Final Results

RNS Number : 3283B

Inland Homes PLC

20 September 2018

 

20 September 2018

 

Inland Homes Plc

(the 'Company' or the 'Group')

Preliminary results for the year ended 30 June 2018

Record plot sales and homes delivered underpins strong financial performance, as robust demand for new, lower priced homes continues in the South and South East

Inland Homes Plc (AIM: INL), the leading brownfield developer, housebuilder and partnership housing company with a focus on the South and South East of England, today announces its preliminary results for the year to 30 June 2018.

Financial highlights

·      EPRA NAV per share (undiluted) up 6.3% to 102.28p (2017: 96.22p)

·      9.0% increase in net asset value to £142.4m (2017: £130.6m)

·      Profit before tax of £19.3m (2017: £18.1m, before a revaluation uplift of £1.5m)

·      29.2% increase in proposed final dividend to 1.55p (2017: 1.2p) per share.

Continued operational scale supporting record output and increasingly diverse revenue streams

·    Maintained healthy land bank at 6,870 plots (2017: 6,776), with an anticipated gross development value of £2.1 billion, including 1,714 plots with planning consent or resolution to grant (2017: 2,105)

·     A record 837 residential plots sold (2017: 780) and completion of 275 open market homes (2017: 188), at an average sales price of £293,000 (2017: £306,000) and 79 partnership home equivalents, generating revenues of £147.4m (2017: £90.7m), an increase of 62.5%. The number of open market homes to be completed in the current financial year is expected to be lower than in the previous period, due to the cyclical nature of the construction programme.  However, the number of partnership home equivalents is expected to increase

·      Private housing forward order book of £19.7m (2017: £19.9m)

·    Significant Partnership housing business growth delivered a 287% increase in contracted income from £3.1m to £12.0m, with a construction order book of approximately £100m, reflecting demand from local authorities and housing associations for a turnkey product that can support government-set targets. Highlights included:

o  A £65m contract secured with A2 Dominion, a top ten housing association, for the delivery of 357 high quality, one-to-five storey homes

·   Largest ever planning application submitted for 1,853 homes and in excess of 18,000 sqm of commercial space at Cheshunt Lakeside, a major South East UK regeneration scheme

·    682 homes under construction, including 220 partnership housing units, on course to meet target of delivering 1,000 homes per year by 2021

·     Supporting the evolving operations and maturing of the business, staff numbers increased to 105, up from 74 last year

·     Appointment of two experienced Non-Executive Directors, Laure Duhot and Brian Johnson to the Board

·     Post-period registration as a provider of social housing will see Company develop, hold and manage Section 106 homes, comprising a blend of shared ownership and social housing units for rent.

Favourable market dynamics including chronic undersupply of suitable housing in the Group's target markets and political support for first time buyers

·   Demand for consented and unconsented land within the London suburbs, home counties and the South East remains strong amongst the major housebuilders, local authorities and housing associations

·     Strong levels of employment, wage growth and relatively low interest rates supporting existing and prospective home owners

·   Government initiatives, including the Help to Buy Scheme and recently announced Homes England and Barclays partnership demonstrate public sector appetite for increased delivery.

Stephen Wicks, Chief Executive at Inland Homes, commented:

"This has been another strong year for the Group, both operationally, with our activity delivering healthy growth in revenues, profit and net asset value, as well as strategically as we continue to pivot the business towards a more robust, diversified and adaptable model. Furthermore, our margins on new developments for open market sale are expected to increase as the expansion in our in-house build capacity results in additional buying power and general efficiencies within the supply chain. Revenues are being generated from housebuilding, brownfield site regeneration, land sales, partnerships with housing associations, whilst at the same time we are growing our exposure to the Private Rented Sector and social housing.

"Despite potential political and regulatory headwinds, the overall health of the sector is positive, particularly the part of the market in which we operate and where we believe there will continue to be ongoing support for the products that we are offering. Our priority is to build on the strong financial performance during the period and, with a significantly enlarged, highly qualified team in place, we believe we are now in a position to effectively manage this increasingly broad range of activity and to meet our growth ambitions for Inland Homes."

  Enquires:

Inland Homes plc:	Tel: [phone]
Stephen Wicks, Chief Executive
Nishith Malde, Finance Director
Gary Skinner, Managing Director
Panmure Gordon (UK) Limited	Tel: [phone]
Dominic Morley
Erik Anderson
FTI Consulting:	Tel: [phone]
Dido Laurimore
Richard Gotla
Claire Turvey

Notes to Editors:

Incorporated in the UK in 2005, Inland Homes plc is an AIM listed specialist housebuilder and brownfield developer, dedicated to achieving excellence in sustainability and design.

Inland Homes acquires brownfield land in the South and South-East of England principally for residentially led development schemes. The business then enhances the land value by obtaining planning permission, before building open market and affordable homes or selling surplus consented land to other developers to generate cash.

The Company is committed to extensive public and community consultation in order to ensure that, where possible, local community needs and objectives are met.

Inland's aim is to create sustainable communities and homes which set a benchmark for all future developments in the South of England. The Company is always looking for brownfield sites without planning permission for future development.

For further information, please visit the Inland Homes website at www.inlandhomes.co.uk

 

Chairman's statement

Overview

This has been another strong year for the Group, both operationally, our activity delivering healthy growth in revenues, profit and net asset value, as well as strategically as we continue to pivot the business towards a more robust, diversified and adaptable model. Revenues are being generated from housebuilding, brownfield site regeneration, land sales, partnerships with housing associations, whilst at the same time we are growing our  exposure to the Private Rented Sector and social housing. Our priority is to build on the strong financial performance during the period and, with a significantly enlarged, highly qualified team in place, we believe we are now in a position to effectively manage this increasingly broad range of activity and to meet our growth ambitions for Inland Homes.

Revenue increased to £147.4m (2017: £90.7m) with the completion of 275 open market homes (2017: 188) and 79 partnership equivalents (2017: 37) as well as the sale of a record number of 837 building plots (2017: 780). Despite these sales and the use of plots for our own developments, we were still able to increase the size of the land bank to 6,870 plots (2017: 6,776) which demonstrates the scale of the underlying activity levels.

Results and dividend

The Group achieved a profit before revaluation gains and tax of £19.3m (2017: £18.1m), an increase of 6.6%.  The undiluted EPRA net asset value per share has increased by 6.3%, from 96.22p to 102.28p per share, while net asset value per share has increased by 9.0% to 70.46p (2017: 64.62p).  In August 2018, we  extended the maturity of the zero dividend preference shares from 10 April 2019 to 10 April 2024.  We are also in discussions with a number of banks to increase our revolving credit facility to support our expanding house building operations.

On the back of another strong set of results and the continued progress being made by the Group, the Board has recommended an increase in the payment of a final dividend by 29.2% from 1.20p to 1.55p per share subject to shareholder approval at the Annual General Meeting to be held on 27 November 2018.  This together with the interim dividend of 0.65p (2017: 0.50p) per share equates to a total dividend of 2.20p (2017: 1.70p) per share, an increase of 29.4%.

Operations

Following a considerable and carefully executed recruitment programme, we now have a high quality and scalable construction business in place. At the same time, the land team has also been strengthened and is well placed to manage the significant number of pipeline opportunities ahead of us.

Our in-house construction team is increasingly focused on the delivery of partnership housing, where we can provide turnkey developments for housing associations, other public bodies and operators in the private rental sector. Our order book currently stands at circa £100m.

In March, we submitted our largest planning application to date, for 1,853 homes at Cheshunt Lakeside, the former Tesco headquarters. It is the major brownfield site in Broxbourne Borough and we are working very closely with the Council to ensure early delivery.  We are anticipating a resolution to grant planning permission before the end of the year.

The planning application at our flagship scheme at Wilton Park, Beaconsfield has now been submitted for over a year. Although progress has been slower than we would have anticipated we remain in active dialogue with the local authority on the 100-acre site, which it has allocated for development. Whilst we are confident that we will achieve the necessary permissions, we are considering the options open to us over the coming months. In the meantime, the site continues to produce rental income of approximately £1.5m per annum.

Corporate Governance

With effect from 28 September 2018, all AIM companies are required to adopt a recognised corporate governance code and to make additional corporate governance related disclosures on their websites.  I am pleased to announce that the Company has adopted the Quoted Companies Alliance's Corporate Governance Code (QCA Code). Notwithstanding that the requirement to adopt a recognised code came into force after the date to which the Group's financial statements have been prepared, we have prepared the relevant sections of our accounts as if the requirement to adopt that code had been in force during the financial year ended 30 June 2018. 

The Board

During the year we welcomed Laure Duhot and Brian Johnson to the Board as new non-executive Directors. Laure brings over 30 years of senior executive level experience in the investment banking and property sectors, specialising in alternative real estate assets and Brian brings a wealth of sector expertise having held senior management and non-executive positions within the housing, social care and commercial sectors.

In another change to our Non-executive Board, we are pleased to announce the appointment of Simon Bennett as Senior Independent Director effective from 13 September 2018.  Simon has been an independent Non- executive Director since March 2007 and has chaired the Remuneration Committee since that date.

We were also pleased to add Gary Skinner to the Board as Managing Director in April 2018. Gary was previously Director of Operations at Willmott Dixon Housing, a privately-owned contracting and interior fit-out group, where he was responsible for the delivery of up to 1,000 homes per annum. Since joining the Group, in February 2016, Gary has had a tremendous impact and has been an integral part of our growth, having led the formation and expansion of our construction operations.

As announced in February 2018, Paul Brett, our Land Director since 2011, decided to leave the Group to pursue his own interests and he stepped down from Board with effect from 16 April 2018 but will remain as a consultant to the Group, supporting, in particular, the ongoing planning application processes at its significant development opportunities at Wilton Park in Beaconsfield and Cheshunt Lakeside in Hertfordshire. On behalf of the Board, I should like to thank Paul for his contribution to the Group since its formation and wish him well in his new endeavours.

Outlook

Despite wider market uncertainty, we continue to see robust demand for our products, whether it be consented land or affordably priced homes. Whilst prices have softened slightly in the Greater London area and the industry awaits further clarity on the long term future of the Help to Buy scheme, we are well positioned through our increasingly diverse revenue streams to benefit from the fundamental lack of suitable housing in our target markets.  We have delivered significant progress this year and strong financial metrics and now have a platform in place that provides excellent visibility over our future growth ambitions.

Terry Roydon

Chairman

Chief Executive's review

We have had yet another very good year of further growth which has once again generated solid financial results, as management continues with the implementation of our expansion strategy and the diversification of the Group's revenue streams.

Over the last three years, we have built a highly accomplished construction division, now comprising 79 employees, which has the ability and experience to take on the most complex brownfield projects.  Our core skillset at Inland Homes has always been the ability to source attractive land opportunities and secure planning permissions from challenging sites, for which key management has a successful, 25 year unbroken track record.  By adding the building operations to our existing land platform, we have created a winning formula for the delivery of our new homes and, importantly, the capability to provide "turnkey" land and building partnerships to Housing Associations, PRS funds and local authorities.  This element of our business is gathering momentum and we have circa £100m of Housing Association contracts in place for the delivery of over 500 affordable homes over the next five years.  The total number of units under construction, including both private and partnership homes, at the year end was over 680, a record for the Group.

Inland Homes has always taken an entrepreneurial approach to the growth of the business and we have a history of looking at things differently, focusing our efforts on finding and creating new opportunities where they seldom existed before. We have an outstanding track record over the last decade of managing schemes through the complex UK planning process and of tackling challenging sites, where our expertise can be deployed to the benefit of the wider community. 

Our strategy

With this in mind, my job as Chief Executive of the Group is to execute the strategy formulated by the Board and to deliver it effectively, ultimately generating value for our shareholders. This time last year, I stated that our Group strategy continues to focus on the following four strategic goals:

·    Increasing the size of our strategic land bank, including brownfield sites where residential development is expected; the tactical acquisition of sites which unlock future potential; and locations which will become key housebuilding terrain in the future.

·   Adding value to our land bank by navigating what are often complex sites through the planning system, requiring a unique skillset, and selling them to other developers, realising attractive short-term margins and generating cash to fund our operations.

·  Maximising the value from our land bank through housing development and direct sales, as well as providing housebuilding services to other landowners.

·   Ensuring a strong and flexible balance sheet by maintaining borrowings at a manageable level through a focus on cash management and with a maturity profile appropriate to our potential future cash flows.

In a changing environment it is important that the strategy evolves to take account of wider economic factors as well as specific industry issues, including affordability and efficient delivery, which are at the forefront of our thinking. Against this backdrop, the key components of our strategy include:

NEW HOMES FOR SALE

Maintain our focus on providing affordably priced (average sales price of £293,000), high quality homes, in those locations in the South and South East of England.

PLOT SALES

Continue our policy of selling consented plots to third parties to generate cash and profitability, with a bias towards sales where our building division can secure the construction contract.

PARTNERSHIP HOUSING

Delivery of homes for housing associations where contract income will provide a regular positive cash flow and a contribution towards profit.

LAND ACQUISITION

Grow our land bank year-on-year through a mix of unconditional brownfield purchases and strategic land options.

RENTAL INCOME

Improve the short term letting income from our residential and commercial assets whilst sites are going through the planning process.

Strategy evolution in action

In line with our efforts to consistently evolve our strategy against this changing market backdrop, we have two new embryonic businesses, established this year following significant research and viability assessments, that we believe will support our ambitions for sustainable growth.

ROSEWOOD HOUSING

As announced on 22 August 2018, Rosewood Housing, a wholly owned subsidiary of Inland Homes has been registered as a for profit provider of social housing by Homes England, the Regulator of Social Housing, following a two year qualification period.  This registration opens up the opportunity for Rosewood to develop, hold and manage certain section 106 homes, comprising a mix of rented and shared ownership units that need to remain within the regulated sector whilst owned by a Registered Provider.

In particular, the Company expects to generate visible and attractive income from the "staircasing" of shared ownership homes, whereby residents can buy further shares in their property once they have lived in it for a certain period of time.

Once we have achieved critical mass in this specialist sub-sector, it may be appropriate for us to partner with an institutional investor to help deliver further portfolio growth.  This activity will be highly complementary to our develop-to-sell strategy and will leverage the capabilities of our rapidly growing in house construction division.

HUGG HOMES

Based on current trends more than 100,000 homeless families in England will be living in temporary accommodation soon.  Since 2010, the number has grown by 61% and in 2016 alone local authority spend on this form of housing - which is often in unsuitable and cramped bed and breakfast or hostel accommodation, with no stability - was a cost to the tax payer of £845m, with many councils having to subsidise the accommodation beyond the local housing allowance.

Inland Homes has been working on a new modular housing product for some time, www.hugghomes.co.uk, based on a concept that provides high quality modular homes, offering a flexible and responsive solution to the housing shortage through bespoke temporary accommodation that is focused on sustainability and a commitment to design and manufacturing excellence.

Hugg Homes is based on a principle of using land that would be otherwise inactive during the planning process, enabling "pop up" developments in key locations.  It will give local authorities the agility to react quickly to emerging temporary local housing requirements and ensure that vacant land is efficiently utilised in support of social needs.

The first temporary consents have been secured in Southampton, Hampshire and Cheshunt, Hertfordshire for a total of 76 units with the first installation expected to be complete and occupied by the end of this calendar year.

The units will be let to local authorities for a three to five year period and the Company has an agreement with an experienced manufacturer that has the capacity to service our requirements. The Hugg units have an estimated 60 year lifespan and at the end of each lease period are transportable on a lorry to a new suitable location. 

We believe this new business will provide an additional significant and reliable income stream to our Group, whilst providing good quality homes for people in need at a significant saving to the taxpayer. They will be particularly attractive to local authorities where estate regeneration is taking place and where residents can be temporarily relocated within their own communities while works are completed.

Ongoing projects

The Portfolio Review will provide a detailed account of many of our projects, but I would like to comment on two key projects in particular:

WILTON PARK, BEACONSFIELD, BUCKINGHAMSHIRE

Despite our 100% record in securing permissions, unfortunately the UK planning system continues to present challenges to us in certain instances.

The 100 acre site at Wilton Park, described by Savills as "the best residential development opportunity in Southern England" has an allocation for 350 homes and 2,100 sqm of commercial space. We have now owned the site for over five years, guiding the project through to an adopted planning brief and a subsequent planning application, which has now been submitted for over a year.  Developers are required to build Affordable Housing, as defined by local authority policy - in this case 40% of all homes built - unless it can be demonstrated through a Financial Viability Assessment (FVA) that it would not be viable to do so. While our FVA, which demonstrated that the delivery of the decreed 40% Affordable Housing at Wilton Park would be unviable due to heavy infrastructure costs, was signed off by a source approved by the council, the council has refused to accept the findings. It subsequently commissioned a further viability assessment which took six months to prepare and came to a similar conclusion, which, frustratingly, the council is again refusing to accept.

Inland Homes is making every effort to engage with the Council to resolve this matter to everyone's satisfaction and discussions are continuing. Such delays caused by arguments over the level of affordable housing are one of the biggest causes of delays in the delivery of new homes in the UK; the battle continues!

CHESHUNT LAKESIDE, HERTFORDSHIRE

This is the largest project in the Inland portfolio where a planning application has been submitted for a new community of 1,853 homes and 200,000 sqft of commercial space, comprising a significant part of the former Tesco headquarters in Cheshunt, Hertfordshire together with other land we have assembled on this large scale brownfield opportunity. The local authority at Broxbourne are very supportive of our proposals and we are anticipating an early approval. 

This development will provide some significant project delivery opportunities to work on, alongside major PRS funds and housing associations as well as private sales. This scheme is held in a joint venture where there is an ability to buy out our partners, which is the current intention.

Outlook

Underpinning our overall strategy is the ongoing chronic shortage of housing across the UK, at various price points, and whilst this situation remains, we are confident that housebuilders like ourselves, as well as other stakeholders who are committed to solving this problem, will continue to be supported in their activities. We anticipate that any changes to the Help-to-Buy scheme come 2021 will impact those who are not first-time buyers and those looking at properties towards the higher end of the bracket and we'd expect the favorable borrowing environment to persist for the foreseeable future. Whilst the Greater London property market continues to be impacted by wider political uncertainty, values and demand in the Home Counties remains robust, supported by improving infrastructure investment and evidence of wage growth returning in the UK economy.

Conclusion

2018 has been another busy year for Inland and we have made considerable strides which, importantly, are reflected in our full year results. I firmly believe that the component parts of this business are well balanced and provide a cohesive strategy for continuing and sustainable growth in the more uncertain environment over the short to medium term.  Whilst there are challenges, we see great opportunities for us at Inland going forward.

Finally, I would like to extend my heartfelt thanks to the entire team at Inland Homes, without which the building of such a dynamic and successful business would not have been remotely possible.

Stephen Wicks

Chief Executive

Portfolio review

It has been another successful and very active year for the Group with growth across all areas of the business in line with our strategic plan. Revenue, homes delivered and under construction, land plot sales and our land bank have all increased.

Land bank

The Group operates across a diverse land portfolio from town centre developments to major regeneration projects as well as some redevelopment of land located in the greenbelt. This requires a highly experienced and knowledgeable land and planning team and the team we now have in place ensures that we continue to be able to negotiate the complex landscape and deliver consented land both for sale and for our own construction activity.

We sold 837 land plots in the year, comprising 480 plots to private housebuilders, and 357 plots to Housing Associations. Despite these disposals and the 275 house sales in the year our land bank still increased from 6,776 at 30 June 2017 to 6,870 plots at the year end.

We are continuing to see strong demand on our land sales and where appropriate we are targeting these sales to the major housing associations and where our partnership housing team can secure the related build contract as part of the transaction. Demand for consented and unconsented land within the London suburbs, home counties and the South East remains strong amongst the major housebuilders particularly given the decline of the London housing market. The planning system continues to be the single biggest factor prohibiting housing delivery due to sustained lack of investment in the public sector planning departments, this has resulted in an increase in both planning costs and timetable to achieve planning consents. During the current financial year Inland will continue to focus on growing the land bank through the acquisition of brownfield sites and options over greenfield sites in strategic locations throughout the South East. In line with recent years, the pattern of land sales is likely to result in the profits for the year to 30 June 2019 being heavily weighted to the second half.

Construction and Sales

An increasingly core business activity is our private house building and partnership homes activities. We completed on 275 open market completions (including joint ventures), an increase of 46% from 188 last year and increased the partnership housing equivalent units from 37 to 79, an increase of 114%.

The average sales price of our residential units was £293,000 (2017: £306,000), and we continue to see significant demand from first time buyers. Help to Buy has been a major influence, with 58% of our sales utilising the government scheme. The abolition of SDLT for First Time Buyers on homes of up to £300,000 has also benefitted our sales, with 61% of our buyers purchasing under this price point. A combination of the two schemes and tailored incentive packages from Inland Homes has proven effective, with an increase in visitors and reservations at various sales events. Customer demand for our good quality, affordably priced homes remains strong and the average sales rate per active site during the second half of the year was 1.34 units.

As previously stated, we are committed to improving our housebuilding margins which we believe will come primarily through scale. Already the increase in the volume of units we are constructing has enabled us to negotiate group deals at discount rates, including rebates, with national material suppliers, driving down our build costs, and alleviating the upward pressure on construction costs.

We believe we now have in place a construction team that can help us deliver on our stated target of building 1,000 homes a year, having added a number of highly skilled people to the team from across the industry. Our staff numbers have increased to 105 at 30 June 2018 from 74 last year. Career progression, long term incentivisation and a good working environment, should ensure that we maintain the quality and strengths of the team going forward.

Validating our partnership housing strategy, we secured our largest build contract to date with A2 Dominion, one of the UK's biggest housing associations. We sold our site at Church Road, Ashford in Middlesex for £29.7m and simultaneously signed a £65m construction contract for delivery of 357 houses and apartments. Together with our contracts at Alperton and Witley Gardens, Southall our partnership housing order book currently stands at approximately £100m for the delivery of over 500 affordable homes over five years.

We currently have 13 sites under construction which are diverse in both location and type of build. At the year end there were 682 homes under construction (including 220 partnership housing units) compared to 427 last year with 82 reserved or exchanged representing forward sales of £19.7m. We anticipate a slight drop off in the number of open market completions next year due to the build cycle of our sites. In line with the increasing demand from housing associations who have been tasked by the Government to increase the number of homes within their portfolios, we are targeting the delivery of 200 partnership housing units during the current year, resulting in an overall increase in total completions.

Sites under construction

Meridian Waterside, Southampton

This brownfield regeneration of the former Meridian television studios is adjacent to the River Itchen in Southampton. The development comprises of 350, one, two and three bedroom new build apartments plus 5,415 sqft of commercial space. Phases one and two were of traditional construction and comprised 96 homes.  The final private sale completions in phase two were achieved in June 2018. The remaining 254 apartments in phases three and four are concrete frame construction up to 10 storeys high and piling commenced in August 2018. Completion is expected during 2021.

Chapel Riverside, Southampton

This riverside regeneration site is being delivered by way of a Development Agreement with Southampton City Council. It comprises of 457, one, two and three bedroom new build apartments plus 64,000 sqft of commercial space. In addition to the construction of the dwellings, there is a high element of civil infrastructure investment required.  This includes the construction of a 210 metre long sea wall and the relocation of three water settlement tanks. This project is a lightweight steel frame construction, the first phase will complete in October 2018 with 36 private sale and 27 PRS completions achieved for the year to 30 June 2018. This is a six year development which is expected to complete by 2024. 

Chapel Riverside, Southampton has added greatly to our accomplishments on the South Coast, selling out the first phase in just 17 weeks, with an average reservation rate of 2.63 per week. There has been a strong demand in the Southampton area. We have achieved 160 legal completions for the region this year and won the 'Regeneration Project of the Year' award for Meridian Waterside, at the prestigious South Coast Property Awards.

Lily's Walk, High Wycombe

This brownfield regeneration site on a former gas works in the heart of High Wycombe with sloping terrain presented a range of challenges to overcome. The project comprises 239, one and two bedroom new build apartments plus 15,800 sqft of commercial space and a Town Centre relief road. This four year project is a concrete frame construction with the first completions due in June 2019.

Abbey Wharf, Alperton

This is a brownfield regeneration of a former light industrial site adjacent to the Grand Union Canal in Alperton, near Wembley in North West London. A partnership contract was secured with Clarion Housing association for £30.0m during the year for the construction of 135, one and two bedroom apartments. This project is concrete frame construction and is due to complete in September 2020.

Church Road, Ashford

The former Brooklands College in the town centre in Ashford, close to Heathrow Airport, will be developed into 357 homes (one and two bedroom apartments and three bedroom houses) plus 6,700 sqft of commercial space and 4,700 sqft of educational space. After receiving planning permission in December 2017 we purchased our joint venture partner's 80% interest in March 2018. In June 2018 we sold the site to A2 Dominion for £29.7m and simultaneously signed a £65.1m construction contract for this concrete frame build project. Construction commenced in July 2018 and phased completion is forecast for between 2020 and 2023.

Wessex Hotel, Bournemouth

The Wessex Hotel site was previously an operating hotel and is within walking distance of Bournemouth town centre on the south coast and will comprise 88 apartments (one and two bedroom) in two blocks together with a new 105 bed hotel where we have entered into a 25 year pre-let with Whitbread for a Premier Inn. This project is light weight steel frame construction over a concrete basement carpark. Construction commences in September 2018 with completion expected in the first quarter of 2021.

Bucknalls Lane, Garston

This green belt release site between Watford and Hemel Hempstead comprises 100 two, three and four bedroom houses and one and two bedroom apartments. This project is in a 50:50 joint venture with the existing land owners and Inland Homes. Construction commenced in May 2018 with the show home opening in Autumn 2018 and first completions expected in Spring 2019.

Europa Way, Ipswich

This is a former light industrial site in Ipswich where we secured planning for 94 two, three and four bedroom houses and one and two bedroom apartments. The site was transferred into a 50:50 joint venture with the Anderson Group who are constructing the development and with Inland Homes undertaking the sales and marketing function. The project commenced in February 2018 with the show home opening in October 2018 and first completions due in January 2019.

Planning and future pipeline

During the year ended 30 June 2018 new planning approvals and resolutions to grant planning approval had been received for 594 residential units.

Detailed accounts of the key projects, Wilton Park, Beaconsfield and Cheshunt Lakeside, Hertfordshire are set out in the Chief Executive's review.

Gardiners Lane, Basildon

A designated for development site, this is also a joint venture with the Anderson Group on a site in Basildon with the partners having the same responsibilities as at Europa Way outlined above. Phase one comprised of 43 two, three and four bedroom houses and one and two bedroom apartments. This phase is now complete and the joint venture is in the process of purchasing phase two where planning has been procured for 33 homes. Construction is expected to commence in November 2018

Strategic land

We continued to strengthen our land bank during the year to ensure that our pipeline of prospective projects extends well into the future. We acquired options over 90 acres of strategic land across eight different locations which has the potential for 771 plots and we now have 24 options covering approximately 380 acres of potential development land secured at attractive discounts to market value.

Finance Director's review

The Group generated record revenues of £147.4m (2017: £90.7m) with profit before tax of £19.3m (2017: £18.1m), being an increase of 6.6% (excluding revaluation gains) over the previous year.  The Group's revenues are derived principally from the following activities:

•    Trading parcels of land to other housebuilders

•    Disposal of parcels of land to Registered Providers or PRS operators as part of our Partnership Housing business

•    Private homes built by the Group for open market sale

Group income statement

The rise in revenues has resulted predominantly from the increase in our housebuilding activities and disposals of land parcels to both developers and Registered Providers.  The Group sold 837 plots (2017: 780 plots) for £59.3m (2017: £49.4m) as follows:

                                                                                   2018                               2017

                                                                        Plots                £m         Plots                £m

Land assets sold directly                              837               59.3          207               22.4

Disposal of interest in joint venture                 -                  -             400               11.0

Land sold by corporate disposal                      1                1.2           173               16.0

Total plot sale revenues                               838               60.5          780               49.4

The Group's revenues continue to grow with substantial sales being generated from its land trading activity. This is increasingly being supported by partnership housing that involves the sale of land followed by a construction contract to build the homes.  Partnership housing has led to a surge in contract income by 287%, from £3.1m to £12.0m.  The Group recognises the revenue on construction contracts based on the proportion of the contract completed.  As a typical construction contract has a build programme of more than 12 months, this includes revenue from construction contracts that were entered into in previous years and continued during the financial year ended 30 June 2018 as well as new contracts exchanged during the year.  A key focus of the Group's strategy is to grow its partnership housing business and as at the year end the construction order book under this activity amounted to £98.0m which will be delivered over the next five years.  This activity enables the Group to recognise revenue and profitability much earlier compared to the sale of homes on the open market to private purchasers. It also de-risks part of the Group's operations and reduces net borrowings.

We completed the sale of 275 private homes during the financial year (2017: 188 homes) at an average price of £293,000 (2017: £306,000) producing revenues of £70.2m (2017: £57.7m).

Gross profit was £31.8m (2017: £19.5m) representing a total margin of 21.6% (2017: 21.5%).  The gross profit from land sales was £18.3m (2017: £19.2m) including the disposal of our interest in a joint venture and land sold via a corporate disposal) representing a margin of 30.2% (2017: 38.9%).  The gross profit from private house building was £7.7m (2017: £8.7m) delivering a 11.0% margin (2017: 15.1%).  As stated in my previous year's report the lower margin is due to an increase in site wide costs on certain large project and continued additional remedial costs on some historic projects.  Our margins on new developments for open market sale are expected to increase as the expansion in the Group's in-house build capacity results in additional buying power and general efficiencies within the supply chain.  The gross profit from construction contracts was £1.8m (2017: loss of £0.3m) representing a margin of 15.0% (2017: loss of 9.7%).  We expect a minimum margin of 10% on partnership housing construction contracts.  This is in addition to the margin made on the related land disposal which varies from site to site.

Our average number of employees has increased by 58% from 59 to 93 during the year as the Group has expanded its in-house construction capabilities to self-deliver most of our sites and increase its operational capacity for growth. This investment into the Group's growth and expertise has inevitably led to a rise in our administrative costs by 22.1% from £7.7m to £9.4m representing 6.4% of revenues.

Gross finance costs reduced by 23.5% from £8.1m to £6.2m partly due to notional interest of £1.4m charged in the previous year that has not been incurred this year.  It also reflected a general reduction in some of our funding costs in spite of gross borrowings having increased from £94.5m to £120.1m.  Included within finance costs is £1.1m (2017: £1.1m) in respect of the coupon on zero dividend preference ("ZDP") shares.  The Group capitalised £1.1m (2017: £1.1m) of finance costs within the carrying value of the Wilton Park site in accordance with IAS 23 Borrowing Costs, as it is constructed over a significant period of time and is complex in nature. 

Tax Charge

The total tax charge of £3.9m represents 20.2% of the profit before tax.  The current corporation tax rate is 19% and the small difference arises due to the disallowance of the interest accrued on the zero dividend preference shares together with other expenditure disallowed for tax purposes.

Earnings per share and dividend

Basic earnings per share reduced by 2.3% to 7.64p (2017: 7.82p) per share while the basic earnings per share excluding revaluation gains has increased by 7.8% from 7.09p to 7.64p.

The Company continues to maintain a progressive dividend policy having already increased the interim dividend by 30% to 0.65p (2017: 0.50p) per share that was paid on 29 June 2018.  The Board has recommended a final dividend of 1.55p (2017: 1.20p) per share giving a total increase of 29.4% over the previous year and delivering a yield of 3.3% based on the share price at the financial year end of 67.5p.  The proposed final dividend will be paid on 25 January 2019 to shareholders on the register at the close of business on 28 December 2018.  The ex-dividend date is 27 December 2018.

Group balance sheet

Net assets of the Group have increased to £142.4m at 30 June 2018 from £130.6m, principally due to retained earnings for the financial year net of the dividends paid in January and June 2018.  This translates to net assets of 70.46p per share (2017: 64.62p).  The undiluted EPRA net asset value per share at the year end was 102.28p (2017: 96.22p). 

Joint ventures

The investment period within the Project Helix joint venture with CPC Group Limited came to an end in December 2017.  After planning consent was received for the joint venture's land at Church Road site in Ashford, Middlesex the Group purchased the remaining interest. 

We are a 50% partner in Cheshunt Lakeside Developments Limited where we injected a further £5.3m by way of loans to fund the acquisition of further parcels of land, work in progress and finance costs. 

The Group has a 50% interest in Bucknalls Developments Limited which secured detailed planning consent in March 2018 on the site at Bucknalls Lane, Garston.  We have increased our loans to the joint venture by £1.2m to £5.6m to fund the initial construction costs.  Shortly after the year end we secured senior debt funding for the development of 100 homes on the site.

We also have a 50% interest in two joint ventures with Constable Homes Limited, one of which was the development of 43 homes at Gardiners Park, Basildon where 33 homes were sold by the year ended 30 June 2018 generating a profit of £1.6m.  Our investment in this venture has been fully repaid.  The other is at Europa Way, Ipswich where construction is now under way for 94 homes funded by a senior debt facility.

Other assets

Inventories comprise largely of sites (with and without planning), professional fees incurred in the planning process and option fees for strategic sites.  The carrying value of inventories have remained relatively static in comparison to the previous year due to new opportunities being focused on options over strategic sites which are light on capital.

Trade and other receivables stand at £41.4m (2017: £28.1m) with approximately £24.9m being outstanding in relation to land transactions of which £11.0m is due after more than one year. 

Net debt and borrowings

Our cash balances at the year end stood at £40.4m (2017: £26.5m) with net debt at £79.7m (£68.0m).  As expected net debt has increased due to the expansion in the Group's house building for open market sale and represents net gearing of 56.0% (2017: 52.1%) on net assets of £142.4m (2017: £130.6m) or 38.6% (2017: 35.0%) on EPRA net assets of £206.7m (2017: £194.4m). 

We have undrawn committed bank facilities at the year end of £32.1m (2017: £11.2m).  Although £44.4m of our borrowings fall due within one year, in August 2018 we extended the maturity date of £18.4m ZDP shares by five years to 10 April 2024.  In addition, we issued a further 1,000,000 ZDP shares at 150.8p per share raising a gross sum of £1.5m.  The gross redemption yield will reduce from 7.3% per annum to 5.25% per annum as from 10 April 2019. 

Inland Homes has a revolving credit facility of £20.0m from Barclays to fund construction costs relating to the development of private homes for open market sale.  As at the year end, the Group had drawn £13.8m of this facility. The Group also has a revolving credit facility of £17.2m from a Fund to finance sites with and without planning consent, that falls due for repayment in August 2020.  This facility was fully drawn down at the year end. 

During the year we secured a facility for £6.6m from Homes England for infrastructure and development costs in respect of 450 homes at our site, Chapel Riverside in Southampton.  As at 30 June 2018, a substantial part of Phase 1, comprising 72 units had been built and sold and consequently the full facility was available to fund ongoing costs.

We have a revolving cashflow facility of £24.0m to finance the construction of 239 homes at Lily's Walk in High Wycombe.  The Group had drawn down £10.7m of this facility at the year end.

The Group is also in advance negotiations and has received strong indications that its borrowing facilities of £26m expiring in December 2018 will be extended by another 12 months.

Inland Homes is in a solid financial position with a good spread of borrowing facilities to fund both land purchases and construction costs for the delivery of its strategic growth plans.  This will be complimented by the expansion of its partnership housing activity which obviates the need for equity or debt and assists in reducing the Group's gearing levels. 

GROUP INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2018
		2018	2017
Continuing operations	Note	£m	£m
Revenue	2	147.4	90.7
Cost of sales	2	(115.6)	(71.2)
Gross profit		31.8	19.5
Administrative expenses		(9.4)	(7.7)
Gain on sale of subsidiary	7	0.1	6.0
Gain on sale of joint venture	7	-	7.0
Share of loss of associates	7	-	(0.2)
Share of profit of joint ventures	7	1.0	-
Revaluation of investment properties	6	-	1.5
Operating profit		23.5	26.1
Finance cost - interest expense		(5.1)	(7.0)
Finance income - interest receivable and similar income		0.9	0.5
Profit before tax		19.3	19.6
Tax charge	3	(3.9)	(3.8)
Total profit and comprehensive income for the year		15.4	15.8
Earnings per share for profit attributable to the equity holders of the Company during the year
- basic	4	7.64p	7.82p
- diluted	4	7.30p	7.46p

GROUP STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2018
			2018		2017
		Note	£m		£m
ASSETS
Non-current assets
Investment properties		6	52.8		53.6
Property, plant and equipment			1.3		0.7
Investments			0.2		-
Investment in joint ventures		7	0.4		0.2
Amounts due from joint ventures		7	1.0		-
Investment in associates		7	1.1		1.1
Amounts due from associate		7	3.0		5.8
Other receivables		10	11.0		5.7
Total non-current assets			70.8		67.1
Current assets
Inventories		9	136.2		139.9
Trade and other receivables		10	30.4		22.4
Amounts due from associate		7	2.8		-
Amounts due from joint ventures		7	19.0		18.3
Cash and cash equivalents			40.4		26.5
Total current assets			228.8		207.1
Total assets			299.6		274.2
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital		11	20.5		20.4
Share premium account		12	34.8		34.3
Employee benefit trust		12	(1.1)		(1.1)
Treasury reserve		12	(0.5)		-
Special reserve		12	6.1		6.1
Retained earnings		12	82.6		70.9
Total equity attributable to shareholders of the Company			142.4		130.6
LIABILITIES
Current liabilities
Bank loans and overdrafts		14	26.0		-
Zero Dividend Preference shares		14	18.4		-
Trade and other payables		13	24.9		20.5
Corporation tax			6.6		6.5
Other financial liabilities		15	3.7		20.1
Total current liabilities			79.6		47.1
Non-current liabilities
Zero Dividend Preference shares		14	-		17.3
Bank loans		14	41.4		63.2
Other loans		14	34.3		14.0
Deferred tax due in more than one year		8	1.9		2.0
Total non-current liabilities			77.6		96.5
Total equity and liabilities			299.6		274.2
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018

	Share capital £m	Share premium £m	Employee Benefit Trust £m	Special reserve £m	Treasury reserve £m	Retained earnings £m	Total £m
At 30 June 2016	20.3	34.0	(0.7)	6.1	-	56.6	116.3
Total comprehensive income for the year	-	-	-	-	-	15.8	15.8
Transactions with owners
Share-based payments	-	-	-	-	-	1.3	1.3
Dividend payment	-	-	-	-	-	(2.8)	(2.8)
Issue of ordinary shares	0.1	0.3	-	-	-	-	0.4
Purchase of own shares for deferred bonus plan	-	-	(0.4)	-	-	-	(0.4)
At 30 June 2017	20.4	34.3	(1.1)	6.1	-	70.9	130.6
Total comprehensive income for the year	-	-	-	-	-	15.4	15.4
Transactions with owners
Share-based payments	-	-	-	-	-	0.6	0.6
Dividend payment	-	-	-	-	-	(3.7)	(3.7)
Issue of ordinary shares	0.1	0.5	-	-	-	(0.6)	-
Purchase of own shares	-	-	-	-	(0.6)	-	(0.6)
Issue of share options	-	-	-	-	0.1	-	0.1
At 30 June 2018	20.5	34.8	(1.1)	6.1	(0.5)	82.6	142.4

GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018
		2018	2017
		£m	£m
Cash flow from operating activities
Profit for the year before tax		19.3	19.6
Adjustments for:
- depreciation		0.3	0.3
- share-based payments		0.8	1.3
- revaluation of investment properties		-	(1.5)
- gain on disposal of subsidiary		(0.1)	(6.0)
- gain on disposal of joint venture		-	(7.0)
- interest expense		5.1	7.0
- interest and similar income		(0.9)	(0.5)
- share of profit of joint ventures		(1.0)	-
- share of loss of associates		-	0.2
Corporation tax payments		(4.0)	(3.6)
Change in working capital:
- increase in inventories		(3.2)	(6.9)
- decrease in trade and other receivables		(17.8)	6.1
- decrease in trade and other payables		(12.8)	(7.4)
Net cash (outflow)/inflow from operating activities		(14.3)	1.6
Cash flow from investing activities
Interest received		0.8	0.3
Purchases of property, plant and equipment		(0.9)	(0.5)
Purchases of investment property		(0.2)	(0.4)
Purchase of investment		(0.2)	-
Proceeds from sale of subsidiary		13.4	5.8
Loans provided to joint ventures		(7.6)	(10.8)
Amounts repaid by joint ventures		5.9	-
Distribution of profits from joint venture		0.8	-
Loans provided to associate		-	(2.5)
Amounts repaid by associate		-	1.1
Investment in associate		-	(0.1)
Net cash inflow/(outflow) from investing activities		12.0	(7.1)
Cash flow from financing activities
Interest paid		(3.8)	(4.5)
Repayment of borrowings		(6.3)	(48.7)
New loans		30.6	71.3
Net proceeds on issue of ordinary shares		-	0.4
Equity dividends paid to ordinary shareholders		(3.7)	(2.8)
Purchase of own shares for Long Term Incentive Plan		(0.6)	(0.4)
Net cash inflow from financing activities		16.2	15.3
Net increase in cash and cash equivalents		13.9	9.7
Net cash and cash equivalents at beginning of year		26.5	16.7
Net cash and cash equivalents at end of year		40.4	26.5

NOTES TO THE GROUP PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2018

1. BASIS OF PREPARATION

The financial information does not constitute the Group's statutory accounts for either the year ended 30 June 2018 or the year ended 30 June 2017, but is derived from those accounts. Statutory accounts for the year ended 30 June 2017 have been delivered to the Registrar of Companies and those for the period ended 30 June 2018 will be delivered following the Company's Annual General Meeting. The Auditor's report on both the 2017 and 2018 accounts was unmodified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498 of the Companies Act 2006.

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), IFRS IC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention as modified by the revaluation of investment properties and financial assets and liabilities held for trading.

Going concern

The Board has reviewed the performance for the current year and forecasts for the future period. It has also considered the risks and uncertainties, including credit risk and liquidity risk. The Directors have considered the present economic climate, the state of the housing market and the current demand for land with planning consent. The Group has continued to see an increase in demand for consented land in the areas in which it operates. The Group has significant forward sales of residential units as well as a substantial order book for its Partnership homes and is in discussions for the sale of some land within its projects and expects to make sufficient disposals in the foreseeable future to ensure it has adequate working capital for its requirements. The Directors are satisfied that the Group will generate sufficient cash to meet its liabilities as and when they fall due for a period of at least 12 months from the date of signing these financial statements. At 30 June 2018, the Group had £44.4m of borrowing facilities expiring within one year. Included within this figure was £18.4m relating to the Group's ZDP borrowings, the maturity of which was extended to April 2024 shortly after the year end. The balance of £26m relates to loans where we are in advance negotiations with the bank and have received strong indications that the facility will be extended by a further 12 months to expire in December 2019. The Directors therefore consider it appropriate to prepare the financial statements on the going concern basis.

CHANGES IN ACCOUNTING POLICIES

The accounting policies used by the Group in these condensed financial statements are consistent with those applied in the Group's financial statements for the year to 30 June 2017, as amended to reflect the adoption of new standards, amendments and interpretations which became effective in the year as shown below.

New standards adopted during the year

The following standards, amendments and interpretations endorsed by the EU were effective for the first time for the Group's 30 June 2018 year end and had no material impact on the financial statements.  The adoption of IAS 7 has resulted in an additional note for the reconciliation of net debt and is note 14 in the financial statements.

IAS 7 (amended) - Statement of Cash Flows;

IAS 12 (amended) - Income Taxes;

IFRS 12 - Disclosure of Interests in Other  Entities

Standards in issue but not yet effective

The following new standards, amendments and interpretations to existing standards were in issue at the date of approval of these financial statements but are not yet effective for the current accounting year and have not been adopted early. Based on the Group's current circumstances the Directors do not anticipate that their adoption in future periods will have a material impact on the financial statements of the Group.

IAS 40 (amended) - Transfers of Investment Property

IFRS 2 (amended) - Share Based Payments;

IFRS 4 (amended) - Insurance Contracts;

IFRS 17 - Insurance Contracts;

IFRIC 22 - Foreign Currency Transactions and Advance Consideration;

IFRIC 23 Uncertainty over Income Tax Treatments; and

Annual improvements to IFRSs (2014 - 2016 cycle).

Amendments to IAS 28: Long-term interests in Associates and Joint Ventures1

Annual Improvements to IFRSs (2015-2017 Cycle)¹

Amendments to IAS 19: Plan Amendment, Curtailment or Settlement¹

Amendments to References to the Conceptual Framework in IFRS Standards¹

¹Standards and amendments not yet endorsed by the EU.

In addition to the above, IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers have been endorsed by the EU and will be effective for the first time for the Group's year end ending 30 June 2019. IFRS 16 Leases has also been endorsed and will be effective for the Group's year end ending 30 June 2020.

IFRS 9 Financial Instruments

This standard applies to classification and measurement of financial assets and financial liabilities, impairment provisioning and hedge accounting.  Management's assessment of IFRS 9 determined that the main area of potential impact was impairment provisioning on trade receivables for the Group and balances due from subsidiaries for the Company.   In both cases, this was due to the requirement to use a forward-looking expected credit loss model. The Group does not presently hold any complex financial instruments. Given that inter group balances are eliminated on consolidation and does not affect group results,  no material impairment allowance adjustments are expected.  Having substantially completed our assessment, it is considered that the introduction of IFRS 9 is not expected to have a material impact on the results or cash flows of either the Group or the Company. Presentation changes are expected given the additional disclosure requirements under IFRS 9.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 combines a number of previous standards, setting out a five-step model for the recognition of revenue and establishing principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue.  The standard is applicable to land sales, house sales, contract income, management fees and hotel income but excludes rental income, which is within the scope of IFRS 16.

The Group has substantially completed its assessment of the impact of IFRS 15 on its financial statements and has identified no material adjustments to date that will be required as a result of the implementation of IFRS 15.  Currently the Group recognises revenue at the fair value of the consideration received and receivable in respect of the sale of housing and land on legal completion. This standard is not expected to effect the statement of cashflows nor does the Group expect the implementation of this standard to have a material impact on profit.

IFRS 15 introduces a substantial change to presentations and disclosures. IFRS 15 requires separate presentation of contract assets and contract liabilities. This will result in some reclassifications as of 1 July 2017 in relation to advance payments and deferred revenue which are currently included in other balance sheet line items. Other presentation changes are limited to additional disclosure requirements under IFRS 15 only.

IFRS 16 Leases

This standard does not substantially affect the accounting for rental income earned by the Group as lessor. The main impact of the standard is the removal of the distinction between operating and finance leases for lessees, which will result in almost all leases being recognised on the balance sheet. This will therefore have a presentational impact on the financial statements when the Group enters into a new office lease next year, details of which are yet to be finalised.

SIGNIFICANT JUDGEMENTS, KEY ASSUMPTIONS AND ESTIMATES

Some of the significant accounting policies require management to make difficult, subjective or complex judgments or estimates.  The following is a summary of those policies which management consider critical because of the level of complexity, judgment or estimation involved in their application and their impact on the financial statements.

Key sources of estimation uncertainty

- Valuation of inventories

- Income taxes

- Fair value of investment properties

- Discounting on deferred consideration of inventories, disposal of joint ventures and acquisition of shares

Significant judgments

- Time of likely repayments of amounts due from joint ventures and associate

- Likelihood of achieving planning

- Capitalisation of borrowing costs

- Investment in joint ventures

- Investment in associates

A full explanation of these policies is included in the 2018 financial statements.

2. SEGMENTAL INFORMATION

In accordance with IFRS 8, information is disclosed to enable users of financial statements to evaluate the nature and financial effects of the business activities in which the Group engages.

In identifying its operating segments, management differentiates between land sales, housebuilding, contract income, rental income, hotel income, investments, investment properties, management fees and other income. These segments are based on the information reported to the chief operating decision maker (which in the Group's case is the Operating Board comprising the three Executive Directors and four senior managers) and represent the activities which generate significant revenues, profits and use of resources within the Group. These operating segments are monitored and strategic decisions are made on the basis of segment operating results.

Segmental analysis by activity

2018	Land sales £m	House building £m	Contract income £m	Rental income £m	Investment properties £m	Management fees £m	Other £m	Total £m
Revenue	59.3	70.2	12.0	0.7	1.3	2.4	1.5	147.4
Cost of sales	(41.0)	(62.5)	(10.2)	(0.1)	(0.3)	-	(1.5)	(115.6)
Gross profit	18.3	7.7	1.8	0.6	1.0	2.4	-	31.8
Administrative expenses	-	-	-	-	-	-	(9.4)	(9.4)
Share of profit of joint ventures	-	0.8	-	0.2	-	-	-	1.0
Gain on sale of subsidiary	-	-	-	-	0.1	-	-	0.1
Operating profit/(loss)	18.3	8.5	1.8	0.8	1.1	2.4	(9.4)	23.5
Net finance cost	(1.6)	(0.9)	-	-	(1.2)	-	(0.5)	(4.2)
Profit/(loss) before tax	16.7	7.6	1.8	0.8	(0.1)	2.4	(9.9)	19.3
Tax (charge)/credit	(3.1)	(0.5)	(0.1)	-	(0.1)	(0.2)	0.1	(3.9)
Total profit/(loss) for the year	13.6	7.1	1.7	0.8	(0.2)	2.2	(9.8)	15.4
2017
Revenue	22.4	57.7	3.1	1.3	1.1	2.5	2.6	90.7
Cost of sales	(16.2)	(49.0)	(3.4)	(0.1)	(0.2)	-	(2.3)	(71.2)
Gross profit/(loss)	6.2	8.7	(0.3)	1.2	0.9	2.5	0.3	19.5
Administrative expenses	-	-	-	-	-	-	(7.7)	(7.7)
Gain on sale of subsidiary	6.0	-	-	-	-	-	-	6.0
Gain on sale of joint venture	7.0	-	-	-	-	-	-	7.0
Share of loss of associates	-	(0.2)	-	-	-	-	-	(0.2)
Revaluation of investment properties	-	-	-	-	1.5	-	-	1.5
Operating profit/(loss)	19.2	8.5	(0.3)	1.2	2.4	2.5	(7.4)	26.1
Net finance cost	(3.5)	(0.8)	-	-	(0.9)	-	(1.3)	(6.5)
Profit/(loss) before tax	15.7	7.7	(0.3)	1.2	1.5	2.5	(8.7)	19.6
Tax (charge)/credit	(3.0)	(1.5)	0.1	(0.2)	(1.3)	-	2.1	(3.8)
Total profit/(loss) for the year	12.7	6.2	(0.2)	1.0	0.2	2.5	(6.6)	15.8

Included within the 'Land sales' segment are land sales to housing associations which include construction works to 'Golden Brick'. The construction works to completion are included in the 'Contract income' segment.

Included with the 'Housebuilding' segment are the sales of freehold reversions and customers' extras that arise as a by-product of house building activity.

Items included within 'Other' above do not produce significant income streams and are therefore not monitored separately by the Board, but as a group.

During the year, one land sale transaction (2017: None) with a customer accounted for more than 10% of revenue and amounted to £29.7m.

2018							Land £m		House building £m	Contract Income £m	Investment properties £m	Other £m	Total £m
ASSETS
Non-current assets
Investment properties							-		-	-	52.8	-	52.8
Property, plant and equipment							-		-	-	-	1.3	1.3
Investments							-		-	-	-	0.2	0.2
Investment in joint ventures							-		0.4	-	-	-	0.4
Amounts due from joint ventures							-		1.0	-	-	-	1.0
Investment in associate							-		1.1	-	-	-	1.1
Amounts due from associate							-		3.0	-	-	-	3.0
Other receivables							11.0		-	-	-	-	11.0
Total non-current assets							11.0		5.5	-	52.8	1.5	70.8
Current assets
Inventories							85.0		51.2	-	-	-	136.2
Trade and other receivables							13.9		6.3	8.2	1.3	0.7	30.4
Amounts due from associate							-		2.8	-	-	-	2.8
Amounts due from joint ventures							-		19.0	-	-	-	19.0
Cash and cash equivalents							-		-	-	-	40.4	40.4
Total current assets							98.9		79.3	8.2	1.3	41.1	228.8
Total assets							109.9		84.8	8.2	54.1	42.6	299.6
EQUITY
Share capital							-		-	-	-	20.5	20.5
Share premium account							-		-	-	-	34.8	34.8
Employee benefit trust							-		-	-	-	(1.1)	(1.1)
Treasury reserve							-		-	-	-	(0.5)	(0.5)
Special reserve							-		-	-	-	6.1	6.1
Retained earnings							-		-	-	-	82.6	82.6
Total equity							-		-	-	-	142.4	142.4
LIABILITIES
Current liabilities
Bank loans and overdrafts							26.0		-	-	-	-	26.0
Zero Dividend Preference shares							-		-	-	-	18.4	18.4
Trade and other payables							3.1		11.3	2.9	0.4	7.2	24.9
Corporation tax							-		-	-	-	6.6	6.6
Other financial liabilities							3.7		-	-	-	-	3.7
Total current liabilities							32.8		11.3	2.9	0.4	32.2	79.6
Non-current liabilities
Bank loans							1.1		13.8	-	26.5	-	41.4
Other loans							17.2		17.1	-	-	-	34.3
Deferred tax							-		-	-	1.9	-	1.9
Total non-current liabilities							18.3		30.9	-	28.4	-	77.6
Total equity and liabilities							51.1		42.2	2.9	28.8	174.6	299.6

2017							Land £m		House building £m	Contract income £m	Investment properties £m	Other £m	Total £m
ASSETS
Non-current assets
Investment properties							-		-	-	53.6	-	53.6
Property, plant and equipment							-		-	-	-	0.7	0.7
Investment in joint ventures							-		0.2	-	-	-	0.2
Investment in associate							-		1.1	-	-	-	1.1
Amounts due from associates							-		5.8	-	-	-	5.8
Other receivables							5.7		-	-	-	-	5.7
Total non-current assets							5.7		7.1	-	53.6	0.7	67.1
Current assets
Inventories							85.1		51.9	2.9	-	-	139.9
Trade and other receivables							18.9		1.3	1.5	-	0.7	22.4
Amounts due from joint ventures							-		18.3	-	-	-	18.3
Amounts due from associates							-		-	-	-	-	-
Cash and cash equivalents							-		-	-	-	26.5	26.5
Total current assets							104.0		71.5	4.4	-	27.2	207.1
Total assets							109.7		78.6	4.4	53.6	27.9	274.2
EQUITY
Share capital							-		-	-	-	20.4	20.4
Share premium account							-		-	-	-	34.3	34.3
Employee benefit trust							-		-	-	-	(1.1)	(1.1)
Special reserve							-		-	-	-	6.1	6.1
Retained earnings							-		-	-	-	70.9	70.9
Total equity attributable to shareholders of the Company							-		-	-	-	130.6	130.6
LIABILITIES
Current liabilities
Trade and other payables							7.9		7.5	1.5	0.3	3.3	20.5
Corporation tax							-		-	-	-	6.5	6.5
Other financial liabilities							20.1		-	-	-	-	20.1
Total current liabilities							28.0		7.5	1.5	0.3	9.8	47.1
Non-current liabilities
Zero Dividend Preference shares							-		-	-	-	17.3	17.3
Bank loans due in more than one year							17.0		19.9	-	26.3	-	63.2
Other loans due in more than one year							14.0		-	-	-	-	14.0
Deferred tax due in more than one year							(0.1)		(0.6)	-	3.3	(0.6)	2.0
Total non-current liabilities							30.9		19.3	-	29.6	16.7	96.5
Total equity and liabilities							58.9		26.8	1.5	29.9	157.1	274.2

¹Included within land inventories above is £6.8m (2017: £5.7m) relating to the hotel.

All assets and revenues arose solely in the United Kingdom.

3. TAX CHARGE
	2018	2017
	£m	£m
Current tax charge	4.0	2.7
Deferred tax charge	(0.1)	1.1
Total	3.9	3.8

The tax on the Group's profit before tax differs from the theoretical amount that would arise using the tax rate applicable to profit on the Group companies as follows:
		2018	2017
		£m	£m
Profit before tax		19.3	19.6
Expected tax charge based on the standard rate of corporation tax in the UK of 19.0% (2017: 19.0%)		3.7	3.7
Expenses not deductible for tax purposes		0.1	-
ZDP interest not deductible for tax purposes		0.2	0.2
Adjustments to tax charge in respect of previous periods		-	0.1
Capital losses		(0.1)
Timing differences		-	(0.2)
Release deferred tax asset on disposal of joint venture		-	0.1
Deferred tax liability on investment properties		-	1.3
Tax losses utilised		-	(1.4)
Tax charge		3.9	3.8

4.  EARNINGS AND NET ASSET VALUE PER SHARE
Number of shares
	Earnings per share		Net asset value per share
	Weighted average		At 30 June
	2018	2017	2018	2017
	'000	'000	'000	'000
Shares in issue			204,551	203,654
Less shares held in:
- EBT1			(1,627)	(1,627)
- Treasury2			(825)	-
For use in basic measures	201,621	201,875	202,099	202,027
Dilutive effect of:
- share options	1,844	1,882	1,837	1,912
- deferred bonus shares	1,763	1,627	1,823	1,627
- growth shares3	5,790	6,000	5,100	6,000
For use in diluted measure	211,018	211,384	210,859	211,566
1The Group's Employee Benefit Trust (EBT) purchased 650,000 shares on 29 October 2014, 377,500 shares on 20 December 2015 and a further 600,000 shares on 16 December 2016 in Inland Homes plc under the terms of the Long Term Incentive Plan. These total 1,627,500 and have been deducted from the weighted average number of ordinary shares in issue and also from the shares in issue at the year end. 2In several transactions in October and November 2017, the Group purchased 1,000,000 of its own shares to be held in treasury. On 18 January 2018, 175,000 shares were transferred from the treasury reserve to satisfy employee share options exercised within the terms of the Company's share option plan. 3Amounts included for the growth shares are those where the performance conditions have been satisfied. on 6 April 2018, 896,689 growth shares were exercised. As a result, the Group issued 896,689 shares to satisfy an obligation under the LTIP scheme. In addition, 3,311 growth shares lapsed on the same date.
Basic and diluted EPS
			2018	2017
Profit attributable to equity holders of the Company (£m)			15.4	15.8
Earnings per share			7.64p	7.82p
Diluted earnings per share			7.30p	7.46p
Net asset value and net asset value per share
			Undiluted	Diluted
		£m	p	p
At 30 June 2018
Net assets attributable to equity shareholders		142.4	70.46	67.53
Adjustment for:
Revaluation of projects		61.0
Deferred tax on investment property revaluation		3.3
EPRA net asset value		206.7	102.28	98.03
Adjustment for:
Deferred tax on investment property revaluation		(3.3)
Deferred tax on project revaluation		(11.6)
EPRA triple net asset value		191.8	94.91	90.97
At 30 June 2017
Net assets attributable to equity shareholders		130.6	64.62	61.72
Adjustment for:
Revaluation of projects		60.5
Deferred tax on investment property revaluation		3.3
EPRA net asset value		194.4	96.22	91.88
Adjustment for:
Deferred tax on investment property revaluation		(3.3)
Deferred tax on project revaluation		(11.5)
EPRA triple net asset value		179.6	88.90	84.89

5.  DIVIDENDS
		Dividend per share	2018	2017
	Payment date	p	£m	£m
Current year
2018 final dividend	25 January 2019	1.55	-	-
2018 interim dividend	29 June 2018	0.65	1.3	-
Distribution of current year profit		2.20	1.3	-
Prior year
2017 final dividend	26 January 2018	1.20	2.4	-
2017 interim dividend	23 June 2017	0.50	-	1.0
Distribution of prior year profit		1.70	2.4	1.0
2016 final dividend	27 January 2017	0.90	-	1.8
Dividends as reported in the Group statement of changes in equity			3.7	2.8
Dividends are not paid on the shares owned by the Employee Benefit Trust.

6. INVESTMENT PROPERTIES
		Commercial properties £m	Residential properties £m	Development land £m	Total £m
Fair value
At 30 June 2016		1.0	45.4	5.3	51.7
Additions		0.3	0.1	-	0.4
Fair value adjustment		-	1.5	-	1.5
At 30 June 2017		1.3	47.0	5.3	53.6
Additions		-	0.5	-	0.5
Transfer from inventories		1.2	-	-	1.2
Disposals		(2.5)	-	-	(2.5)
At 30 June 2018		-	47.5	5.3	52.8

Valuation techniques and sensitivity

- Commercial properties

At 30 June 2017, the Group's commercial property consisted of a property at Leighton Buzzard which was carried at fair value established by the Directors using a rental yield of 5.5%. The annual rent used in this calculation was the subject of a lease with the Co-op. Costs to complete were deducted from the fair value along with a suitable developer's margin. The property was disposed of during the year to 30 June 2018.

- Residential properties

The Group's residential investment properties were valued by the Directors on the basis of 'open market value'. In arriving at their view of open market value the Directors had regard to the following; the accommodation offered, the square footage and the condition of each property.  They then considered the above in light of the local market and prices achieved in recent transaction in consultation with a local property agent.

- Development land

The Group's development property is carried at fair value which has been established by the Directors using an internal appraisal model based on the 'residual method'. The inputs for this model are the market value of units to be constructed in accordance with the planning permission, the costs of any housebuilding, infrastructure, local authority fees and professional fees. The market value of the units has been assumed to be at a similar level to the prices obtained by the Group on earlier phases of the same development for similar property types. Housebuilding and infrastructure costs have been forecast using costs incurred by the Group on this or other similar developments with an allowance for cost increases. Local authority fees were agreed at the time of the signing of the planning permission and are therefore known costs. Professional fees are input using costs incurred on similar projects and finance holding costs are the Group's cost of debt capital.  Using a profit margin of 20% this generated a land value for the remaining site of £5.3m (2017: £5.3m). The Directors are of the opinion that developing the site reflects the highest and best use of this asset.

These techniques use significant unobservable inputs such that the fair value measurement of investment properties has been classified as Level 3 in the fair value hierarchy as set out by IFRS 13: Fair Value Measurement.  There were no transfers between Levels 1 and 2 or between 2 and 3 in the fair value hierarchy during the year ended 30 June 2018 (2017: None).

Sensitivity analysis				Increase/(decrease)
		Variable	Variation	2018 £m	2017 £m
Fair value
Commercial properties		House prices	+5%	n/a	0.1
			-5%	n/a	(0.1)
Residential properties		Rental values	+5%	2.4	2.4
			-5%	(2.4)	(2.4)
Development land		House prices	+5%	1.6	1.6
			-5%	(1.3)	(1.3)
		Development costs	+5%	(1.1)	(1.1)
			-5%	0.9	0.9

Income and expense

During the year ended 30 June 2018 £1.3m (2017: £1.1m) rental and ancilliary income from investment properties was recognised in the Group Income Statement. Direct operating expenses, including repairs and maintenance, arising from investment property that generated rental income amounted to £0.3m (2017: £0.2m). The Group did not incur any direct operating expenses arising from investment properties that did not generate rental income (2017: £nil).

Restrictions and obligations

At 30 June 2018 there were no restrictions on the realisability of investment property or the remittance of income and proceeds of disposal (2017: None). There are no obligations to construct or develop the Group's residential or development land investment property (2017: None).

7. INVESTMENTS

At 30 June 2018, the Company, directly or indirectly, held equity of the following entities:

Company name	Principal activity	Holding and voting rights1
Subsidiary undertakings
Basildon United Football, Sports & Leisure Limited	Sports club	100%
Brooklands Helix Developments Limited	Real estate development	100%
Bucks Developments Limited	Real estate development	100%
Chapel Riverside Developments Limited	Real estate development	100%
Drayton Developments Limited	Real estate development	100%
Drayton Garden Village Limited	Real estate development	100%
Exeter Road (Bournemouth) Limited	Real estate development	100%
High Wycombe Developments Limited	Real estate development	100%
High Wycombe Developments Limited	Real estate development	100%
Hugg Homes Limited	Letting or operating of real estate	100%
Hugg Housing Limited	Letting or operating of real estate	100%
Inland Limited	Real estate development	100%
Inland (Southern) Limited	Real estate development	100%
Inland (STB) Limited	Provision of finance	100%
Inland Finance Limited	Real estate development	100%
Inland Helix Limited	Real estate development	100%
Inland Homes (Essex) Limited	Real estate development	100%
Inland Homes 2013 Limited	Holding company	100%
Inland Homes Developments Limited	Real estate development	100%
Inland Housing Limited	Real estate development	100%
Inland Partnerships Limited	Construction	100%
Inland Property Limited	Real estate investment	100%
Inland Property Finance Limited	Provision of finance	100%
Inland ZDP plc	Provision of finance	100%
Leighton Developments Limited*	Real estate development	100%
Poole Investments Limited	Real estate investment	100%
Rosewood Housing Limited	Real estate development	100%
Wessex Hotel Developments Limited	Real estate development	100%
Wilton Park Developments Limited	Real estate development	100%
Interests in joint ventures
10 Ant South Limited	Real estate investment	50%
Bucknalls Developments Limited	Real estate development	50%
Cheshunt Lakeside Developments Limited	Real estate development	50%
Europa Park LLP	Real estate development	50%
Gardiners Park LLP	Real estate development	50%
Project Helix Holdco Limited	Holding company	20%
Interests in associates
Troy Homes Limited	Real estate development	25%

¹All holdings are of ordinary shares

Inland Homes 2013 Limited is the only direct subsidiary of the Company. All others are indirect holdings. All of the above entities are incorporated and domiciled in England & Wales.  In addition, all entities are registered at Decimal Place, Chiltern Avenue, Amersham, Buckinghamshire, HP6 5FG, with the exception of:

- Europa Park LLP and Gardiners Park LLP which are registered at Springfield Lodge, Colchester Road, Chelmsford, Essex, CM2 5PW

- Troy Homes Limited which is registered at 10-14 Accommodation Road, London, NW11 8ED

The joint ventures and associates listed above are accounted for using the equity method. Further details can be found in Critical Judgements in note 3 and below.

There are no restrictions on the ability of the Parent Company or its subsidiaries to transfer cash or other assets to or from other entities in the Group.

Disposal of subsidiaries

During the year to 30 June 2018, the Group disposed of two of its subsidiaries Uxbridge Homes Developments Limited and Inland Commercial Limited.  During the year to 30 June 2017, Inland Homes 2013 Limited disposed of its 100% owned subsidiary, Inland New Homes Limited. There was a gain of £0.1m on the sale of these subsidiaries. A management fee of £6.0m was charged by Inland Ltd to Inland New Homes Ltd prior to the sale for £1 resulting in a gain of £6.0m which was recognised in the Group Income Statement.

		Investment in joint ventures
	Aston Clinton S.A.R.L. £m	Project Helix £m	Bucknalls Develop-ments £m	Cheshunt Lakeside Develop-ments £m	Europa Park £m	Gardiners Park £m	Total £m	Investment in associates £m	Total £m
Cost
At 30 June 2016	1.0	-	-	0.2	-	-	1.2	0.1	1.3
Additions	0.3	-	-	-	-	-	0.3	1.2	1.5
Transfer to loans to joint ventures	(0.2)	-	-	-	-	-	(0.2)	-	(0.2)
Disposal of interest in joint venture	(1.1)	-	-	-	-	-	(1.1)	-	(1.1)
Share of loss after tax	-	-	-	-	-	-	-	(0.2)	(0.2)
Movement during the year	(1.0)	-	-	-	-	-	(1.0)	1.0	-
At 30 June 2017	-	-	-	0.2	-	-	0.2	1.1	1.3
Share of profit after tax	-	-	-	0.2	-	0.8	1.0	-	1.0
Receipts from joint ventures	-	-	-	-	-	(0.8)	(0.8)	-	(0.8)
Movement during the year	-	-	-	0.2	-	-	0.2	-	0.2
At 30 June 2018	-	-	-	0.4	-	-	0.4	1.1	1.5

Amounts due from associate

			2018	2017
			£m	£m
Due in less than one year
Other receivables			2.8	-
Due in more than one year
Loans			3.0	3.0
Other receivables			-	2.8
			3.0	5.8
			5.8	5.8

Amounts due from joint ventures

	2018	2017
	£m	£m
Due in less than one year
Project Helix	-	4.9
Bucknalls Developments Ltd	5.6	4.4
Cheshunt Lakeside Developments Ltd	13.4	8.1
Gardiners Park LLP	-	0.9
	19.0	18.3
Due in more than one year
Europa Park LLP	1.0	-
	20.0	18.3

INTERESTS IN JOINT VENTURES           

Aston Clinton S.A.R.L.

In November 2014, the Group acquired a 10% interest in Aston Clinton S.A.R.L (Lux) whose purpose was to acquire a site near Aylesbury, Buckinghamshire, and obtain planning permission. During the year ended 30 June 2017, following the achievement of planning consent for 400 residential units and commercial space was achieved, the Group sold its interest in Aston Clinton S.A.R.L. for £8.3m, generating a gain of £7.0m which was recognised in the Group Income Statement. Aston Clinton S.A.R.L. is based in Luxembourg.

Summarised statement of total comprehensive income

			2018	2017
			£m	£m
Revenue			-	-
Interest income			-	-
Interest charge			-	(0.3)
Income tax expense			-	-
Total comprehensive income			-	(0.3)

Project Helix Group

In December 2014, the Group entered into a joint venture with CPC Group Ltd (CPC) to purchase land, obtain planning permission and ultimately sell the land. During the year, Project Helix Holdco Limited's interests in its subsidiary undertakings, High Wycombe Developments Ltd, High Wycombe Developments No. 2 Ltd and Brooklands Helix Developments Ltd were purchased by the Group. Project Helix Group will be liquidated shortly.

Summarised statement of financial position

					2018	2017
					£m	£m
Current assets
Cash and cash equivalents					-	-
Other current assets					-	24.3
Total current assets					-	24.3
Current liabilities
Financial liabilities (excluding trade payables and provisions)					-	0.6
Other current liabilities					-	24.0
Total current liabilities					-	24.6
Net liabilities					-	(0.3)
Reporting entity's share					-	(0.1)
Investment cost					-	0.1
Carrying amount at year end					-	-
Summarised statement of total comprehensive income
					2018 £m	2017 £m
Revenue					-	0.2
Operating expenses					-	(0.1)
Total comprehensive income					-	0.1

Bucknalls Developments Ltd                                                                                                

In December 2015, the Group entered into a joint venture with two individuals to purchase land, obtain planning permission and develop the homes in Garston, Hertfordshire. During the year ended 30 June 2017 outline planning consent was obtained for 100 residential units. Under the terms of the joint venture, the Group owns 50% of the share capital, is obliged to fund 50% of the costs of the site and is entitled to receive a management fee and 50% of the returns.

Summarised statement of financial position

			2018	2017
			£m	£m
Current assets
Cash and cash equivalents			0.1	-
Other current assets			9.5	8.4
Total current assets			9.6	8.4
Current liabilities
Financial liabilities (excluding trade payables and provisions)			9.9	8.3
Other current liabilities			0.3	0.1
Total current liabilities			10.2	8.4
Net liabilities			(0.6)	-
Reporting entity's share			(0.3)	-
Losses restricted to nil			0.3	-
Carrying amount at year end			-	-
Summarised statement of total comprehensive income
			2018	2017
			£m	£m
Revenue			-	-
Operating expenses			-	-
Interest			(0.3)	-
Total comprehensive income			(0.3)	-

Cheshunt Lakeside Developments Ltd (formerly Inland (Stonegate) Ltd)

In June 2016, the Group entered into a joint venture whose purpose was to acquire a site in Cheshunt, Hertfordshire, obtain planning permission and ultimately sell the land. The site has the potential for 1,500 residential plots. Under the terms of the joint venture agreement, the Group has an obligation to fund 50% of the costs of the site and is entitled to receive 50% of the net returns.

Summarised statement of financial position

				2018		2017
				£m		£m
Current assets
Cash and cash equivalents				0.3		0.2
Other current assets				57.5		39.4
Total current assets				57.8		39.6
Current liabilities
Financial liabilities (excluding trade payables and provisions)				56.6		22.7
Other current liabilities				0.6		16.7
Total current liabilities				57.2		39.4
Net assets				0.6		0.2
Reporting entity's share				0.3		0.1
Investment cost				0.1		0.1
Carrying amount at year end				0.4		0.2
Summarised statement of total comprehensive income
				2018		2017
				£m		£m
Revenue				0.7		0.2
Operating expenses				(0.3)		-
Interest				-		-
Income tax expense				-		-
Total comprehensive income				0.4		0.2

Europa Park LLP

In December 2017, the Group entered into a joint venture which acquired a site in Ipswich, Suffolk from the Group which has planning permission for 94 residential plots. Under the terms of the joint venture agreement, the Group has an obligation to fund 50% of the costs of the site and is entitled to receive 50% of the net returns.

Summarised statement of financial position

					2018	2017
					£m	£m
Current assets
Cash and cash equivalents					0.1	-
Other current assets					2.7	-
Total current assets					2.8	-
Current liabilities
Financial liabilities (excluding trade payables and provisions)						-
Partners loans					1.9	-
Other current liabilities					0.9	-
Total current liabilities					2.8	-
Net assets					-	-
Reporting entity's share					-	-
Investment cost					-	-
Carrying amount at year end					-	-
Summarised statement of total comprehensive income
					2018	2017
					£m	£m
Revenue					-	-
Operating expenses					-	-
Interest					-	-
Income tax expense					-	-
Total comprehensive income					-	-

Gardiners Park LLP

In November 2016, the Group entered a joint venture with Constable Homes Limited to develop a site in Basildon, Essex with 30 private and 13 Housing Association units. Under the terms of the joint venture agreement, the Group has an obligation to fund 50% of the costs of the site and is entitled to receive 50% of the net returns.

Summarised statement of financial position

					2018	2017
					£m	£m
Current assets
Cash and cash equivalents					0.4	0.3
Other current assets					0.9	5.9
Total current assets					1.3	6.2
Current liabilities
Financial liabilities (excluding trade payables and provisions)					-	3.4
Partners loans					-	1.8
Other current liabilities					1.3	1.1
Total current liabilities					1.3	6.3
Net assets					-	(0.1)
Reporting entity's share					-	-
Investment cost					-	-
Carrying amount at year end					-	-
Summarised statement of total comprehensive income
					2018	2017
					£m	£m
Revenue					11.0	0.9
Operating expenses					(9.3)	(0.9)
Interest					(0.1)	(0.1)
Income tax expense					-	-
Total comprehensive income					1.6	(0.1)

INTERESTS IN ASSOCIATES

Troy Homes Ltd

 In October 2015 the Group acquired 25% of Troy Homes Ltd (Troy), a new premium housebuilder, and is entitled to 25% of the net returns.

Summarised statement of financial position
			2018	2017
			£m	£m
Non-current assets
Tangible assets			0.1	0.1
Total non- current assets			0.1	0.1
Current assets
Cash and cash equivalents			3.1	0.6
Other current assets			29.3	26.1
Total current assets			32.4	26.7
Total assets			32.5	26.8
Current liabilities
Financial liabilities (excluding trade payables and provisions)			14.1	10.4
Other current liabilities			5.5	3.4
Total current liabilities			19.6	13.8
Non-current liabilities
Financial liabilities (excluding trade payables and provisions)			9.2	9.5
Total non-current liabilities			9.2	9.5
Total liabilities			28.8	23.3
Net assets			3.7	3.5
Reporting entity's share			0.9	0.9
Investment cost			0.2	0.2
Carrying amount at year end			1.1	1.1
Summarised statement of total comprehensive income
			2018 £m	2017 £m
Revenue			14.2	1.0
Operating expenses			(12.9)	(1.9)
Interest			(1.4)	(0.8)
Income tax			0.3	0.3
Total comprehensive income/(expense)			0.2	(1.4)

8. DEFERRED TAX

	Revaluation gain £m	Capital losses recognised on revaluation gain £m	Share-based Compensation £m	Notional interest on deferred consideration £m	Total £m
At 1 July 2017	6.5	(3.2)	(0.6)	(0.7)	2.0
Charged/(credited) to income statement	(0.5)	0.5	(0.1)	-	(0.1)
At 30 June 2018	6.0	(2.7)	(0.7)	(0.7)	1.9

9. INVENTORIES
	2017	2016
	£m	£m
At 1 July	139.9	148.4
Additions	107.8	58.0
Capitalisation of finance costs	1.1	1.1
Capitalisation of employee costs	3.0	1.4
Charged to income statement	(113.7)	(68.6)
Transferred to investment property	(1.2)	-
Impairment	(0.7)	(0.4)
At 30 June	136.2	139.9

Certain of the inventories are secured against the Group's borrowings.

10. TRADE AND OTHER RECEIVABLES
	2018	2017
	£m	£m
Trade receivables	16.1	3.4
Prepayments and accrued income	0.4	1.3
Other receivables	13.9	17.7
Trade and other receivables due in less than one year	30.4	22.4
Other receivables due in more than one year	11.0	5.7
	41.4	28.1

The carrying value of trade and other receivables is considered a reasonable approximation of fair value. During the year an amount of £0.5m (2017: £nil) was written off in relation to a contractor which went into administration in 2016 (for more details see note 13). No other trade receivables are considered to be impaired and there were no unimpaired trade receivables past due at the reporting date.

Other receivables

	2018	2017
	£m	£m
Due in less than one year
Prepayments and accrued income	1.3	10.7
Other receivables	5.0	5.0
Corporation tax debtor	5.0	-
Other receivables due in more than one year	2.6	2.0
	13.9	17.7
Due in more than one year
Sale of subsidiary	4.7	-
Sale of interest in joint venture	5.7	5.7
Other	0.6	-
	11.0	5.7

Within other receivables is £0.6m (2017: £0.4m) relating to retentions receivable from construction contracting clients. Within prepayments and accrued income is £2.9m (2017: £1.0m) relating to income accrued on a construction contract.

11. SHARE CAPITAL

The movement in the number of shares in issue is shown in the table below:

	10p ordinary shares		10p deferred shares
	Number	£m	Number	£m
At 30 June 2016	202,799,432	20.3	9,980	-
Issued on exercise of share options	855,000	0.1	-	-
Issued for cash during the year	-	-	-	-
At 30 June 2017	203,654,432	20.4	9,980	-
Issued on exercise of LTIP	896,689	0.1	-	-
At 30 June 2018	204,551,121	20.5	9,980	-

Employee Benefit Trust
At 30 June 2016	1,027,500	(0.7)
Purchase of own shares for deferred bonus plan	600,000	(0.4)
At 30 June 2017 and 30 June 2018	1,627,500	(1.1)

Treasury reserve
At 30 June 2016 and 30 June 2017	-	-
Purchase of own shares	1,000,000	(0.6)
Exercise of share options	(175,000)	0.1
At 30 June 2018	825,000	(0.5)

Total voting shares1
At 30 June 2016	201,771,932
At 30 June 2017	202,026,932
At 30 June 2018	202,098,621

¹ Ordinary shares in issue less shares held in the Employee Benefit Trust and the Treasury reserve

Ordinary shares

Except for the shares held in the Employee Benefit Trust and the Treasury (see note 12) reserve each share has the right to one vote and is entitled to participate in any distribution made by the Company, including the right to receive a dividend.

Deferred shares

Deferred shares shall not confer the right to be paid a dividend or to receive notice of or attend or vote at a general meeting. On a winding-up, after the distribution of the first £10.0m of the assets of the Company, the holders of the deferred shares (if any) shall be entitled to receive an amount equal to the nominal value of such deferred shares pro rata to their respective holdings.

12. RESERVES

The following describes the nature and purpose of each reserve within shareholders' equity

Reserve	Description and purpose
Share premium	Amount subscribed for share capital in excess of nominal value less directly attributable issue costs.
Employee Benefit Trust	This represents the purchase of the Company's own shares and are deducted from total equity until they are issued to employees under the Deferred Bonus Plan.  At 30 June 2018, this reserve holds 1,627,500 shares (2017: 1,627,500 shares).
Special reserve	A resolution was passed at the AGM in November 2011 for the capitalisation of the Parent Company's reserves to allow for the possibility of distributions in the future and this was put in the Special Reserve, which is a distributable reserve. A copy of this resolution is available from Companies House.
Treasury reserve	This represents the purchase of the Company's own shares and are deducted from total equity until they are issued to employees under the share option plan.  At 30 June 2018, this reserve holds 825,000 shares (2017: None).
Retained earnings	Cumulative net gains and losses recognised in the Group income statement together with other items such as dividends and share-based payments.

13. TRADE AND OTHER PAYABLES
			2018	2017
			£m	£m
Trade payables			8.5	7.2
Other creditors			3.1	6.3
Sales and social security taxes			6.4	1.8
Accruals and deferred income			6.9	5.2
			24.9	20.5

The carrying value of trade and other payables is considered to be a reasonable approximation of fair value. Within trade payables is £0.7m relating to amounts payable in relation to construction contracts.

The contingencies note of last year's financial statements included disclosure relating to a claim and counter-claim with respect to one of the Group's contractors which went into Administration during the year ended 30 June 2016. Included within other creditors of £3.1m at 30 June 2018 is a provision for £275,000 for the final agreed settlement with the Administrators in relation to these claims.

14. NET DEBT

	< 1 year	1 to 2 years	2 to 3 years	3 to 4 years	4 to 5 years	> 5 years	Total
	£m	£m	£m	£m	£m	£m	£m
At 30 June 2018
Secured bank loans	26.0	13.8	-	27.6	-	-	67.4
Other secured loans	-	17.2	10.5	-	-	6.6	34.3
Borrowings	26.0	31.0	10.5	27.6	-	6.6	101.7
ZDP shares	18.4	-	-	-	-	-	18.4
Gross debt	44.4	31.0	10.5	27.6	-	6.6	120.1
Cash and cash equivalents							(40.4)
Net debt							79.7
At 30 June 2017
Secured bank loans	-	16.0	19.9	-	27.3	-	63.2
Other secured loans	-	-	14.0	-	-	-	14.0
Borrowings	-	16.0	33.9	-	27.3	-	77.2
ZDP shares	-	17.3	-	-	-	-	17.3
Gross debt	-	33.3	33.9	-	27.3	-	94.5
Cash and cash equivalents							(26.5)
Net debt					-		68.0
Undrawn committed bank facilities
At 30 June 2018	-	13.9	13.3	-	-	4.9	32.1
At 30 June 2017	-	-	11.2	-	-	-	11.2

At 30 June 2018, the bank loans were secured over £47.1m (2017: £53.6m) of investment property and £16.6m (2017: £18.5m) of inventories. The other loans were secured over £5.3m (2017: £nil) of investment property and £50.9m (2017: £40.0m) of inventories. The ZDP shares were secured against inventories of £4.1m (2017: £4.1m) and loans to joint ventures of £18.9m (2017: £12.5m). No property, plant or equipment are pledged as security.

Net gearing			2018	2017
			£m	£m
Net debt			79.7	68.0
Net assets
IFRS			142.4	130.6
EPRA			206.7	194.4
Net gearing
IFRS			56.0%	52.1%
EPRA			38.6%	35.0%

Zero Dividend Preference (ZDP) shares

The ZDP shares carry no entitlement to any dividends or other distributions or to participate in the revenue or any other profits of the Company.  The ZDP shareholders have no right to receive notice of, or to attend or vote at, any general meeting of the company except in those circumstances set out in the Inland ZDP plc's Articles of Association, which would be likely to affect their rights or general interests. At 30 June 2018, there were 12,444,200 ZDP shares in issue (2017: 11,313,200). An explanation of the fair value of the ZDP shares is included in note 26. The maturity of the ZDP shares was extended in August 2018 and will now be repaid on or before 10 April 2024. In addition, a further 1,000,000 ZDP shares were issued.  More details on the continuation and extension are included in note 16.

15. OTHER FINANCIAL LIABILITIES

Other financial liabilities of £3.7m (2017: £20.1m) relates to purchase consideration on inventories falling due within one year.

16. POST BALANCE SHEET EVENTS

ZDP refinancing

On 13 August 2018, the life of the Group's existing ZDP shares was extended to 10 April 2024. Additionally, a further 1,000,000 ZDP shares were issued for gross proceeds of £1.5m.  Following this issue, the number of ZDP shares in issue was 13,444,200 shares.

 

END

 

 

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