17th Mar 2008 07:01
Inland PLC17 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 byobtaining planning permission, today announces interim results for the sixmonths 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 inthe granting of planning permission on our major site in Farnborough for 399residential plots and approximately 100,000 sq ft of commercial space. We alsoconcluded the acquisition of Poole Investments PLC which provides us with anopportunity to achieve up to 500 residential plots and some commercial space. Webelieve that the current slow down in the house building sector will present uswith some excellent land opportunities. We therefore believe that the short to medium term outlook for Inland remainspositive as we continue to acquire high quality land stocks and produce planningschemes specifically designed to meet the requirements of house builders." For further information please contact: Inland Plc Tel: 01923 713 600Stephen Wicks, Chief ExecutiveNishith Malde, Finance DirectorBuchanan Communications Tel: 020 7466 5000Jeremy Garcia / Susanna GaleDawnay, Day Corporate Finance Limited Tel: 020 7509 4570David Floyd / Alex Stanbury CHAIRMAN'S STATEMENT Introduction It has been a very busy and highly productive six months for Inland. We havecontinued to add to our land bank and expect the sale of a number of our landassets to take place in the second half of the financial year. Our land team hasbeen extremely active submitting planning applications on a number of schemes.Whilst this process continues to be challenging due to over complicated planninglegislation, we remain confident in maintaining our strong track record ofproducing high quality development stock for house builders. Inland continues to identify good land opportunities and the current land bankthat is owned, controlled or where offers have been agreed comprise of 24 sitesrepresenting approximately 1,470 residential plots with a gross developmentvalue of approximately £361m. The Group also has consents for commercialdevelopment 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 landassets during the six months ended 31 December 2007. The Group showed a lossbefore taxation for the period of £1.18m (2006: profit £1.01m). However,conditional contracts have been exchanged subject to discharging a planningcondition for the sale of 24 residential plots, following a successful planningapplication on our site at Hatfield for £3.65m. This leaves Inland with a listedcommercial building on this site comprising 13,000 sq ft, which will be placedon the open market shortly. We anticipate a profit of approximately £900,000 onthe sale of the entire site. Terms have been agreed for the sale of our site inBorehamwood which has planning consent for 14 residential plots. We have gained planning consent in October 2007 at our major site in Farnboroughfor 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 42residential units to improve the overall residential density to 441 plots. Weanticipate 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 attheir expense, is progressing well and once completed it will further enhancethe appeal and value of the site. The annual rental income from the site nowstands at £295,000. We are very pleased with the progress at Farnborough whichdemonstrates the ability of the management team to identify large scale landopportunities, obtain valuable planning permissions and create significantshareholder value. Since the last year end we have continued to increase our land bank and ourstocks and work in progress amounts to £52.0m (2006: £38.8m). In addition weacquired Poole Investments plc which has an investment property that has beenreflected at a fair value of £8.8m. The increase in our land acquisition hasreduced 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 didnot disclose a diluted loss per share as the share options issued to theemployees did not have a dilutive effect. The increase in stocks and work in progress means that we now have 21 sitesowned and where purchase contracts have been unconditionally exchanged at 31December 2007. These sites represent a gross development value of £345m with thebenefit of planning consent. Since 31 December 2007, the Group has also acquiredor agreed terms to purchase 3 sites which can accommodate 51 residential plotswith a gross development value of approximately £16m with the benefit ofplanning consent. Planning applications have been submitted on a further 10sites for 345 residential plots. The acute shortage of land with planning consent is a continuing problem forhouse builders and the sales referred to above demonstrates the demand for sitesin good locations with well thought through planning consent. In spite of thecurrent weakness in the housing market, the long term dynamics relating to thesupply and demand for housing remains unchanged, with the demand for land withplanning consent remaining strong in the areas in which we operate. We believe that the current slowdown is presenting us with some excellent buyingopportunities and whilst planning remains very difficult the consents we obtainare structured to meet the requirements of house builders with the right productmix, 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 tofacing the challenge of producing the required levels of housing stock. Planningauthorities remain understaffed and over worked and the over zealous drive bygovernment for house builders to provide greater quantities of social housingwill ensure demand in the long term will outstrip supply. With an increasingamount of all new build earmarked for social housing, house builders are nolonger being incentivised to meet government targets. Corporate activity and investments The Group completed the acquisition of the remaining 10% of Poole on 3 January2008 and our land team is progressing with plans for a mixed use scheme toenhance the value of the site in Lower Hamworthy in Dorset. As we stated at thetime of the acquisition, this site represents an outstanding opportunity forInland to maximise the return on our investment, once a satisfactory planningconsent has been obtained. On 19 December 2007, the Company announced that it owned 3.03% of M J GleesonPLC 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 aconsideration of £357,000. During the six months to 31 January 2008, Howarthmade a profit before tax of £1.09m and whilst, in line with other housebuilders, trading conditions have become more challenging, the management teamat Howarth has been strengthened by the appointment of a new finance director,technical director and a sales and marketing director. We have every confidencethat these additions to the Howarth management team, who have particularexperience in volume house building will be invaluable in helping the companythrough its next period of growth. The company is currently operating from 7sites with 135 units under construction and has forward sold £20.8m of thecurrent year's residential sales. Outlook Over the last few months some of the major house builders have stated that theyare 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 thebanking sector should provide Inland with good opportunities to acquireadditional brownfield development sites. We have already seen land opportunitiesbeing brought back to us where higher bidders have failed to complete theirtransactions. We are currently able to re-negotiate better terms than hadpreviously been proposed. Market indicators would appear to suggest that further falls in interest ratesare in the pipeline. This should bring more stability to the housing market.Whilst demand for new homes remains sluggish, the requirement for land with theright planning consent remains strong. We have a strong balance sheet and remainfinancially flexible and Inland has a real opportunity to take advantage of anyweakness in the marketplace as and when they arise. We have a considerable number of planning applications in the pipeline andbelieve that the Group's healthy balance sheet and strong land position togetherwith a highly experienced land team provides a positive outlook for the short tomedium 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 5,466Cost of sales (7) (1,810) (2,603)Gross profit 162 2,057 2,863Administrative 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 948Share of profit/(loss) ofassociate 36 (19) 175(Loss)/profit before (1,178) 1,010 1,123taxationIncome tax 5 (41) (306) (328)(Loss)/profit for the period (1,219) 704 795 (Loss)/earnings per shareBasic and diluted(loss)/earnings per share inpence 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 ASSETSNon-current assetsProperty, plant and equipment 7 8,867 59 65Investments 8 7,572 1,006 4,156Investment in associate 8 410 243 385Deferred tax 6,434 159 393 23,283 1,467 4,999Current assetsInventories 51,975 27,119 38,791Trade and other receivables 451 492 2,674Loan to associate 240 2,270 2,000Cash and cash equivalents 11,697 4,568 42,838 64,363 34,449 86,303Total assets 87,646 35,916 91,302 EQUITYCapital and reservesattributable to the Company'sequity holdersShare capital 9 16,216 6,212 16,216Share premium account 45,171 7,635 45,184Retained earnings (756) 238 373Other reserves (1,242) 6 -Total equity 59,389 14,091 61,773 LIABILITIESCurrent liabilitiesTrade and other payables 1,447 321 740Current tax liabilities 599 251 454Deferred purchase consideration 11,861 4,957 9,202Borrowings - 1,700 -Total current liabilities 13,907 7,229 10,396Non-current liabilitiesDeferred purchase consideration 14,350 14,596 19,133Total non-current liabilities 14,350 14,596 19,133Total liabilities 28,257 21,825 29,529Total 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 inrespect ofavailable for sale financialassets - - - 6 6 Net income recogniseddirectly in equity - - - 6 6Profit attributable toshareholders - - 704 - 704 Total recognised income andexpense - - 704 6 710Issue 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 - 44Fair value adjustment inrespect ofavailable for sale financialassets - - - (6) (6) Net income recogniseddirectly in equity - - 44 (6) 38Profit attributable toshareholders - - 91 - 91 Total recognised income andexpense - - 135 (6) 129Issue of shares 10,004 40,407 - - 50,411Issue 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 inrespect ofavailable for sale financialassets - - - (1,242) (1,242)Share based compensation - - 90 - 90 Net income recogniseddirectly in equity - - 90 (1,242) (1,152)Loss attributable toshareholders - - (1,219) - (1,219) Total recognised income andexpense - - (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 operatingactivities(Loss)/profit forthe period beforetax (1,178) 1,010 1,123Adjustments 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 ofacquisition): - 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 29,522Net cash outflowfrom operatingactivities (12,851) (7,205) (12,337)Investing activitiesInterest received 915 193 946Dividends received 166 - 11Purchases ofproperty, plant andequipment (109) (29) (45)Purchase of listedinvestments (8,544) (186) (3,342)Sale of listedinvestments 3,168 - -Acquisition ofsubsidiary, net ofcash acquired 10 (10,638) - -Net cash used ininvestingactivities (15,042) (22) (2,430)Financing activitiesInterest paid (30) (64) (107)Repayments of bankborrowings (3,205) (525) (1,700)New bank loansraised - 1,700 1,175Issue of shares(net of expenses) (13) 9,869 57,422Net cash fromfinancingactivities (3,248) 10,980 56,790Net(decrease)/increasein cash and cashequivalents (31,141) 3,753 42,023Cash and cashequivalents atbeginning of period 42,838 815 815Cash and cashequivalents at theend 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 theGroup) is to acquire residential and mixed use sites and seek planning consentfor development. Inland PLC is the Group's ultimate parent company. It is incorporated anddomiciled in Great Britain. The address of Inland PLC's registered office, whichis 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 theLondon Stock Exchange. This consolidated interim statement have been approved for issue by the Board ofDirectors on 14 March 2008. The financial information set out in this interim statement does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. TheGroup's statutory financial statements for the year ended 30 June 2007 have beenfiled with the Registrar of Companies and is available at www.inlandplc.com. Theauditor's report on those financial statements was unqualified and did notcontain any statement under Section 237(2) or Section 237(3) of the CompaniesAct 1985. 2. Basis of preparation This interim financial report has been prepared in accordance with InternationalAccounting Standard 34 Interim Financial Reporting. The consolidated interim statement should be read in conjunction with the annualfinancial statements for the year ended 30 June 2007, which have been preparedin accordance with IFRS as adopted by the European Union. 3. Accounting policies The accounting policies applied are consistent with those of the annualfinancial statements for the year ended 30 June 2007, as described in thoseannual financial statements. The following additional accounting policy has beenadopted upon the acquisition of Poole Investments PLC: "The Group measures all of the investment property in accordance with IAS 16'srequirements for the cost model, other than those that meet the criteria to beclassified as held for sale (or are included as a disposal group that isclassified as held for resale)." CONSOLIDATED INCOME STATEMENT 4. SEGMENT INFORMATION Property Investment trading property Total £000 £000 £0006 months to 31 December2007 RevenueRental income 113 6 119Management fees 50 - 50Land sales - - - --------- -------- -------- Total 163 6 169 --------- -------- -------- Operating (loss)/profitRental income 111 6 117Management fees 50 - 50Land sales (1,698) - (1,698) --------- -------- -------- Total (1,537) 6 (1,531) --------- -------- -------- 6 months to 31 December2006 RevenueRental income 162 - 162Management fees 300 - 300Land sales 3,405 - 3,405 --------- -------- -------- Total 3,867 - 3,867 --------- -------- -------- Operating profitRental income 162 - 162Management fees 300 - 300Land sales 955 - 955 --------- -------- -------- Total 1,417 - 1,417 --------- -------- -------- Year ended 30 June 2007 RevenueRental income 268 - 268Management fees 323 - 323Land sales 4,875 - 4,875 --------- -------- -------- Total 5,466 - 5,466 --------- -------- -------- Operating profitRental income 263 - 263Management fees 323 - 323Land 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 taxcharge 156 251 507Deferred tax credit (505) 55 (179)Deferred tax asset written off afterinitial recognition inrespect of theacquisition of PooleInvestments 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 averagenumber 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 toequity holders of the Company (1,219) 704 795Weighted average number ofordinary shares in issue 162,150 47,258 80,944Dilutive effect of options treatedas exercisable at the period end(thousands) - - (96) 162,150 47,258 80,848 Basic and diluted (loss)/earningsper 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 CostAt 1 July 2007 - 27 29 31 87Additions 83 17 6 3 109Acquired upon acquisitionof subsidiary 8,704 - - - 8,704 At 31 December 2007 8,787 44 35 34 8,900 DepreciationAt 1 July 2007 - 4 6 12 22Depreciation charge - 3 4 4 11 At 31 December 2007 - 7 10 16 33 Net book valueAt 31 December 2007 8,787 37 25 18 8,867At 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 4,156Additions - 8,544 - - 8,544Transfer to investment insubsidiary - (51) - - (51)Disposals - (2,989) - - (2,989)Fair value adjustment - (2,094) - - (2,094)Notional interest - - - 6 6adjustmentShare 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 issueShares in issue at start of period 162,150,059 32,792,866 32,792,866Shares issued - 29,329,193 129,357,193Shares 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. £000Purchase 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 8,704Debtors 144 144Cash and cash equivalents 18 18Creditors & other payables (572) (572)Loans (3,205) (3,205) ---------- --------- 2,909 5,089Deferred tax (tax losses insubsidiary) - 6,222 ---------- ---------Net identifiable assets 2,909 11,311acquired ========== ========= £000Outflow of cash to acquire business, net of cash acquired:Cash consideration 11,311Cash paid in previous period (51)Cash consideration and direct costsoutstanding at 31 December 2007 (604) --------- 10,656Cash and cash equivalents insubsidiary 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 financialstatements in the half-yearly financial report for the six months ended 31December 2007 which comprises the consolidated income statement, theconsolidated balance sheet, the consolidated statement of changes in equity, theconsolidated cash flow statement and notes 1 to 10 to the consolidated interimstatement. We have read the other information contained in the half yearlyfinancial report which comprises only the chairman's statement and consideredwhether it contains any apparent misstatements or material inconsistencies withthe information in the condensed set of financial statements. This report is made solely to the Company in accordance with guidance containedin ISRE (UK and Ireland) 2410, "Review of Interim Financial Informationperformed by the Independent Auditor of the Entity". Our review work has beenundertaken so that we might state to the Company those matters we are requiredto state to them in a review report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the company, for our review work, for this report, or for theconclusion we have formed. Directors' Responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the Directors. As disclosed in Note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting," as adopted by the European Union. Our Responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 31 December 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union. Grant Thornton UK LLP Chartered accountants London Thames Valley Office Slough 14 March 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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