Half-year Report

RNS Number : 0980S

Inland Homes PLC

07 March 2019

 

7 March 2019

Inland Homes plc

(the 'Company' or the 'Group')

Interim results - six months to 31 December 2018

Inland Homes plc (AIM: INL), a leading housebuilder, partnership housing developer and regeneration specialist, today announces its interim results for the six months to 31 December 2018. 

Stephen Wicks, Chief Executive at Inland Homes, commented:

"This is a very pleasing set of results, with continued growth in the underlying value of our land holdings and overall profitability, reflecting a successful period of operational activity for the business.

At Inland, we operate a simple model: we acquire land in areas of high-demand in the South and South-East of England, adding significant value by securing planning permissions and then generate further value for our shareholders through a mix of:

·      Sales of plots to other developers;

·      Development of homes for sale; and

·      Delivery of turnkey developments for partners: Housing Associations, PRS operators and other third parties.

These activities generate a number of profitable income streams including construction income and management fees.

Despite well-reported political and economic uncertainty, demand for new homes continues to significantly outstrip supply. At present, our market segments remain stable with continued demand across our core activities, and our visitor numbers and sales rates are holding up well. Likewise, the market for land in prime locations with planning consent continues to be robust. With our high-quality land holdings, the business has a strong platform to complete its transition from a business that was predominantly focused on land trading to a business predicated on delivering our medium-term annual target of 500 homes for sale and 500 homes for Partnership Housing."

Financial highlights:

·      Revenue decreased to £51.0m (2017: £61.2m), as expected

·      Gross profit increased by 28.1% to £14.6m (2017: £11.4m)

·      Gross margin at 28.6% (2017: 18.6%)

·      PBT up to £5.5m (2017: £5.4m)

·      Interim dividend up 30.8% to 0.85p per share (H1 2017: 0.65p)

·      Net Asset Value per share ("NAV") up 7.0% to 71.71p (2017: 67.02p)

·      EPRA NAV¹ up 6.1% to 103.57p (2017: 97.63p)

Operational highlights:

·     Further acquisitions of high-quality sites, both outright and under option - total land holdings of 7,291 plots (2017: 7,372) with an anticipated gross development value of c. £2.3bn (2017: c. £2.2bn)

·     Private Housing: lower level of completions at 81 (2017: 96) as expected, and forward sales at £19.3m (2017: £38.9m) reflecting the timing of our development programme. A record 1,057 homes for sale under construction (2017: 560)

·     Partnership Housing: Significant increase in contract income to £15.0m (2017: £5.2m). Total current order book increased 326% to c. £140m² (2017: £43m) with 496 homes for Partnership Housing under construction (2017: 220)

·     Land sales: 30 plots sold (2017: 338)

·     Negotiations with the local authority continue at our flagship site in Wilton Park, Beaconsfield with planning outcome expected in the current financial year

·     Net management fee of £9.2m (2017: £2.2m) for planning and development services

¹ on an undiluted basis

² Including Dagenham contract discussed below

Enquiries:

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
Instinctif Partners	Tel: [phone]
Mark Garraway James Gray

Notes to Editors:

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

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

The Company is committed to extensive public and community consultation in order to ensure that, where possible, local community needs and objectives are met. Its aim is to create sustainable communities and homes in the South and South-East of England. The Company is always looking for brownfield sites without planning permission for future development.

For further information, please visit the Inland Homes websites at:

·      Investor - www.inlandhomesplc.com

·      Sales -  www.inlandhomes.co.uk.

·      Hugg Homes - www.hugghomes.co.uk

·      Rosewood Housing - www.rosewoodhousing.co.uk

Chairman's statement

Introduction

We have made encouraging progress across all areas of the business since the last year end.  We:

-     acquired further sites both outright and under option;

-     earned a substantial management fee from a site managed on behalf of a third-party;

-     launched sales on three development sites; and

-     extended the maturity of debt facilities with improved terms.

Financial results

Income statement

Revenue for the period decreased to £51.0m (2017: £61.2m) largely as a result of a reduced number of plots sold and the expected decrease in private home completions due to the timing of our development programme. However, gross profit increased by 28.1% to £14.6m (2017: £11.4m), primarily as a result of management fees from a site managed by us. As a result, overall gross margin increased to 28.6% (2017: 18.6%) and operating margin to 16.5% (2017: 11.4%). Profit before tax also increased to £5.5m (2017: £5.4m).

EPRA net asset value

EPRA net asset value is a prime metric for the business, reflecting the unrealised value in the business' land holdings and balance sheet. Undiluted EPRA net asset value per share rose by 6.1% to 103.57p at 31 December 2018 from 97.63p at the previous half year end. This increase results from the profit for the period and the increase in the EPRA adjustment for the revaluation of projects currently held at cost in inventories.

	December 2018		December 2017
	£m	p	£m	p
IFRS NAV1	147.4	71.71	134.7	67.02
Valuation uplift of inventories (76%2 by professional valuation)	62.2		58.2
Reversal of deferred tax on investment properties	3.3		3.3
EPRA NAV at 31 December 2018	212.9	103.57	196.2	97.63

¹ on an undiluted basis

² Excluding strategic land

Net debt and borrowings

Net debt has increased to £96.6m and represents net gearing of 45.4% (30 June 2018: 38.6%) on EPRA net assets of £212.9m (30 June 2018: £206.7m) as a result of the increase in our development activity which is predominantly on sites with large blocks of apartments. We have undrawn bank facilities at the period end of £24.6m (2017: £37.0m). During the period, we extended the maturity date of the our ZDP shares by five years to 10 April 2024. In addition, we issued a further 2.5m ZDP shares at an average 151.6p per share raising a gross sum of £3.8m. The gross redemption yield will reduce from 7.3% p.a. to 5.25% p.a. as from 10 April 2019.  We have also agreed in principle the refinancing of our £20.0m revolving credit facility ("RCF") with a new £65m RCF with HSBC (including a £20m accordion) for a four-year term. Additionally, we renewed a £26.2m facility, which previously expired in December 2018, for a further 12 months. As a result of our enhanced and extended facilities, the average maturity of borrowings increases to 2.7 years from 1.9 years at the year end and our undrawn bank facilities increases to £49.6m.

Dividend

The Board is pleased to increase the interim dividend by 30.8% to 0.85p (2017: 0.65p) per share. The dividend will be paid on 3 July 2019 to shareholders on the register at the close of business on 21 June 2019. The ex-dividend date is 20 June 2019.

Operational performance

We sold 30 land plots (2017: 338) and completed the sale of 81 private homes (2017: 96) in the period generating revenue of £4.8m (2017: £20.3m) and £20.2m (2017: £31.0m) respectively. The average selling price of our residential units was £238,000 (2017: £322,000), the decrease resulting from a different property mix of the sales in the period.

We launched the sale of homes at two joint venture sites during the period; Jasmine Park in Ipswich, a development of 94 homes and Farriers Wood, Garston near Watford for 100 homes and sales reservations at both sites have been encouraging. In January 2019, we launched our 239 unit site at Lily's Walk located in the town centre of High Wycombe, Buckinghamshire (part of our Centre Square development). Our forward sales currently stand at £19.3m, including 23 units at Lily's Walk. We are also in discussions with a number of build to rent operators for bulk sales on some of our sites.

Our Partnership Housing business, where we completed one site in the period and are on-site at a further two, generated £15.0m of contract income in the period (2017: £5.2m). Including the transaction at Dagenham, East London discussed below, the total current order book is approximately £140m.

We manage a number of sites on behalf of third parties and we secured management fees of £10.1m on a project at Aston Clinton, Buckinghamshire where completion of the sale of 386 plots took place to a major housebuilder in November 2018.

At the half year end we had a record 1,057 homes for sale under construction (including 193 within JVs) (2017: 560) and a further 496 homes for Partnership Housing (2017: 220), a combined increase of 99.1%. We expect to deliver the following units over the current and following financial years:

Expected short-term delivery timeline	H1 2018/19	H2 2018/19	2019/20
Private and affordable units - Group	79	35	371
- within JVs	2	45	150
	81	80	521
Partnership Housing equivalent units1	63	163	313
Total units	144	243	834
Partnership Housing1,2 (£m)	15.0	16.0	46.7

¹ Including Dagenham contract discussed below

² Remainder of c£140m order book to be received in years 2020/21 and 2021/22

Planning update

During the period, we received planning permission at our site in Meppershall, Bedfordshire for a total of 60 units where the expected gross development value ("GDV") is £19m. Additionally, planning applications are awaiting decisions on 1,876 plots across five sites.

Negotiations with the local authority continue at Wilton Park, Beaconsfield and hinge on the level of affordable housing to be provided on this prime 100-acre site. The site has an allocation for over 300 homes and a GDV of £350m. The site continues to generate significant rental income of £1.5m pa from residential and commercial occupiers whilst we negotiate the planning permission which is expected to be received in the current financial year.

Although our planning application for 1,853 units at Cheshunt Lakeside, Hertfordshire was recommended for approval by the planning officers, the planning committee of Broxbourne District Council resolved to defer the decision, requesting clarification on a few matters. We expect these matters to be resolved shortly and then to receive planning permission in the coming months.

Land portfolio

Acquisitions and disposals

We have exchanged contracts to acquire a major development site in Dagenham, East London. The four-acre brownfield site, which was previously part of the former Ford manufacturing plant, lies within the London Riverside Opportunity Area, a 3,000 hectare major regeneration zone designated in the London Plan to deliver up to 26,500 homes and create 16,000 jobs across the boroughs of Barking and Dagenham.

The site has an existing planning consent for 325 homes and 1,600 sqm of commercial space and we are at an advanced stage for the onward sale of this site and a Partnership Housing construction contract with a major Housing Association.

We have also facilitated the purchase of a development site known as "Hillingdon Gateway" in the London Borough of Hillingdon on behalf of an investor with whom we have a long-standing relationship.  The site is allocated for a major residentially led mixed-use scheme which has capacity for over 400 homes together with commercial space. We will manage the planning process and the ultimate development on behalf of the investor in return for a management fee and a share of the development profits.

Additionally, we have secured options over sites totalling 18.0 acres where we estimate there is the potential for 170 residential units.

Our site at West Cliff Road (formerly Wessex Hotel), Bournemouth has planning consent for 88 apartments and a 105-bed hotel. As announced in June, we have signed a pre-let for the hotel with Premier Inn for a 25-year lease, with a starting rent of £588,000 per annum. During the period, we signed a conditional forward sale agreement with Aviva Investors which will purchase the hotel at practical completion, expected in mid-2020, for £13.3m. Construction commenced in October 2018.

At 31 December 2018, our land portfolio stood at 7,291 plots, of which 2,048 (28%) have a planning consent or a resolution to grant planning consent.

Breakdown of land holdings	Number of plots		Group share
	Dec 2018	Dec 2017	Dec 2018	Dec 2017
Without planning permission:
Planning application submitted	1,876		1,216
Pre-application discussions	371		371
Preparing for pre-application discussions	520		520
Strategic sites	2,476		2,476
	5,243	5,044	4,583	4,386
With planning permission	2,048	2,328	1,939	2,042
Total	7,291	7,372	6,522	6,428

A large portion of our land pipeline is held in a capital efficient manner, with the majority of our strategic land controlled by way of options which are usually exercisable at a discount to market value. Our strategic land covers 522 acres across 37 sites and is expected to deliver over 3,000 homes.

New initiatives

After a 30-month registration period, our subsidiary, Rosewood Housing, obtained approval from the regulator as a "for profit" registered provider of affordable housing. This will enable us to build and hold affordable housing units, that we will offer alongside our private homes for sale, collecting rental income and retaining the long-term value of shared ownership homes. The first property has been transferred to Rosewood which has recently been let at an affordable rent under a section 106 agreement.  We have identified a further pipeline of new opportunities which are a mix of shared ownership, social and discounted market rent units and we will be seeking a joint venture partner to move this business forward.

Our modular housing product (www.hugghomes.co.uk) now has 22 units in situ at our Chapel Riverside site which have been let to Southampton City Council and private tenants for £168,000 pa. Additionally, a further 32 units have been let to the Borough of Broxbourne for three years for £319,000 pa at Cheshunt Lakeside and will be fully income-producing within the financial year. This initiative has been well received by a number of local authorities and institutional land owners with whom we are exploring further opportunities to develop this business.

Outlook

The current market conditions in the South and South-East of the United Kingdom are showing signs of a slow-down, but the demand for new homes continues to significantly outstrip supply. We are continuing to see good visitor numbers at our sales outlets and overall sales rates are according to plan but are being achieved after the provision of additional incentives including the use of Help to Buy.  Our ability to secure Partnership Housing deals alongside private housebuilding balances our business model during these times of uncertainty.  The demand for land with planning consent in our areas of operation continues to be robust and we believe that our land portfolio provides us with an excellent base for the future.

Terry Roydon

Chairman

GROUP INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
		Six months ended 31 December 2018 (unaudited)	Six months ended 31 December 2017 (unaudited)	Year ended 30  June 2018 (audited)
Continuing operations	Note	£m	£m	£m
Revenue	5	51.0	61.2	147.4
Cost of sales	5	(36.4)	(49.8)	(115.6)
Gross profit		14.6	11.4	31.8
Administrative expenses		(6.2)	(5.0)	(9.4)
Gain on sale of subsidiary	9	-	-	0.1
Share of (loss)/profit of associate	9	(0.1)	0.1	-
Share of profit of joint ventures	9	0.3	0.5	1.0
Revaluation of investment properties	8	0.1	-	-
Revaluation of investments		(0.3)	-	-
Operating profit		8.4	7.0	23.5
Finance cost		(3.7)	(2.0)	(5.1)
Finance income		0.8	0.4	0.9
Profit before tax		5.5	5.4	19.3
Tax charge	6	(0.9)	(1.0)	(3.9)
Total profit and comprehensive income for the period		4.6	4.4	15.4
Earnings per share
- basic	7	2.25p	2.19p	7.64p
- diluted	7	2.18p	2.08p	7.30p

GROUP STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2018
		At 31 December 2018 (unaudited)	At 31 December 2017 (unaudited)	At 30 June 2018 (audited)
	Note		£m	£m
ASSETS
Non-current assets
Investment properties	8	55.6	53.6	52.8
Property, plant and equipment		3.6	1.0	1.3
Investments		1.2	-	0.2
Investment in joint ventures	9	1.7	0.6	0.4
Amounts due from joint ventures	9	1.0	-	1.0
Investment in associate	9	1.0	1.3	1.1
Amounts due from associate	9	3.2	6.0	3.0
Other receivables	10	5.9	5.9	11.0
Total non-current assets		73.2	68.4	70.8
Current assets
Inventories		162.5	137.1	136.2
Trade and other receivables	10	26.1	20.6	30.4
Amounts due from joint ventures	9	20.5	19.8	19.0
Amounts due from associate	9	2.5	-	2.8
Cash and cash equivalents		30.2	24.8	40.4
Total current assets		241.8	202.3	228.8
Total assets		315.0	270.7	299.6
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital	11	20.8	20.4	20.5
Share premium account		36.4	34.3	34.8
Employee benefit trust		(1.1)	(1.1)	(1.1)
Treasury reserve		(0.1)	(0.6)	(0.5)
Special reserve		6.1	6.1	6.1
Retained earnings		85.3	75.6	82.6
Total equity attributable to shareholders of the Company		147.4	134.7	142.4
LIABILITIES
Current liabilities
Bank loans and overdrafts	13	32.0	16.1	26.0
Other loans	13	1.1	-	-
Zero Dividend Preference shares	13	-	-	18.4
Trade and other payables	12	17.3	12.0	24.9
Corporation tax		4.9	3.5	6.6
Other financial liabilities	14	16.6	23.8	3.7
Total current liabilities		71.9	55.4	79.6
Non-current liabilities
Zero Dividend Preference shares	13	22.5	17.9	-
Bank loans	13	47.0	49.1	51.9
Other loans	13	24.2	11.5	23.8
Deferred tax	15	2.0	2.1	1.9
Total non-current liabilities		95.7	80.6	77.6
Total equity and liabilities		315.0	270.7	299.6

GROUP STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 DECEMBER 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 2017 (audited)	20.4	34.3	(1.1)	6.1	-	70.9		130.6
Total comprehensive income for the period	-	-	-	-	-	4.4		4.4
Transactions with owners:
Share-based payments	-	-	-	-	-	0.3		0.3
Purchase of own shares	-	-	-	-	(0.6)	-		(0.6)
At 31 December 2017 (unaudited)	20.4	34.3	(1.1)	6.1	(0.6)	75.6		134.7
Total comprehensive income for the period	-	-	-	-	-	11.0		11.0
Transactions with owners:
Share-based payments	-	-	-	-	-	0.3		0.3
Dividend payment	-	-	-	-	-	(3.7)		(3.7)
Issue of ordinary shares	0.1	0.5	-	-	-	(0.6)		-
Exercise of share options	-	-	-	-	0.1	-		0.1
At 30 June 2018 (audited)	20.5	34.8	(1.1)	6.1	(0.5)	82.6		142.4
Total comprehensive income for the period	-	-	-	-	-	4.6		4.6
Transactions with owners:
Share-based payments	-	-	-	-	-	0.4		0.4
Issue of ordinary shares	0.3	1.6	-	-	-	(1.9)		-
Purchase of own shares	-	-	-	-	(0.1)	-		(0.1)
Exercise of share options	-	-	-	-	0.5	(0.4)		0.1
At 31 December 2018 (unaudited)	20.8	36.4	(1.1)	6.1	(0.1)	85.3		147.4

GROUP STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
	Note	Six months ended 31 December 2018 (unaudited)	Six months ended 31 December 2017 (unaudited)	Year ended 30 June 2018 (audited)
		£m	£m	£m
Cash flow from operating activities
Profit for the period before tax		5.5	5.4	19.3
Adjustments for:
- depreciation		0.1	0.1	0.3
- share-based payments		0.2	0.2	0.8
- revaluation of investment properties		(0.1)	-	-
- revaluation of investments		0.3	-	-
- gain on disposal of subsidiary		-	-	(0.1)
- interest expense		3.7	2.0	5.1
- interest and similar income		(0.8)	(0.3)	(0.9)
- share of profit of joint ventures		(0.3)	(0.5)	(1.0)
- share of profit/(loss) of associate		0.1	(0.1)	-
Corporation tax payments		(2.6)	(0.9)	(4.0)
Change in working capital:
- increase in inventories		(27.9)	(4.7)	(3.2)
- decrease/(increase) in trade and other receivables		6.3	(2.5)	(17.8)
- increase/(decrease) in trade and other payables		4.7	(8.5)	(12.8)
Net cash outflow from operating activities		(10.8)	(9.8)	(14.3)
Cash flow from investing activities
Interest received		0.2	0.2	0.8
Purchases of property, plant and equipment		(0.1)	(0.1)	(0.9)
Purchases of investment property	8	(0.2)	-	(0.2)
Purchase of investment		-	-	(0.2)
Proceeds from sale of subsidiary		-	12.2	13.4
Investment in joint venture		(1.0)	-	-
Loans provided to joint ventures		(4.7)	(1.5)	(7.6)
Amounts repaid by joint ventures		3.4	-	5.9
Distribution of profits from joint venture		-	-	0.8
Loans provided to associate		-	(0.2)	-
Net cash (outflow)/inflow from investing activities		(2.4)	10.6	12.0
Cash flow from financing activities
Interest paid		(2.2)	(1.4)	(3.8)
Repayment of borrowings		(8.1)	(4.1)	(6.3)
New loans		13.4	3.6	30.6
Equity dividends paid to ordinary shareholders		-	-	(3.7)
Purchase of own shares for Long Term Incentive Plan		(0.1)	(0.6)	(0.6)
Net cash inflow/(outflow) from financing activities		3.0	(2.5)	16.2
Net (decrease)/increase in cash and cash equivalents		(10.2)	(1.7)	13.9
Net cash and cash equivalents at beginning of period		40.4	26.5	26.5
Net cash and cash equivalents at end of period		30.2	24.8	40.4

NOTES TO THE HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2018

1. NATURE OF OPERATIONS AND GENERAL INFORMATION

The principal activity of the Company and its subsidiaries (the "Group") is to acquire residential and mixed-use sites and seek planning consent for development. The Group also develops a number of plots for private sale.

Inland Homes plc is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The address of Inland Homes plc's registered office, which is also its principal place of business, is Decimal Place, Chiltern Avenue, Amersham, Buckinghamshire HP6 5FG.

Inland Homes plc's shares are quoted on AIM, a market operated by the London Stock Exchange. This consolidated half-yearly financial report has been approved for issue by the Board of Directors on 6 March 2019.

2. BASIS OF PREPARATION

Neither the financial information for the half year to 31 December 2018 nor the half year to 31 December 2017 was subject to an audit but has been subject to a review in accordance with the International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, issued by the Auditing Practices Board.

The financial information set out in this half-yearly financial report does not constitute statutory accounts as defined in Sections 434(3) and 435(3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 June 2018 have been filed with the Registrar of Companies and are available at www.inlandhomesplc.com. The Auditor's report on those financial statements was unqualified, did not draw attention to any matters by way of an emphasis of matter and did not contain any statement under Section 498 of the Companies Act 2006.

The financial information in these condensed consolidated financial statements is that of the holding company and all of its subsidiaries together with the Group's share of its joint ventures and associate. It has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting and should be read in conjunction with the annual report and accounts for the year ended 30 June 2018, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and as issued by the International Accounting Standards Board.

Going concern

The Board has reviewed the performance for the current period 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 a 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 Housing division.  The Group is also in discussions for the sale of some land parcels within its projects.   At 31 December 2018, the Group had £33.1m of borrowings expiring within one year.  Included in this figure was £5.7m drawn down against our revolving credit facility of £20m from Barclays Bank that expires on 6 November 2019.   We have agreed terms in principle with HSBC to refinance this facility with a committed facility of £45m and a £20m accordion and expect it to be in place very shortly.  £26.2m relates to loans which expire in December 2019 and which are secured against a prime site.  The board have had discussions with the current lender who have indicated their willingness to extend the facility and are confident that alternative lenders could be found given the level of security and the quality of the site. 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 publishing the interim report.  The Directors therefore consider it appropriate to prepare these condensed consolidated financial statements on the going concern basis.

3. ACCOUNTING POLICIES

The accounting policies applied are consistent with those applied in the annual financial statements for the year ended 30 June 2018 except the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers which have been endorsed by the EU and are effective for the first time in this half-yearly financial report.

IFRS 9 Financial Instruments

This standard applies to classification and measurement of financial assets and financial liabilities, impairment provisioning and hedge accounting. IFRS 9 replaces IAS 39 Financial Instrument: Recognition and Measurement and introduces a single model that has initially only two classification categories rather than the multiple classification and measurement models in the previous standard. The new models are amortised at cost and fair value.

There has been no change to the measurement of financial instruments on adoption of IFRS 9.

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. Given that inter group balances are eliminated on consolidation and does not affect group results, there are no material impairment allowance adjustments. Any impact on the parent company results will be reported in the next annual report for the year ending 30 June 2019.

Impairment provisions for current and non-current trade receivables are recognised based on the simplified approach within IFRS 9 using a provision matrix in the determination of the lifetime expected credit losses.  During this process the probability of the non-payment of the trade receivables is assessed.  This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net, such provisions are recorded in a separate provision account with the loss being recognised within cost of sales in the consolidated statement of comprehensive income.  On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for other receivables are recognised based on a forward-looking expected credit loss model.  The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset.  For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised.  For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised.  For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.

Having completed our assessment, it was concluded that the introduction of IFRS 9 does not have a material impact on the results or cash flows of the Group.

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 completed its assessment of the impact of IFRS 15 on its financial statements and has identified no material adjustments as a result of the implementation of IFRS 15.

4. SIGNIFICANT JUDGEMENTS, KEY ASSUMPTIONS AND ESTIMATES

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates and judgements.  It also requires management to exercise judgement in the process of applying the Group's accounting policies.  Not all of these accounting policies require management to make difficult, subjective or complex judgements or estimates.  Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  Although these estimates are based on management's best knowledge of the amount, event or actions, actual results may differ from those estimates.  The following is intended to provide an understanding of the policies that management consider critical because of the level of complexity, judgement or estimation involved in their application and their impact on the financial statements.

Key sources of estimation uncertainty

Valuation of inventories

In applying the Group's accounting policy for inventories which are held at the lower of cost and net realisable value the Directors are required to assess the expected selling price and costs to sell each of the plots or units that constitute the Group's land bank and work in progress to arrive at a valuation. Cost includes the cost of acquisition of sites, the cost of infrastructure and construction works, and legal and professional fees incurred during development prior to sale. Estimation of the selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land. The critical judgement in respect of receipt of planning consent (see below) further increases the level of estimation uncertainty in this area.

Income taxes (notes 6 and 15)

The Group recognises tax/deferred tax assets and liabilities for anticipated tax based on estimates of when the tax/deferred tax will be paid or recovered. When the final outcome of these matters is different from the amounts initially recorded, such differences impact the period in which the determination is made. Critical accounting estimates relate to the profit forecasts used to determine the extent to which deferred tax assets are recognised from available losses and the period over which they are estimated.

Fair value of investment properties (note 8)

The fair value of materially completed investment property is determined by independent valuation experts using the open market value of existing use method, subject to current leases and restrictions, as this has been assessed currently as the best use of these assets. Investment properties awaiting construction are valued by the Directors using an appraisal system; critical accounting estimates relate to the forecasts prepared in order to assess the carrying value.

Discounting on deferred consideration of inventories, disposal of joint ventures and acquisition of shares (notes 9 and 14)

The Group discounts deferred consideration using the discounted cash flow method; the Group considers that the cost of debt capital is the most appropriate discount rate and this is a significant estimate.

Significant judgements

Timing of likely repayment - Amounts due from joint ventures and associate (note 9)

Each of the amounts due from the joint ventures are contractually repayable on demand and the amounts due from the associate are repayable over the term of the underlying development. At each balance sheet date, the Directors review the forecasts of the underlying developments and make a judgement as to the likely timing of the recoverability of each loan which are then disclosed as either due in less than one year or greater than one year accordingly.

Likelihood of achieving planning - Inventories

The Group values inventories at the lower of cost and net realisable value. The net realisable value is based on the judgement of the probability that planning consent will be granted for each site. The Group believes that, based on the Directors' experience, planning consent will be given. If planning consent was not achieved, then a provision may be required against inventories. The cost value is based on actual costs incurred at the date of signing the financial statements with an estimation of costs to complete. The judgement of costs to complete is based on the Directors' experience and if actual plus projected costs are higher than net realisable value then a provision would be required against inventories.

Capitalisation of borrowing costs

The Group capitalises borrowing costs where there is a qualifying asset. The Directors must assess each site held with inventories each year in order to judge whether or not the site is a qualifying asset in line with the requirements of IAS 23 Borrowing Costs. In the opinion of the Directors, sites are judged to be qualifying assets if due to the long term, complex nature of these developments which will take several years before parts of it are sold or developed. This has resulted in borrowing costs related to such sites to be capitalised in the current and prior years. For non-qualifying sites the Group expenses borrowing costs due to the quantity and repetitive nature of the process adopted. In many cases such developments may take longer than 12 months. The Directors are therefore required to exercise judgement as to whether or not a site represents a qualifying asset.

Investment in joint ventures (note 9)

The Group's joint venture investments in Bucknalls Developments Limited, Cheshunt Lakeside Developments Limited, Europa Park LLP and Gardiners Park LLP are 50/50 joint ventures and the Group has joint control over the activities of the companies with the other parties and has an entitlement to veto any decisions. The Group and the other parties to the agreements only have rights to the net assets of these companies through the terms of the contractual arrangements. The Group is entitled to 50% of the net assets of these four joint ventures. Therefore, these entities are classified as joint ventures and are accounted for using the equity method.

Investment in associate (note 9)

The Group has a 25% investment in Troy Homes Limited. It has significant influence over that entity but does not have joint control. Therefore, the investment is classified as an associate and is accounted for using the equity method.

5. 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. This is also deemed to be the appropriate analysis of the disaggregation of revenues required by IFRS 15.

In identifying its operating segments, management differentiates between land sales, housebuilding, contract income, rental 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

Six months ended 31 December 2018 (unaudited)	Land sales £m	House building £m	Contract income £m	Investment properties £m	Management fees £m	Other £m	Total £m
Revenue	4.8	20.2	15.0	0.7	10.1	0.2	51.0
Cost of sales	(4.3)	(17.7)	(13.3)	(0.1)	(0.9)	(0.1)	(36.4)
Gross profit/(loss)	0.5	2.5	1.7	0.6	9.2	0.1	14.6
Administrative expenses	-	-	-	-	-	(6.2)	(6.2)
Share of profits of joint ventures	-	0.3	-	-	-	-	0.3
Share of loss of associate	-	(0.1)	-	-	-	-	(0.1)
Revaluation of investment properties	-	-	-	0.1	-	-	0.1
Revaluation of investments	-	-	-	-	-	(0.3)	(0.3)
Operating profit/(loss)	0.5	2.7	1.7	0.7	9.2	(6.4)	8.4
Net finance cost	(1.2)	(1.0)	(0.3)	(0.6)	-	(0.1)	(2.9)
Profit/(loss) before tax	(0.7)	1.7	1.4	0.1	9.2	(6.5)	5.5
Tax (charge)/credit	(0.2)	(0.1)	(0.3)	(0.1)	(0.5)	0.3	(0.9)
Total profit/(loss) for the period	(0.9)	1.6	1.1	-	8.7	(6.2)	4.6
Six months ended 31 December 2017 (unaudited)
Revenue	20.3	31.0	5.2	0.7	2.2	1.8	61.2
Cost of sales	(16.4)	(27.5)	(4.5)	(0.2)	-	(1.2)	(49.8)
Gross profit	3.9	3.5	0.7	0.5	2.2	0.6	11.4
Administrative expenses	-	-	-	-	-	(5.0)	(5.0)
Share of profit of joint ventures	-	0.5	-	-	-	-	0.5
Share of profit of associate	-	0.1	-	-	-	-	0.1
Operating profit/(loss)	3.9	4.1	0.7	0.5	2.2	(4.4)	7.0
Net finance cost	(0.9)	(0.3)	-	-	-	(0.4)	(1.6)
Profit/(loss) before tax	3.0	3.8	0.7	0.5	2.2	(4.8)	5.4
Tax (charge)/credit	(0.6)	(0.7)	(0.1)	(0.1)	(0.4)	0.9	(1.0)
Total profit/(loss) for the period	2.4	3.1	0.6	0.4	1.8	(3.9)	4.4
Six months ended 30 June 2018 (unaudited)
Revenue	39.0	39.2	6.8	0.6	0.2	0.4	86.2
Cost of sales	(24.6)	(35.0)	(5.7)	(0.1)	-	(0.4)	(65.8)
Gross profit/(loss)	14.4	4.2	1.1	0.5	0.2	-	20.4
Administrative expenses	-	-	-	-	-	(4.4)	(4.4)
Gain on sale of subsidiary	-	-	-	0.1	-	-	0.1
Share of profit of joint ventures	-	0.3	-	-	-	-	0.5
Share of loss of associate	-	(0.1)	-	-	-	-	(0.1)
Operating profit/(loss)	14.4	4.4	1.1	0.6	0.2	(4.2)	16.5
Net finance cost	(0.7)	(0.6)	-	(1.2)	-	(0.1)	(2.6)
Profit/(loss) before tax	13.7	3.8	1.1	(0.6)	0.2	(4.3)	13.9
Tax (charge)/credit	(2.5)	0.2	-	-	0.2	(0.8)	(2.9)
Total profit/(loss) for the period	11.2	4.0	1.1	(0.6)	0.4	(5.1)	11.0

31 December 2018 (unaudited)	Land £m	House building £m	Contract income £m	Investment properties £m	Other £m	Total £m
ASSETS
Non-current assets
Investment properties	-	-	-	55.6	-	55.6
Property, plant and equipment	-	-	-	-	3.6	3.6
Investments	-	-	-	-	1.2	1.2
Investment in joint ventures	-	5.7	-	-	-	5.7
Amounts due from joint ventures	-	1.0	-	-	-	1.0
Investment in associate	-	1.0	-	-	-	1.0
Amounts due from associate	-	3.2	-	-	-	3.2
Other receivables	-	5.9	-	-	-	5.9
Total non-current assets	-	16.8	-	55.6	4.8	77.2
Current assets
Inventories	89.8	72.7	-	-	-	162.5
Trade and other receivables	5.9	1.7	10.3	0.1	8.1	26.1
Amounts due from joint ventures	-	16.5	-	-	-	16.5
Amounts due from associate	-	2.5	-	-	-	2.5
Cash and cash equivalents	-	-	-	-	30.2	30.2
Total current assets	95.7	93.4	10.3	0.1	38.3	237.8
Total assets	95.7	110.2	10.3	55.7	43.1	315.0
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital	-	-	-	-	20.8	20.8
Share premium account	-	-	-	-	36.4	36.4
Employee benefit trust	-	-	-	-	(1.1)	(1.1)
Treasury reserve	-	-	-	-	(0.1)	(0.1)
Special reserve	-	-	-	-	6.1	6.1
Retained earnings	-	-	-	-	85.3	85.3
Total equity	-	-	-	-	147.4	147.4
LIABILITIES
Current liabilities
Bank loans and overdrafts	25.0	5.7	-	1.3	-	32.0
Other loans	1.1	-	-	-	-	1.1
Trade and other payables	1.4	8.4	4.7	0.4	2.4	17.3
Corporation tax	-	-	-	-	4.9	4.9
Other financial liabilities	16.6	-	-	-	-	16.6
Total current liabilities	44.1	14.1	4.7	1.7	7.3	71.9
Non-current liabilities
Zero Dividend Preference shares	-	-	-	-	22.5	22.5
Bank loans	1.1	-	-	45.9	-	47.0
Other loans	17.2	7.0	-	-	-	24.2
Deferred tax	-	-	-	2.0	-	2.0
Total non-current liabilities	18.3	7.0	-	47.9	22.5	95.7
Total equity and liabilities	62.4	21.1	4.7	49.6	177.0	315.0

31 December 2017 (unaudited)	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	-	-	-	-	1.0	1.0
Investment in joint ventures	-	0.6	-	-	-	0.6
Investment in associate	-	1.3	-	-	-	1.3
Amounts due from associate	-	6.0	-	-	-	6.0
Other receivables	-	5.9	-	-	-	5.9
Total non-current assets	-	13.8	-	53.6	1.0	68.4
Current assets
Inventories	92.9	44.1	0.1	-	-	137.1
Trade and other receivables	5.1	0.1	-	-	15.4	20.6
Amounts due from joint ventures	-	19.8	-	-	-	19.8
Amounts due from associate	-	-	-	-	-	-
Cash and cash equivalents	-	-	-	-	24.8	24.8
Total current assets	98.0	64.0	0.1	-	40.2	202.3
Total assets	98.0	77.8	0.1	53.6	41.2	270.7
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital	-	-	-	-	20.4	20.4
Share premium account	-	-	-	-	34.3	34.3
Employee benefit trust	-	-	-	-	(1.1)	(1.1)
Treasury reserve					(0.6)	(0.6)
Special reserve	-	-	-	-	6.1	6.1
Retained earnings	-	-	-	-	75.6	75.6
Total equity	-	-	-	-	134.7	134.7
LIABILITIES
Current liabilities
Bank loans and overdrafts	-	0.1	-	16.0	-	16.1
Trade and other payables	3.2	5.6	0.5	0.4	2.3	12.0
Corporation tax	-	-	-	-	3.5	3.5
Other financial liabilities	23.8	-	-	-	-	23.8
Total current liabilities	27.0	5.7	0.5	16.4	5.8	55.4
Non-current liabilities
Zero Dividend Preference shares	-	-	-	-	17.9	17.9
Bank loans	2.3	18.1	-	28.7	-	49.1
Other loans	-	11.5	-	-	-	11.5
Deferred tax	-	-	-	2.1	-	2.1
Total non-current liabilities	2.3	29.6	-	30.8	17.9	80.6
Total equity and liabilities	29.3	35.3	0.5	47.2	158.4	270.7

30 June 2018 (audited)	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 joint ventures	-	19.0	-	-	-	19.0
Amounts due from associate	-	2.8	-	-	-	2.8
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
Capital and reserves attributable to the Company's equity holders
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	24.3	-	26.5	-	51.9
Other loans	17.2	6.6	-	-	-	23.8
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

All assets and revenues arose solely in the United Kingdom.

6. TAX CHARGE
	Six months ended 31 December 2018 (unaudited)	Six months ended 31 December 2017 (unaudited)	Year ended 30 June 2018 (audited)
	£m	£m	£m
Current tax charge	0.8	0.9	4.0
Deferred tax charge/(credit)	0.1	0.1	(0.1)
Total	0.9	1.0	3.9

7.  EARNINGS AND NET ASSET VALUE PER SHARE
Number of shares
	Earnings per share			Net asset value per share
	Weighted average
	Six months ended 31 December		Year ended 30 June 2018	At 31 December		At 30 June 2018
	2018	2017		2018	2017
	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
	'000	'000	'000	'000	'000	'000
Shares in issue				207,366	203,654	204,551
Less shares held in:
- EBT1				(1,627)	(1,627)	(1,627)
- Treasury2				(176)	(1,000)	(825)
For use in basic measures	204,851	201,875	201,621	205,563	201,027	202,099
Dilutive effect of:
- share options	1,623	1,870	1,844	1,355	1,870	1,837
- deferred bonus shares	1,823	1,627	1,763	1,823	1,627	1,823
- growth shares3	2,560	6,000	5,790	2,285	6,000	5,100
For use in diluted measure	210,857	211,372	211,018	211,026	210,524	210,859

¹ The 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 shares and have been deducted from the weighted average number of ordinary shares in issue and also from the shares in issue at the period end.

² In several transactions in October and November 2017, the Group purchased 1,000,000 of its own shares to be held in treasury and in October 2018 purchased a further 200,000.  On 18 January 2018 and 24 October 2018, 175,000 and 849,241 shares respectively were transferred from the treasury reserve to satisfy employee share options exercised within the terms of the Company's share option scheme.

³ Amounts included for the growth shares are those where the performance conditions have been satisfied. On 6 April 2018, Paul Brett transferred 79 vested LTIP shares to the Company in exchange for the issue of 896,689 shares in the Company and on 19 July 2018, Stephen Wicks transferred 248 vested LTIP shares to the Company in exchange for the issue of 2,814,924 shares in the Company.

Basic and diluted EPS
	Six months ended 31 December		Year ended 30 June 2018 (audited)
	2018 (unaudited)	2017 (unaudited)
Profit attributable to equity shareholders (£m)	4.6	4.4	15.4
Earnings per share	2.25p	2.19p	7.64p
Diluted earnings per share	2.18p	2.08p	7.30p
Net asset value and net asset value per share
		Undiluted	Diluted
	£m	p	p
At 31 December 2018 (unaudited)
Net assets attributable to equity shareholders	147.4	71.71	69.85
Adjustment for:
Revaluation of projects	62.2
Deferred tax on investment property revaluation	3.3
EPRA net asset value	212.9	103.57	100.89
At 31 December 2017 (unaudited)
Net assets attributable to equity shareholders	134.7	67.02	63.98
Adjustment for:
Revaluation of projects	58.2
Deferred tax on investment property revaluation	3.3
EPRA net asset value	196.2	97.63	93.20
At 30 June 2018 (audited)
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

8. INVESTMENT PROPERTIES
		Commercial properties £m	Residential properties £m	Development land £m	Total £m
Fair value
At 31 December 2017 (unaudited)		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 (audited)		-	47.5	5.3	52.8
Additions		2.5	0.2	-	2.7
Fair value adjustment		0.1	-	-	0.1
At 31 December 2018 (unaudited)		2.6	47.7	5.3	55.6

£47.0m of the Group's investment property was valued by external valuers on the basis of fair value, in accordance with the RICS valuation - Professional Standards 2017, ninth edition, published by The Royal Institute of Chartered Surveyors. The remaining £8.6m of investment property was valued by the Directors using the following methods:

- Commercial properties: rental yield;

- Residential properties: open market value; and

- Development land: internal appraisal model based on "residual method".

Property valuations are inherently subjective as they are made on the basis of significant unobservable inputs, including assumptions made by the valuer which may not prove to be accurate. For these reasons, and consistent with EPRA's guidance, we have classified the valuations of our property portfolio as Level 3 as defined by IFRS 13 Fair Value Measurement. There were no transfers between levels in the period. Inputs to the valuation, including equivalent yields, rental values and costs to complete, are 'unobservable' as defined by IFRS 13.

9. INVESTMENTS

	Investment in joint ventures
	Project Helix £m	Bucknalls Develop-ments £m	Cheshunt Lakeside Develop-ments £m	Europa Park £m	Gardiners Park £m	Total £m	Investment in associate £m	Total £m
Cost
At 31 December 2017 (unaudited)	-	-	0.3	-	0.3	0.6	1.3	1.9
Share of profit/(loss) after tax	-	-	0.1	-	0.5	0.6	(0.2)	0.4
Receipts from joint ventures	-	-	-	-	(0.8)	(0.8)	-	(0.8)
Movement during the period	-	-	0.1	-	(0.3)	(0.2)	(0.2)	(0.4)
At 30 June 2018 (audited)	-	-	0.4	-	-	0.4	1.1	1.5
Share of profit after tax	-	-	0.3	-	-	0.3	(0.1)	0.2
Additions	-	-	-	-	1.0	1.0	-	1.0
Movement during the period	-	-	0.3	-	1.0	1.3	(0.1)	1.2
At 31 December 2018 (unaudited)	-	-	0.7	-	1.0	1.7	1.0	2.7

Amounts due from joint ventures

		31 December 2018 (unaudited)	31 December 2017 (unaudited)	30 June 2018 (audited)
		£m	£m	£m
Due in less than one year
Bucknalls Developments Limited1	- held at carrying value	0.7	0.6	1.6
	- held at fair value through profit and loss	4.0	4.0	4.0
		4.7	4.6	5.6
Project Helix		-	3.1	-
Cheshunt Lakeside Developments Limited		15.6	10.5	13.4
Gardiners Park LLP		0.2	0.9	-
Europa Park LLP		-	0.7	-
		20.5	19.8	19.0
Due in more than one year
Europa Park LLP		1.0	-	1.0
		21.5	19.8	20.0

¹ The directors have considered the classification of the amounts due from Bucknalls Developments Limited and believe that £4.0m previously classified as amounts due from joint ventures at carrying value should be classified as assets held at fair value through the profit and loss. There is no impact on the measurement. All other amounts above are held at carrying value.

Amounts due from associate

	31 December 2018 (unaudited)	31 December 2017 (unaudited)	30 June 2018 (audited)
	£m	£m	£m
Due in less than one year
Other receivables2	2.5	-	2.8
Due in more than one year
Loans	3.2	3.2	3.0
Other receivables1	-	2.8	-
	3.2	6.0	3.0
	5.7	6.0	5.8

² Other receivables relates to amounts due from the sale of two sites during the year ended 30 June 2016.

The above loans are repayable in October 2020 and other receivables over the period of the underlying development.  Interest is charged on the loan amounts but not on other receivables.

Amounts due from joint ventures and associates are classified as non-current where there is a fixed repayment term that falls due in greater than one year. Where there is no fixed repayment term, the amounts due have been classified as current, as the Group expects to recover these assets in the normal operating cycle of the business.

The impairment of amounts due from joint ventures and associate has been assessed under IFRS 9 and, due to the security held by the Group and the projected profits on the underlying developments, no impairment has been recognised.

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. In July 2017, Project Helix Holdco Limited's interests in its subsidiary undertakings, High Wycombe Developments Limited, High Wycombe Developments No. 2 Limited and Brooklands Helix Developments Limited were purchased by the Group. Project Helix Group will be liquidated shortly.

Bucknalls Developments Limited

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 is obliged to fund 50% of the costs of the site and is entitled to receive a management fee and 50% of the returns.

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

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.

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.

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.

INTERESTS IN ASSOCIATE

Troy Homes Limited

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

All Group 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 associate listed above are accounted for using the equity method. Further details can be found in Critical Judgements in note 4.

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

In June 2018, the Group disposed of two of its subsidiaries Uxbridge Homes Developments Limited and Inland Commercial Limited. There was a gain of £0.1m on the sale of these companies.

Acquisition of subsidiaries

In December 2018, the Group acquired KCR (Cygnet) Limited which has been renamed as Inland Commercial Property Limited.

10. TRADE AND OTHER RECEIVABLES

	31 December 2018 (unaudited)	31 December 2017 (unaudited)	30 June 2018 (audited)
	£m	£m	£m
Trade receivables	15.1	5.5	16.1
Prepayments and accrued income	8.4	1.4	0.4
Sales and social security taxes	0.4	-	-
Other receivables	2.2	13.7	13.9
Trade and other receivables due in less than one year	26.1	20.6	30.4
Other receivables due in more than one year	5.9	5.9	11.0
	32.0	26.5	41.4

The carrying value of trade and other receivables is considered a reasonable approximation of fair value. During the year ended 30 June 2018 an amount of £0.5m (six months ended 31 December 2018 and 2017: £nil) was written off in relation to a contractor which went into administration in 2016 (for more details see note 12).

Other receivables

	31 December 2018 (unaudited)	31 December 2017 (unaudited)	30 June 2018 (audited)
	£m	£m	£m
Due in less than one year
Sale of subsidiary	-	5.8	1.3
Sale of interest in joint venture	-	5.1	5.0
Construction contract bond	-	-	5.0
Other	2.2	2.8	2.6
	2.2	13.7	13.9
Due in more than one year
Sale of subsidiary	2.7	2.7	4.7
Sale of interest in joint venture	2.3	2.3	5.7
Other	0.9	0.9	0.6
	5.9	5.9	11.0

11. SHARE CAPITAL

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

	10p ordinary shares	£m
	Number
At 31 December 2017	203,654,432	20.4
Issued on exercise of LTIP	896,689	0.1
At 30 June 2018	204,551,121	20.5
Issued on exercise of LTIP	2,814,924	0.3
At 31 December 2018	207,366,045	20.8
Employee Benefit Trust
At 31 December 2017, 30 June 2018 and 31 December 2018	1,627,500	(1.1)
Treasury reserve
At 31 December 2017	1,000,000	(0.6)
Exercise of share options	(175,000)	0.1
At 30 June 2018	825,000	(0.5)
Purchase of own shares	200,000	(0.1)
Exercise of share options	(849,241)	0.5
At 30 June 2018	175,759	(0.1)
Total voting shares1
At 31 December 2017	202,026,932
At 30 June 2018	202,098,621
At 31 December 2018	205,562,786

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

Except for the shares held in the Employee Benefit Trust and the Treasury 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.

12. TRADE AND OTHER PAYABLES

	31 December 2018 (unaudited)	31 December 2017 (unaudited)	30 June 2018 (audited)
	£m	£m	£m
Trade payables	7.5	5.2	8.5
Other creditors	1.4	2.8	3.1
Sales and social security taxes	1.0	1.3	6.4
Accruals	7.4	2.7	6.9
	17.3	12.0	24.9

The carrying value of trade and other payables is considered to be a reasonable approximation of fair value.

The contingencies note of last year's half-yearly report 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 £2.8m at 30 June 2018 is a provision for £275,000 (31 December 2018 and 31 December 2017: £nil) for the final agreed settlement with the Administrators in relation to these claims which was paid during the six months to 31 December 2018.

13. 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 31 December 2018 (audited)
Secured bank loans	32.0	-	45.8	1.2	-	-	79.0
Other secured loans	1.1	17.2	-	-	-	7.0	25.3
Borrowings	33.1	17.2	45.8	1.2	-	7.0	104.3
ZDP shares	-	-	-	-	-	22.5	22.5
Gross debt	33.1	17.2	45.8	1.2	-	29.5	126.8
Cash and cash equivalents							(30.2)
Net debt							96.6
At 31 December 2017 (unaudited)
Secured bank loans	16.1	18.1	-	29.7	1.3	-	65.2
Other secured loans	-	11.5	-	-	-	-	11.5
Borrowings	16.1	29.6	-	29.7	1.3	-	76.7
ZDP shares	-	17.9	-	-	-	-	17.9
Gross debt	16.1	47.5	-	29.7	1.3	-	94.6
Cash and cash equivalents							(24.8)
Net debt							69.8
At 30 June 2018 (unaudited)
Secured bank loans	26.0	13.8	10.5	27.6	-	-	77.9
Other secured loans	-	17.2	-	-	-	6.6	23.8
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
Undrawn committed bank facilities
At 31 December 2018 (unaudited)	14.3		5.8	0.1	-	4.5	24.7
At 30 June 2018 (audited)	-	13.9	13.3	-	-	4.9	32.1
At 31 December 2017 (unaudited)	-	15.3	-	21.7	-	-	37.0

¹ A loan totalling £10.5m at 30 June 2018 previously disclosed as other secured loans has been reclassified as secured bank loans in the above figures as this better reflects the nature of the loan.

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 31 December 2018, there were 14,933,000 ZDP shares in issue (30 June 2018: 12,444,200; 31 December 2017: 11,313,200). During the period, the Group extended the maturity date of the ZDP shares by five years to 10 April 2024. In addition, a further 2,500,000 ZDP shares were issued at an average 151.6p per share raising a gross sum of £3.8m. The gross redemption yield will reduce from 7.3% p.a. to 5.25% p.a. as from 10 April 2019.

14. OTHER FINANCIAL LIABILITIES

Other financial liabilities of £16.6m (30 June 2018: £3.7m; 31 December 2017: £23.8m) relates to purchase consideration on inventories falling due within one year.

15. DEFERRED TAX

	Revaluation gain £m	Capital losses recognised on revaluation gain £m	Notional interest on deferred consideration £m	Share-based payments £m	Other £m	Total £m
At 1 January 2018 (unaudited)	6.5	(3.2)	(0.7)	(0.6)	0.1	2.1
Charged/(credited) to income statement	(0.5)	0.5	-	(0.1)	(0.1)	(0.2)
At 30 June 2018 (audited)	6.0	(2.7)	(0.7)	(0.7)	-	1.9
Charged/(credited) to income statement	-	-	-	0.1	-	0.1
At 31 December 2018 (unaudited)	6.0	(2.7)	(0.7)	(0.6)	-	2.0

16. Copies of our half-yearly financial report can be viewed and downloaded from our website at www.inlandhomesplc.com. Copies are also available on request by writing to the Company Secretary at the Registered Office of Inland Homes plc.

INDEPENDENT REVIEW REPORT TO INLAND HOMES PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2018 which comprises the Group Income Statement, Group Statement of Financial Position, Group Statement of Changes in Equity, Group Statement of Cash Flows and Notes 1 to 15.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors.  The directors are responsible for preparing the interim report in accordance with the rules of the London Stock Exchange for companies trading securities on AIM which require that the half-yearly report be presented and prepared in a form consistent with that which will be adopted in the Company's annual accounts having regard to the accounting standards applicable to such annual accounts.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the rules of the London Stock Exchange for companies trading securities on AIM and for no other purpose.  No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent.  Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ''Review of Interim Financial Information Performed by the Independent Auditor of the Entity'', issued by the Financial Reporting Council for use in the United Kingdom.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2018 is not prepared, in all material respects, in accordance with the rules of the London Stock Exchange for companies trading securities on AIM.

BDO LLP

Chartered Accountants

London

6 March 2019

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

 

END

 

 

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