9p) per share, increasing the total dividend for the year by 30.7% to 1.7p (2016: 1.3p) per share which delivers a yield of approximately 2.8% based on the share price at 30 June 2017. The proposed final dividend will be payable on 26 January 2018 subject to shareholders' approval, to shareholders on the register at the close of business on 29 December 2017.

EPRA net asset value by segment

EPRA net asset

Stated net asset value



Investment properties

Recommended final dividend

1.2p per share

(2016: 0.9p)

Adjusted EPRA net asset value

96.22p per share

(2016 restated*: 92.34p)

Group Balance Sheet and Financial Position

Net assets at 30 June 2017 were £130.6 million, an increase of 12.2% mainly due to retained earnings and a small issue of new shares to employees as a result of exercising share options. This translates to net assets of 64.62p per share (2016 restated*: 57.66p). The EPRA net asset value per share at 30 June 2017 was 91.88p (2016 restated*: 88.22p) and the adjusted EPRA net asset value was 96.22p (2016 restated*: 92.34p) per share.

The Group has provided a loan facility to its associate, Troy Homes Limited, of £3.1 million which bears a coupon of 8% per annum and expires on 9 October 2020. As at the year end Troy had drawn down £2.9 million of this facility.

Inventories have reduced in line with the sale of residential units and plots during the year as there were no significant land purchases during the financial year. The design proposals at Wilton Park in Beaconsfield have taken longer than originally anticipated in order to make sure that the scheme met the requirements of this prominent site and that of the Local Authority. Therefore, in line with International Accounting Standard 23, the Group has decided to capitalise the borrowing costs in relation to this project and has included £1.1 million within inventories. Accordingly, a prior year adjustment for £1.6 million was made against inventories and reserves brought forward.

Cash flow movements

The Group is owed £28.3 million included in Trade and Other Receivables in both current and non-current assets. This is represented by an amount of £10.8 million in respect of the sale of its interest in a joint venture that held its site at Aston Clinton, Buckinghamshire and £10.8 million in respect of the sale of its site at Alperton, North West London which was undertaken via a corporate disposal.

The Group's net investment and loans across four joint ventures has increased from £11.3 million to £18.4 million. This includes our 50% interest in the former Tesco headquarter's site in Cheshunt, Hertfordshire where we are leading the master planning on the wider regeneration for a scheme of approximately 2,000 residential plots of which approximately 1,350 would be within the land that our joint venture owns.

Other financial liabilities of £20.1 million consists of deferred consideration on two sites in Buckinghamshire.

The term of the Group's borrowing facilities has been improved with 100% of total borrowings being repayable after one year, and 53.5% repayable between three and five years. Our development activities are financed using a £20.0 million committed revolving credit facility expiring in the Autumn of 2019 and land purchases have the benefit of a £25.0 million committed revolving credit facility expiring in over three years. We have also procured a £43.3 million term facility secured against the existing residential units and land at our site in Wilton Park, Beaconsfield. In addition, the Group has the Zero Dividend Preference Shares which have an accrued liability of £17.3 million and are repayable on 10 April 2019. The cash balance at the year end amounted to £26.5 million (2016: £16.7 million) and net borrowings (loans and ZDP liability less cash) were £68.0 million (2016 restated*: £54.6 million) representing net gearing of 52.1% (2016 restated*: 46.9%) on net assets of £130.6 million (2016 restated*: £116.3 million) or 35.0% on EPRA net assets of £194.4 million (2016 restated*: £186.3 million). Net gearing is defined as loans and accrued ZDP liability less cash as a proportion of either net asset value or EPRA net asset value.

Nishith Malde
Finance Director
27 September 2017

St John’s, Chelmsford, Essex

* Further information can be found in note 29 to the accounts