Preliminary Results

RNS Number : 1286U

Inland PLC

11 October 2010

 



11 October 2009

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

Unaudited preliminary results for the year ended 30 June 2010

Inland which specialises in the acquisition of brownfield sites and seeks to enhance their value by obtaining planning permission today announces preliminary results for the year ended 30 June 2010.

Financial highlights

Ø Revenue increased by 217% £16.54m (2009: £5.22m)

Ø Operating profit £2.04m (2009: operating loss before exceptional costs £3.93m)

Ø Pre-tax profit £1.05m (2009: pretax loss £10.47m)

Ø Earnings per share 0.68p (2009: loss per share 7.83p)

Ø Inventories £35.15m (2009: £41.66m)

Ø Net asset value per share 24.30p (2009: 24.90p)

Operational highlights

Ø 158 building plots and 10 completed apartments sold in the year

Ø Planning consent obtained for 773 units at Drayton Garden Village since the year end

Ø Land bank controlled comprises 1,950 residential plots and 263,000 sq ft of commercial space of which

·      1,357 (2009: 690) are consented residential plots

·      163,000 sq ft (2009: 110,000) is consented commercial space

Ø Sale of one site completed and another exchanged since the year end with a total value of £4.4m

Ø Sales agreed of 148 plots and 40,000 sq ft of commercial space for approximately £17.7m which has no associated debt

Stephen Wicks, Chief Executive of Inland commented:

"We are extremely pleased to report a significant increase in turnover and more importantly a return to profitability.  This is a notable achievement in a difficult trading environment.

There is good demand for land within our portfolio with a pipeline of land disposals and some interesting new prospects.  Inland is well placed to benefit from an environment where planning permissions are becoming even more difficult to secure and we are confident about its ongoing strategy."

Enquiries:

Inland PLC

Stephen Wicks, Chief Executive                                            Tel: [phone]

Nishith Malde, Finance Director                                             Tel: [phone]

FinnCap Nominated Adviser & Broker

Matthew Robinson / Henrik Persson (Corporate Finance)         Tel: [phone]

Buchanan Communications

Jeremy Garcia / Christian Goodbody                                      Tel: [phone]

The annual accounts will shortly be sent to shareholders and made available on the Company's website www.inlandplc.com

Chairman's Statement

Introduction

I am pleased to report that the year ended 30 June 2010 saw market conditions change dramatically during the second half. Demand for land with planning consent improved, leading to a significant increase in turnover, which in turn has improved the Group's liquidity position and returned it to profitability.  We also raised a small amount of new equity during the early and latter part of the year to improve our working capital in a climate where securing bank finance has proved to be extremely challenging. 

Results

Total turnover resulting from sales, rental income and management fees was £16.5m (2009: £5.2m).  Operating profit was £2.0m (2009: operating loss of £7.7m) and profit before tax was £1.1m (2009: loss before tax of £10.5m). 

Operational Review

The results demonstrate that the market for land in the South East of England has improved significantly with the larger housebuilders showing more interest in purchasing land to replenish their land banks within their local regions.  We have disposed of most of the smaller sites within our portfolio and our strategy is to secure larger sites which will predominantly be purchased with joint venture partners.  Our priority has been to generate cash flow in order to reduce both bank debt and settle outstanding deferred land payments.

During the year ended 30 June 2010 we sold 158 building plots (2009: 25 building plots) and 10 completed apartments at our development in Byfleet.  On the planning front we were successful in obtaining planning permission on all but 4 sites within our portfolio.  In May 2010, a resolution to grant planning permission subject to the signing of a legal agreement was received at West Drayton for 773 units and 55,000 sq ft of commercial space comprising a nursing home, a primary care trust and some office space. The legal agreement has now been signed and the planning permission issued. 

The land bank under our control currently comprises of 1,357 consented residential plots and 163,000 sq ft of consented commercial space including 80,000 sq ft for two care homes. We have a further 600 plots and 100,000 sq ft of commercial space being processed through the planning system. 

Since the year end we have completed the sale of one site and exchanged a contract on another with a total value of £4.4m.  We have also completed the sale of 10 residential units since the year end with forward sales of 10 residential units either reserved or exchanged.  Looking forward, we have also agreed the sale of 148 plots and 40,000 sqft of commercial space for approximately £17.7m which has no associated debt.

Financial Summary

The net profit for the year ended 30 June 2010 was £1.2m (2009: net loss of £12.7m) which represents earnings per share of 0.68p (2009: loss per share of 7.83p).  The interest expense increased significantly over the previous year as it includes various professional fees that we have had to incur to conclude the renewal of our revolving credit facility with RBS which currently stands at £8m against a drawn down position of £5.2m.  As at the year end we had outstanding deferred consideration payments of £6.0m (2009: £13.0m) of which £2.0m has been paid and the balance is due to be repaid by March 2011.  Net assets at the year end were £44.5m which translate to 24.3p per share (2009: 24.9p per share).  Net debt stood at £6.7m (2009: £6.5m) with gearing (including outstanding deferred consideration payments) reduced to 34.2% (2009: 47.3%).

Investments

Our associate company, Howarth Homes PLC has seen trading improve over its last financial year to 31 July 2010 having refinanced its loans out of RBS.  Howarth has returned to profitability and is currently developing 5 sites with a total of 111 units which includes a site of 51 units in a joint venture with Inland.  In addition, the company has construction contracts in hand valued at £17m. 

Outlook

Whilst the current economic uncertainty, lack of mortgage finance and shortage of bank funding for land  are a concern for the Group, we are pleased that the Group's existing sites are located in areas of good demand and will continue to generate cash flow and profitability.  Our strategy is to pursue larger opportunities in partnership with others and where appropriate small scale residential developments.  The Group's financial and liquidity position is continuing to improve and whilst market conditions are fragile, we are confident about our strategy for the future.

Terry Roydon

Chairman

Group Income Statement For the year ended 30 June 2010		2010					2009
		Before	Exceptional				Before	Exceptional
		exceptional	costs				exceptional	costs
		costs	(Note 1)				costs	(Note 1)
Continuing Operations	Note	£000 (unaudited)	£000 (unaudited)	£000 (unaudited)			£000 (audited)	£000 (audited)	£000 (audited)
Revenue		16,542	-	16,542			5,219	-	5,219
Cost of sales		(12,875)	-	(12,875)			(5,434)	(3,798)	(9,232)
Gross profit/(loss)		3,667	-	3,667			(215)	(3,798)	(4,013)
Administrative expenses		(1,945)	-	(1,945)			(2,024)	-	(2,024)
Profit/(loss) on investments		321	-	321			(1,689)	-	(1,689)
Operating profit/(loss)		2,043	-	2,043			(3,928)	(3,798)	(7,726)
Finance cost - interest expense		(807)	-	(807)			(491)	-	(491)
Finance cost - notional interest		(324)	-	(324)			(847)	-	(847)
Finance income - interest receivable and similar income		139	-	139			247	-	247
		1,051	-	1,051			(5,019)	(3,798)	(8,817)
Share of profit/(loss) of associate		-	-	-			(224)	-	(224)
Impairment of investment in associate		-	-	-			-	(1,426)	(1,426)
Profit/(loss) before tax		1,051	-	1,051			(5,243)	(5,224)	(10,467)
Income tax	2	141	-	141			137	(2,360)	(2,223)
Profit/(loss) for the year		1,192	-	1,192			(5,106)	(7,584)	(12,690)
Attributable to:
Equity holders of the Company				1,192					(12,690)
Earnings/(loss) per share for profit/(loss) attributable to the equity holders of the Company during the year
- basic	3			0.68p					(7.83)p

Diluted earnings per share is taken as equal to basic earnings per share as the Group's average share price during the period is lower than the option exercise price and therefore the effect of including share options is anti-dilutive.

Group statement of comprehensive income

For the year ended 30 June 2010

		2010	2009
		£000 (unaudited)	£000 (audited)
Profit/(loss) for the year		1,192	(12,690)
Other comprehensive income:
- loss on available-for-sale financial assets		-	(409)
Other comprehensive income for the year, net of tax		-	(409)
Total comprehensive income for the year		1,192	(13,099)

Group Statement of Financial Position

At 30 June 2010

		2010	2009
	Note	£000 (unaudited)	£000 (audited)
Assets
Non-current assets
Investment property		8,801	8,801
Property, plant and equipment		58	81
Investments		2,998	250
Investment in associate		-	-
Deferred tax	4	4,597	4,456
Total non-current assets		16,454	13,588
Current assets
Inventories		35,151	41,656
Trade and other receivables		5,691	3,698
Loan to associate		1,895	2,000
Listed investments held for trading (carried at fair value through profit and loss)		131	471
Cash and cash equivalents		2,519	72
Total current assets		45,387	47,897
Total assets		61,841	61,485
Equity
Capital and reserves attributable to the Company's equity holders
Share capital		18,301	16,216
Share premium account		45,806	45,184
Treasury shares		(366)	(366)
Retained earnings		(19,280)	(15,848)
Other reserves		-	(4,806)
Total equity		44,461	40,380
Liabilities
Current liabilities
Bank loans and overdrafts		9,242	6,566
Trade and other payables		2,173	1,923
Other financial liabilities	5	5,965	7,975
Total current liabilities		17,380	16,464
Non-current liabilities
Other financial liabilities	5	-	4,641
Total non-current liabilities		-	4,641
Total liabilities		17,380	21,105
Total equity and liabilities		61,841	61,485

Group Statement of Changes in Equity

For the year ended 30 June 2010

	Share	Share	Treasury	Retained	Other
	capital	premium	shares	earnings	reserves	Total
	£000	£000	£000	£000	£000	£000
At 30 June 2008 (audited)	16,216	45,184	(366)	(3,317)	(4,397)	53,320
Share based payment	-	-	-	159	-	159
Transactions with owners	-	-	-	159	-	159
Loss attributable to shareholders	-	-	-	(12,690)	-	(12,690)
Other comprehensive income:
- fair value adjustment in respect of available for    sale financial assets	-	-	-	-	(409)	(409)
Total comprehensive income for the year	-	-	-	(12,690)	(409)	(13,099)
At 30 June 2009 (audited)	16,216	45,184	(366)	(15,848)	(4,806)	40,380
Share based payment	-	-	-	182	-	182
Issue of equity	2,085	622	-	-	-	2,707
Transactions with owners	2,085	622	-	182	-	2,889
Profit attributable to shareholders	-	-	-	1,192	-	1,192
Available for sale financial asset - reclassification to profit or loss	-	-	-	(4,806)	4,806	-
Total comprehensive income for the year	-	-	-	(3,614)	4,806	1,192
At 30 June 2010 (unaudited)	18,301	45,806	(366)	(19,280)	-	44,461

Group Statement of Cash Flows

For the year ended 30 June 2010

			2010	2009
			£000 (unaudited)	£000 (audited)
Cash flows from operating activities
Profit/(loss) for the year before tax			1,051	(10,467)
Adjustments for:
- depreciation			34	34
- share based compensation			182	159
- fair value adjustment for listed investments			(31)	513
- profit on disposal of tangible fixed assets			-	(1)
- loss/(profit) on disposal of listed investments			(60)	1,176
- interest expense			1,131	1,338
- interest and similar income			(139)	(247)
- share of profit of associate			-	223
- impairment of investment in associate			-	1,426
- tax received/(paid)			-	206
Changes in working capital (excluding the effects of acquisition):
- decrease in inventories			6,505	6,027
- increase in trade and other receivables			(2,094)	(634)
- decrease in trade and other payables			(6,788)	(11,644)
Net cash outflow from operating activities			(209)	(11,891)
Cash flow from investing activities
Interest received			120	179
Dividends received			-	19
Sale of tangible fixed assets			-	12
Purchases of property, plant and equipment			(11)	(39)
Purchase of investments			(2,717)	(422)
Sale of investments			628	1,511
Net cash used in investing activities			(1,980)	1,260
Cash flow from financing activities
Interest paid			(748)	(463)
Net proceeds on issue of ordinary shares			2,707	-
Net cash from financing activities			1,959	(463)
Net decrease in cash and cash equivalents			(230)	(11,094)
Net cash and cash equivalents at beginning of period			(6,494)	4,600
Net cash and cash equivalents at the end of the period			(6,724)	(6,494)
Cash and cash equivalents			2,519	72
Bank loans and overdraft			(9,243)	(6,566)
			(6,724)	(6,494)

Notes to the Preliminary Announcement

For the year ended 30 June 2010

1. EXCEPTIONAL COSTS

The Group conducted a review of the net realisable value of its landbank in view of the depressed UK housing market. Where the estimated future net realisable value of the site is less than its carrying value within the Statement of Financial Position, the Group has impaired the land value. This has resulted in an impairment of £0.2m which the Directors do not consider to be exceptional (2009: £3.798m).

2. INCOME TAX

	2010	2009
	£000	£000
Corporation tax charge	-	-
Adjustments in respect of prior year	-	-
Tax credit on associate's loss	-	(62)
Deferred tax (credit)/charge	(141)	2,285
	(141)	2,223

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

	2010	2009
	£000	£000
Profit/(loss) before tax	1,051	(10,467)
Loss on ordinary activities multiplied by the standard rate of corporation tax in the UK of 28% (2009: 28%)	294	(2,931)
Expenses not deductible for tax purposes	28	19
Non utilisation of tax losses	-	2,775
Utilisation of tax losses	(465)	-
Previous losses no longer expected to be utilised	-	2,360
Losses not recognised	2	-
Tax charge/(credit)	(141)	2,223

3. EARNINGS/(LOSS) PER SHARE

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

	2010	2009
Profit/(loss) attributable to equity holders of the Company (£000)	1,192	(12,690)
Weighted average number of ordinary shares in issue (000)	174,965	162,150
Basic earnings/(loss) per share in pence	0.68p	(7.83)p

Diluted earnings per share is taken as equal to basic earnings per share as the Group's average share price during the period is lower than the option exercise price and therefore the effect of including share options is anti-dilutive.

4. DEFERRED TAX

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

	£000
At 1 July 2009	4,456
Income statement credit	141
At 30 June 2010	4,597

The movement in deferred tax assets is as follows:

	Accelerated
	tax
	depreciation	Losses	Other	Total
	£000	£000	£000	£000
At 1 July 2009	(4)	3,584	876	4,456
Credited to income statement	(3)	28	116	141
At 30 June 2010	(7)	3,612	992	4,597

The deferred tax asset is recoverable as follows:

	2010	2009
	£000	£000
Deferred tax asset to be recovered after twelve months	4,597	4,456

Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group did not recognise deferred income tax assets of £5,800,000 (2009: £8,223,000) that can be carried forward against future taxable income.

5. OTHER FINANCIAL LIABILITIES

	2010	2009
	£000	£000
Deferred purchase consideration on inventories falling due within one year	5,965	7,975
Deferred purchase consideration on inventories falling due:
- between one and two years	-	4,641
	5,965	12,616

The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs.

Flexibility is achieved by bank loans and overdraft facilities.

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

6. PUBLICATION OF NON STATUTORY ACCOUNTS

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

The Group Income Statement, the Group Statement of Comprehensive Income, the Group Statement of Financial Position at 30 June 2010, the Group Statement of Changes in Equity and the Group Statement of Cash Flows and associated notes for the year then ended have been extracted from the Group's financial statements.  Those financial statements have not yet been delivered to the Registrar, nor have the auditors reported on them.

 

END

 

 

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