INL.L Regulatory News (INL)

23 July 2015

Inland Homes plc

('Inland Homes', 'Inland', the 'Group' or the 'Company')

Trading update

The Board of Inland Homes provides the following update on trading ahead of its preliminary results announcement for the twelve months ended 30 June 2014, which will be released in September 2015.

The Group's performance for the year ended 30 June 2015 has been extremely strong and, as reported on 17 June 2015, the profit before tax will be significantly ahead of the then consensus forecast in the market of £12.7m. The performance in the first half of the financial year was driven primarily by our housebuilding operations, which was followed by profitable land sales in the second half. The land bank has also continued to grow, notwithstanding the land sales during the year. 

Strong performance from Housebuilding programme

As previously reported, the Group took a strategic decision to increase its housebuilding activity in order to take advantage of market conditions and extract maximum value from Inland's land bank. There has been a substantial increase in the number of residential unit completions, with the housebuilding activity playing an increasingly important role in generating Group profits.

The Group completed the sale of 287 (2014: 189) residential units (including units being managed on behalf of Drayton Garden Village Limited ('DGVL')) that include 39 (2014: 75) affordable housing unit equivalents which has resulted in record gross revenues. 31 per cent. of the open market units were sold using the Government's Help to Buy scheme. The Group has a medium term target of achieving approximately 500 residential unit completions per annum.

The Group currently has 195 units under construction across 7 sites (including the construction of 33 units managed for DGVL) with combined forward sales either agreed or contracted of £30 million.

Land sales and increase in land bank

Demand for the Group's consented plots is strong with 435 residential plots sold (including plots disposed of by DGVL) in the second half of the financial year ended 30 June 2015 for a total sum of £39.0 million. 

Inland has continued to grow its land bank even after the sale of consented plots and residential units. The land bank now stands at over 5,000 plots together with a significant amount of commercial space (including sites held within joint ventures and managed on behalf of DGVL). 

During the financial year, Inland acquired 76 existing houses, together with undeveloped land, that was released by the Defence Infrastructure Organisation at Wilton Park, Beaconsfield, Buckinghamshire. It is the intention of the Group to hold the existing houses as investment properties, where significant value uplift is envisaged over the cost of these properties. 13 of these houses have already been let in the first three weeks of agents being instructed, confirming the strong demand for rental stock. Once fully let the 76 houses are expected to generate gross rental income in excess of £1 million per annum. There are other short term income generating opportunities that the Group are in the course of securing, whilst the scheme is being progressed for the wider development of this site.

The Group has recently received a resolution to grant planning consent for 351 residential plots at its site that was the former Meridian TV Studios in Southampton. Planning applications for 329 residential plots across 8 development sites are currently being considered by various local authorities with further applications for 1,196 residential plots to be made in the near future.

The Group has completed the acquisition of phase 1 of a 10 acre town centre site in Ashford, Middlesex in our joint venture with CPC Group Limited. The site is currently used as a general education college and will accommodate approximately 300 new homes, subject to an appropriate planning consent, with a gross development value in the order of £90 million. This is the second project within this joint venture.

Commercial and residential income

Whilst all of our assets are held with a view to generate significant future value, some produce a regular income stream which helps to underpin the running costs of the business. As a brownfield regeneration specialist we inherit a variety of existing tenants and short term letting opportunities when we acquire sites for ultimate development. Alongside existing income streams and short term letting opportunities, the Group has a policy of holding commercial property developed as part of its mixed use developments. An example of this strategy will be the property let to Sainsbury at Drayton Garden Village which will be transferred to the Group, at a value to be agreed with DGVL, as part payment of its share of profits from DGVL and the proposed pre-let to the Co-op at our site known as RAF Stanbridge in Leighton Buzzard.

We anticipate annual rental income from residential and commercial property to exceed £2 million in the foreseeable future.

Strong balance sheet

The Group's balance sheet continues to improve with £21.4 million (2014: £11.2 million) of cash balances at the year end. Net debt has increased marginally to £30.2 million (2014: £28.8 million), however net gearing has reduced compared to the previous period. 

Outlook

With the strength in our balance sheet along with a strong joint venture partner in CPC Group Limited, we remain confident in acquiring large scale opportunities to deliver further growth in value for our shareholders.

Stephen Wicks, Inland Homes' Chief Executive commented: 

"Inland is fast becoming the brownfield regeneration specialist of choice with major institutional and corporate land owners. We have established an enviable track record as a leading developer of homes and creating vibrant new communities on sites which were previously derelict and redundant."

"The Group is now on a significant growth path which we believe will create further substantial value for our shareholders."

Notes to Editors:

Inland Homes identifies brownfield land in the South and South-East of England principally for residentially led development schemes. The business then enhances the land value by obtaining planning permission, before building houses for private sale or selling consented land onto other developers.