Half Yearly Report

RNS Number : 0174A

Inland Homes PLC

26 March 2012

 

26 March 2012

Inland Homes plc

brownfield regeneration specialists and home builders

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

Unaudited preliminary results for the six month sended 31 December 2011

"20% increase on pre-tax profit and strong pipeline of activities"

Key financials:

·      Trading profit for the period up to £2.3 million (2010: £2.1m)

·      Profit before tax of £1.1m (2010: £900,000)

·      Net assets (excluding DGV) increased  8.5% to £49.4m (2010: £45.5m)

·      Potential future share of profits from DGV project expected to be in excess of 6p per ordinary share (net of tax)

·      Inland continues to have very low gearing and a strong balance sheet

Key commercial highlights:

·      Selectively growing house building activities - the programme will enable Inland to secure additional development contribution, improve cash flow and provide access to conventional funding sources

·      Value of the land bank enhanced - increased to 2,065 plots principally in the South and South-East of England where shortage exists and high demand for quality consented plots

·      Healthy pipeline of opportunities that fit development criteria

·      The Board is optimistic and encouraged by the current portfolio of planning applications and land opportunities

Stephen Wicks, Chief Executive of Inland commented:

"The first half of the current financial year has delivered a solid performance reflecting the underlying quality of our assets and their saleability in an improving market place for development land and new homes.

Inland's business model continues to evolve but it remains based around our key objectives of developing both our land acquisition and home building activities to create long-term value for shareholders.

We have a very healthy pipeline of new opportunities that fit our development criteria.  All of our land holdings are well located in the South and South-East of England where there is a shortage and consequently high demand for quality consented development plots.

We believe our entrepreneurial skills in locating development opportunities and 'seeing the angles' are somewhat unique in our industry and having weathered the financial storm of the last few years Inland is now firmly on track to make significant progress on all fronts.

In the absence of any unforeseen circumstances, it is the Board's intention to propose a dividend based on the final results for the year ending 30 June 2012."

Enquiries:

Inland Homes plc

Stephen Wicks, Chief Executive                                           Tel: [phone]

Nishith Malde, Group Finance Director                                   Tel: [phone]

finnCap Securities Nominated Adviser & Broker

Matthew Robinson, Corporate Finance                                   Tel: [phone]

Tooley Street Communications Investor Relations

Fiona Tooley                                                                       Tel: [phone]

Chairman's statement

Introduction

Since our last Annual Report in October 2011, Inland has continued to make excellent progress which I am pleased is borne out in our financial results for the six months ended 31 December 2011.

The first half of the current financial year has delivered a solid performance reflecting the underlying quality of our assets and their saleability in a market place which continues to be short of development land and new homes in the South-East of England, where virtually all the Group's land bank resides.

Half-Year Results

Our revenue in the first half year of £3.7 million (2010: £10.1m) does not include any land sales and is principally made up of a fee of £2.5 million (2010: £945,000) for development services provided to Drayton Garden Village Limited ("DGVL"). The 2010 comparable figure for revenue of £10.1 million included sales of 21 completed units and land sales totalling £9.9m.

Trading profit for the half year was £2.3 million (2010: £2.1m). Operating profit for the six months was £733,000 (2010: profit of £1.1m). However, after taking into account a write-back of our investment in our associate company, Howarth Homes plc ("Howarth") of £200,000 and including both our share of their profits of £138,000 (2010: £nil) and those from our on-going joint venture project with them of £71,000 (2010: £nil), further details of which are set out below, I am pleased to report a 20% increase in profit before tax of £1.1m (2010: £900,000).

The stated net assets of the Group have increased by 8.5% to £49.4m (2010: £45.5m), equating to net asset value per share of 26.97p (2010: 24.85p). As shareholders are aware, this figure excludes any future value from DGVL, where Inland has the potential of earning up to 90% of the profit from this development as a result of the development services Inland provides.

After taking account of the DGVL fee referred to above, the Directors believe that the potential future share of profits from this project is expected to be in excess of 6.0p per ordinary share (net of tax).

Inland has very low gearing and a strong balance sheet. We continue to develop our banking relationships and our current providers of finance include Barclays Bank and Close Brothers.

Review of Operations

During the first half-year we made satisfactory progress across the business through the enhancement of the value of our land bank. As outlined to shareholders previously we have selectively started to grow our house building activities.

Turning to our key managed project:-

Drayton Garden Village ("DGV")

The pace of progress at this development has continued unabated. DGVL exchanged contracts for the sale of 88 apartment plots for £5.75m and a plot of land for an 80-bed nursing home for £1.80m during the first half with completion of these sales having taken place after the period end.

236 residential building plots have now been sold out of the original consent for 773 plots, with contracts issued for the sale of a further 28 residential plots which are expected to complete shortly.

A major infrastructure and utility services programme has been completed and the landscaping, which includes trees and hedge planting, is well underway with the first of the village greens now laid out. The site has a low carbon footprint with an Energy Centre providing combined heat and power that is now operational and ready for the first occupation of new homes due shortly.

DGVL, in conjunction with Inland, is planning to 'construct and sell' a phase of 32 units (9 flats and 23 houses) later this year.

In respect of our own key projects:

Queensgate, Farnborough, Hampshire

Inland completed the sale of five remaining homes on the previous phase of this scheme and we have commenced the development of 19 mainly two-bedroom houses on the next phase.  We have been very encouraged by the number of early reservations taken at prices above our original expectations.

The Causeway, Redhill, Surrey

Construction has also commenced at our Redhill site comprising 28 units, being a mix of one, two and three-bedroom houses and flats in this popular location.  Negotiations are well advanced for the sale of seven units to A2 Dominion Housing Association. 

By the end of the current calendar year, it is anticipated that Inland will have approximately 100 homes under construction.

Investments

Our associate company, Howarth Homes plc (Howarth), continues to see its trading improve and reported a profit before tax of £643,000 for its year ended 31 July 2011 (2010:  £383,000).

Currently, Howarth has in hand private developments of 48 units with a gross development value of £19.5m and construction contracts valued at approximately £28.9 million, which include approximately 220 units.

In addition, Inland and Howarth are joint venture partners on a site designated for 51 houses in Croxley Green, Hertfordshire. Of this, 15 affordable homes have been completed and 17 private homes have been exchanged or completed at prices above management's expectations. Inland has invested £2.3 million in this venture and anticipates its profit share to be in the region of £1.3 million.

Land Purchases and Planning

Inland acquired 152 potential plots via the purchase of the Swan Public House in West Drayton, Middlesex (25 plots) for £825,000 and an unconditional exchange of contracts to purchase the northern section of St John's Hospital, Chelmsford, Essex (127 plots) for £4.75m, which completed in January 2012.

·     We have also purchased the southern section of St John's Hospital, Chelmsford, Essex for £9.0 million, on attractive deferred terms, with £1.8 million and £5.2 million becoming payable in July 2012 and March 2013 respectively.  This will be a lower density development with about 110 plots envisaged. 

·     Having submitted a revised planning application for the balance of our site at Queensgate, Farnborough, Hampshire, detailed negotiations have been on-going with the local authority and we are expecting the improved planning consent by the end of the financial year.

·     Following submission of our planning application at Carters Quay, Poole, Dorset, for approximately 268 homes and over 100,000 square feet commercial space, we have been working with planning officers and undertaking detailed public consultations. We have been very encouraged by the feedback and are expecting to receive a positive decision. 

·     We are expecting positive feedback by the year end on our planning application for the northern part of St John's Hospital, Chelmsford, Essex which was submitted in February 2012, and

·     A successful outcome is also anticipated for our planning application for the Swan Public House, West Drayton, Middlesex.

Of particular significance is a new opportunity in a prime part of Buckinghamshire where Inland has secured an interest in a 20-acre site that has strategic access importance relating to land which is allocated for over 300 homes and commercial space. We are now in detailed discussions with the local authority to jointly formulate a development brief for this site.

Land Bank

The Group's residential land bank has grown since our last Annual Report & Accounts and, as at 31 December 2011, was made up as follows:

-    Owned with consent                                                                                         484 plots

-    Drayton Garden Village and other managed sites with consent                       692 plots

-    Owned/contracted without consent (allocated for development)                     530 plots

-    Sites controlled or terms agreed (allocated for development)                         359 plots

                                                                                                            Total:   2,065 plots

Dividend

The Board is conscious of the shareholders desire for dividends and intend to initiate a progressive dividend policy.

As previously reported, the Board has taken steps to reduce the deficit on the Company's distributable reserves thereby putting it in a position to pay dividends in the future out of distributable profits. In the absence of any unforeseen circumstances, it is the Board's intention to propose a dividend based on the final results for the year ending 30 June 2012.

Outlook

Inland's business model continues to evolve but it remains based around our key objectives of developing both our land and house building activities to create long-term value for shareholders.

We have a very healthy pipeline of new opportunities that fit our development criteria.  All of our land holdings are well located in the South and South-East of England where there is a shortage and consequently high demand for quality consented development plots.   

Our expanding house building programme will enable us to secure additional development contribution, improve our cash flow and provide access to conventional funding sources.  Our aim is to grow the residual core land bank each year whilst increasing the number of plots both sold and developed.

We look forward to updating shareholders on our progress and schemes over the coming year.

Terry Roydon

Chairman

Group income statement

for the six months ended 31 December 2011

		Six months ended	Six months ended	Year ended
		31 December	31 December	30 June
		2011	2010	2011
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Revenue		3,663	10,058	21,372
Cost of sales		(1,374)	(7,924)	(15,699)
Gross profit		2,289	2,134	5,673
Administrative expenses:		(1,472)	(1,130)	(2,207)
- (loss)/profit on investments		(84)	131	46
Operating profit		733	1,135	3,512
Interest expense		(286)	(360)	(577)
Notional interest expense		-	(18)	-
Notional interest income	4	119	103	207
Interest and similar income		102	36	131
		668	896	3,273
Share of profit of associate		138	-	132
Reverse impairment of investment in associate		200	-	-
Share of profit of joint venture		71	-	138
Profit before tax		1,077	896	3,543
Income tax	5	(282)	31	303
Profit for the period		795	927	3,846
Earnings per share
- basic earnings per share in pence	6	0.43p	0.51p	2.10p
- diluted earnings per share in pence		0.43p	0.50p	2.07p

Group statement of comprehensive income

for the six months ended 31 December 2011

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Profit for the period	795	927	3,846
Other comprehensive income for the period, net of tax	-	-	-
Total comprehensive income for the period	795	927	3,846

Group statement of financial position

at 31 December 2011

		As at	As at	As at
		31 December	31 December	30 June
		2011	2010	2011
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
ASSETS
Non-current assets
Investment property		8,801	8,801	8,801
Property, plant and equipment	7	71	80	76
Investments	8	925	844	1,009
Joint ventures		2,453	2,301	2,401
Investment in associate	8	394	-	96
Receivables due in more than one year	9	70	103	70
Deferred tax	10	4,753	4,629	4,976
Total non-current assets		17,467	16,758	17,429
Current assets
Inventories		26,573	30,077	24,105
Trade and other receivables	10	7,421	5,143	10,299
Loan to associate		700	1,146	1,895
Listed investments held for trading (carried at fair value through profit and loss)		1	-	1
Cash and cash equivalents		1,478	536	2,239
Total current assets		36,173	36,902	38,539
Total assets		53,640	53,660	55,968
EQUITY
Capital and reserves attributable to the Company's equity holders
Share capital	11	18,301	18,301	18,301
Share premium account		30,794	45,794	45,794
Treasury shares		(366)	(366)	(366)
Special reserve		6,059	-	-
Retained earnings		(5,429)	(18,260)	(15,248)
Total equity		49,359	45,469	48,481
LIABILITIES
Current liabilities
Bank loans and overdrafts		905	4,276	663
Other loans		2,000	-	2,000
Trade and other payables		1,376	1,933	4,824
Other financial liabilities	12	-	1,982	-
Total liabilities		4,281	8,191	7,487
Total equity and liabilities		53,640	53,660	55,968

Group statement of changes in equity

for the six months ended 31 December 2011

	Share	Share	Treasury	Special	Retained
	capital	premium	shares	reserve	earnings	Total
	£000	£000	£000	£000	£000	£000
At 30 June 2010 (audited)	18,301	45,806	(366)	-	(19,280)	44,461
Share based payment	-	-	-	-	93	93
Issue of equity	-	(12)	-	-	-	(12)
Transactions with owners	-	(12)	-	-	93	81
Total comprehensive income	-	-	-	-	927	927
Total changes in equity	-	(12)	-	-	1,020	1,008
At 31 December 2010 (unaudited)	18,301	45,794	(366)	-	(18,260)	45,469
Share-based payment	-	-	-	-	93	93
Transactions with owners	-	-	-	-	93	93
Total comprehensive income	-	-	-	-	2,919	2,919
Total changes in equity	-	-	-	-	3,012	3,012
At 30 June 2011 (audited)	18,301	45,794	(366)	-	(15,248)	48,481
Share based payment	-	-	-	-	83	83
Capital reduction	-	(15,000)	-	6,059	8,941	-
Transactions with owners	-	(15,000)	-	6,059	9,024	83
Total comprehensive income	-	-	-	-	795	795
Total changes in equity	-	(15,000)	-	6,059	9,819	878
At 31 December 2011 (unaudited)	18,301	30,794	(366)	6,059	(5,429)	49,359

Group statement of cash flows

for the six months ended 31 December 2011

		Six months ended	Six months ended	Year ended
		31 December	31 December	30 June
		2011	2010	2011
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Cash flows from operating activities
Profit for the half year before tax		1,077	896	3,543
Adjustments for:
- depreciation		20	18	38
- share-based compensation		83	93	186
- fair value adjustment for investments		84	(115)	(30)
- profit on disposal of listed investments		-	(16)	(16)
- interest and similar income		(221)	(139)	(338)
- interest expense		286	378	577
- share of profit of associate		(138)	-	(132)
- reverse impairment of investment in associate		(200)	-	-
- share of profit of joint ventures		(71)	-	(138)
Changes in working capital:
- (increase)/decrease in inventories		(2,469)	5,074	11,046
- decrease/(increase) in trade and other receivables		2,996	1,333	(4,400)
-  increase in receivables due in more than one year		-	-	(70)
- decrease in trade and other payables		(3,452)	(4,268)	(3,365)
Net cash (outflow)/inflow from operating activities		(2,005)	3,254	6,901
Cash flow from investing activities
Interest received		103	-	131
Purchases of property, plant and equipment	7	(15)	(40)	(56)
Purchase of investments		-	(32)	(283)
Sale of investments		-	147	146
Net cash inflow/(outflow) from investing activities		88	75	(62)
Cash flow from financing activities
Interest paid		(282)	(333)	(527)
Repayment of borrowings		-	-	(2,410)
Receipt of loan repayment from associate		1,195	-	-
New loans		243	1,203	2,000
Costs on issue of ordinary shares		-	(12)	(12)
Net cash inflow/(outflow) from financing activities		1,156	858	(949)
Net (decrease)/increase in cash and cash equivalents		(761)	4,187	5,890
Net cash and cash equivalents at beginning of period		2,239	(3,651)	(3,651)
Net cash and cash equivalents at the end of period		1,478	536	2,239
Cash and cash equivalents		1,478	536	2,239
		1,478	536	2,239

Notes to the interim report

for the six months ended 31 December 2011

1. Nature of operations and general information

On 23 November 2011 the Company changed its name from Inland plc to Inland Homes plc.

The principal activity of the Company and its subsidiaries (together called 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 2 Anglo Office Park, 67 White Lion Road, Amersham, Buckinghamshire HP7 9FB.

Inland Homes plc's shares are quoted on AIM, a market operated by the London Stock Exchange. This consolidated interim statement has been approved for issue by the Board of Directors on 23 March 2012.

The financial information set out in this interim statement 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 2011 have been filed with the Registrar of Companies and are available at www.inlandplc.com. The auditor's report on those financial statements was unqualified and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

2. Basis of preparation

This consolidated interim statement has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The consolidated interim statement should be read in conjunction with the annual financial statements for the year ended 30 June 2011, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

3. Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2011.

4. Critical accounting estimates and judgments

Estimates and judgements are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.

(a) Valuation of inventories

In applying the Group's accounting policy for the valuation of inventories 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. Estimation of the selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land.

Whilst the Directors exercise due care and attention to make reasonable estimates taking into account all available information in estimating the future selling price, the estimates will, in all likelihood, differ from the actual selling prices achieved in future periods and these differences may, in certain circumstances, be very significant. The critical judgement in respect of planning consent (see below) further increases the level of estimation uncertainty in this area.

(b) Income taxes

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.

(c) Fair value of derivatives and other financial instruments

The fair value of instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based on existing market conditions.

(d) Investment properties

Properties are classified as investment properties if there are significant rentals and the intention is to hold those properties for a significantly longer time than inventory property, i.e. not for sale in the ordinary course of business.

(e) Discounting on deferred consideration of inventories

The Group discounts deferred consideration of inventories by discounted cash flow method, using the cost of capital as the discount rate.

4. Critical accounting estimates and judgments continued

Critical judgements in applying the entity's accounting policies

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 given 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.

Investments

The Group has entered into a Development Services Agreement with Drayton Garden Village Limited (DGVL). The Directors have considered the requirements of IAS 27 'Consolidated and separate financial statements' (revised 2008) and 'SIC 12 Consolidation - special purpose entities' and do not believe that the Group has the power to control DGVL. DGVL makes its own decisions regarding the development of the site even though the director of DGVL receives property advice to consider and property services from the Group. The Directors also consider that the Group does not have the decision making powers to obtain the majority of the benefits and the risks of the activities of DGVL as the shareholder of DGVL maintains control as to whether he finances the deferred land consideration payments. The key requirement in influencing Inland's profit share is the basis on which deferred consideration is satisfied. This is at the discretion of the DGVL director and hence he can improve his profit share, or allow Inland to arrange the funding. Therefore the Directors do not believe that DGVL should be consolidated within the Group's financial statements.

The Group is entitled to receive a fee for the provision of planning application services, assistance in obtaining statutory and third party consents, assistance in entering into development and construction agreements, assistance in achieving sales, assistance in engaging professional advisors, seeking opportunities to generate interim revenues and the potential provision of finance to DGVL in respect of the site known as Drayton Garden Village. Under the agreement the Group has the potential to earn up to 90% of the profits realised from the sale of the property over the life of the project.

Because the final decision on the financial and operational activities of DGVL reside with the director of DGVL, the Directors of Inland Homes plc do not consider that they have significant influence over DGVL and therefore DGVL is not considered to be an associate.

At 31 December 2011 the funding arrangements in place for the satisfaction of deferred consideration entitled Inland to 58.19% of the profits expected to be realised from the sale of the property over the life of the project. In accordance with the Option and Development Services Agreement with DGVL (The Agreement), 51.23% of the total profits would be due to the Group for the provision of planning application and property management services completed at the balance sheet date and this has to be accounted for under IAS 18. 6.96% of the profits would be due to the Group for the provision of finance to DGVL and would be accounted for under IAS 39 as notional interest income.

In calculating the fee for the provision of planning application and property services to DGVL recognised in the period, under IAS 18 the Group has estimated the following:

•     total profits (total expected sales less total estimated development costs to completion) to be realised from the sale of the property;

•     profits would be realised over six years from 1 July 2010;

•     percentage, where the stage of completion is an appropriate basis for evaluating fair value, of planning application and property services provided to DGVL as at the period end with the balance to be provided over the remaining life of the project (i.e. in future accounting periods); and

•     the fair value of completed service components at 31 December 2011.

During the six months ended 31 December 2011 the Group has recognised £2.48m (2010: £1.79m) in revenue within the Group Income Statement for such services to DGVL.

In calculating the fee for the provision of finance to DGVL, under IAS 39 the Group has estimated the following:

•    Total profits (total expected sales less total estimated development costs to completion) to be realised from the sale of the property; and

•    Profits would be realised over six years from 1 July 2010.

Under IAS 39 the Group has a choice as to how to account for the asset. The Directors consider the most appropriate classification for the asset to be 'loans and receivables' due to the underlying asset being a 'non derivative' financial asset with fixed or determinable payments. The effective interest rate method has been applied in calculating the income in the period.

During the six months ended 31 December 2011 the Group has recognised £0.12m (2010: £0.10m) within notional interest income in the Group Income Statement in respect of such fees.

5. Income tax

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Tax charge on associate and joint venture profit	59	-	76
Deferred tax charge/(credit)	223	(31)	(379)
	282	(31)	(303)

6. Earnings and net asset value per share

Basic and diluted EPS

Basic and diluted earnings per share is calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Profit attributable to equity holders of the Company (£000)	795	927	3,846
Net assets attributable to equity holders of the company (£000)	49,359	45,469	48,481
Weighted average number of ordinary shares in issue (000s)	182,999	182,999	182,999
Dilutive effect of options treated as exercisable at the period end (000s)	25	2,290	2,575
	183,024	185,289	185,574
Basic earnings per share in pence	0.43p	0.51p	2.10p
Diluted earnings per share in pence	0.43p	0.50p	2.07p
Net asset value per share in pence	26.97p	24.85p	26.49p

7. Property, plant and equipment

	Investment			Leasehold			Motor	Office	Fixtures
	property			property			vehicles	equipment	and fittings		Total
	£000			£000			£000	£000	£000		£000
Cost
At 31 December 2010	8,801			5			49	59	80		193
Additions	-			-			-	16	-		16
At 30 June 2011	8,801			5			49	75	80		209
Additions	-			-			-	14	1		15
At 31 December 2011	8,801			5			49	89	81		224
Depreciation
At 31 December 2010	-				2	31		39		41		113
Depreciation charge	-				-	7		1		12		20
At 30 June 2011	-				2	38		40		53		133
Depreciation charge	-				1	6		7		6		20
At 31 December 2011	-				3	44		47		59		153
Net book value at 31 December 2011	8,801				2	5		42		22		71
At 30 June 2011	8,801				3	11		35		27		76

8. Investments

			Investment
	Investment		in joint
	in associate	Option	venture	Total
	£000	£000	£000	£000
Cost or fair value at 31 December 2010	-	844	2,301	3,145
Fair value adjustment	-	(85)	-	(85)
Share of profit after tax	96	-	99	195
Additions	-	250	1	251
At 30 June 2011	96	1,009	2,401	3,506
Fair value adjustment	-	(84)	-	(84)
Share of profit after tax	98	-	52	150
Reversal of impairment	200	-	-	200
At 31 December 2011	394	925	2,453	3,772

In December 2005, the Groupinvested £200,000 in its associate, Howarth Homes plc (Howarth), and in return received ordinary shares amounting to 10% of the issued share capital of Howarth. In January 2008, the Group made a further investment of £359,000 in Howarth to increase its interest to 15% of the issued share capital of Howarth. The Groupalso subscribed for £800,000 convertible loan stock which was converted on 31 July 2009 into 864,583 ordinary shares, thus increasing Inland's interest to 33% of the issued share capital of Howarth. A provision of £1,426,000 was made against the equity investment in Howarth and the convertible loan stock during the year ended 30 June 2009. Howarth have made profits over its last two financial years and expect to continue to make profits. Accordingly the Directorshave concluded that a £200,000 reversal of the impairment is required.

On 18 December 2008, Inland entered into an Option and Development Services Agreement with DGVL which granted Inland Limited(formerly Inland Homes Limited) an option for a consideration of £250,000 to purchase the share capital of DGVL at an exercise price of £1. The initial period of the option was for one year from the date of the agreement and this can be extended on up to four occasions to a maximum period of ten years by making further payments. During the years ended 30 June 2010 and 2011, the option period was extended by a further period of two years in consideration of two payments of £250,000. In accordance with the Group's accounting policy for financial assets, the option has been measured at fair value at 31 December 2011, which resulted in a fair value loss of £84,000 (2011: profit of £115,000) that has been recognised in the Group Income Statement. As at 31 December 2011 the carrying value stands at £175,000 over and above the actual consideration paid for the option. The option is not currently exercisable and only becomes exercisable when the development owned by DGVL is completed.

During the year ended 30 June 2010, the Group entered into a joint venture with Howarth for the development of 51 units at a site in Croxley Green, Hertfordshire in a company called Harvey Road (Rickmansworth) Limited. The Group has invested £2,302,000 (2010: £2,301,000). Although Howarth owns 100% of the issued share capital of Harvey Road (Rickmansworth) Limited, Inland Directors constitute 50% of the Board of Directors and therefore control 50% of the entity and Inland is entitled to 50% of the profits made by the entity. The Group's 50% share of the profits after tax to 31 December 2011 amounts to £52,000 that has been recognised in the Group Income Statement. To date the Group has recognised £151,000 profit in relation to this joint venture.

9. DEFERRED TAX

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

	£000
At 31 December 2010	4,629
Income statement credit	661
Adjustment in respect of corporation tax to 26%	(314)
At 30 June 2011	4,976
Income statement charge	(223)
At 31 December 2011	4,753

The movement in deferred tax assets is as follows:

	Accelerated
	tax
	depreciation	Losses	Other	Total
	£000	£000	£000	£000
At 31 December 2010	(7)	3,644	992	4,629
Credited/(charged) to income statement	5	451	(109)	347
At 30 June 2011	(2)	4,095	883	4,976
Charged to income statement	-	(223)	-	(223)
At 31 December 2011	(2)	3,872	883	4,753

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group has capital losses amounting to £20,449,000 (2010: £19,983,000) that have not been recognised as the Directors consider the realisation of the losses is not expected to crystalise in the foreseeable future.

10. Trade and other receivables

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	Number	Number	Number
Prepayments and accrued income	1,034	87	1,073
Other receivables falling due within one year	6,387	5,056	9,226
Other receivables falling due after more than one year	70	103	70
	7,491	5,246	10,369

Other receivables includes an amount of £2.6m (2010: £1.4m) accrued in respect of costs and sales invoices that has been reimbursed by DGVL since 31 December 2011. The carrying value is considered a reasonable approximation of fair value.

Other receivables also includes an amount of £3.0m (2010: £3.0m) lent to DGVL in respect of financing arrangements referred to in Note 4 'Critical judgements in applying the entities accounting policies'.

11. Share capital

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	Number	Number	Number
Shares in issue
Shares in issue at start of period	182,999,484	182,999,484	182,999,484
Shares issued	-	-	-
Shares in issue at end of period	182,999,484	182,999,484	182,999,484

12. Other financial liabilities

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2011	2010	2011
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Deferred purchase consideration falling due within one year	-	1,982	-
	-	1,982	-

13. Copies of our interim report can be found on our website at www.inlandplc.com.

Introduction

We have reviewed the condensed set of financial statements in the half-yearly financial report of Inland Homes plc for the six months ended 31 December 2011 which comprises the Group Income Statement, Group Statement of Comprehensive Income, Group Statement of Financial Position, Group Statement of Changes in Equity, Group Statement of Cash Flows and Notes 1 to 12 to the interim statement. We have read the other information contained in the half-yearly financial report which comprises only the chairman's statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Board of Directors of Inland Homes plc, as a body, in accordance with guidance contained in International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information performed by the Independent Auditor of the Entity. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. As disclosed in Note 2, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the European Union.

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.

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 Auditing Practices Board for use in the United Kingdom. A review of half-yearly 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 Ireland) 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 2011 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the European Union.

Grant Thornton UK LLP    

Chartered accountants & statutory auditors

Reading

23 March 2012

 

END

 

 

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