Final Results

RNS Number : 5006A

Inland PLC

09 October 2009

 

9 October 2009

Inland PLC

("Inland" or the "Company" or the "Group")

Unaudited preliminary results for the year ended 30 June 2009

Inland which specialises in the acquisition of brownfield sites and seeks to enhance their value by obtaining planning permission today announces preliminary results for the year ended 30 June 2009.

Financial highlights

• Revenue £5.22m (2008: £11.01m)

• Operating loss before exceptional costs £3.93m (2008: operating profit £0.71m)

• Exceptional costs before tax £5.22m (2008: £4.78m)

• Pretax loss £10.47m (2008: £4.19m)

• Inventories £41.66m (2008: £47.68m)

• Net asset value per share 24.90p (2008: 32.88p)

Operational highlights

• 25 plots sold in the year

• Acquired RAF West Drayton with joint venture partner

• Land bank owned (including West Drayton) has potential for over 2,000 homes and substantial     commercial development

• Deferred payments either completed or renegotiated

• Current annual rental income of £726,000

• Overheads reduced by 8.3%

• Small pilot scheme of potential build out of some of the land bank ready for sales launch

• Further equity raised from shareholders

Stephen Wicks, Chief Executive of Inland commented: 

"Over the last 12 months Inland has been under pressure due to falling property prices, lack of bank funding, a weak land market and commitments to make deferred land payments on transactions that were agreed in entirely different market conditions.

Notwithstanding these constraints we have managed to trade through extremely difficult circumstances by renegotiating a number of key contracts and achieving a flow of small land sales, increasing our rental income and reducing our overheads. We are now in a better position to progress, particularly as market conditions start to improve.

These are the worst results in our Group's short trading history and I am determined that they will not be repeated.

We own or control one of the most attractive landbanks in the southeast of England and are currently reviewing how best to achieve the greatest return on these assets for our shareholders."

For further information please contact:

Inland Plc Stephen Wicks, Chief Executive Nishith Malde, Finance Director	Tel: [phone]
KBC Peel Hunt Ltd Julian Blunt - Corporate Finance Nicholas Marren - Corporate Broking Marianne Woods - Corporate Broking	Tel: [phone]

CHAIRMAN'S STATEMENT

Introduction

These results come on the back of a vicious downturn in both the general economic climate and the housebuilding industry unlike any other in recent history. The effect on the housing market has been further exacerbated due to the severe constraints in the availability of credit. 

The results for the year ended 30 June 2009 show an operating loss before exceptional costs of £3.93million (2008: £0.71 million) and a loss before tax of £10.47 million (2008: £4.19 million). In line with others in the sector, it has been necessary to make a substantial writedown in the carrying value of our land bank of £3.78m (2008: £4.78m). In addition, in the interests of prudence the Board has decided to make a full provision amounting to £1.43 million against the carrying value of our associate company which like many other housebuilders has also been significantly affected by the current downturn in the sector. We have also written off a significant amount of the deferred tax asset due to the fall in value of our site in Poole.

Operations

The year has been one where we have concentrated on preserving cash and as a consequence we did not acquire any new sites in our own right. Our focus has been in securing planning consents on the sites in our land bank many of which have now been obtained on appeal. I am pleased to report that during the year we obtained residential planning consents on 11 sites for 296 plots and 100,000 sq ft of commercial space. The varied and attractive nature of our land portfolio has meant that although there was a general view that no-one was buying land with planning consent, we managed to sell 5 sites and 2 properties during the year generating £4.51m of cashflow through the most difficult times that the industry has had to face, albeit that a number of the sales were achieved at values below those that had been originally anticipated.  

As reported in the interim statement, the master planning process on our joint venture RAF West Drayton has progressed well and we anticipate submitting a planning application within the next few weeks for approximately 775 residential units and 65,000 sq ft of commercial space that will include a primary healthcare centre, a pharmacy and an 80 bed care home. The joint venture agreement with our partner has been varied whereby in the event of a change of control of Inland PLC prior to receipt of planning consent, our partner will be entitled, at any time during the period of 60 business days following the date of the change of control, to terminate the joint venture. In return for agreeing to this variation Inland has the ability to charge management fees to the joint venture company of up to £2.5 million.  To date Inland's investment in the project amounts to £250,000.

Our current land portfolio comprises approximately 2,080 residential plots and 290,000 sq ft of commercial space. Consent has been secured on 690 residential plots. The Board believes that on a fully consented basis the residential element of our land portfolio would have a gross development value of £420m, including West Drayton.

Inland's original objective was to obtain planning consent on the sites it acquired before selling them to housebuilders at a profit, having added significant value through the planning process. In the current climate, in order to maximise the value from some of our sites the Board is exploring the prospect of building out some of the sites either as principals or by way of joint ventures. As part of this evaluation the Board has selected two sites and accordingly we have developed our site in Byfleet, Surrey as principals and the marketing campaign for the 14 two bedroom apartments will be launched shortly.  The construction of this project has been substantially funded by way of senior debt provided by a merchant bank and secured on the development.  We have also commenced construction of a showhouse complex at Queensgate, Farnborough where Inland will develop part of the 370 consented plots, again by utilising senior debt finance secured against the development. In recent weeks there has been a noticeable increase in interest from housebuilders in our land bank and the Board still expects to sell certain of our sites to generate cash where we receive offers that match our expectations.

The Board notes that in recent weeks, a number of the major housebuilders have announced fund raisings in order to facilitate further investment in their respective businesses including land purchases.  

Financial summary

During the year ended 30 June 2009, the Group generated Revenue of £5.22 million of which £4.51 million was achieved by way of land sales and £0.71 million from rental and other income. The current annualised rental income amounts to £726,000 including £72,000 at RAF West Drayton. Overheads have been strictly controlled and were reduced by £184,000 over the previous year.

As referred to above, due to deteriorating market conditions, we have made a write down of £3.80 million in the carrying value of our land portfolio and we have taken a full provision against the carrying value of our investment in associate of £1.43 million as an exceptional cost.

The Board do not recommend the payment of a dividend.

Net assets at 30 June 2009 stood at £40.4 million (2008: £53.32 million) representing 24.9p per share at that date. Bank borrowings at the year end amounted to £6.57 million equating to gearing of 16.3%.  The Group's revolving credit facility of £10m with the Royal Bank of Scotland expires on 15 December 2009 and initial discussions have already commenced with the bank and the Board has a reasonable expectation for the facility to be renewed.  A number of our sites were purchased on deferred consideration terms and we successfully renegotiated the terms on four sites so that the payments were managed in line with our cash flow. As at the date of this report the outstanding deferred considerations amounts to £9.50 million of which £3.5 million is due in the current financial year and the balance in the following financial year.  

During July 2009, under the authority granted at the last annual general meeting, the Board issued 12,665,000 shares at 10p per share raising further equity of £1.27 million.

Outlook

There are some signs that whilst weak, the market is stabilising and our immediate task will be to capitalise on the value of our substantial and well located land bank. We are now in a position to move the business forward from an appropriate base and if current conditions persist we do not envisage further write downs of our land bank being required. The Board remains cautiously optimistic that provided conditions do not deteriorate further that an early return to profitability will now be achieved.

Terry Roydon

Chairman

INLAND PLC

GROUP INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________    

		2009 Before exceptional costs	2009 Exceptional costs (note 1)	2009	2008 Before exceptional costs	2008 Exceptional costs (note 1)	2008
		(Unaudited)	(Unaudited)	(Unaudited)	(Audited)	(Audited)	(Audited)
	Note	£000	£000	£000	£000	£000	£000
Revenue		5,219	-	5,219	11,006	-	11,006
Cost of sales		(5,434)	(3,798)	(9,232)	(6,565)	(4,783)	(11,348)
Gross loss		(215)	(3,798)	(4,013)	4,441	(4,783)	(342)
Administrative expenses		(2,024)	-	(2,024)	(2,208)	-	(2,208)
Loss on investments		(1,689)	-	(1,689)	(1,525)	-	(1,525)
Operating loss		(3,928)	(3,798)	(7,726)	708	(4,783)	(4,075)
Finance cost - Interest expense		(491)	-	(491)	(103)	-	(103)
Finance cost - Notional interest		(847)	-	(847)	(1,455)	-	(1,455)
Finance income - Interest receivable and similar income		247	-	247	1,427	-	1,427
		(5,019)	(3,798)	(8,817)	577	(4,783)	(4,206)
Share of (loss)/profit of associate		(224)	-	(224)	17	-	17
Impairment of investment in associate		-	(1,426)	(1,426)	-	-	-
Loss before tax		(5,243)	(5,224)	(10,467)	594	(4,783)	(4,189)
Income tax	2	137	(2,360)	(2,223)	317	-	317
Loss for the year		(5,106)	(7,584)	(12,690)	911	(4,783)	(3,872)
Attributable to:
Equity holders of the Company				(12,690)			(3,872)
Loss per share for loss attributable to the equity holders of the Company during the year
- basic	3			(7.83)p			(2.39)p

INLAND PLC 

GROUP STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________

		2009	2008
		£000	£000
Loss for the year		(12,690)	(3,872)
Other comprehensive income:
Loss on available-for-sale financial assets		(409)	(4,397)
Other comprehensive income for the year, net of tax		(409)	(4,397)
Total comprehensive income for the year		(13,099)	(8,269)

INLAND PLC 

GROUP STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________

		2009	2008
	Note	£000	£000
ASSETS
Non-current assets
Investment property		8,801	8,801
Property, plant and equipment		81	87
Investments		250	825
Investment in associate		-	756
Available-for-sale financial assets		-	3,064
Deferred tax	4	4,456	6,741
		13,588	20,274
Current assets
Inventories		41,656	47,683
Trade and other receivables		3,698	4,752
Loan to associate		2,000	475
Listed investments held for trading (carried at fair value through profit and loss)		471	842
Cash and cash equivalents		72	4,600
		47,897	58,352
Total assets		61,485	78,626
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital		16,216	16,216
Share premium account		45,184	45,184
Treasury shares		(366)	(366)
Retained earnings		(15,848)	(3,317)
Other reserves		(4,806)	(4,397)
Total equity		40,380	53,320
LIABILITIES
Current liabilities
Bank loans and overdrafts		6,566	-
Trade and other payables		1,923	2,697
Other financial liabilities	5	7,975	14,040
Total current liabilities		16,464	16,737
Non-current liabilities
Other financial liabilities	5	4,641	8,569
Total non-current liabilities		4,641	8,569
Total liabilities		21,105	25,306
Total equity and liabilities		61,485	78,626

INLAND PLC 

GROUP STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2009

___________________________________________________________________________

	Share	Share	Treasury	Retained	Other
	capital	premium	shares	earnings	reserves	Total
	£000	£000	£000	£000	£000	£000
At 30 June 2007	16,216	45,184	-	373	-	61,773
Share based payment	-	-	-	182	-	182
Purchase of own shares	-	-	(366)	-	-	(366)
Transactions with owners	-	-	(366)	182	-	(184)
Loss attributable to shareholders	-	-	-	(3,872)	-	(3,872)
Other comprehensive income:
Fair value adjustment in respect of available for sale financial assets	-	-	-	-	(4,397)	(4,397)
Total comprehensive income for the year	-	-	-	-	(4,397)	(4,397)
At 30 June 2008	16,216	45,184	(366)	(3,317)	(4,397)	53,320

Share based payment	-	-	-	159	-	159
Transactions with owners	-	-	-	159	-	159
Loss attributable to shareholders	-	-	-	(12,690)	-	(12,690)
Other comprehensive income:
Fair value adjustment in respect of available for sale financial assets	-	-	-	-	(409)	(409)
	-	-	-	-	(409)	(409)
At 30 June 2009	16,216	45,184	(366)	(15,848)	(4,806)	40,380

INLAND PLC 

GROUP STATEMENT OF CASH FLOW

FOR THE YEAR ENDED 30 JUNE 2009

__________________________________________________________________________

		2009	2008
		£000	£000
Cash flows from operating activities
Loss for the year before tax		(10,467)	(4,189)
Adjustments for:
- depreciation		34	25
- share based compensation		159	182
- fair value adjustment for listed investments		513	1,863
- profit on disposal of tangible fixed assets		(1)	-
- loss/(profit) on disposal of listed investments		1,176	(338)
- interest expense		1,338	1,558
- interest and similar income		(247)	(1,427)
- Share of profit of associate		223	(17)
- Impairment of investment in associate		1,426	-
- Tax received/(paid)		206	(454)
Changes in working capital (excluding the effects of acquisition):
- decrease/(increase) in inventories		6,027	(8,892)
- decrease in trade and other receivables		(634)	(202)
- increase in trade and other payables		(11,644)	(5,807)
Net cash outflow from operating activities		(11,891)	(17,698)
Cash flow from investing activities
Interest received		179	1,115
Dividends received		19	302
Sale of tangible fixed assets		12	-
Purchases of property, plant and equipment		(39)	(133)
Equity investment in associate		-	(359)
Convertible loan stock in associate		-	-
Purchase of investments		(422)	(15,396)
Purchase of own shares		-	(366)
Sale of investments		1,511	8,859
Acquisition of subsidiary, net of cash acquired		-	(11,267)
Net cash used in investing activities		1,260	(17,245)
Cash flow from financing activities
Interest paid		(463)	(91)
Bank loans repaid		-	(3,204)
Net cash from financing activities		(463)	(3,295)
Net decrease in cash and cash equivalents		(11,094)	(38,238)
Net cash and cash equivalents at beginning of period		4,600	42,838
Net cash and cash equivalents at the end of the period		(6,494)	4,600

Cash and cash equivalents		72	4,600
Bank loans and overdraft		(6,566)	-
		(6,494)	4,600

INLAND PLC 

NOTES TO THE PRELIMINARY ANNOUNCEMENT

FOR THE YEAR ENDED 30 JUNE 2009

__________________________________________________________________________

1.    EXCEPTIONAL COSTS

The Group conducted a review of the net realisable value of its land bank in view of the deterioration in the UK housing market. Where the estimated future net realisable value of the site is less than its carrying value within the balance sheet, the Group has impaired the land value. This has resulted in an impairment of £3.798m (2008: £4.783m).

Due to the current downturn in the housing market, our associate company, Howarth has suffered significant losses and the Directors have taken the view that the carrying value of the investment in Howarth, both by way of equity and convertible loan has been permanently impaired and have therefore provided £1.426m (2008: nil) against this investment.

Upon the acquisition of Poole Investments PLC, the fair value of the consideration was allocated to the assets in the appropriate category. One of these categories was deferred tax of £6.23m. As a result of the substantial fall in the housing market the anticipated taxable profit has reduced significantly and accordingly £2.36m of deferred tax has been written off as an exceptional cost.

2.    Income tax 

	2009	2008
	£000	£000
Corporation tax charge	-	5
Adjustments in respect of prior year	-	(206)
Tax credit on associate's loss	(62)	-
Deferred tax charge/(credit)	2,285	(571)
Deferred tax asset written off after initial recognition in respect of Poole Investments PLC	-	400
Change in tax rate	-	55
	2,223	(317)

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the tax rate applicable to profits of the consolidated companies as follows:

	2009	2008
	£000	£000
Loss before tax	(10,467)	(4,189)
Loss on ordinary activities multiplied by the standard rate of corporation tax in the UK of 28% (2008: 29.5%)	(2,931)	(1,236)
Expenses not deductible for tax purposes	19	7
Non utilisation of tax losses	2,775	442
Change in rate of tax	-	55
Other differences	-	17
Initial recognition of Poole Investments PLC	-	400
Previous losses no longer expected to be utilised	2,360	-
Losses carried back	-	204
Adjustment in respect of prior periods	-	(206)
Tax charge/(credit)	2,223	(317)

3.    LOSS  per share

The loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

	2009	2008
Loss attributable to equity holders of the Company (£'000)	(12,690)	(3,872)
Weighted average number of ordinary shares in issue ('000)	162,150	162,150
Basic loss per share in pence	(7.83)p	(2.39)p

4.    deferred tax

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

	£000
At 1 July 2008	6,741
Income statement credit	(2,285)
At 30 June 2009	4,456

The movement in deferred tax assets is as follows:

	Accelerated tax
	depreciation £000	Losses £000	Other £000	Total £000
At 1 July 2008	(3)	5,936	808	6,741
Previous losses no longer recognised	-	(2,360)	-	(2,360)
Charged/(credited) to income statement	(1)	8	68	75
At 30 June 2009	(4)	3,584	876	4,456

The deferred tax asset is recoverable as follows:

	2009 £000	2008 £000
Deferred tax asset to be recovered after 12 months	4,456	6,741
	4,456	6,741

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. The Group did not recognise deferred income tax assets of £8,223,000 (2008: £2,527,000) that can be carried forward against future taxable income.

5.    Other financial liabilities

	2009 £000	2008 £000
Deferred purchase consideration on inventories falling due within one year	7,975	14,040

Deferred purchase consideration on inventories falling due
between one and two years	4,641	4,179
between two and three years	-	4,390
	4,641	8,569

The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Flexibility is achieved by bank loans and overdraft facilities.

A first charge on property included within inventories has been granted to some of the vendors.

6.    PUBLICATION OF NON STATUTORY ACCOUNTS

The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The Group Income Statement, the Group Statement of Comprehensive Income, the Group Statement of Financial Position at 30 June 2009, the Group Statement of Changes in Equity and the Group Statement of Cash Flow and associated notes for the year then ended have been extracted from the Group's financial statements. Those financial statements have not yet been delivered to the Registrar, nor have the auditors reported on them.

 

END

 

 

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