Chairman's Statement

Terry Roydon
Non-executive Chairman

A great deal of effort has been focused on developing a platform for the future expansion of the business and I am confident that shareholders will begin to see the fruits of this labour in the near future.

Operationally and strategically, this has been yet another significant year for Inland Homes, which now has a strengthened management team, has progressed on a number of important projects and has entered the new financial year with a sound balance sheet. A great deal of effort has been focused on developing a platform for the future expansion of the business and I am confident that shareholders will begin to see the fruits of this labour in the near future.

The appointment of Gary Skinner as Managing Director of Inland Limited, our main operating subsidiary, in February 2016 has added additional expertise to the management team and was an important step in our strategic decision to develop our in-house capability to "self-deliver" our homes, rather than engaging external main contractors on our schemes. This will enable the Group to have greater control and more certainty over delivery, as well as allowing our homes to be built more competitively. Gary was previously Director of Operations at Wilmott Dixon, a major contractor, where he was responsible for the delivery of over 800 homes per annum, and his impact at Inland is already delivering tangible benefits to the business.

Operationally, the geographic focus of the Group continues to be in the South East of England and the outer London Boroughs, where there is a shortage of an adequate, sustainable supply of land with planning consent and also of homes within an affordable price bracket. The Group has delivered another set of robust annual results, with turnover for the year at £101.9 million (2015: £114.2 million) and profit before tax at £32.9 million (2015: £34.0 million), including a revaluation surplus on our investment properties of £18.0 million (2015: £14.5 million) which contributed to a 30% increase in net asset value to £116.0 million (2015: £88.8 million).

As signalled in our 2015 Annual Report and Accounts, the Board has adopted the performance measures of the European Public Real Estate Association (EPRA), in common with most UK listed companies in the real estate market. The EPRA net asset value reflects the unrealised value within projects, created by the increasing value of our land bank as we go through the different stages involved with the planning process and gives a more up to date representation of our key assets. The EPRA net asset value and the adjusted EPRA net asset value of the Group at 30 June 2016 was 86.63p and 91.54p per ordinary share respectively and has been determined as follows:

Shares in issue (000)201,779201,779
Dilutive effect of options (000)2,413
Dilutive effect of deferred bonus shares (000)1,027
Dilutive effect of growth shares (000)8,000

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

per share
per share
Current net asset value116,03254.42p116,03257.50p
Unrealised value within projects67,89631.84p67,89633.65p
Reverse deferred tax liability on investment property7870.37p7870.39p
EPRA net asset value184,71586.63p184,71591.54p
Deferred tax on uplift at 19%(6.05)p(6.39)p
EPRA net asset value after deferred tax80.58p85.15p

Our financial performance was affected by a contractor engaged by Inland Homes running into financial difficulties, resulting in the delay of 23 legal completions, the proceeds from which will now fall into the year ending 30 June 2017. The actions taken to strengthen our in-house construction team meant that the Group was able to quickly take full control of the relevant sites and all of the related construction activity, which significantly limited the downside suffered by the Group.

During the year, Inland Homes sold 168 homes (2015: 287) (including 21 for Housing Association equivalent units (2015: 39)) at an average price of £337,000 (2015: £264,000) per private unit. Fewer homes were sold this year compared to last year, partly caused by delays in finishing the 23 units referred to above and partly because the previous year's sales numbers were flattered by a bulk sale of 59 units. Inland Homes currently has 321 units under construction across 10 sites, which demonstrates the momentum driving this part of the Group's activities. The timing of these projects together with planned land sales are such that a major part of our profitability will be realised in the second half of our current financial year. Figures for the forward sales of homes, where units have been reserved or where contracts have been exchanged, remain strong and currently total £22.5 million.

As an expert in the regeneration of challenging brownfield sites that other housebuilders are unwilling to take on, the Group's position remains strong. The Group sold 425 (2015: 440) consented plots to other housebuilders in the year, demonstrating the continued market appetite for these opportunities.

Artist's impression of proposed Randalls development in Uxbridge, Middlesex

Our rental income for the year increased by 165% to £2.1 million (2015: £0.8 million). Further increases are anticipated in the year to come as we continue to intensively manage our commercial and residential portfolio, and effectively exploit the short term rental opportunities (such as car parking or the use of our sites by production companies for filming) provided by our brownfield sites as they are navigated through the planning process.

Worthy of comment is the significant increase in the size of our strategic land bank (sites which are next to existing settlements and are highly likely to get zoned for development because the local authority is short of a five year land supply). From virtually no such holdings 18 months ago, we now have 17 options, delivering control over 330 acres, which offer the potential for over 1,600 residential plots.

Including strategic land, I am pleased to report the entire land bank has increased by 29% to a record 6,681 plots (2015: 5,176), a significant achievement by any measure and putting us in a good position to capitalise on these opportunities in the medium to long term.

Including strategic land, I am pleased to report the entire land bank has increased by 29% to a record 6,681 plots.

The Group's balance sheet has been strengthened during the period, with cash balances of £16.7 million (2015: £21.4 million) at the year end and net borrowings (defined as loans and the accrued ZDP liability less cash) amounting to £54.6 million (2015: £34.9 million). Borrowings have increased post year end due to continuing investment in land opportunities and a further increase in work in progress due to the momentum in our housebuilding activities.

Given the robust underlying performance of the Group, I'm pleased to report that the Board is proposing to increase the final dividend by 28.6% from 0.7p to 0.9p per share, subject to shareholder approval at the upcoming AGM, which is to be held on 1 December 2016. Together with the interim dividend of 0.4p per share paid in May 2016, this brings the total dividend for the year to 1.3p, an increase of 30%. The final dividend will be paid to shareholders on 27 January 2017.

The dividend increase is indicative of our confidence in the business and our strategic position in the market going forward. It remains too soon to judge with any confidence the effect that the result of the EU Referendum will have on the new homes market. However, the market fundamentals remain strong, supported by long term unfulfilled demand. To date, interest in our well-located, lower cost, quality homes has remained largely unaffected by the Brexit decision.

Finally, I should like to extend my thanks once again to our small, but highly skilled and highly motivated team for their continued hard work in building a strong and effective Company in Inland Homes.


Artist's impression of proposed Abbey Wharf development in Alperton, Middlesex

Terry Roydon
Non-Executive Chairman
13 October 2016

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