Half Yearly Report

RNS Number : 3948A

Inland Homes PLC

20 March 2013

 

20 March 2013

Inland Homes PLC

brownfield regeneration specialists and home builders

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

Unaudited half-yearly financial results for the six months ended 31 December 2012

"Strong six months delivers three-fold rise in pre-tax profit to £3.1 million"

Key financials

·        Trading profit for the period increased to £4.3m (2011: £2.3m)

·        Profit before tax increased to £3.1m (2011: £1.1m)

·        Net assets (excluding Drayton Garden Village) increased to £51.7m (2011: £49.4m)

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

Key commercial highlights

·        Profitable land sales achieved of 355 building plots with revenue of £15.4m

·        Excellent progress and expansion of our housebuilding programme

§ Generated revenue of £3.12m in first half

§ Inland currently building 146 homes on four developments

·        Planning permission awarded at Carters Quay in Poole, Dorset for 268 homes

·        Inland to expected to realise investment in Howarth Homes plc by the end of the financial year

Stephen Wicks, Chief Executive of Inland commented:

"I am pleased to report an excellent set of interim results. 

Gross profit is up by 87.6% and profit before tax has increased by 183% over the corresponding period last year.

Our development pipeline from both a housebuilding and a land perspective has never been stronger and we are looking forward to substantial further growth over the coming years".

Enquiries:
Inland Homes plc	finnCap Nominated Adviser & Broker	Tooley Street Communications Investor & media relations
Stephen Wicks, Chief Executive
Nishith Malde, Group Finance Director	Matthew Robinson-Corporate Finance	Fiona Tooley Tel: [phone]
Tel: [phone]	Tel: [phone]	Graeme Cull Tel: [phone]
Editor's Note Inland's corporate strategy is to acquire sites with development potential and, by applying its expertise and knowledge of the planning system, achieve the consents required to add value to its land portfolio. The Company's focus is currently to identify and acquire brownfield land in South of England where Inland considers it to hold excellent potential for residential and mixed use development, including commercial space.  The Company then seeks to enhance its land value by obtaining planning permission before selling consented land onto developers.  This process can take a few years, during which time Inland continues selling sites when it receives attractive offers and also develops homes on certain sites for private sale.			Ticker: AIM INL Website: www.inlandplc.co.uk Email: [e-mail]

Chairman's statement

Introduction

Since the announcement of our 2012 annual results in October last year, Inland has made considerable progress and this is clearly demonstrated in these results for the six months ended 31 December 2012.

During the first half of the current financial year, Inland has delivered an outstanding performance in terms of profitable land sales achieved. I am also pleased to report that we have made excellent progress on Inland's expanding housebuilding programme.

Half year results

Revenue in the six month period to 31 December 2012 was £19.31 million (2011: £3.66 million) comprising of land sales totalling £15.35 million with the balance arising from the sale of residential homes, development services, rental and sundry income. Gross profit for the half year was £4.29 million (2011: £2.29 million) and operating profit for the half year was £3.16 million (2011: £0.73 million). After net interest costs of £0.59 million and the share of profits from associate and joint venture of £0.47 million (2011: £ 0.34 million), it is pleasing to report a near threefold rise in profit before tax to £3.05 million (2011: £1.08 million).

The stated net assets of the Group have increased by 4.7% to £51.69 million (2011: £49.36 million) equating to net assets per share of 28.24p (2011: 26.97p). Shareholders will be aware that this figure excludes the future value of Drayton Garden Village (DGV) where Inland has the potential of earning up to 90% of the profits from this development as a result of the development services that Inland provides to Drayton Garden Village Limited (DGVL). The Directors believe that the future profit share from DGV will be worth in excess of 5p per share (net of tax).

Dividend

A maiden dividend of 0.067p was paid to shareholders on the 17 December 2012. The Board expects that, in the absence of unforeseen circumstances, it will recommend a substantially increased dividend for the financial year ending 30 June 2013, to be paid in December 2013.

Funding

As at 31 December 2012, Inland had cash balances of £12.76 million (2011: £1.48 million) with gearing of only 10.3% (2011: 2.9%), a very low level of borrowing compared to its peers. We are continuing to grow our relationships with funding partners, including our bankers Barclays Bank and Close Brothers. In December 2012 our financial capacity was further increased via the successful Placing of Zero Dividend Preference shares (ZDPs) raising £8.1 million (net). This was followed by a further Placing of ZDPs in January 2013 which raised an additional £0.84 million (net). These securities are separately listed on the Main Market of the London Stock Exchange (Epic code: INLZ) as a standard listing. The ZDP fundraisings have particularly flexible characteristics that will enable Inland to direct increased capital into its core business of land acquisition for future development.

Review of operations

During the first half of the current financial year we sold 355 building plots across six sites for a total consideration of £15.35 million; completed the sale of 15 new homes generating revenue of £3.12 million; and six units through our joint venture with Howarth Homes which produced revenue to the joint venture of £3.32 million.

Inland is currently building on four developments totalling 146 homes (including 32 units being managed on behalf of DGV). At Inland's site in Ashford, Middlesex, where we have planning consent for 152 units, the Group was originally planning to develop the site in conjunction with one of the UK's leading housebuilders. However, Inland has recently received an attractive offer from a third party wishing to acquire the site, and this is currently being evaluated. Housebuilding is expected to play an increasing part in Inland's profitability and cash flow in the short to medium term as the number of sales outlets are increased.

Land and Planning

Our prime focus in the first half of the current financial year was to secure planned land transactions which resulted in the sale of the 355 plots referred to above.

Another notable milestone was the long awaited grant of planning permission at Carters Quay in Poole, Dorset where in December 2012 a planning consent for 268 homes (without affordable housing), together with 108,000 sq ft of commercial space was successfully attained. Demolition and site clearance works are underway, and the construction of the first phase of homes is anticipated to commence before the end of the current financial year.

A planning permission for the development of 101 homes on the southern section of St John's Hospital, Essex is awaited. Demolition and site clearance is now underway on this project, with the Group anticipating the development of most of the plots.

During the half year the Group acquired two small sites, comprising 23 plots, and a long term strategic option was secured over a four acre site with good potential for residential development, all located in the Home Counties.

In October 2012 Inland announced that it is to work with the Defence Infrastructure Organisation (DIO), which is part of the Ministry of Defence, South Bucks District Council and Buckinghamshire County Council to formulate a detailed Development Brief for the future of the 90 acre site currently occupied by the Defence School of Languages at Wilton Park in Beaconsfield, Buckinghamshire. Inland has already invested a significant amount of time and resources in the Public Consultation process. Inland owns 20 acres identified as fundamental to the access to this potential development site which has an allocation for 300 homes. We are working with the intention that the Development Brief will be "adopted" by the end of the calendar year. We hope to enter into a transaction with the DIO shortly and that a planning permission could be in place by late 2014. 

Inland also recently announced that a further deferred consideration payment had been made by DGVL in respect of DGV. As a result of this payment, Inland's profit share on this development has increased to 69.77%. Inland has the potential to earn up to 90% of the profits realised from this site.

Land Bank

The number of residential plots in the Group's current land bank as at 19 March 2013 is as follows:

Owned with consent	647
Drayton Garden Village	516
Owned/contracted without consent	115
Plots controlled or terms agreed	653
Total plots	1,931

Investments

Our associate Company, Howarth Homes plc (Howarth), has continued to see its trading improve and reported a profit before tax of £1.06 million for its year ended 31 July 2012 (2011: £0.64 million).

The original intention behind our investment in Howarth was to assist in its growth in order achieve a possible flotation of that company. The conditions on the AIM Market of the London Stock Exchange have not been conducive to flotations in recent years. As a result, your Board has conditionally agreed terms for Howarth to purchase Inland's holding in that company for cash consideration of £1.4 million which, on completion, will result in a profit of £0.39 million over the carrying value of £1.01 million as at the half year end. It is anticipated that this transaction will be completed by Inland's current financial year end. Inland has a residual secured loan of £1.0 million to Howarth, which attracts an interest rate of 8.0% over base rate, that is due to be fully repaid by 31 December 2015.

Outlook

Our aim is to increase the residual core land bank each year whilst increasing the number of plots sold and built out.

Housebuilders and housing associations have a keen desire to acquire more consented land from us and this should enable us to achieve further profitable land sales. The demand for development land in the South East remains strong, as demonstrated by our recent sales of 355 plots.

Our growing activity of the construction and sale of new homes is bearing fruit and is underpinned by forward sales on contracted or reserved homes currently in excess of £4.7 million. This expanding housebuilding programme will enable us to secure additional development contribution and improve cash flow.

The Group also has a healthy pipeline of new opportunities that are being worked on and we will continue to update shareholders.

Terry Roydon

Chairman

19 March 2013

Group income statement

for the six months ended 31 December 2012

		Six months ended	Six months ended	Year ended
		31 December	31 December	30 June
		2012	2011	2012
		(unaudited)	(unaudited)	(audited)
	Notes	£000	£000	£000
Revenue		19,308	3,663	6,110
Cost of sales		(15,014)	(1,374)	(2,224)
Gross profit		4,294	2,289	3,886
Administrative expenses:		(1,199)	(1,472)	(2,679)
- profit/(loss) on investments		69	(84)	(145)
Operating profit		3,164	733	1,062
Interest expense		(619)	(286)	(698)
Notional interest expense		(116)	-	(115)
Notional interest income	4	108	119	237
Interest and similar income		41	102	87
		2,578	668	573
Share of profit of associate		249	138	307
Reverse impairment of investment in associate		-	200	500
Share of profit of joint venture		225	71	217
Profit before tax		3,052	1,077	1,597
Income tax	5	(681)	(282)	(838)
Profit for the period		2,371	795	759
Earnings per share
- basic earnings per share in pence	6	1.30p	0.43p	0.41p
- diluted earnings per share in pence		1.30p	0.43p	0.41p

Group statement of comprehensive income

for the six months ended 31 December 2012

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2012	2011	2012
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Profit for the period	2,371	795	759
Other comprehensive income for the period, net of tax	-	-	-
Total comprehensive income for the period	2,371	795	759

Group statement of financial position

at 31 December 2012

		As at 31 December	As at 31 December	As at 30 June
		2012	2011	2012
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
ASSETS
Non-current assets
Investment property	7	8,801	8,801	8,801
Property, plant and equipment	7	98	71	68
Investments	8	1,183	925	1,114
Joint ventures	8	1,390	2,453	2,563
Investment in associate	8	1,011	394	822
Receivables due in more than one year	10	55	70	55
Deferred tax	9	3,778	4,753	4,275
Total non-current assets		16,316	17,467	17,698
Current assets
Inventories		36,013	26,573	43,776
Trade and other receivables	10	8,089	7,421	2,632
Loan to associate		1,000	700	1,000
Listed investments held for trading (carried at fair value through profit and loss)		1	1	1
Cash and cash equivalents		12,764	1,478	575
Total current assets		57,867	36,173	47,984
Total assets		74,183	53,640	65,682
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	30,794	30,794
Treasury shares		(366)	(366)	(366)
Special reserve		6,059	6,059	6,059
Retained earnings		(3,103)	(5,429)	(5,382)
Total equity		51,685	49,359	49,406
LIABILITIES
Current liabilities
Bank loans and overdrafts		2,315	905	1,111
Other loans		1,280	2,000	5,875
Trade and other payables		4,431	1,376	2,522
Other financial liabilities	12	5,953	-	6,768
Total current liabilities		13,979	4,281	16,276
Non-current liabilities
Zero dividend preference shares	12	8,519	-	-
Total non-current liabilities		8,519	-	-
Total equity and liabilities		74,183	53,640	65,682

Group statement of changes in equity

for the six months ended 31 December 2012

	Share	Share	Treasury	Special	Retained
	capital	premium	shares	reserve	earnings	Total
	£000	£000	£000	£000	£000	£000
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
Share-based payment	-	-	-	-	83	83
Total comprehensive income	-	-	-	-	(36)	(36)
Total changes in equity	-	-	-	-	47	47
At 30 June 2012 (audited)	18,301	30,794	(366)	6,059	(5,382)	49,406
Share based payment	-	-	-	-	30	30
Dividend payment	-	-	-	-	(122)	(122)
Transactions with owners	-	-	-	-	(92)	(92)
Total comprehensive income	-	-	-	-	2,371	2,371
Total changes in equity	-	-	-	-	2,279	2,279
At 31 December 2012 (unaudited)	18,301	30,794	(366)	6,059	(3,103)	51,685

Group statement of cash flows

for the six months ended 31 December 2012

		Six months ended	Six months ended	Year ended
		31 December	31 December	30 June
		2012	2011	2012
		(unaudited)	(unaudited)	(audited)
	Note	£000	£000	£000
Cash flows from operating activities
Profit for the half year before tax		3,052	1,077	1,597
Adjustments for:
- depreciation		21	20	38
- profit on the sale of property, plant and equipment		(9)	-	-
- share-based compensation		30	83	166
- fair value adjustment for investments		(69)	84	145
- interest and similar income		(149)	(221)	(324)
- interest expense		735	286	813
- share of profit of associate		(249)	(138)	(307)
- reverse impairment of investment in associate		-	(200)	(500)
- share of profit of joint ventures		(225)	(71)	(217)
Changes in working capital:
- increase in investments		-	-	(250)
- decrease/(increase) in inventories		7,764	(2,469)	(19,672)
- (increase)/decrease in trade and other receivables		(5,349)	2,996	7,904
- decrease in receivables due in more than one year		-	-	15
- increase/(decrease) in trade and other payables		885	(3,452)	4,330
Net cash inflow/(outflow) from operating activities		6,437	(2,005)	(6,262)
Cash flow from investing activities
Interest received		41	103	87
Purchases of property, plant and equipment	7	(53)	(15)	(30)
Return of investment in joint venture		1,339	-	-
Sale of property, plant and equipment		11	-	-
Net cash inflow from investing activities		1,338	88	57
Cash flow from financing activities
Interest paid		(573)	(282)	(677)
Repayment of borrowings		(5,425)	-	-
Receipt of loan repayment from associate		-	1,195	895
New loans		2,445	243	4,323
Issue of cash dividends		(122)	-	-
Issue of zero dividend preference shares		8,500	-	-
Costs on issue of zero dividend preference shares		(411)	-	-
Net cash inflow from financing activities		4,414	1,156	4,541
Net increase/(decrease) in cash and cash equivalents		12,189	(761)	(1,664)
Net cash and cash equivalents at beginning of period		575	2,239	2,239
Net cash and cash equivalents at the end of period		12,764	1,478	575
Cash and cash equivalents		12,764	1,478	575

Notes to the half-yearly financial report

for the six months ended 31 December 2012

1. Nature of operations and general information

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 half-yearly financial report has been approved for issue by the Board of Directors on 19 March 2013.

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 2012 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 half-yearly financial report has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.

The consolidated half-yearly financial report should be read in conjunction with the annual financial statements for the year ended 30 June 2012, 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 2012.

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 market conditions existing.

(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 debt capital as the discount rate.

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.

4. Critical accounting estimates and judgements continued

Critical judgements in applying the entity's accounting policies continued

Investments

The Group has entered into a Development Services Agreement with 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.

The Group's relationship with DGVL is further explained in note 8 and balances in note 10.

Because the final decision on the financial and operational activities of DGVL resides 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 or a subsidiary undertaking.

At 31 December 2012 the funding arrangements in place for the satisfaction of deferred consideration entitled Inland to 60.51% 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), 53.55% 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 year, 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 the year end.

During the six months ended 31 December 2012 the Group has recognised £0.65m (2011: £2.48m) 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. See Note 10.

During the six months ended 31 December 2012 the Group has recognised £0.11m (2011: £0.12m) 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
	2012	2011	2012
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Tax charge on associate and joint venture profit	118	59	137
Corporation tax charge	66	-	-
Deferred tax charge due to change of corporation tax rate	-	-	382
Deferred tax charge	497	223	319
	681	282	838

6. Earnings and net asset value per share

Basic and diluted EPS

Basic and diluted earnings per share has been 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
	2012	2011	2012
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Profit attributable to equity holders of the Company (£000)	2,371	795	759
Net assets attributable to equity holders of the company (£000)	51,691	49,359	49,406
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)	198	25	51
	183,197	183,024	183,050
Basic earnings per share in pence	1.30p	0.43p	0.41p
Diluted earnings per share in pence	1.30p	0.43p	0.41p
Net asset value per share in pence	28.24p	26.97p	27.00p

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 2011	8,801	5	49	89	81	224
Additions		-	-	7	8	15
At 30 June 2012	8,801	5	49	96	89	239
Additions	-	-	47	6	-	53
Disposals	-	-	(32)	-	-	(32)
At 31 December 2012	8,801	5	64	102	89	260
Depreciation
At 31 December 2011	-	3	44	47	59		153
Depreciation charge	-	-	3	8	7		18
At 30 June 2012	-	3	47	55	66		171
Depreciation charge	-	1	6	8	6		21
Depreciation on disposals	-	-	(30)	-	-		(30)
At 31 December 2012	-	4	23	63	72		162
Net book value at 31 December 2012	8,801	1	41	39	17		98
At 30 June 2012	8,801	2	2	41	23		68

8. Investments

			Investment
	Investment		in joint
	in associate	Option	venture	Total
	£000	£000	£000	£000
Cost or fair value at 31 December 2011	394	925	2,453	3,772
Fair value adjustment	-	(61)	-	(61)
Share of profit after tax	128	-	110	238
Reversal of impairment	300	-	-	300
Additions	-	250	-	250
At 30 June 2012	822	1,114	2,563	4,499
Fair value adjustment	-	69	-	69
Return of investment	-	-	(1,339)	(1,339)
Share of profit after tax	189	-	166	355
At 31 December 2012	1,011	1,183	1,390	3,584

As detailed in the Chairman's Statement, we have agreed terms for Howarth to purchase Inland's holding in that company for a consideration of £1.4 million. During the six months ended 31 December 2012 £189,000 (2011: £98,000) was recognised in the Group Income Statement, being the Group's 33% share of profits after tax reported by Howarth.

On 18 December 2008, Inland entered into an Option and Development Services Agreement with Drayton Garden Village Limited which granted Inland 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,  2011 and 2012, the option period was extended by a further period of three years in consideration of £750,000. In accordance with the Group's accounting policy for financial assets, the option has been measured at fair value at 31 December 2012, which resulted in a fair value gain of £69,000 (2011: loss of £84,000) that has been recognised in the Group Income Statement, resulting in the option being valued at £183,000 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 £1,390,000 (2011: £2,453,000). 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 for the period to 31 December 2012 amounts to £166,000 (2011: £52,000) that has been recognised in the Group Income Statement. To date the Group has recognised £427,000 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 2011	4,753
Income statement charge	(96)
Deferred tax charge due to change of corporation tax rate	(382)
At 30 June 2012	4,275
Income statement charge	(497)
At 31 December 2012	3,778

The movement in deferred tax assets is as follows:

	Accelerated
	tax
	depreciation	Losses	Other	Total
	£000	£000	£000	£000
At 31 December 2011	(2)	3,872	883	4,753
Charged to income statement	(1)	(465)	(12)	(478)
At 30 June 2012	(3)	3,407	871	4,275
Charged to income statement	-	(497)	-	(497)
At 31 December 2012	(3)	2,910	871	3,778

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 (2011: £20,449,000) that have not been recognised as the Directors consider the realisation of the losses is not expected to crystallise in the foreseeable future.

10. Trade and other receivables

	Six months ended	Six months ended	Year ended
	31 December	31 December	30 June
	2012	2011	2012
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Prepayments and accrued income	846	1,034	891
Other receivables falling due within one year	7,243	6,387	1,741
Other receivables falling due after more than one year	55	70	55
	8,144	7,491	2,687

Other receivables includes an amount of £4.3m (2011: £2.6m) accrued in respect of costs and sales invoices charged to DGVL. The carrying value is considered a reasonable approximation of fair value.

Other receivables also includes an amount of £nil (2011: £3.0m) loaned 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
	2012	2011	2012
	(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
	2012	2011	2012
	(unaudited)	(unaudited)	(audited)
	£000	£000	£000
Deferred purchase consideration falling due within one year	5,953	-	6,768
Zero dividend preference shares falling due after more than one year	8,519	-	-
	14,472	-	6,768

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

.

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 2012 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. We have read the other information contained in the half yearly financial report which comprises only the Chairman's Statementand 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 Company's members, as a body, 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'. Our review work has been undertaken so that we might state to the Company's members 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 and the Company's members as a body, 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 International Financial Reporting Standards 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 International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express 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'. 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 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 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

19 March 2013

GRANT THORNTON UK LLP

AUDITOR

READING

 

END

 

 

IR LLFFTVLIALIV