2014
Annual Report and Accounts
for the year ended 30 June 2014
Stock code: inl
CreatIve tHInkIng In
BROwnFiElD DEvElOPMEnT
23697.04 22 October 2014 5:25 PM PROOF 9
IFC /
01
WeLCOMe tO
inlAnD HOMES PlC
As a leading brownfield regeneration specialist, we focus on buying
brownfield sites and enhancing their value through obtaining
planning permissions for residential and mixed use developments.
Sustainability is at the heart of everything we do.
wilton Park, Beaconsfield
Business Model
pages 08 to 11
Strategy Section
page 13
Marketplace Section
pages 18 and 19
WHY InveSt In InLanD HOMeS PLC
• Strong management team
• Adding value throughout the development process
• Diverse land portfolio in the South and South East of England
• Unrealised value within the land bank as a result of planning
permissions
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014 WHat’S
inSiDE
StrategIC rePOrt
welcome to inland Homes plc
who we Are
Our land Portfolio
Building Sustainable Homes
Financial and Operational Highlights
Chairman’s Statement
Our Business Model (what we do)
Our Strategy (Overview)
Q&A on Strategy with Stephen wicks
Q&A on Finance with nish Malde
Q&A on land Strategy with Paul Brett
Our Marketplace
Chief Executive’s Review
Finance Director’s Review
Case Study – Drayton Garden village
Case Study 2 – west Plaza, Ashford
Case Study 3 – Callis yard, woolwich
Key Performance indicators
Risk and Risk Management
Corporate, Social, Ethical and
Environmental Responsibilities
Our gOvernanCe
Board Composition
Board of Directors
Senior Management (the broader team)
Our Governance
Directors’ Remuneration Report
Directors’ Report
Our FInanCIaLS
independent Auditor’s Report (Group)
Group income Statement
Group Statement of Comprehensive income
Group Statement of Financial Position
Group Statement of Changes in Equity
Group Statement of Cash Flows
notes to the Group Financial Statements
independent Auditor’s Report (Company)
Company Balance Sheet
notes to the Company Financial Statements
SHareHOLDer InFOrMatIOn
Company information
iFC
01
02
03
04
06
08
13
14
15
16
18
20
24
26
30
34
38
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42
48
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62
70
71
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102
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104
iBC
WHO
wE ARE
inland Homes is an established land regeneration business, focused
on developing sites in southern England for residential and mixed
use projects. Our foundations have been built on a proactive and
decisive approach to identifying the right land opportunities, and our
ability to navigate the complex planning system and maximises the
potential of the final development.
Our versatile structure, relatively small team, local insight
and opportunistic approach gives us a competitive advantage,
ensuring we can react fast to secure the sites we want at a price
that maximises returns. Once secured, our knowledge of and
relationships with local authorities, and the wealth of experience in
our land team, means that we are able to secure the right planning
consent for the sites we own and manage.
Our ambitious developments, combining style, comfort and
sustainability for a wide social demographic, deliver appropriate
rewards for our business, our stakeholders, our shareholders and
the local community.
increasingly, we are utilising our own land bank to grow our
housebuilding operations and this growth will continue to optimise
our revenue profile.
InveStOr WebSIte
we maintain a corporate website at www.inlandhomes.co.uk
containing a wide range of information of interest to institutional
and private investors including:
• latest news and press releases
• Annual reports and investor presentations
view our Annual Report online
www.inlandhomesplc.annualreport2014.co.uk
gettIng arOunD tHe rePOrt
introduction to signposting devices:
annual report
navigation device
Online
navigation device
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 02 /
02
03
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
LanD
PORTFOliO
The land portfolio consists of 3,734 plots across the south of
England, owned, controlled or managed by Inland Homes.
acton
amersham
ashford
aylesbury
beaconsfield
boreham
bournemouth
Chelmsford (two sites)
Sites Under Construction
Chesham
Other inland Sites
Colchester
Frating
Farnborough
gerrards Cross
Loudwater
Markyate
Poole
Henley on thames
Southampton
High Wycombe
Holmer green
Ipswich
Iver
Leighton buzzard
Little Chalfont
tiptree
Woolwich
Wooburn green
West Drayton
Ipswich
Leighton Buzzard
Little Chalfont
Chesham
Colchester Frating
Aylesbury
Amersham
Holmer Green
High Wycombe & Loudwater
Wooburn Green
Beaconsfield
Markyate
Tiptree
Boreham
Chelmsford
Woolwich
Iver
Acton
Henley on Thames
Gerrards Cross
West Drayton
Farnborough
Ashford
Bournemouth
Southampton
Poole
23697.04 22 October 2014 5:25 PM PROOF 9
Read about our Strategy
on page 13
Read about KPi’s
on pages 38 and 39
www.inlandhomes.co.uk
Proposed development in iver, South Buckinghamshire
reSIDentIaL PLOtS
SOlD 2014
169 plots
MajOr
SiTES
LanD
BAnK
12 accounting for 2,601 plots
3,734 plots
PLOtS WItH PLannIng
PERMiSSiOn
1,318 plots
PLOtS WItHOut
PlAnninG
2,416 plots
annuaL rentaL
inCOME
£605,000
C O MMUNITY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
SUPPLY CHAIN
buILDIng SuStaInabLe HOMeS WHILSt DeLIverIng On Our
COMMiTMEnT TO ‘QUAliTy AnD COMFORT’:
At inland Homes we are proud of our commitment to create developments that not only
serve the needs of the residents into the future, but that sustainably enrich the wider
community. without compromising on our excellence in design or the quality of our builds,
we ensure that each of our projects contributes to the sustainable development of six core
areas: community, customers, health and safety, supply chain, sustainable homes and
people. we want our projects to stand testament to our values and leave a positive legacy
to the area.
Read about Corporate Social
Responsibility on pages 42 to 45
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information
0404 05
£8.6m
Profit before tax
1,318
Consented plots in land bank
FInanCIaL anD
OPERATiOnAl HiGHliGHTS
grOuP HIgHLIgHtS
• Record performance, ahead of market expectations;
• Strategic expansion of housebuilding activity proceeding according to plan and
delivering results; 114 (2013: 55) completions in the year (including units managed on
behalf of Drayton Garden village limited (DGvl));
• Continued growth in land bank, which currently stands at a record 3,734 plots (3
October 2013: 2,306) with 1,318 plots consented (3 October 2013: 1,057);
• Dividend increased 122% to 0.60p (2013: 0.27p), reflecting the Group’s strong financial
position and confidence in the short and medium term outlook.
POSt Year enD HIgHLIgHtS
• Heads of terms signed with a private rented sector institution for the sale of over 200
apartments at Drayton Garden village (DGv);
• Planning consent received for 114 residential plots plus over 150,000 sq ft of
commercial and leisure space at the winter Gardens site in Bournemouth;
• Planning permission secured for 15 residential plots on the site of a former office block
in Gerrards Cross, Buckinghamshire;
• Planning consent received for 152 residential plots at woolwich, in london;
• Entered into joint venture with a third party on a site in Aylesbury, Buckinghamshire
with the potential for in excess of 350 plots;
• The Judicial Review on the MoD’s decision to sell the wilton Park, Beaconsfield site has
been withdrawn and the Group’s agreement with its financial partners can be concluded.
OutLOOk
• Market conditions remain buoyant: demand for private housing in south and south-east
of England increasing; continuing strong demand for consented land from housebuilders;
• very strong forward sales position of £54.6 million with 436 units under construction;
targeting approximately 270 unit completions in the current financial year;
• Actively targeting opportunities within the private rented sector;
• Heads of terms agreed with Group’s financial partners for development of wilton Park,
Beaconsfield; inland to receive up to 80% of the net profit of the project;
Read more online at
www.inlandplc.com
• Core strategic goal of growing land bank remains; continue to see a healthy pipeline
of opportunities and confident of achieving further land bank growth throughout the
course of the current financial year and beyond.
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 2013/14
FinAnCiAl HiGHliGHTS
revenue
Up 28.0%
at £39.8m
(2013: £31.1m)
£21.4m
£39.8m
£31.1m
baSIC earnIngS Per SHare
Up 45.0%
at 2.87p
(2013: 1.98p)
2.10p
2.87p
1.98p
£6.1m
0.41p
11
12
13
14
11
12
13
14
PrOFIt beFOre tax
Up 65.7%
at £8.6m
(2013: £5.2m)
£8.6m
£5.2m
£3.5m
£1.6m
net aSSet vaLue Per SHare1
Up 10.1%
at 31.6p
(2013: 28.7p)
26.5p
27.0p
28.7p
31.6p
11
12
13
14
11
12
13
14
Year enD CaSH baLanCeS
£11.2m
(2013: £12.2m)
£12.2m
£11.2m
DIvIDenD Per SHare
Up 122.2%
at 0.60p
(2013: 0.27p)
0.60p
Chairman’s Statement
pages 06 and 07
CEO Review
pages 20 to 23
Finance Directors Review
pages 24 to 25
1. Excludes the Group’s interest in DGvl from
which inland expects to derive a further
2.8p per share net of tax. Also excludes any
unrealised gains within our land bank.
£2.2m
£0.6m
11
12
13
14
23697.04 22 October 2014 5:25 PM PROOF 9
0.27p
0.00p 0.067p
11
12
13
14
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 0606 07
’’
I am very pleased to be reporting
on another excellent year for Inland
Homes plc during which the Group
has increased pre-tax profits by
more than 65%.’’
terry roydon
Chairman
CHaIrMan’S
STATEMEnT
The performance of the business has been outstanding with all our strategic objectives
having been achieved. These include increasing our housebuilding completions,
substantially growing our land bank and achieving industry-leading margins.
Private unit completions (including those managed on behalf of DGvl) more than doubled
to 114 (2013: 55) with 436 units under construction across nine development sites. The
unmet demand for homes in the UK continues to grow, a situation that is exacerbated by
the continuing shortage of supply. The demand in the south and south east of England,
where the Group operates, is particularly strong and is demonstrated by the forward sales
position, for both inland and DGvl, of £54.6m in respect of units which have been reserved
or where contracts have been exchanged. This places us in a strong position and we would
expect that our net borrowings, which at the year end amounted to £28.8m (2013: £3.90m),
to reduce significantly over the next six months as a result of these forward sales, along
with a number of planned land disposals.
The number of building plots sold in the year, including plots sold
by DGvl, was 169 (2013: 451) reflecting our strategy to grow our
housebuilding activities. Despite the land disposals and unit completions,
i am pleased to report that the land bank has also increased by 61.9%
since 3 October 2013 to 3,734 plots (including those managed on behalf
of DGvl) of which 1,318 plots have planning permission. This pipeline of
residential plots is anticipated to result in future gross development value
of £1.1bn. in addition to these plots the land bank contains commercial
space which currently generates annual rental income of £605,000.
The Group’s operating expenses increased as we continued to invest in personnel, in line
with our growing turnover and profitability.
Given the Group’s strong earnings, growth and forward sales position, the Board is
proposing to increase the dividend by 122.2% to 0.60p (2013: 0.27p) per share subject
to shareholder approval at the AGM which is to be held on 1 December 2014. The final
dividend will be paid to shareholders on 9 January 2015.
i would like to take this opportunity to thank our small, entrepreneurial and highly
motivated team for all their hard work which has been reflected by these highly
commendable and record results. They also continue to create inspiring development
opportunities that i have no doubt will stand the Group in good stead over future years.
terry roydon
Chairman
15 October 2014
122%
Given the Group’s strong earnings,
growth and forward sales position,
the Board is proposing to increase the
dividend by 122% to 0.6p
61.9%
i am pleased to report that the land
bank has increased by 61.9% since
3 October 2013 to 3,734 plots
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 114Private unit completions
more than doubled in the year
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 0808 09
Our
BUSinESS MODEl
Creating short, medium and long term value.
Inland Homes has a defined business model for delivering value
in the short, medium and long term. In the recent past, the
model has changed to accommodate our growing housebuilding
programme, which should deliver greater profitability and more
regular returns in the medium and long term than selling land
with planning consent.
RETURN VALUE TO
SHAREHOLDERS
ADDING VALUE AND CREATING VALUE RIGHT THROUGH THE CHAIN
MEDIUM TERM
RETURNS
LONG TERM
RETURNS
SHORT TERM
RETURNS
REINVEST
IDentIFY
lAnD
Our local insight and established
relationships mean that inland Homes is
always aware of opportunities to increase
its land bank.
aCquIre
lAnD
Our flexible structure and motivated,
close-knit team combine to make us a
swift and astute land buyer.
aCHIeve PLannIng
PERMiSSiOn
Once a site is acquired, work begins to
achieve planning permission. Our record
of achieving planning permissions on our
sites is second to none.
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 RETURN VALUE TO
SHAREHOLDERS
ADDING VALUE AND CREATING VALUE RIGHT THROUGH THE CHAIN
REINVEST
’’
During the research and planning
phase for each development we
undertake consultations with the
community, discussing the site and its
surrounding environment with local
groups and town councils.’’
Mark gilpin
Planning Director
MEDIUM TERM
RETURNS
LONG TERM
RETURNS
SHORT TERM
RETURNS
SeLL LanD WItH PLannIng
PERMiSSiOn TO DEvElOPERS
Once consent is achieved, inland Homes
has the opportunity to sell the site with
outline planning permission to developers
or housing associations for a short term
return.
DeveLOP aLL Or Part OF
THE SiTE
By selling parts of a site while
carrying out infrastructure works and
housebuilding on other parts, inland
Homes is delivering revenue in the
medium term.
retaIn aLL Or Part OF tHe
SiTE; BUilD USinG MAin
COnTRACTORS AnD JOinT
vEnTURES
Building a whole development takes
longer but maximises the revenue a site
can deliver over the long term.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 1010 11
Our
BUSinESS MODEl COnTinUED
We are proud of the developments we plan and design, and
are always looking to create communities attractive to future
residents. Delivering on our commitment to quality and comfort,
developed sites feature open spaces, play areas and immaculate
landscaping to suit the needs of a wide variety of people.
IDentIFY
lAnD
Our local insight and established
relationships mean that inland Homes is
always aware of opportunities to increase
its land bank. we have particularly strong
ties with central london agents, the MoD
and other Government organisations,
which frequently lead to new deals.
Sites of varying value and size located
around the M25 and the south and
south east of England remain our
priority. intensive legal, financial and
land research is carried out at the
identification stage, supported by our
in-house architect and a number of
planning/architectural consultants.
Research into key factors such as local
employment and transport links also
influences our decisions.
Our appraisals and due diligence
minimise risk and reinforce the land’s
potential, ensuring that we fully
understand the opportunity and that only
sites with the right risk/reward balance
are selected for acquisition. Payment
terms for the land we buy can be deferred
for up to three or four years with land
being released to inland Homes as and
when payment is made.
aCquIre
lAnD
aCHIeve PLannIng
PERMiSSiOn
Our flexible structure and motivated,
close-knit team combine to enable
us to make swift and astute decisions
concerning the land that we buy. As well
as the more usual sites we acquire for
development, we also target strategic
parcels of land where we consider that the
site will be key to securing further land or
development opportunities in the future.
Once a site is acquired, work begins to
achieve planning permission. Our record
of achieving planning permissions on
our sites is second to none. we place
the needs of all affected parties —
Government, local Authorities, local
residents, potential end users, local
wildlife and the environment — alongside
our own.
Government organisations and vendors
generally sell to developers that can
make a success of the land acquired,
deliver much needed housing and meet
potential future contractual terms
such as overage. in that respect, inland
Homes has a reputation for meeting
and exceeding these expectations, thus
strengthening our case when making
offers on new land acquisitions.
Sites acquired can often deliver short
term returns through the sale of surplus
assets or rent from tenants (acquiring
sites can sometimes mean that inland
Homes becomes a short term landlord
until new development has begun).
Our expertise in designing sites involves
detailed surveys, public consultations and
presentations to create developments
that naturally blend into the local
environment. Plans produced by inland
Homes are designed to deliver the
maximum value for our stakeholders.
inland Homes produces comprehensive
development proposals that are
supported by robust financial viability
assessments and a strong balance sheet.
Applications are further leveraged by our
ability and experience in delivering ‘green’
sites that are energy efficient and offer
carbon reductions. we typically allow
18 to 24 months to secure a planning
permission for a newly acquired site.
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 ’’
We take a collaborative approach to
the whole process of developing a
site, from planning to completion,
by maintaining a dialogue with our
partners and contractors.’’
Pedro Longras
Development Director
SeLL LanD WItH PLannIng
PERMiSSiOn TO DEvElOPERS
Historically, once consent has been
achieved, inland Homes would sell the
site with outline planning permission to
developers or housing associations for a
short term return. whilst we remain keen
to further our housebuilding operations,
where appropriate this strategy will
continue.
we have good relationships with our
land-buying customers and most
transactions happen once the necessary
ground remediation (removal of pollution
and contaminants) has happened and
the infrastructure has been installed. A
‘serviced site’ contains all the necessary
drainage and roads, etc. already in place.
As housebuilders ourselves, we know how
to meet the needs of potential developers
in order for them to be able to move
quickly.
Those developing on parts of our sites
are required to follow our ‘Design Code’
for consistency. This ensures the site
has a look and feel in keeping with the
development as a whole and with the
local area.
DeveLOP aLL Or Part OF
THE SiTE
while portions of our sites are still sold
to other developers, inland Homes
is increasingly using its land bank to
grow as a housebuilder. By installing
infrastructure and selling parts of a site,
whilst carrying out our own housebuilding
on other parts, we are delivering
additional revenue in the medium term.
Our customers for land are major
housebuilders, medium tier and smaller
local developers and our homes are
acquired by private purchasers as owner
occupiers or as investors. we also
have strong relationships with Housing
Associations and investors in the private
rented sector.
value is returned to inland Homes either
as milestone payments as construction
takes place, or as payments when units
are completed, both of which provide
regular cash flow. large projects
usually require a ‘mixed use scheme’,
where inland Homes will develop the
commercial plots that are then let to
tenants. value is realised by managing
the asset for a short period of time before
selling the investment to a third party.
retaIn aLL Or Part OF tHe
SiTE; BUilD USinG MAin
COnTRACTORS AnD JOinT
vEnTURES
with greater gross margins achieved on
our own housebuilding, building a whole
development ourselves takes longer but
maximises the revenue a site can deliver
over the long term. inland Homes has
substantially increased its housebuilding
activities over the recent past and we
expect this to continue.
we have forged strong relationships with
main contractors and third parties that have
a reputation and track record for delivering
stunning homes. By agreeing fixed-price
contracts upfront we are minimising
risk during the construction stage, with
payments only being made on valuation
certificates provided by surveyors who have
assessed the on-site progress made by the
contractors on our behalf.
As well as delivering value, we are
proud of the developments we plan
and design, and are always looking to
create communities attractive to future
residents. Delivering on our commitment
to quality and comfort, developed sites
feature open spaces, play areas and
immaculate landscaping to suit the needs
of a wide variety of people.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 1212 13
Inland Homes plc
500 homes per annum
The Group’s short term housebuilding target
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcAnnual Report andAccounts 2014/Annual Report andAccounts 2014 Our
STRATEGy
Inland Homes has a clear strategy focused on maximising the
value of its land bank, realising value at appropriate stages during
the development cycle to support ongoing sustainable growth and
therefore delivering shareholder value.
Our strategy focuses on four key goals:
generate cash to fund our operations
1 increase the size of our land bank year on year
2 Continue the core activity of plot sales to other developers to
3 Maximise the value from our land bank by expanding our
4 Maintain borrowings at a manageable level through a strong
focus on cash management and vendor financing
housebuilding programme
with strong demand for land in the south and south east of England, we will continue
to capture land trading margin by selling brownfield land with planning permission
to developers. At the same time, we are growing and utilising our capabilities as a
housebuilder (436 units now under construction). we look to extract value using the
appropriate option available to us through the value chain, with a focus on the cash needs
of the business. Making use of equity, debt funding and vendor financing, we will grow
the business by capitalising on buoyant market conditions and achieving better margins
through housebuilding, whilst maintaining a sound working capital position.
with short, medium and long term value releasing options available, we will support our
strategy of expanding the land bank year on year. we will continue to meet the needs of
our customers and build on our strong relationships with institutional purchasers. Our
outsourcing model makes the business agile and quick to capitalise on market conditions,
enabling us to easily scale-up or scale-down when appropriate.
Adding to our team of industry experts we have invested in additional resources including
planners, architectural designers, project managers, and sales and marketing people to
build extra capacity to support our growth journey as housebuilders, which will provide
more regular earnings for shareholders.
Read our KPi’s
on pages 38 and 39
Read about our Risk
Management on
pages 40 and 41
Left: latest phase on our Queensgate
development in Farnborough, Hampshire
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 14 /
14
15
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
Stephen Wicks
Chief Executive
5,000
The Group’s target is to have a land
bank of approximately 5,000 plots
within the next 12 months
q&a On StrategY
wiTH STEPHEn wiCKS
Could you explain the strategic logic behind the recent expansion of
your housebuilding activity and can we expect more of it in the future?
inland Homes is all about extracting maximum value from its well-located land bank. Our
strategy of acquiring brownfield sites at the pre-planning stage and its long track record of
planning success, positions the Group as a housebuilder with exceptional skills in large scale
brownfield development. now that market conditions in the sector have returned to normal
it makes sense for us to secure the additional development margin that can be achieved
through the housebuilding process. The Group is intending to increase its housebuilding
activities with the short term objective of building approximately 500 units per annum.
Inland Homes’ land bank currently stands at 3,734 plots. What’s your
target, in both the short and medium term? Is the end game for Inland
to grow the landbank to a size that makes the Company a takeover
target for a bigger, national housebuilder?
The Group’s target is to have a land bank of approximately 5,000 plots within the next 12
months. The Group is now firing on all cylinders. we have some fantastic development
opportunities in the land bank and other housebuilders would naturally be interested in
our activities. we are not expecting to be taken over in the foreseeable future.
How much more value are you likely to extract from Drayton garden
village? and when do you expect to fully complete and exit the project?
with our current housebuilding phase we expect to extract 2.8p per share (net of tax),
however with the prospect of a large forward sale of over 200 apartments for private
rented, we could extract up to 5.0p per share (net of tax) from this development.
Which of your projects do you expect to be the primary cash generators
in the current financial year?
There are a number of projects that will generate cash in the current financial year. The
notable ones are expected to be woolwich, Drayton Garden village and our west Plaza
development in Ashford, Middlesex.
What role do you feel the private rented sector has to play in solving the
nation’s housing shortage? Is this an area that Inland Homes is exploring?
with affordability becoming a big issue in the south east the private rented sector should
play a big part in creating new opportunities for people to rent good quality housing with
perhaps more certainty of tenure.
What does next year’s general election, and a potential change of
government, mean for the housebuilding industry?
All the political parties have now woken up to the importance of supporting increased
housebuilding. My personal ‘worst nightmare’ would be a lib-Dem/labour coalition led
by vince Cable!
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
q&a On FInanCe
wiTH niSH MAlDE
You have increased the dividend significantly. How did you determine
the level?
The Board wanted to ensure that the dividend was progressive, in line with its intention
announced at the time of our 2012 results. The amount was neither driven by dividend cover
or yield, but determined in consideration of the Group’s cash requirements for the foreseeable
future. The yield based on the current share price is approximately 1.3% and although this
is above the average yield from all AiM companies, the Board believes that the majority of
investors are seeking growth and not a dividend yield.
Has securing finance become any easier in recent times?
Procuring development finance for housebuilding has become relatively easier for inland
Homes than a few years ago. However, obtaining funding for land with or without planning
consent is extremely difficult. Although one or two entrants have emerged for land finance,
the Group endeavours to structure its land acquisitions by the use of
vendor financing or from its own cash resource.
given the increase in the group’s housebuilding activity,
should we expect net debt to continue to rise? What kind
of level would you be comfortable with?
Debt levels have increased in line with the expansion of our housebuilding activity as
expected by the Board. The Group expects borrowings to reduce by the half year due to
a significant number of legal completions of residential units and some land sales. The
Group’s borrowings are controlled by a gearing covenant imposed by the Zero Dividend
Preference shareholders. The Board would be comfortable with an average gearing
of 30%, although there may be times when a planned increase will take place where a
reduction could be forecast within a short period of time.
’’
We expect profits to continue to
increase with underlying net asset
value continuing to grow at a very
respectable rate.’’
nishith Malde
Group Finance Director
What are your expectations for nav and profit growth for the current
financial year?
we expect profits to continue to increase with both stated and underlying net asset value
continuing to grow at a very respectable rate. The consensus forecast in the market, for
profit before tax for the year ending 30 June 2015, is £12m.
It’s very difficult to ascertain a ‘true’ nav value for Inland, given assets
are held on the balance sheet at the lower of cost and net realisable
value. Could you not revalue your portfolio annually or provide some
guidance to investors?
Accounting Standards preclude the Group from revaluing its stock and work in progress in the
accounts. As an indication to investors of the potential unrealised value within the land owned
by the Group, the average cost per plot of £38,000 should be compared to the open market
value of consented plots. As a general rule of thumb, the value of a consented plot equates
to 30% of the value of the home. Based on the average UK house price of £274,000 this could
result in a consented plot value of approximately £82,000.
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 1616 17
Paul brett
land Director
17
we have added 17 sites to our land
bank over the last year. Significantly,
we have also begun to expand our land
portfolio to include strategic sites.
Read about our KPis
on pages 38 and 39
Read about our Risk
Management on
pages 40 and 41
q&a On LanD StrategY
wiTH PAUl BRETT
How do Inland discover new plots of land?
The land team at inland are constantly researching and approaching landowners to source
new development opportunities. The most common way we come across potential sites
for acquisition is through our extensive and strong network of connections and contacts
with vendors, landowners and agents. Over the last 20 years we have worked hard at
establishing and maintaining relationships. My land team and i, often accompanied by
Stephen wicks, our CEO, frequently identify and personally meet with agents to build new
relationships. inland also advertise nationally in the trade press. it has always been a strict
policy of inland to conduct ourselves with the utmost integrity and so to behave reliably,
transparently and professionally. Our due diligence before signing any contract means
that we are always upfront with our business partners, and deliver the agreed services as
promised. This is proven in our strong track record, which has led to positive long term
relationships, where organisations return to us time and again. Many new opportunities
for buying land are generated in this way.
Who are some of these key relationships with?
Much of the brownfield land we acquire has previously been used by the public sector,
from hospitals to military bases. The Government has responded to the nationwide
housing shortage by providing the impetus to the public sector to release more land for
housebuilding. One of the key sources of land for us has been the Ministry of Defence,
from whom we have acquired four sites. This is an example of an ongoing relationship
where demonstrating our ability to deliver has led to further opportunities.
we also attract and retain relationships with individual agents with our flexible business
model, which means we can involve them throughout the process of developing a site.
when an agent introduces us to a land opportunity, we can offer them multiple fees beyond
the introductory fee. if we go on to sell the land we can utilise their services again, or
similarly if we build homes on the site they can act as agents for selling the properties.
What is the strategy for deciding which sites to purchase?
we undertake extensive research on all prospective acquisitions, involving input from
various colleagues across inland’s departments. it is essential that we quickly identify the
sites with potential, so that we utilise our expertise efficiently, commencing detailed due
diligence on only the most promising and suitable opportunities.
we assess on average 15–20 sites a week to see whether they meet our criteria on a
planning, technical and financial basis. Of these, those that are suitable are discussed
with our architectural, planning and technical teams, who undertake further due diligence.
Only around 10% of opportunities are taken beyond this stage. The land and planning
teams then debate the various opportunities that a given site presents and how it fits
into our strategy for growing our land bank. This might include considering whether it
can generate sufficient dwelling numbers and whether the site location can be exploited
strategically, by opening up further opportunities with adjoining land or unlocking further
sites in the area. By the time we have decided to pursue a site, we have completed a
comprehensive analysis that provides both us and our partners with clarity on our position.
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 Apartments at our development at Carter’s Quay in Poole, Dorset
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 1818 19
’’
Our
MARKETPlACE
Throughout 2014, the UK housing market has shown continuing signs of improvement. The
number of transactions has increased and the pent up demand has subsequently seen
prices rise.
in the south-east of England where inland Homes predominantly operates, the Office for
national Statistics (OnS) found that property prices have soared by 11.6% in the year to
August 2014. with growth in employment expected in the south east over the next decade,
housing demand and prices are set to continue rising.
Government schemes such as Help to Buy, Build to Rent and the Builders Finance Fund
have seen new housing supply rising, with new housing starts at 137,780 in the 12 months to
June 2014, up by 22% compared to the year before.
However, there are currently insufficient new houses being built to keep up with the growing
demand, which is estimated at over 250,000 units p.a., and demand is approximately double
what is being built. with an ageing population meaning fewer occupants
per property, the long term shortage of homes is likely to continue.
in terms of buyers, Government schemes such as Help to Buy are
building on these signs of recovery. The Help to Buy home ownership
scheme will run until 2020. Over half of the 114 private completions this
year used this scheme.
There is also the Build to Rent Fund, which was launched to stimulate new private rented
housing supply. it is anticipated that the fund will be used to finance the building of over
200 apartments at DGv being sold to a PRS investment fund.
With growth in employment expected
in the south east over the next
decade, housing demand and prices
are set to continue rising.’’
vicki noon
Sales & Marketing Director
The UK Government’s reforms to make the planning system less complex and easier to
understand has recently resulted in a change of legislation to promote office to residential
conversion under “prior approval notification” procedures, and this has been useful on one
of the Group’s projects.
inland Homes sells the majority of its houses to UK purchasers. However, recently it sold
14 apartments from the west Plaza, Ashford, Middlesex development to customers in
Hong Kong. There is evidence that overseas demand for UK property is strong, with 15% of
all new buildings in london now purchased by foreign buyers.
Read about our Strategy
on pages 13
Read about our Business
Model on pages 08 to 11
11.6%
The Office for national Statistics
(OnS) found that property prices in the
south-east have soared by 11.6% in the
year to August 2014
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 ’’
Having been allocated funding from the
HCA run Build to Rent scheme for over 200
homes in Drayton Garden Village, we plan to
take advantage of any similar opportunities
on future developments.’’
Melanie Hyland
Financial Operations Director
SeaSOnaLLY aDjuSteD trenDS In quarterLY HOuSIng
STARTS AnD COMPlETiOnS, EnGlAnD
60,000
50,000
40,000
30,000
20,000
10,000
0
4
0
-
3
0
0
2
Completions
Starts
5
0
-
4
0
0
2
6
0
-
5
0
0
2
7
0
-
6
0
0
2
8
0
-
7
0
0
2
9
0
-
8
0
0
2
0
1
-
9
0
0
2
1
1
-
0
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
5
1
-
4
1
0
2
SOutH eaSt HOuSe PrICe InCreaSeS
2014 (%)
8.6
8.1
7.2
11.6
Date
9.9
Yearly
change
Sales
volume
August 2014
11.6
July 2014
June 2014
May 2014
April 2014
9.9
8.1
8.6
7.2
13,123
13,295
12,484
Apr
May
Jun July
Aug
Source: Offices of national Statistics
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 2020 21
’’
financial year’’
Stephen Wicks
Chief Executive
620
we now have six strategic sites
with the potential for 620 plots
CHIeF exeCutIve’S
REviEw
This was another outstanding year of progress for Inland Homes.
we are benefiting from better market conditions with improved mortgage availability,
together with a boost for homebuyers from the Government’s Help to Buy initiative. Of the
114 private legal completions, 62 purchasers used the funding provided by the scheme.
The core activity of our business remains the acquisition of predominantly brownfield land
acquired without planning permission. we have also made a decision to supplement our
brownfield activities with a number of longer term strategic sites where land is secured
under a long term option at a discount to market value. The land portfolio includes six
such sites with the potential for 620 plots.
Since last year’s report a number of substantial milestones were achieved in our site
acquisition programme, namely:
Our performance this year
demonstrates that we have the
right strategy going forward. The
Group is in an excellent shape with
tremendous momentum behind it
as we move into the new
raF Stanbridge, Leighton buzzard, bedfordshire
• Former MoD site with consent now achieved for 175 plots plus
commercial space
reading road, Henley, Oxfordshire
• Former commercial site with scope for 55 plots
Lily’s Walk, High Wycombe, buckinghamshire
• Former gasworks with scope for 200 plots plus commercial space
queens road, High Wycombe, buckinghamshire
• Consent secured for 14 units
the vale, acton, West London
• Builders’ merchants with scope for 100 plots plus commercial space
rainsford road, Chelmsford, essex
• Former public house where we have secured consent for 14 units
tiptree, essex
• Former sports ground with scope for 40 plots
Meridian, Southampton, Hampshire
• Former Tv studios on seven acres with scope for 350 plots
aylesbury, buckinghamshire
• Joint venture with another developer. A 50 acre site to be acquired jointly with scope for
in excess of 300 plots plus commercial space
Loudwater, buckinghamshire
• A five acre investment property site producing income and having development potential
and of strategic importance for the development of a wider area
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 436
Homes under construction
over nine development sites
152
Of particular note in the year
was our development at west
Plaza, Ashford in Middlesex of
152 apartments
WILtOn Park, beaCOnSFIeLD
• Financial partners of inland have now completed the purchase of this 100 acre site
from the Ministry of Defence, who were being challenged by a third party by way of a
Judicial Review in respect of the sale. This Judicial Review has now been withdrawn.
Shareholders may recall that inland Homes own the preferred access to this site which
has been allocated in the local Plan for in excess of 300 new homes. An agreement will
be concluded with our financial partners in the near future now that the Judicial Review
has been withdrawn.
The number of residential plots in the land bank of the Group and those separately held by
DGvl is currently as follows:
Owned or contracted with planning consent
Drayton Garden village with planning consent
Owned or contracted without planning consent
Plots controlled or terms agreed
total plots
1,070
248
605
1,811
3,734
whilst commercial investment and development is not a core activity, current annual
rental income generated by the land bank now exceeds £600,000. This has been bolstered
by the lease to Sainsbury’s at DGv that was let on a 15 year term with a starting rent of
£64,000 per annum.
Of particular note in the year was our development at west Plaza, Ashford in Middlesex
of 152 apartments. This project is nearing completion with total anticipated revenue of
approximately £33.0m. 90% of the development is either contracted for sale or legally
completed.
nuMber OF PLOtS WItH anD
wiTHOUT PlAnninG COnSEnT
reSIDentIaL PLOtS SOLD
(nUMBER)
3,734
1,318
2,416
2,306
1,057
1,249
451*
256*
183*
169*
158*
13
14
10
11
12
13
14
1,959
1,357
602
10
1,942
1,215
727
12
1,590
1,109
481
11
Plots with planning permission
Plots without planning permission
* includes plots sold within DGvl.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 2222 23
CHIeF exeCutIve’S
REviEw COnTinUED
Planning permission was received for our development of 152 apartments and commercial
space at Callis yard, woolwich in london. This is a brownfield site which is opposite a new
Crossrail station and close to the town centre. This planning consent has resulted in a very
significant increase in the value of the site over its carrying value.
The strategy of acquiring sites in the outer boroughs of london is gathering momentum
and we were particularly pleased with the unconditional purchase of a builder’s yard
in Acton, west london which should yield over 100 residential units along with some
commercial space.
Significant planning approvals or resolutions to grant planning permission gained in the
year are as follows:
Europa way, ipswich
Callis yard, woolwich
vale Road, Bushey
Station Road, Gerrards Cross
Queensgate, Farnborough
Other smaller sites
total plots
94
152
41
30
26
35
378
One of our intentions is to make forward sales of the units we construct to organisations
that specialise in building up private rented portfolios. Heads of terms have recently been
signed for a substantial development at Drayton Garden village of over 200 homes with an
institution seeking to build a private rented portfolio in the UK. Construction is intended to
be financed via the Government’s “Build to Rent” scheme.
we believe that with home ownership now being out of the reach of an increasingly large
group of the younger population, private rented homes which are properly managed by
long term landlords will become very popular with home occupiers as well as forming
an exciting new asset class for institutional investors. inland expects to have substantial
involvement in this sector using sites from its well located land bank.
As mentioned in the Chairman’s Statement, these are excellent results but the key factor
is that we have created a sound platform for growth. in addition, our performance this year
demonstrates that we have the right strategy going forward.
The Group is in an excellent shape with tremendous momentum behind it as we move into
the new financial year.
The considerable progress which is being made at inland is entirely due to our small, highly
motivated team. i would like to thank them for their continued hard work, commitment and
support in ensuring we deliver our strategy of growth and value for our shareholders.
right: new Sainsbury’s local at
Drayton Garden village, west Drayton
in Middlesex
Stephen Wicks
Chief Executive
15 October 2014
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 378Planning approvals or
resolutions to grant planning
permission gained in the year
Stock code: INL
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Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 2424 25
’’
FInanCe DIreCtOr’S
REviEw
The Group has produced a record set of results for the year ended 30 June 2014 with
increasing revenues and profitability from housebuilding. inland’s strategic decision
to increase the housebuilding activity was well timed to catch both the recovery in the
housebuilding sector as well as the wider economy. Although debt funding for the
acquisition of land with or without planning consent has been almost non-existent, there
are signs of some entrants into this market. Finance for housebuilding has become far
more readily available and this has assisted the expansion of our housebuilding activities.
The key highlights of our financial performance are:
• Revenue has increased by 28.0% to £39.8m (2013: £31.1m);
• Profit before tax has increased by 65.7% to £8.6m (2013: £5.2m);
• Basic earnings per share has increased by 45.0% to 2.87p (2013: 1.98p);
• Dividend per share increased by 122.0% to 0.60p (2013: 0.27p)
• net assets per share increased by 10.1% to 31.6p (2013: 28.7p)
which excludes the Group’s share of future profit from DGvl,
currently estimated at 2.8p per share net of tax, and any
unrealised gains within our land bank;
• year end cash balance of £11.2m (2013: £12.2m);
The Group has produced a record set
of results for the year ended 30 June
2014 with increasing revenues and
profitability from housebuilding.’’
nishith Malde
Group Finance Director
• net gearing (including the accrued ZDP liability) has increased to 45.0% (2013: 6.7%)
due to a planned increase in housebuilding.
28%
Group revenue was up by 28% to
£39.8m (2013: £31.1m)
traDIng PerFOrManCe
Group revenue was up by 28.0% to £39.8m (2013: £31.1m). This included land sales of
£6.7m (2013: £16.4m), open market unit completions of £18.8m (2013: £11.4m), affordable
home sales of £2.5m (2013: £nil) and fee income from DGvl of £6.6m (2013: £3.0m). The
gross margin increased to 39.4% (2013: 24.7%) and the open market unit completions
generated a gross margin of 27.5% (2013: 21.1%). The average selling price of the private
units (including those sold on behalf of DGvl) was £256,000 (2013: £208,000). The Group
uses main contractors to construct all the units we build and after administrative overheads
of £4.4m (2013: £2.7m) it has achieved an operating margin of 26.4% (2013: 16.3%).
Administrative overheads have increased primarily due to an increase in staff costs.
FInanCe exPenSe
As expected, the Group’s net debt has increased to £28.8m in comparison to £3.9m in the
previous year primarily due to the expansion in housebuilding, and this resulted in the net
finance expense increasing to £2.5m (2013: £1.4m). The net finance expense is covered 3.5
times (2013: 3.7 times).
taxatIOn
The total tax charge represents 32.8% of profit before tax. This is significantly higher than
the UK corporation tax rate because the Group wrote off £469,000 of the deferred tax asset
due to a reduction in the future rate of corporation tax. £225,000 was also written off as
a result of a stock and work in progress credit that has been released to cost of sales as
it was originally subject to a notional interest adjustment due to deferred land payment
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 45.0%
Basic earnings per share has
increased by 45% to 2.87p (2013: 1.98p)
65.7%
Profit before tax has increased by
65.7% to £8.6m (2013: £5.2m)
terms. The current year tax charge of 25.3% is also high because of an impairment of the
fair value of the option over shares in DGvl and the interest accrued to ZDP shareholders
being disallowed for tax purposes.
earnIngS Per SHare anD DIvIDenDS
Earnings per share has increased by 45.0% over the previous year to 2.87p (2013: 1.98p).
The increase is disproportionate to the increase in profit before tax due to the higher tax
charge in the current year as explained above and a higher level of brought forward tax
losses available for relief in the previous year.
The Board has proposed a final dividend of 0.60p per share for the year ended 30 June 2014,
subject to approval by the shareholders. This is an increase of 122.2% in comparison to
the previous year, in line with the progressive dividend strategy adopted by the Board and
reflecting both the strong set of results as well as the confidence in the Group’s financial
position. The dividend will be paid on 9 January 2015 to shareholders on the register at the
close of business on 12 December 2014. The ex-dividend date is 11 December 2014.
CaSH FLOWS
During the year the Group increased operating cash flows before movements in working
capital by 125% to £11.6m (2013: £5.1m). The increase in investment in land and the
expansion of the housebuilding activity led to £24.5m of cash outflow from operating
activities which has predominantly been financed by a planned increase in debt. During
the year, lenders have continued to remain very cautious in providing funding for land
irrespective of whether it has planning permission or not. The Group had to therefore rely
on its own resources as well as vendor financing to fund these purchases. in addition to
bank debt, the Group raised £1.1m by way of issuing 934,900 Zero Dividend Preference
shares with a gross redemption yield of 5.57% p.a.
net cash inflow from financing activities was £22.6m (2013: £12.3m) and this included
proceeds from the sale of 1,325,000 treasury shares of £580,000. it also included the
repayment of a loan of £1.0m from our former associate company, Howarth Homes PlC,
new loans of £26.3m and dividends paid of £0.5m.
FInanCIaL POSItIOn
The Group’s inventories increased by 101.8% over the previous year to £90.3m (2013:
£44.7m) due to the purchase of eight new sites during the year as well as the increase in
investment due to the number of units under construction. The amount due from DGvl
has decreased to £10.5m (2013: £13.7m) resulting in a lower amount of trade and other
receivables. Current liabilities increased from £18.5m to £51.0m as land creditors, trade
creditors and loan balances have increased. net gearing at the year end (including the
accrued ZDP liability) was 45.0% (2013: 6.7%) and net assets increased to £64.0m (2013:
£57.7m) equating to 31.6p per share. it should be noted that this figure excludes the
Group’s share of future profit from DGvl, currently estimated at approximately 2.8p per
share net of tax. it also excludes the unrealised added value accumulated within the land
bank due to planning permissions achieved on some of the sites.
nishith Malde
Group Finance Director
15 October 2014
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 2626 27
DraYtOn garDen vILLage,
MiDDlESEX
Read our case study
on pages 27 to 29
www.inlandhomes.co.uk
www.inlandplc.com
slugline
slugline
Inland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 CaSe
STUDy 1
Drayton Garden Village is a significant development Inland Homes
has been managing for several years on behalf of DGVL. It is a
31 acre site, with planning permission for 773 residential units
and 53,000 sq ft of commercial space, as well as community
areas including several village greens. The development has
provided the opportunity for Inland Homes to demonstrate their
large scale housing construction capabilities, as well as to utilise
environmentally friendly techniques and features, for which it has
been recognised.
Stock code: INL
Stock code: INL
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Strategic ReportOur GovernanceOur FinancialsShareholder Information 28 /
28
29
29
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
LOCatIOn
Drayton Garden village,
Middlesex
Read more online at
www.inlandplc.com
www.inlandhomes.co.uk
CaSe
STUDy 1
Since the purchase of the land in 2009, Inland Homes have
increased their profit share on the project from 35% to the
maximum 90%. Inland obtained planning consent within 20
months of acquisition for 773 residential units plus employment
and community space with just 8% of the homes being provided as
affordable housing, a significant reduction from the 50% target set
by the London Plan at the time and, as such, maximising the value
of the land. They have co-ordinated and managed the different
areas and aspects of the site, including the sale of serviced plots
to other property developers, as well as building a number of the
homes for DGVL. This strategy has proved successful, enabling a
staggered release of cash throughout the development process,
and will be repeated in future projects.
At Drayton Garden village, the Group has accessed the growing private rented sector
(PRS), through an agreed bulk sale of 205 units to an institution, a strategic move that
will be repeated in future projects. The government is encouraging investment in PRS,
to increase the supply of privately rented homes for the expanding rental market. inland
Homes is seeking to diversify the risk profile of its projects and bring in large numbers of
early sales.
inland Homes is managing the building of 387 homes within Drayton Garden village. Of
these, it is overseeing the whole process of building and selling 75 houses and apartments,
and has been contracted to construct 107 units by Paradigm Housing Association, and
heads of terms have been agreed for a further 205 units to be constructed for PRS. These
bulk sales can help release cash during the project, and de-risks the market risk.
The 75 units being built on behalf of DGvl have generated significant interest from buyers.
The first 32 units released sold above market expectations, and at the release of the next
group of homes, there was a queue of prospective buyers waiting to access the show
homes. This scene, unheard of since before the financial crisis, was a testament to the
desirability of this attractive development.
The project has significantly exceeded Group expectations, aided by the productive
relationships that DGvl and inland Homes have established with their partners and
contractors. A significant achievement at this site was securing a contract with E.On for
the design, construction and maintenance of the energy centre. A fifteen year lease has
also been secured with Sainsbury’s, benefiting the residents and providing a source of
income. The external landscape has been completed following a productive collaboration
with the landscape architects and contractors, and many of the homes have been built.
A phased move in of residents to completed areas has seen 250-300 families settle into
their homes, whilst the construction of the remaining homes, to bring the whole project to
completion, is expected to conclude in 2017.
23697.04 22 October 2014 5:25 PM PROOF 9
Heading level one 32Homes sold during the year
205 homes
Heads of terms agreed on a
bulk sale to a PRS institution
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 3030 31
WeSt PLaza, aSHFOrD,
MiDDlESEX
Read our case study
on pages 31 to 33
www.inlandhomes.co.uk
slugline
Inland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 CaSe
STUDy 2
West Plaza, in Ashford, Middlesex, is an attractive modern
development of two apartment complexes set around courtyards.
The site was acquired by Inland Homes for its strong location,
within two miles of Heathrow Airport and with excellent transport
links into London. Planning was granted for 152 apartments, and
construction of the site has progressed well, with the build nearing
completion six months ahead of schedule.
Stock code: INL
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Strategic ReportOur GovernanceOur FinancialsShareholder Information 32 /
32
33
33
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
LOCatIOn
west Plaza, Ashford,
Middlesex
Read more online at
www.inlandplc.com
www.inlandhomes.co.uk
CaSe
STUDy 2
The project has been planned to progress in four phases, with
occupants moving into completed sections whilst other areas of
the site are still in progress. The second phase has recently been
completed, with new occupants moving in to join those that have
been there since June. The third and fourth build phases are
expected to finish in October and December 2014. This strategy
has several advantages, including the realisation of profitability
and recouping funds, to improve working capital and the partial
occupation aiding sales of the remaining homes.
The sales strategy for the complex has been to sell apartments in advance of their
completion, both to individuals on the open market, and in bulk to organisations. Due to
the high level of interest and demand the development has attracted, inland Homes has
been successful in selling the apartments. individual sales have been achieved through
a combination of footfall - with people engaging with the attractive marketing suite and
show flats - and online advertising by inland Homes, agents, and third party websites.
On a sales trip to Hong Kong 14 apartments were sold. inland Homes also achieved a
significant bulk transaction of 59 residential units to a housing association operating in the
private rented sector.
The development of west Plaza has shown several initiatives taken by inland Homes and
their partners. The main contractor suggested pre-building some of the components
off-site, before installing them. Having reviewed, assessed and accepted the suggestion,
this modern technique meant that six months were shaved off the duration of the build,
to the benefit of both inland Homes and the contractor. Additionally, during the process of
the build, inland Homes monitored market changes and identified an increased appetite
for high quality appliances, so modified the designs to include upgraded features. This
enhanced specification supported the strong demand for the homes at west Plaza.
Another notable feature of the development is its ‘Green’ credentials. Photovoltaic cells
have been installed onto roofs, and the electricity generated will supply the communal
areas of the site, with excess energy generated sold back to the grid. This both supports
the Government target of decentralising electricity generation, and provides an income for
the development which will contribute towards future maintenance costs.
The success of the project so far has been down to the skills and experiences of both
the team at inland Homes and the external consultants. Selecting contractors with the
necessary skills and experiences for this type of project and allocating sufficient internal
resources to manage the project, has been key to its smooth running. As inland Homes
moves into more housebuilding projects, it will be critical to draw on the productive co-
operation and relationships that led to the success of the project.
Finally, inland Homes is delighted to announce that west Plaza has been nominated for
the lABC ‘Development of the year’ award.
23697.04 22 October 2014 5:25 PM PROOF 9
33mexpected gross development value
90%of apartments either exchanged
or completed
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 3434 35
CaLLIS YarD, WOOLWICH,
lOnDOn
Read our case study
on pages 35 to 37
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 CaSe
STUDy 3
Inland Homes purchased the Callis Yard site in Woolwich from West
Register, RBS’s property arm, in 2013. The one acre site is located
between Woolwich High Street and the Royal Arsenal regeneration
project. It is a highly attractive location, with a new crossrail station
due to be built approximately 300 yards away, and within walking
distance of the DLR.
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 37/36
36
Inland Homes plc
Annual Report and
Accounts 2014
LOCatIOn
Callis yard, woolwich,
london
CaSe
STUDy 3
Inland Homes is currently evaluating how best to move forward
with this site. The Group could sell it, as its value has increased
significantly since planning permission was received in July 2014.
The development could also be a prime opportunity for a bulk sale
to a private rented sector organisation, a growing market Inland
Homes have previously sold residential units to. These two options
represent the different time scales in which Inland Homes can
monetise this asset.
The site has received planning consent for an apartment block with 152 residential units,
20% of which will be affordable housing. The research for this design involved consultations
with the Greenwich authorities (including the Head of Regeneration), as well as the local
community, with whom inland Homes held a public exhibition. There were several factors
to consider in the planning process, including the treatment of a listed building within the
site, as well as the balance of this site with the widespread regeneration in the area. The
experienced team at inland Homes consulted with local groups and put forward a plan that
was accepted by the local community.
in addition to the apartments, the development will feature a business centre and a gym
for the residents. in line with the Mayor’s focus on delivering children’s play areas, the
design team at inland Homes has planned a ground level indoor children’s play area with
gym facilities. This will provide a dynamic visual front to the building, and utilise the small
footprint of the site effectively.
Read more online at
www.inlandplc.com
This design would contribute to the exciting, rapid regeneration of the area, with homes that
are highly desirable for their location, transport connections and views. The acquisition of
this prime land has proven a highly valuable addition to the Group’s land bank.
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcAnnual Report andAccounts 2014 station
300Yards from new Crossrail
152Resolution to grant planning
permission received for 152
apartments
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 3838 39
FInanCIaL
kPI
revenue
keY PerFOrManCe
inDiCATORS
StrategIC FOCuS
2014 PerFOrManCe
Revenue from housebuilding
activities is expected to increase
significantly and this will be
supplemented by land sales
28.0%
14
13
12
11
£39.8m
£31.1m
£6.1m
£21.4m
65.7%
14
13
12
11
£8.6m
£5.2m
£1.6m
£3.5m
PrOFIt beFOre tax
The Board’s expectation is to
continue to build on the profitability
achieved over the last two years
and will seek to secure this by the
planned expansion of housebuilding
net aSSet vaLue Per
SHare1
The value added to the land bank by
the planning process will continue
to be the Group’s key focus. Further
value will be extracted from the
land bank through the development
activities
10.1%
14
13
12
11
31.6p
28.7p
27.0p
26.5p
DIvIDenD Per SHare
it is the Group’s intention to
progressively increase the dividend
annually as profits rise
122.2%
baSIC earnIngS Per
SHare
The increase in revenue and
profitability mentioned above will
have a proportional impact on
earnings per share which should
continue to improve
0.60p
14
13
12
0.27p
0.067p
11
0.0p
45.0%
14
13
12
11
0.41p
2.87p
1.98p
2.10p
1. Excludes the Group’s interest in DGvl from which inland expects to derive a further 2.8p per share net of tax and any unrealised gains within our land bank.
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 nOn-FInanCIaL
kPI
StrategIC FOCuS
2014 PerFOrManCe
nuMber OF PLOtS WItH
Or WItHOut PLannIng
COnSent
The Group’s focus is to have a
land bank of approximately 5,000
residential plots within the next
twelve months
61.9%
14
13
12
11
2,416
1,318
3,734
1,249
727
1,057
2,306
1,215
1,942
481
1,109
1,590
tOtaL reSIDentIaL
PLOtS SOLD
reSIDentIaL HOMe SaLeS
in line with the expanding
housebuilding activity, less plots are
sold to housebuilders. The Group’s
objective will be to sell consented
plots to raise working capital or
those plots that are unlikely to be
developed by inland Homes
62.5%
14
13
12
11
169*
183*
256*
451*
The Group expects to sell 270
residential units in the year to June
2015 and the plan is to increase this
target to 500 units in the medium
term
107.3%
114*
14
13
12
11
55
9
35
PLannIng PerMISSIOn
gaIneD DurIng tHe Year
The core activity of the Group is
to acquire sites without planning
consent and to secure consent on
the majority of them within two
years from purchase
average nuMber OF
eMPLOYeeS
The average number of employees
has increased from 14 to 24 and this
will continue to rise modestly as the
volume of housebuilding increases
23.8%
14
13
12
11
378
496
283
71.4%
14
13
12
11
14
13
13
871
24
* includes plots sold within DGvl.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 4040 41
rISk anD
RiSK MAnAGEMEnT
rISk
POtentIaL
IMPaCt
LanD
The inability to source,
acquire, promote and
dispose of land
The Group would not be able to
generate profit and cash flow for
the longer term
May have a detrimental effect on
the financial position of the Group
PLannIng
increased complexity and
delay in the planning process
May impede sales and thus affect
the rate of growth of the business
Market
The adoption of the
Community infrastructure
levy by local authorities
May have a detrimental effect
on the supply and pricing of land
being marketed by landowners
A severe fall in the housing
market in the regions in
which the Group chooses to
operate
inability to realise maximum
value in a timely fashion
Adverse effect on land values
Adverse effect on the timing of
sales
StrategY/MItIgatIOn
The Group has an experienced
management team with a strong
track record in the industry which
mitigates this risk
The Group undertakes extensive
pre-acquisition due diligence
on planning, technical and
environmental issues together
with acquiring housing sites
identified in councils’ local Plans
The Group ensures that its
sites are in good locations thus
providing some protection against
any downturn in the market
PerSOnneL
loss of/inability to source
high calibre, experienced
staff
The Group would have difficulty
growing the business in the
highly competitive markets in
which it operates
The Group maintains good
morale in the workplace and
sets remuneration packages at
attractive levels
IntereSt
rateS
Significant upward changes
in interest rates
May affect residential land prices
as the demand for residential
property would be affected
would lead to increased
borrowing costs and thus have a
detrimental effect on profit
The Group mitigates any adverse
exposure to interest rate changes
by controlling its gearing and,
if necessary, by using hedging
instruments
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014 Strategic report
Our governance
Our Financials
Shareholder Information
rISk
POtentIaL
IMPaCt
envIrOnMentaL Unexpected contamination
being found on a site
liabilities in respect of
decontamination works or fines
for environmental pollution could
affect the outcome of a project
reguLatIOn
Changes in legislation,
Government regulations,
planning policies and
guidelines
COnStruCtIOn
Cost overruns
Material shortages
Delays
May have a detrimental effect on
the Group’s business
May adversely impact margins on
housebuilding and increase the
cost of infrastructure works
FInanCe
The availability of bank
funding for land acquisition
May have an adverse effect on
the Group’s progress
StrategY/MItIgatIOn
The assessment of environmental
risk is an important element of
the due diligence undertaken
when buying land. The Group
uses reputable environmental
consultancy firms to assist in
this area
The Group keeps abreast of
potential changes in these areas
and wherever possible allows for
these in appraising its projects
The Group tries to build
strong relationships with main
contractors and projects are
reviewed frequently in order to
mitigate these risks
The Group continues to seek
finance from alternative lending
sources to improve its liquidity
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INL 4242 43
COrPOrate, SOCIaL, etHICaL
AnD EnviROnMEnTAl
RESPOnSiBiliTiES
The nature of our work means we will always make an impact on
the local area. However, through our focus on sustainability, we
ensure that this is a positive impact, with a careful consideration
of six key areas. We engage with the needs of the local community,
and our customers who will eventually join this community;
we protect the health and safety of our colleagues, as well as
their development within the Group; and we seek productive
relationships and innovative technologies that ensure our houses
and our means for building them last sustainably into the future.
C O MMUNITY
C O MMUNITY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
SUPPLY CHAIN
SUPPLY CHAIN
COMMunItY
At inland Homes we are committed to building more than just
homes - we strive to create developments that engage and
reflect the local community. During the research and planning
phase for each development we undertake consultations with the
community, discussing the site and its surrounding environment
with local groups and town councils. The opinions and requests of
both the neighbourhood residents and local government bodies
are collected and considered for the brief that the designers
and architects base their plans upon. This consultation process
means that we can develop the site in a way that best reflects the
different needs of the local community.
As well as building a development that will continue to serve
the needs of local residents into the future, we are also keen to
invest in the community through our engagement with charities,
for example sponsoring community sports teams and mini-
buses for local schools.
CuStOMerS
it is of paramount importance to inland Homes to deliver a high
quality service to our customers, from the earliest stages of
planning, to after the build is complete.
Our house designs are constantly evolving, based upon feedback
from customers on previous projects and our ever growing
expertise. we design our developments to meet our customers’
needs beyond that of housing, with, for example, outside
spaces, children’s play areas and gyms. within the homes, we
offer a choice of interior design options to those who purchase
our properties in advance of completion.
we manage the handover process, ensuring that the quality of the
build meets our stringent standards, and providing introductory
home tours for new residents as well as moving in packs with
all relevant information. we also co-ordinate aftercare with the
contractors, manage feedback and respond to any customer
service issues through a centralised system.
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014
Planning was gained for 41 units on
vale Road in Bushey, Hertfordshire
Strategic report
Our governance
Our Financials
Shareholder Information
C O MMUNITY
C O MMUNITY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
SUPPLY CHAIN
SUPPLY CHAIN
HeaLtH anD SaFetY
it is extremely important to inland Homes to maintain the
highest standard of Health and Safety practices, both with
our own employees, and with all contractors involved in our
projects. we have rigorous standards which we enforce to
ensure safe working practices at all of our sites. Employees have
received Health and Safety training, and we require all external
contractors who enter our sites to carry a CSCS card at all times
to indicate that they have also undergone the necessary training.
we have a strong network of Health and Safety advisers.
Additionally, each site is appointed a Construction, Design and
Management co-ordinator, who oversees Health and Safety on
behalf of inland Homes. They prepare a comprehensive Health
and Safety plan before construction starts, and this is assessed
alongside the contractor’s Health and Safety and risk plans,
before a contract is issued. Once work has commenced on
site, we carry out regular Health and Safety audits, as well as
assessing monthly reports provided by the contractors.
SuPPLY CHaIn
inland Homes have relationships with a number of contractors
who specialise in different types of build. it is essential to
select the correct contractor, both to ensure a high quality
result, and to draw on their experience and expertise during the
process. There is a dialogue with the contractors throughout
the planning and building stages, and we consider suggestions
on alternative materials or methods for construction. Using
these suggestions has led to saving money and time on
several projects, benefiting both us and our contractors, and
to discovering new techniques that we may return to in future
projects. This co-operation leads to ongoing relationships,
which we seek to ensure are mutually beneficial. Our
collaborative approach delivers high quality buildings.
As well as developing long term relationships with our
contractors, to further our sustainable supply chain we consider
the sustainability of materials used on our sites. we clearly
specify which materials we permit on our sites, and strive to use
sustainable and locally sourced products where possible, as well
as experimenting with new sustainable materials.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INL
4444 45
COrPOrate, SOCIaL, etHICaL
AnD EnviROnMEnTAl
RESPOnSiBiliTiES COnTinUED
C O MMUNITY
C O MMUNITY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
EOPL E
R P
U
O
E
L
S
B
E
A
M
N
I
O
A
H
T
S
U
S
SUSTAINABILITY
AT THE HEART
OF EVERYTHING
WE DO
C
U
S
T
O
M
E
R
S
H
E
A
LT
H & SAFETY
SUPPLY CHAIN
SUPPLY CHAIN
SuStaInabLe HOMeS
At inland Homes we constantly seek innovative materials and
methods to improve the environmental performance of our
properties. we follow each development in legislation and policy
that guides sustainability in home building, and ensure that our
projects are at the forefront of environmental sustainability.
we include many features in our buildings to minimise their
environmental impact, such as rainwater harvesting. we design
our buildings to perform throughout the year, with insulation
and air-flow optimisation to aid summer cooling as well as
retaining warmth in winter. we also seek environmentally friendly
materials, both using locally sourced supplies where possible,
and experimenting with innovative new technology such as the
Durisol block, a building block made of reclaimed softwood,
bound with concrete. Comprising of more than 90% recycled
material, and generating no waste during manufacture, the block
is not only environmentally friendly in production, but also as a
feature in homes due to its insulating properties.
Our PeOPLe
Our philosophy of employment is to attract and cultivate raw
talent, and encourage people to reach their full potential
by offering them opportunities to grow within our open and
entrepreneurial culture. we support all of our employees in
attending conferences and pursuing qualifications that assist
their professional development. Our number of employees
has doubled in the last two years to 28, with growth in all
departments, supporting our move into housebuilding. we plan
to continue measured expansion in the future to complement
our strategy, particularly in the establishment of a strategic
land department.
As we undertake much of our work through outsourcing,
we are also reliant on the continued development of skilled
workers outside of the Group. in response to the shortage of
skilled labourers, we are involved in initiatives to train the next
generation of workers. in some contracts we specify that our
contractors must employ apprentices from the local areas. we
are setting up a mechanism to connect to local colleges, so that
the students can gain the necessary practical experience on our
sites to kickstart their careers.
Strategic Report is approved by order of the Board
Paul brett
Director
15 October 2014
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcwww.inlandhomes.co.ukAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014
a. inland Homes plc’s new
Head Office
b. Peter Kimber – Site
Service Manager
C. Tom Cuff – Group legal
Director
D. Keren Birdseye –
Architectural Assistant
I. linda Smith – Assistant
Accountant
j. Sue Fenton – Office
Manager
k. Gary Magee – Planning
Assistant
D
g
M
a
C
I
L
23697.04 22 October 2014 5:25 PM PROOF 9
b
F
k
e
H
j
n
e. Rob williams – Assistant
Accountant
F. Kathy Hoare – Sales
Co-Ordinator
g. John Embleton & Ricky
Hayes – DGv site liaison
H. nikki McCue – Office
Administrator
L. Gordon Pearce –
Customer Services
Manager
M. James Gallagher –
Project Manager
n. Olie Pearcy – Trainee
land Buyer
46
46
47
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
Artist’s impression of our site in Gerrards
Cross, Buckinghamshire where we recently
gained planning permission for a new
development of 15 units
Our
GOvERnAnCE
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukHeading level one/ COntentS
49 Board Composition
50 Board of Directors
52 Senior Management (the broader team)
54 Our Governance
56 Directors Remuneration Report
62 Directors Report
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 48 49
10.1%
Net assets per share increased by
10.1% to 31.6p (2013: 28.7p) excluding
any unrealised gains within our land
bank and further value from DGV
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ bOarD
COMPOSiTiOn
The Group is managed through its Board of Directors. The
Board comprises the Non-executive Chairman, one other Non-
executive Director, the Chief Executive, Finance Director and the
Land Director. The Board’s main roles are to approve and review
the Group’s strategic objectives and to ensure that the necessary
financial and other resources are made available to enable them
to meet these objectives.
Specific responsibilities reserved to the Board include: setting Group strategy;
reviewing operational and financial performance; approving certain land acquisitions;
approving appointments to the Board; and approving policies relating to Directors’
remuneration. in addition, the Board reviews the risk profile of the Group and ensures
that an adequate system of internal control is in place.
The roles of the Chairman and the Chief Executive are separate. The Chairman meets
the Chief Executive and the other non-executive Director separately as and when
required to discuss matters of the Board.
One-third of the Directors retire annually by rotation in accordance with the Company’s
Articles of Association and this enables the shareholders to decide on the election of
their Company’s Board.
Left: Completed houses at
Carter’s Quay in Poole, Dorset
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Strategic ReportOur GovernanceOur FinancialsShareholder Information 50 51
bOarD OF
DiRECTORS
terrY rOYDOn
non-executive Chairman
appointment to the board
March 2007
StePHen WICkS
Chief executive
appointment to the board
June 2005
nISHItH MaLDe
group Finance Director
appointment to the board
June 2005
Skills he brings to the board
He has worked in the construction and
housebuilding sector all of his working
life and has extensive experience in the
acquisition of large scale development
opportunities
Previous experience
• Founding shareholder and Chief
Executive of Country & Metropolitan
plc, which floated on the main market
of the london Stock Exchange
in December 1999 with a market
capitalisation of £6.9m
• He directed the growth of Country &
Metropolitan plc until its disposal in
April 2005 to Gladedale Holdings plc
for approximately £72m
Skills he brings to the board
He has over 25 years experience in the
property sector with wide professional
knowledge and understanding of both
listed and unlisted companies
Previous experience
• Qualified as a Chartered Accountant
with KPMG in 1985 where he advised
owner-managed businesses
• Finance Director and Company
Secretary of Country & Metropolitan
plc where he was actively involved in
the preparation for the flotation of
the company in December 1999 and
its further development until it was
acquired by Gladedale Holdings plc in
April 2005
external appointments
• Member of the board of AiM quoted
Energiser investments plc
Skills he brings to the board
He has extensive managerial, practical
and political experience of the property
sector obtained over a 40 year career
Previous experience
• Chief Executive of Prowting plc, a UK
housebuilder he led to flotation in 1988
and which was purchased by westbury
plc for £140m in June 2002
• non-executive Director of lSE quoted
Country & Metropolitan plc
• non-executive Director of Gladedale
Holdings plc
• President of the Home Builders
Federation and of the European Union
of Housebuilders and Developers
• Holds a BSC in Estate Management
and a MBA
external appointments
• Consultant and member of the Board
of Dom Development S.A., a major
quoted Polish residential developer
• non-executive Director of AiM quoted
Kimberly Resources nv
• non-executive Director of larkfleet
Holdings limited
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ PauL brett
Land Director
appointment to the board
October 2011
SIMOn bennett
non-executive Director
appointment to the board
March 2007
Skills he brings to the board
He has worked in the land and planning
sector all of his working life and has
considerable knowledge of local
and national planning policies. He is
particularly skilled in the delivery of
complex land acquisitions
Previous experience
• land Director of the Southern Region of
Country & Metropolitan plc for ten years
during which time it floated on the main
market of the london Stock Exchange
• Contributed to the growth of the
Southern Region and its land bank, until
its disposal to Gladedale Holdings plc in
April 2005
Skills he brings to the board
He has 30 years of investment banking
experience and of providing corporate
finance and broking advice to growing
companies
Previous experience
• Qualified as a Chartered Accountant in
1981
• Head of Corporate Finance and Head of
the Mid and Small Caps team at Credit
lyonnais Securities
• Managing Director of Baker Tilly & Co
limited
• Head of Corporate Broking at Fairfax iS
plc
• Head of Corporate Broking at Sanlam
Securities
external appointments
• He established incremental Capital llP
to provide corporate finance advice to
mid and small cap companies
• Chairman of the Grown Up Chocolate
Member of the Audit Committee
Company
Member of the Remuneration
Committee
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Strategic ReportOur GovernanceOur FinancialsShareholder Information 52 53
SenIOr ManageMent
(THE BROADER TEAM)
Mark gILPIn
Planning Director
time with group
4 years
vICkI nOOn
Sales & Marketing
Director
time with group
3 years
MeLanIe HYLanD
Financial Operations
Director
PeDrO LOngraS
Development Director
time with group
5 years
time with group
7 years
Skills he brings to the group
Pedro has a wide-ranging
knowledge of construction,
health & safety, technical,
land and the planning aspects
of the business
Previous experience
• land Management
graduate from the
University of Reading
Skills he brings to the group
He has over 25 years
experience of master planning
and public consultations for
residential, commercial, retail
and industrial projects
Previous experience
• BArch graduate from the
University of Bath
• Member of RiBA
• Design and Technical
Director at St James
Homes (part of Berkeley
Group Holdings plc)
• Design and Planning
Director at Fairview
new Homes
• land, Design & Planning
Director at Howarth
Homes plc
Skills she brings to the group
She brings a wealth of
experience having worked in
the housebuilding industry
most of her working life with
well-rounded expertise in all
aspects of her discipline
Skills she brings to the group
She has worked in the
housebuilding sector for over
11 years and has extensive
knowledge of statutory
reporting, forecasting and
securing funding
Previous experience
• worked with board of
Country & Metropolitan plc
through to the Gladedale
acquisition as Sales &
Marketing Director
• Regional Sales & Marketing
Director at Gladedale plc
• Head of Sales & Marketing
at Prowting Homes Central
Previous experience
• Qualified as a Chartered
Certified Accountant in 2007
• Joined the Group as
Financial Controller
• Divisional Finance Manager
at Barratt Developments plc
• Financial Accountant
and Senior Management
Accountant at St James
Urban living (part of
Berkeley Group
Holdings plc)
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/
DeS WICkS
Land Manager
Matt COrCOran
Planning Manager
CHrIS PIPe
Financial Controller
time with group
7 years
time with group
3 years
time with group
6 months
rutH WHIte
Sales & Marketing
Manager
time with group
1 year
Skills he brings to the group
He has worked at inland
Homes since leaving full-time
education and has developed
an expertise in identifying and
acquiring brownfield sites,
negotiates on both purchases
and disposals of land
Previous experience
• Joined the Group as a
Trainee land Buyer
• Specialises in complex
land assemblies using
considerable negotiation
skills in order to obtain
valuable and attractive
terms
Skills he brings to the group
He has ten years experience
of town planning and
development of residential,
commercial, retail and mixed-
use projects
Previous experience
• Qualified Town Planner
• MA in Urban and Regional
Planning from the
University of westminster
• Part of the Planning and
Development Management
Team at the london
Borough of Barnet,
overseeing strategic
growth initiatives and
infrastructure projects
Skills he brings to the group
He has worked in
the construction and
housebuilding sector for
14 years and has broad
experience of systems
implementation, financial
modelling and forecasting
Skills she brings to the group
She has worked in the
property sector for 14 years
and brings an expanse
of knowledge and skill to
site set up, marketing,
brand awareness and sales
progression
Previous experience
• Qualified as a Chartered
Previous experience
• Qualified with the Chartered
Certified Accountant in 2000
institute of Marketing
• Finance Director at
Mar City Homes
• Finance Director at
Beechwood Homes
• Financial Controller at
Roxylight/ Saxon Homes
• Divisional Marketing
Manager at St. George
Homes (Part of Berkeley
Group Holdings plc)
• Divisional Marketing
Manager at Barratt
Developments plc
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information
54 55
Our
GOvERnAnCE
eMPLOYee InvOLveMent
The Group places considerable value on the involvement of its employees and keeps them
informed of all relevant matters on a regular basis. The Group is an equal opportunities
employer and all applications for employment are considered fully on the basis of
suitability for the job.
CHarItabLe anD POLItICaL COntrIbutIOnS
Donations to charitable organisations amounted to £27,000 (2013: £12,000). These
donations were made to a number of different charities supporting a broad range of
causes. There were no political donations made during the year (2013: £nil).
PaYMent POLICY anD PraCtICe
The Group’s policy is for all companies within the Group to agree terms and conditions
with their suppliers. Payments are then generally made on the basis of this agreement,
providing the suppliers conform to the terms and conditions stipulated.
At 30 June 2014 the Group had an average of 74 days’ (2013: 57 days’) purchases
outstanding in trade payables.
COrPOrate gOvernanCe
The Directors recognise the importance of sound corporate governance and the guidelines
set out in the UK Corporate Governance Code 2012. whilst AiM companies are not
obliged to comply with the Code, the Directors intend to comply with the Code so far as is
appropriate having regard to the size and nature of the various companies making up the
Group. The Board will take such measures so far as considered appropriate for the Group
to comply with the Code and, in addition, the Quoted Companies Alliance (QCA) Guidelines
for AiM companies.
auDIt COMMIttee
The Audit Committee comprises Terry Roydon (Chairman) and Simon Bennett. The Audit
Committee meets at least three times a year and is responsible for ensuring that the
financial performance of the Group is properly reported and monitored and for meeting
the auditor and reviewing their reports in relation to the financial statements and internal
control systems. The Group’s auditor provides some non-audit services, but these are not
considered to threaten their independence. The committee reviews the level of non-audit
fees on an annual basis. The Audit Committee meetings are also attended by invitation by
representatives of the Group’s auditor, the Finance Director and the Chief Executive.
Since 30 June 2013 the Audit Committee has met four times to consider the planning of
the statutory audit and to review the Group’s draft half and full year results prior to Board
approval and to consider the external auditor’s detailed reports thereon.
InternaL COntrOLS
The Board is responsible for maintaining a sound system of internal control to safeguard
shareholders’ investment and the Group’s assets and for reviewing its effectiveness. Such
a system is designed to manage, but not eliminate, the risk of failure to achieve business
objectives. There are inherent limitations in any control system and accordingly even
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ above: Show home on the first
phase of our Carter’s Quay
development in Poole, Dorset
the most effective system can provide only reasonable, not absolute, assurance against
material misstatement or loss.
The Board reviews the effectiveness of the Group’s system of internal control on an ongoing
basis. Annual budgets are prepared and detailed management reports are presented to the
Board and used to monitor financial performance and compliance with the Group’s policies
and procedures. All controls are covered including financial and operational controls to
manage risk. The Board meetings are also used to consider the Group’s major risks.
reLatIOnS WItH SHareHOLDerS
The Company has institutional shareholders and is, where practicable, willing to enter into
a dialogue with them. The Chief Executive and Finance Director meet with institutional
investors within the confines of relevant legislation and guidance.
The Board invites communication from its private investors and encourages participation
by them at the AGM. All Board members are present at the AGM and are available to
answer questions from shareholders.
InternaL auDIt
The Board reviews from time to time the need for an internal audit function and remains
of the opinion that the systems of internal financial control are appropriate to the Group’s
present activities and that such a function is unnecessary.
reMuneratIOn COMMIttee
The Remuneration Committee comprises Simon Bennett (Chairman) and Terry Roydon.
The principal functions of the committee are to determine the Group’s policy on the
remuneration of the Executive Directors and to determine the remuneration package
of each Executive Director. The committee also determines long term incentive plans
and the allocation of share options to the Executive Directors and other employees. The
Remuneration Committee meetings are also attended by invitation by the Chief Executive
and the Finance Director. During the year the committee met six times to review the
Executive Directors’ remuneration package.
The Directors comply with Rule 21 of the AiM Rules relating to Directors’ dealings and take
all reasonable steps to ensure compliance by the Company’s applicable employees. The
Company has adopted and operates a share dealing code for Directors and employees in
accordance with the AiM Rules.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 56 57
DIreCtOrS’
REMUnERATiOn REPORT
There is no requirement for companies quoted on AIM to produce a
formal remuneration report. As a consequence, this Remuneration
Report is produced for information purposes in order to give
shareholders and other users of the financial statements greater
transparency about the way in which the Directors of Inland Homes
are remunerated.
This report sets out the remuneration paid to the Directors for the year ended 30 June
2014 and sets out the remuneration policy for the forthcoming financial year and beyond.
COMPOSItIOn anD rOLe OF tHe reMuneratIOn COMMIttee
The Board have established a Remuneration Committee which currently consists of
Simon Bennett, independent non-executive Director, who is Chairman of the committee
and Terry Roydon, the Company’s non-executive Chairman. The role of the Remuneration
Committee is to determine the specific remuneration package for each of the Executive
Directors and no Director is involved in any decisions that will affect his own remuneration.
The Remuneration Committee has access to information provided by the three Executive
Directors of inland Homes, namely Stephen wicks, Chief Executive, nishith Malde, Finance
Director and Paul Brett, land Director and independent advice from external consultants
where it considers this to be appropriate.
The Remuneration Committee meets formally three times a year and on such other
occasions as may be required.
POLICY FOr exeCutIve DIreCtOrS’ reMuneratIOn
The policy for Executive Directors’ remuneration is designed to attract, motivate and retain
high calibre individuals with a competitive remuneration package. The remuneration policy
takes into account the overall performance of the Company and the individual Executive
Directors and the prevailing pay structures in the markets in which inland Homes operates.
The Executive Directors’ remuneration is designed to provide a balance between fixed and
variable rewards, although it is recognised that it is common industry practice for total
remuneration to be significantly influenced by annual bonuses and long term incentive
plans. Consequently, remuneration packages for individual Executive Directors comprise
a basic salary, deferred bonus plan, a long term incentive plan and benefits in kind. in
agreeing the basic salary and annual bonuses, in addition to the factors outlined above, the
Remuneration Committee takes into account the aggregate remuneration to be received by
the individual Executive.
in 2013, in line with best corporate governance and market practice, the Remuneration
Committee introduced a new deferred bonus plan and a long term incentive plan for the
Company’s Executive Directors, which have been designed to incentivise the Executive
Directors to grow the business and maximise returns to shareholders. The latter is known
as The inland Homes plc 2013 Growth Plan (“2013 lTiP”), which will operate for a period of
six years and which was approved by shareholders in general meeting in December 2013.
The key elements of the scheme are set out below.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ baSIC SaLarY
The basic salaries of the Executive Directors are reviewed on an annual basis.
The Remuneration Committee seeks to establish a basic salary for each position
commensurate with the individual’s responsibilities and performance, taking into account
comparable salaries for similar companies of a similar size in the same market.
DeFerreD bOnuS PLan
The Deferred Bonus Plan came into effect on 1 July 2013. Executive Directors can earn
up to 100% of basic annual salary as an annual bonus. The plan provides for 50% of an
Executive Director’s bonus to be mandatorily deferred into ordinary shares in the Company.
Under these arrangements, bonuses would be based on a percentage of the individual
Executive Director’s base salary as follows:
• 50% of salary for “on target” performance; and
• a further 50% of salary for “out-performance”.
For example, for achieving 90% of on target performance there will be a discretionary
bonus of up to 25% of salary (and pro-rata between 90% and 100% of on target
performance) and there will be no bonus for less than 90% of on target performance.
The target is measured by reference to two equally weighted performance measures,
namely:
• profit before taxation as compared with brokers’ market forecasts following the
announcement of the preliminary results of the previous accounting period; and
• net debt levels.
Once the quantum of the Executive Directors’ bonuses has been calculated, these will be
settled as to 50% in cash and as to 50% by the issue of ordinary shares of the Company.
The issue of any ordinary shares awarded under the Deferred Bonus Plan will be deferred
for three years and will be subject to forfeiture in the event that an Executive leaves the
Company as a “bad leaver”, but would not be subject to further performance conditions.
LOng terM InCentIve PLanS
The Company operates both an unapproved share option scheme, which is open to all
employees of inland Homes and the recently introduced 2013 lTiP for the Executive
Directors.
Awards under the unapproved share option scheme are made on a periodic basis to
the Company’s Executive Directors and employees. The share options in this scheme
vest three years after the date of grant and have an exercise period of seven years. The
schemes are equity-settled.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 58 59
DIreCtOrS’
REMUnERATiOn REPORT COnTinUED
The following is a summary of the principal features and terms of the 2013 lTiP:
1. Creation of growth Shares
The plan operates by reference to rights attached to a special class of share in a newly
established intermediate holding company between the Company and the Group’s
current trading subsidiaries. The special class of shares are called “Growth Shares”.
The Growth Shares are qualifying shares for the purposes of the Employee Shareholder
Status scheme, a recently introduced proposal by the Government, the aim of which is to
provide tax benefits to employees and Directors who achieve growth for their employing
companies.
The vesting of the Growth Shares will be subject to performance targets (“Performance
Targets”) and when such Performance Targets are achieved, a relevant proportion of the
Growth Shares will vest.
2. vesting and exchange of growth Shares
Subject to the Performance Targets being met, the Growth Shares will only vest three
years after their award and thereafter annually if and when each Performance Target
is met. After vesting, the Growth Shares may be realised by being exchanged for a fixed
number of the Company’s ordinary shares.
The Growth Shares will not carry any entitlement to dividends, capital or voting unless and
until they vest and are exchanged for shares in the Company.
3. Performance targets
vesting will only occur if specific Performance Targets (which are linked to the share price
of inland Homes plc over six consecutive performance periods) are met or exceeded for 15
working days in the relevant performance period. The first performance period will end 20
working days after the announcement of the Company’s preliminary results for the year
ended 30 June 2014, being 27 October 2014. The second performance period will commence
on the day following the expiry of the first performance period and will end 20 working days
after the announcement of the Company’s preliminary results for the year ended 30 June
2015 and so on. it is expected that the announcement of preliminary results for each year
will be in September. Accordingly, each performance period is likely to end in October.
The target share prices for the 2013 lTiP are based on compounded growth being achieved
and accordingly, if the Performance Target is missed in one period, the participants’
awards can still vest if the required compound percentage of growth is achieved in
subsequent periods. For instance, if in the first period the Performance Target for that
period is not met, then the related number of Growth Shares which could have vested may
still vest in the following period or periods, provided that the Performance Target for those
periods is achieved, as the target gets increasingly more stretching.
The first Performance Target has been set as a price of 60.5 pence per ordinary share (the
“First Target Performance Price”), which has been set at a 30% premium to the share
price of 46.5 pence per ordinary share (the “initial Base Price”), being the mid price at the
close of business on 20 December 2013, the date 2013 lTiP was adopted.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ The table below shows the accounting periods and the total number of ordinary shares in
the Company that would be issuable on exchange for vested Growth Shares assuming the
Performance Target for each year of the respective years is achieved:
Start date of accounting period
1 July 2013
1 July 2014
1 July 2015
1 July 2016
1 July 2017
1 July 2018
Performance target (Inland
Homes plc share price)
30% above initial Base Price
15% compounded
10% compounded
10% compounded
10% compounded
10% compounded
total number of
Inland Homes plc
shares
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
1,350,504
11,350,504
4. Dilution
The total number of shares in the Company which may become issuable on the exchange
of Growth Shares (assuming vesting in full) is 11,350,504, equivalent to 5.6% of the current
issued share capital of the Company. in order for the maximum of 11,350,504 ordinary
shares in the Company to become issuable under the 2013 lTiP, the price for each inland
Homes ordinary share, in the absence of a takeover, will have had to have more than
doubled before the end of the final performance period (being 20 working days after
the announcement of the preliminary results for the year ending 30 June 2019), when
compared with the initial Base Price of 46.5 pence per ordinary share. This increase is
approximately equivalent to a 14% annual compound rise in the ordinary share price.
5. Change of Control
The 2013 lTiP will allow realisation from three years after the award, provided the
Performance Targets have been met. As is customary, the 2013 lTiP does provide for
early vesting of Growth Shares in the event of a takeover of inland Homes before the
expiry of the plan, such that all the Growth Shares will vest, provided that the offer price is
greater than the share price required to achieve the Performance Target for the relevant
performance period in which the takeover occurs.
6. Participants
The Executive Directors who will participate in the 2013 lTiP and their allocations of
Growth Shares, is as follows: Stephen wicks 47%, nishith Malde 38% and Paul Brett 15%.
in addition, any awards to the Executive Directors under the 2013 lTiP are subject to good
and bad leaver provisions.
OtHer beneFItS
Depending on the exact terms of each individual Executive Director’s service contract with
the Company, they are entitled to a range of benefits including either a car allowance or a
fully expensed company car, contributions to pension schemes, private fuel, private health
care insurance, permanent health insurance and death in service insurance.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 60 61
DIreCtOrS’
REMUnERATiOn REPORT COnTinUED
ServICe COntraCtS anD nOtICe PerIODS
Each of the Executive Directors are employed on rolling contracts subject to one year’s
notice from either inland Homes or the Executive Director in relation to Stephen wicks
and nishith Malde, and three months’ notice in relation to Paul Brett, and contain
confidentiality provisions and restrictive covenants for the Company’s protection.
The Executive Directors’ service contracts do not provide specifically for any termination
payments, although the Company might make payments in lieu of notice. For this purpose,
such payments would consist of basic salary and other benefits for the relevant period and
depending on the circumstances, any awards due under the 2013 lTiP.
nOn-exeCutIve DIreCtOrS
inland Homes has two independent non-executive Directors, namely Terry Roydon,
the Chairman and Head of the Audit Committee and Simon Bennett, Head of the
Remuneration Committee. Both non-executive Directors have letters of appointment,
initially for a three year period and thereafter on six months’ notice from either inland
Homes or the individual and contain confidentiality provisions for the Company’s benefit.
The non-executive Directors’ letters of appointment do not provide specifically for any
termination payments, although the Company might make payments in lieu of notice.
non-executive fees are determined by the Executive Directors, having regard to the
requirement to attract high calibre individuals with the right experience, the time
requirements and the responsibilities incumbent on an individual acting as a non-
executive Director for a company, such as inland Homes, listed on AiM. The non-executive
Directors are not eligible for annual discretionary bonuses and do not participate in the
Company’s long term incentive plans.
The current service contracts of the Executive Directors, the letters of appointment of the
non-executive Directors and the Rules of the 2013 lTiP are available for inspection at
the Company’s registered office during normal office hours and at the Company’s Annual
General Meeting (“AGM”) until the conclusion of the AGM.
DIreCtOrS’ eMOLuMentS FOr tHe Year enDeD 30 june 2014
A review of the financial results for the year ended 30 June 2014 as more fully set out in
the Chairman’s Statement, the Chief Executive’s Review and the Finance Director’s Review,
demonstrates the robustness of the Company’s business model and strategy. it has been
an outstanding year for inland Homes, one in which all the strategic objectives have
been achieved, particularly with regard to growing the land bank and the record number
of housebuilding completions achieved during the year. The financial results have been
equally strong with revenue having increased by 28%, gross margins up by 104%, profit
before tax by 66%, earnings per share up by 45%, net assets per share, which excludes any
unrealised profits within the land bank, up over 10% and dividends up 122%.
in light of the excellent results recorded by the Group, the following bonuses have been
awarded by the Remuneration Committee to the Executive Directors, as follows:
Stephen Wicks
nishith Malde
Paul brett
£240,000
£240,000
£160,000
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/
in accordance with the rules of the Deferred Bonus Plan, further details of which are set
out above, these bonuses will be settled as to 50% in cash and as to 50% in ordinary shares
of the Company. The ordinary shares awarded in respect of these bonuses will be deferred
for three years and will be subject to forfeiture in the event that an Executive Director leaves
the Company as a “bad leaver”, but are not subject to any further performance conditions.
The award of ordinary shares of the Company will be granted on terms that, when they vest,
the number of ordinary shares subject to the award shall be increased by deeming the net
dividends paid on the ordinary shares from the date of the award until the date of vesting to
have been cumulatively reinvested in additional ordinary shares.
DIreCtOrS’ reMuneratIOn tabLe
The remuneration of each of the Directors during the year ended 30 June 2014 is set out in
detail below:
2014
bonus
£000
benefits
£000
Pension
£000
total
remuneration
£000
Social
security
costs
£000
total
remuneration
& social
security
£000
240
240
160
—
—
34
27
11
—
—
—
12
20
—
—
622
615
388
45
35
93
92
57
—
—
715
707
445
45
35
2013
Total
£000
493
481
292
45
35
* S wicks has taken his pension entitlement as part of his salary and n Malde has taken part of his pension
entitlement from October 2013 as part of his salary.
DIreCtOrS’ IntereStS In SHareS anD tHe unaPPrOveD
SHARE OPTiOn SCHEME AnD THE 2013 lTiP
Directors’ interests in the Company’s ordinary shares are disclosed in the Directors’ Report.
The share options held by the Directors in the unapproved share option scheme and the
2013 lTiP are set out below:
Salary/
fees
£000
348
336
197
45
35
executive Directors
S D wicks*
n Malde*
P Brett
non-executive Directors
T Roydon
S Bennett
Options exercisable 28 March 2010 to 27 March 2017 at 50.0p
Options exercisable 17 December 2012 to 16 December 2019 at 16.5p
Options exercisable 22 november 2013 to 21 november 2020 at 18.25p
Total options outstanding at 30 June 2013
Exercised during the year at 18.25p
total options outstanding at 30 june 2014
Stephen Wicks
—
—
1,500,000
1,500,000
(1,500,000)
—
nishith Malde
—
—
1,500,000
1,500,000
—
1,500,000
Paul brett
700,000
400,000
—
1,100,000
—
1,100,000
no awards are likely to be made at this time under the 2013 lTiP as inland Homes’ share
price has not yet reached the First Performance Target price of 60.5 pence per ordinary share
for the necessary 15 working days to satisfy the requirements of the first vesting period.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 62 63
DIreCtOrS’
REPORT
The Directors present their report and the financial statements of
the Group and the Company for the year ended 30 June 2014.
PrInCIPaL aCtIvItY
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 develops a number of the plots for private sale and sells consented plots to
housebuilders.
reSuLtS anD DIvIDenDS
The trading results for the year are set out in the Group income Statement on page 71
and the Group’s financial position at the end of the year is set out in the Group Statement
of Financial Position on page 72. Further details of the performance during the financial
year and expected future developments are contained in the Chairman’s Statement, Chief
Executive’s Review and the Finance Director’s Review which form part of the Strategic
Report.
The Directors have proposed a final dividend of 0.60p per share (2013: 0.27p).
buSIneSS revIeW
A review of the development and performance of the business during the year and the
future outlook of the Group is set out in the Chairman’s Statement on page 6 and the
Chief Executive’s Review on pages 20 to 22. The Group’s key performance indicators are
monitored closely by the Board and the details of performance against these are on pages
38 and 39.
PrInCIPaL rISkS anD unCertaIntIeS
FInanCIaL rISk ManageMent ObjeCtIveS anD POLICIeS
All potential areas of financial risk are regularly monitored and reviewed by the Directors
and management. Any preventative or corrective measures are taken as necessary.
The Group uses various financial instruments. These include loans, cash and trade
receivables that arise directly from its operations. The main purpose of these financial
instruments is to raise finance for the Group’s operations.
The Group also provides finance to DGvl as part of its arrangement with that company. The
main purpose of this financial instrument is to enhance the Group’s return from this project.
The existence of these financial instruments exposes the Group to a number of financial
risks, which are described in more detail below.
Read our Group income
Statement on page 71
Read about Principal Risks
on pages 40 and 41
The main risks arising from the Group’s financial instruments are liquidity risk, interest
rate risk, credit risk and capital risk. The Directors review and agree policies for managing
each of these risks and they are summarised below.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ above: Showhome at Portland
House, Gerrards Cross in
Buckinghamshire
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to
meet foreseeable needs and to invest cash assets safely and profitably.
Flexibility is achieved by loans and overdraft facilities.
Cash flow fair value interest rate risk
The Group’s cash flow interest rate risk arises from long term borrowings. Borrowings
issued at variable rates expose the Group to cash flow interest rate risk. Some of the Group’s
borrowings are at variable rates but the Group does not consider the risk to be significant.
Interest rate risk
The Group finances its operations through a mixture of equity and bank and other
borrowings. The Group controls the exposure to interest rate fluctuations by ensuring that
the level of gearing is maintained at a reasonable level.
Credit risk
The Group’s principal financial assets are trade and other receivables, cash and cash
equivalents. The Group trades and deals with counterparties after having considered their
credit rating. in certain circumstances the Group may seek additional security.
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits for
other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
in order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell
assets to reduce debt.
Consistent with others in the industry, the Group monitors capital in relation to overall
financing. Further information can be found in note 26 to the Group financial statements.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 64 65
DIreCtOrS’
REPORT COnTinUED
DIreCtOrS anD tHeIr IntereStS
Each of the Directors listed on pages 50 and 51 held office as at 30 June 2014. The
Directors of the Company and their respective beneficial interests in the shares of the
Company as at 30 June 2014 were as follows:
as at 30 june 2014
number of
‘growth’
shares
number of
ordinary
shares
number of
share
options
As at 30 June 2013
number of
redeemable
shares
number of
ordinary
shares
number of
share
options
Ordinary Shares
S D wicks
n Malde
P Brett
T Roydon
S Bennett
16,237,332
11,270,029
3,504,214
325,000
110,000
470
380
150
—
—
— 16,237,332
11,072,400
3,444,214
325,000
110,000
1,500,000
1,100,000
—
—
490
392
98
—
—
1,500,000
1,500,000
1,100,000
—
—
P Brett is retiring by rotation in accordance with the Company’s Articles of Association and
has offered himself for re-election.
During the year, Stephen wicks exercised 1,500,000 share options over ordinary shares of
10 pence under the Group’s Employee Share Option Scheme at a price of 18.25 pence per
ordinary share. On admission to AiM, Mr wicks sold all 1,500,000 ordinary shares at a price
of 42 pence per share. Further information on share options can be found in note 20 to the
Group financial statements.
Read our Director’s
Remuneration Report on
pages 56 to 61
During the year, the Group’s 2007 long Term incentive Plan was terminated and the 980
redeemable shares were redesignated as 9,800 valueless deferred shares of 10 pence
each and replaced with the ‘Growth’ shares under the 2013 lTiP. Further information on
the 2013 lTiP can be found in the Directors’ Remuneration Report on pages 56 to 61.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ above: Artist’s impression of
our development on the former
St. John’s Hospital site in
Chelmsford, Essex
DIreCtOrS’ eMOLuMentS
Details of Directors’ remuneration can be found in the Directors’ Remuneration Report on
pages 56 to 61.
quaLIFYIng tHIrD PartY InDeMnItY PrOvISIOn
During the financial year, a qualifying third party indemnity provision for the benefit of all
the Directors was in force.
SubStantIaL SHareHOLDIng
As at 15 October 2014, the Company was aware of the following holdings, in addition
to those of the Directors discussed above, of 3% or more of the nominal value of the
Company’s shares:
name
M H Dixon
Karoo investment Fund SCA SiCAv SiF
A K Brett
Downing llP
Shareholding
21,000,000
11,564,971
7,000,000
6,935,512
%
10.36
5.70
3.45
3.42
gOIng COnCern
The Board has reviewed the performance for the current year and forecasts for the future
period. it has also considered the risks and uncertainties, including credit risk and liquidity
risk. The Directors have considered the present economic climate, the state of the housing
market and the current demand for land with planning consent. The Group has continued
to see an increase in demand for consented land in the areas in which it operates. The
Group has significant forward sales of residential units and is in discussions for the sale
of some of the land within its projects and expects to make sufficient disposals in the
foreseeable future to ensure it has adequate working capital for its requirements. The
Directors are satisfied that the Group will generate sufficient cash to meet its liabilities as
and when they fall due for a period of 12 months from signing these financial statements.
The Directors therefore consider it appropriate to prepare the financial statements on the
going concern basis.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 66 67
DIreCtOrS’
REPORT COnTinUED
DIreCtOrS’ reSPOnSIbILItIeS
The Directors are responsible for preparing the Annual Report and the financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial
year. Under that law the Directors have to prepare Group financial statements in
accordance with international Financial Reporting Standards (iFRSs) as adopted by the
European Union and have elected to prepare Parent Company financial statements in
accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable laws). Under company law the Directors must not
approve the financial statements unless they are satisfied that they give a true and fair
view of the state of affairs and profit or loss of the Company and Group for that period. in
preparing these financial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable iFRSs have been followed in relation to the Group accounts
and applicable UK Accounting Standards have been followed in relation to the Parent
Company accounts, subject to any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate
to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient
to show and explain the Company’s transactions and disclose with reasonable accuracy
at any time the financial position of the Company and enable them to ensure that the
financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors confirm that:
• so far as each Director is aware there is no relevant audit information of which the
Company’s auditor is unaware; and
• the Directors have taken all steps that they ought to have taken to make themselves
aware of any relevant audit information and to establish that the auditor is aware of that
information.
The Directors are responsible for the maintenance and integrity of the corporate and
financial information included on the Company’s website. legislation in the United
Kingdom governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ POSt baLanCe SHeet eventS
There are no events subsequent to the balance sheet date that need to be disclosed.
annuaL generaL MeetIng
The notice covering the AGM together with the proposed resolutions is contained in the
document accompanying this report. The AGM will be held on 1 December 2014.
auDItOr
A resolution to reappoint Grant Thornton UK llP as auditor for the ensuing year will be
proposed at the AGM in accordance with Section 489 of the Companies Act 2006.
By order of the Board
nishith Malde
Company Secretary
15 October 2014
Completed nursing home, shops
and site management area at DGv
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Strategic ReportOur GovernanceOur FinancialsShareholder Information 68 69
68 69
68 69
Proposed development at Meridian,
Southampton, Hampshire
Our
FinAnCiAlS
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ COntentS
70 independent Auditor’s Report (Group)
71 Group income Statement
71 Group Statement of Comprehensive income
72 Group Statement of Financial Position
73 Group Statement of Changes in Equity
74 Group Statement of Cash Flows
75 notes to the Group Financial Statements
102 independent Auditor’s Report (Company)
103 Company Balance Sheet
104 notes to the Company Financial Statements
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder Information 70 71
70 71
70 71
InDePenDent auDItOr’S rePOrt
TO THE MEMBERS OF inlAnD HOMES PlC
we have audited the Group financial statements of inland Homes plc for the year ended 30 June 2014 which comprise the Group income
Statement, the Group Statement of Comprehensive income, Group Statement of Financial Position, the Group Statement of Changes
in Equity, the Group Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their
preparation is applicable law and international Financial Reporting Standards (iFRSs) as adopted by the European Union.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our
audit 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
auditor’s 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 audit work, for this report, or for the opinions we have formed.
reSPeCtIve reSPOnSIbILItIeS OF DIreCtOrS anD auDItOr
As explained more fully in the Directors’ Responsibilities Statement set out on page 66, the Directors are responsible for the
preparation of the Group financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
and express an opinion on the Group financial statements in accordance with applicable law and international Standards on Auditing
(UK and ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical Standards for Auditors.
SCOPe OF tHe auDIt OF tHe FInanCIaL StateMentS
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at
www.frc.org.uk/apb/scope/private.cfm.
OPInIOn On FInanCIaL StateMentS
in our opinion the Group financial statements:
• give a true and fair view of the state of the Group’s affairs as at 30 June 2014 and of its profit for the year then ended;
• have been properly prepared in accordance with iFRSs as adopted by the European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
OPInIOn On OtHer Matter PreSCrIbeD bY tHe COMPanIeS aCt 2006
in our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the Group
financial statements are prepared is consistent with the Group financial statements.
MatterS On WHICH We are requIreD tO rePOrt bY exCePtIOn
we have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
OtHer Matter
we have reported separately on the Parent Company financial statements of inland Homes plc for the year ended 30 June 2014.
grant thornton uk LLP
nicholas Watson
Senior Statutory Auditor
for and on behalf of Grant Thornton UK llP
Statutory Auditor, Chartered Accountants
Reading
15 October 2014
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ grOuP InCOMe
STATEMEnT FOR THE yEAR EnDED 30 JUnE 2014
Continuing operations
Revenue
Cost of sales
gross profit
Administrative expenses
(loss)/profit on investments
Operating profit
Finance cost – interest expense
Finance cost – notional interest
Finance income – interest on DGvl arrangement
Finance income – interest receivable and similar income
Share of profit from Howarth (former associate)
Profit on disposal of investment in Howarth (former associate)
Share of profit of joint venture
Profit before tax
income tax
Profit for the year
attributable to:
Equity holders of the Company
earnings per share for profit attributable to the equity holders
of the Company during the year
– basic
– diluted
note
5
5/6
8
8
9
9
13
13
13
10
11
11
2014
£000
39,824
(24,126)
15,698
(4,353)
(822)
10,523
(2,751)
(57)
263
45
8,023
—
—
613
8,636
(2,830)
5,806
2013
£000
31,116
(23,431)
7,685
(2,652)
48
5,081
(1,419)
(270)
226
83
3,701
330
292
889
5,212
(1,559)
3,653
5,806
3,653
2.87p
2.70p
1.98p
1.97p
The accompanying accounting policies and notes form part of these financial statements.
grOuP StateMent OF
COMPREHEnSivE inCOME FOR THE yEAR EnDED 30 JUnE 2014
Profit for the year
Other comprehensive income
total comprehensive income for the year
The accompanying accounting policies and notes form part of these financial statements.
note
21
2014
£000
5,806
—
5,806
2013
£000
3,653
—
3,653
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL
72 73
72 73
72 73
grOuP StateMent OF
FinAnCiAl POSiTiOn AT 30 JUnE 2014
aSSetS
non-current assets
investment property
Property, plant and equipment
investments
Joint ventures
Receivables due in more than one year
Deferred tax
total non-current assets
Current assets
inventories
Trade and other receivables
loan to Howarth (former associate)
listed investments held for trading (carried at fair value through profit and loss)
Cash and cash equivalents
total current assets
total assets
equItY
Capital and reserves attributable to the Company’s equity holders
Share capital
Share premium account
Treasury shares
Special reserve
Retained earnings
total equity
LIabILItIeS
Current liabilities
Bank loans and overdrafts
Other loans
Trade and other payables
Corporation tax
Other financial liabilities
total current liabilities
non-current liabilities
Zero Dividend Preference shares
total non-current liabilities
total equity and liabilities
note
2014
£000
2013
£000
12
12
13
13
16
14
15
16
17
18
19
20
21
21
21
21
27
27
22
22
23
23
7,681
153
541
—
55
2,767
11,197
90,275
13,983
—
1
11,169
115,428
126,625
20,280
34,033
—
6,059
3,649
64,021
19,192
9,231
10,497
2,808
9,324
51,052
11,552
11,552
126,625
7,681
173
1,363
243
55
3,414
12,929
44,736
15,085
1,000
1
12,154
72,976
85,905
20,131
33,695
(366)
6,059
(1,789)
57,730
1,613
4,710
3,559
625
7,947
18,454
9,721
9,721
85,905
The financial statements were approved and authorised for issue by the Board of Directors on 15 October 2014.
Stephen Wicks
Director
nishith Malde
Director
Company number 5482990
The accompanying accounting policies and notes form part of these financial statements.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ grOuP StateMent OF
CHAnGES in EQUiTy FOR THE yEAR EnDED 30 JUnE 2014
At 30 June 2012
Share-based payment
Dividend payment
issue of equity
Transactions with owners
Total comprehensive income for the year
Total changes in equity
At 30 June 2013
Share-based payment
Dividend payment
Cancellation of deferred shares
Sale of treasury shares
issue of equity
Transactions with owners
Total comprehensive income for the year
Total changes in equity
at 30 june 2014
Share
capital
£000
18,301
—
—
1,830
1,830
—
1,830
20,131
—
—
(1)
—
150
149
—
149
20,280
Share
premium
£000
treasury
shares
£000
Special
reserve
£000
retained
earnings
£000
30,794
—
—
2,901
2,901
—
2,901
33,695
—
—
—
214
124
338
—
338
34,033
(366)
—
—
—
—
—
—
(366)
—
—
—
366
—
366
—
366
—
6,059
—
—
—
—
—
—
6,059
—
—
—
—
—
—
—
—
6,059
(5,382)
62
(122)
—
(60)
3,653
3,593
(1,789)
171
(540)
1
—
—
(368)
5,806
5,438
3,649
total
£000
49,406
62
(122)
4,731
4,671
3,653
8,324
57,730
171
(540)
—
580
274
485
5,806
6,291
64,021
The accompanying accounting policies and notes form part of these financial statements.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 74 75
74 75
74 75
grOuP StateMent OF
CASH FlOwS FOR THE yEAR EnDED 30 JUnE 2014
Cash flow from operating activities
Profit for the year before tax
Adjustments for:
— depreciation
— profit on disposal of property, plant and equipment
— share-based compensation
— fair value adjustment for the value of the DGvl investment
— interest expense
— interest and similar income
— share of profit of Howarth (former associate)
— profit on disposal of investment in Howarth (former associate)
— share of profit in joint venture
Changes in working capital:
— increase in investments
— (increase)/decrease in inventories
— decrease/(increase) in trade and other receivables
— increase in trade and other payables
net cash outflow from operating activities
Cash flow from investing activities
interest received
Purchases of property, plant and equipment
Sale of property, plant and equipment
Distribution from joint venture
net proceeds on sale of investment in Howarth (former associate)
net cash inflow from investing activities
Cash flow from financing activities
interest paid
Repayment of borrowings
new loans
Equity dividends paid to ordinary shareholders
net proceeds on sale of treasury shares
net proceeds on issue of ordinary shares
Receipt of loan repayment from Howarth (former associate)
net cash inflow from financing activities
net (decrease)/increase in cash and cash equivalents
net cash and cash equivalents at beginning of year
net cash and cash equivalents at end of year
The accompanying accounting policies and notes form part of these financial statements.
23697.04 22 October 2014 5:25 PM PROOF 9
note
12
12
2014
£000
2013
£000
8,636
5,212
71
(3)
171
822
2,808
(308)
—
—
(613)
—
(45,540)
1,365
8,133
(24,458)
45
(51)
3
856
—
853
(1,902)
(3,039)
26,247
(540)
580
274
1,000
22,620
(985)
12,154
11,169
49
(9)
62
(48)
1,689
(308)
(330)
(292)
(889)
219
161
(12,228)
1,744
(4,968)
83
(156)
11
2,995
1,364
4,297
(1,072)
(6,531)
15,244
(122)
—
4,731
—
12,250
11,579
575
12,154
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS FOR THE yEAR EnDED 30 JUnE 2014
1. aCCOuntIng POLICIeS
The principal accounting policies adopted in the preparation of the Group financial statements are set out below.
basis of preparation
The Group financial statements have been prepared under the historical cost convention, except for financial instruments which are
measured at fair value, and in accordance with applicable international Financial Reporting Standards (iFRS) as adopted by the EU and
as issued by the international Accounting Standards Board. iFRS13 Fair value Measurement became mandatory for the first time for
the financial year beginning 1 July 2013 but has had no material impact on the results of the Group for the year ended 30 June 2014.
The accounting policies that have been applied in the opening Statement of Financial Position have also been applied throughout all
periods presented in these financial statements. These accounting policies comply with each iFRS that is mandatory for accounting
periods ending on 30 June 2014.
At the date of approval of these financial statements, certain new standards, amendments and interpretations to existing standards
have been published by the iASB but are not yet effective, and have not been adopted early by the Group.
Management anticipates that all of the relevant pronouncements will be adopted in the Group’s accounting policies for the first
period beginning after the effective date of the pronouncement. information on new standards, amendments and interpretations that
are expected to be relevant to the Group’s financial statements is provided below.
Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s
financial statements.
Standards, amendments and interpretations to existing standards that are not yet effective and have not been
adopted early by the group
• iFRS10 Consolidated Financial Statements
• iFRS11 Joint Arrangements
• iFRS12 Disclosure of interests in Other Entities
• iAS27 (Revised) Separate Financial Statements
• iAS28 (Revised) investments in Associates and Joint ventures
Standards in issue but not yet effective
• iFRS9 Financial instruments (effective 1 January 2018)
• iFRS15 Revenue from Contracts with Customers (effective 1 January 2017)
• iAS19 Employee Benefits (Revised June 2011) (effective 1 January 2014)
• Disclosures — Offsetting Financial Assets and Financial liabilities — Amendments to iFRS7 (effective 1 January 2014)
• Offsetting Financial Assets and Financial liabilities — Amendments to iAS32 (effective 1 January 2014)
none of the standards above are expected to have an impact on the Group’s financial statements. The Directors are currently assessing
the impact of iFRS10 on accounting for the DGvl arrangement but at this stage do not anticipate any material changes. However, as
iFRS10 specifically requires the question of control to be reassessed on an ongoing basis, this matter will be kept under review.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 76 77
76 77
76 77
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
1. aCCOuntIng POLICIeS COnTinUED
basis of consolidation
The Group’s financial statements consolidate the financial statements of the Company and all of its subsidiary undertakings drawn
up to 30 June 2014. Subsidiaries are entities over which the Group has the power to control the financial and operating policies so as
to obtain benefits from its activities. The Group obtains and exercises control through voting rights.
Unrealised gains on transactions between the Group and its subsidiaries are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Amounts reported in the financial statements of
subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.
Acquisitions of subsidiaries are dealt with by the acquisition method. The method involves the recognition at fair value of all
identifiable assets and liabilities, including contingent liabilities of the subsidiary, at the acquisition date, regardless of whether or not
they were recorded in the financial statements of the subsidiary prior to acquisition. On initial recognition, the assets and liabilities
of the subsidiary are included in the Group Statement of Financial Position at their fair values, which are also used as the basis for
subsequent measurement in accordance with the Group accounting policies. Goodwill is stated after separating out identifiable
intangible assets. Goodwill represents the excess of the fair value of the consideration transferred over the fair value of the Group’s
share of the identifiable net assets of the acquired subsidiary at the date of acquisition.
going concern
The Board has reviewed the performance for the current year and forecasts for the future period. it has also considered the risks and
uncertainties, including credit risk and liquidity risk. The Directors have considered the present economic climate, the state of the
housing market and the current demand for land with planning consent. The Group has continued to see an increase in demand for
consented land in the areas in which it operates. The Group has significant forward sales of residential units and is in discussions
for the sale of some of the land within its projects and expects to make sufficient disposals in the foreseeable future to ensure it
has adequate working capital for its requirements. The Directors are satisfied that the Group will generate sufficient cash to meet
its liabilities as and when they fall due for a period of 12 months from signing these financial statements. The Directors therefore
consider it appropriate to prepare the financial statements on the going concern basis.
joint ventures
investments in joint ventures are recognised initially at cost and subsequently accounted for using the equity method. All subsequent
changes to the share of interest in the equity of the joint venture are recognised in the Group’s carrying amount of the investment.
Changes resulting from the profit or loss generated by the joint venture are reported in ‘share of profits of joint venture’ in the Group
income Statement and therefore affect net results of the Group. These changes include subsequent depreciation, amortisation or
impairment of the fair value adjustments of assets and liabilities.
revenue
Revenue is measured by reference to the fair value of consideration received or receivable by the Group for goods supplied, excluding
vAT and trade discounts.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ 1. aCCOuntIng POLICIeS COnTinUED
Sale of land
Revenue from the sale of land is recognised when all the following conditions have been satisfied:
• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods which is generally when
contracts have been completed;
• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control
over the land sold which is generally when the contract has been completed;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the Group; and
• the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Sale of residential units
Turnover is recognised on legal completion, which is generally when the title passes.
Contract income
The Group acts as a main contractor on certain building projects, primarily on behalf of housing associations whilst carrying out
its s106 obligations. Once the Group considers that the outcome of the contract can be reliably estimated, revenue and profit is
recognised on the basis of the proportion of the contract that is completed.
Fee income
The Group provides planning and property management services to third parties for a fee. The Group recognises revenue based on
the fair value and stage of completion of the planning and property management services provided to these customers as at the
period end, in accordance with iAS18.
Interest
interest is recognised using the effective interest method which calculates the amortised cost of a financial asset and allocates the
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the net carrying amount of the financial asset.
rental income
Rental income derived from operating leases is recognised on a straight line basis over the lease term.
Property, plant and equipment
Property, plant and equipment is stated at cost or valuation, net of depreciation and any provision for impairment.
Disposal of assets
The gain or loss arising on the disposal of an asset is determined as the difference between the disposal proceeds and the carrying
amount of the asset and is recognised in the Group income Statement. Any revaluation surplus remaining in equity on disposal of the
asset is transferred to the profit and loss reserve.
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1. aCCOuntIng POLICIeS COnTinUED
Depreciation
Depreciation is calculated to write down the cost less estimated residual value of all property, plant and equipment by the straight
line method where it reflects the basis of consumption of the asset. The rates generally applicable are:
Fixtures and fittings — 25%
— 25%
Office equipment
Motor vehicles
— 25%
leasehold property — over shorter of lease term and useful economic life
Material residual value estimates are updated as required, but at least annually, whether or not the asset is revalued.
Investment property
investment properties are measured at cost and are reviewed annually for impairment. Any gain or loss resulting from the sale
of an investment property is immediately recognised in profit or loss. As a result, investment properties are not depreciated. An
investment property shall be derecognised on disposal or when the Directors consider that the status of the property has changed
to being a development property. when a partial disposal or transfer is made, the proportion relating to the disposal or transfer is
derecognised.
Inventories
inventories consist of land and work in progress and are valued at the lower of cost and net realisable value. Cost includes the
purchase of sites, the cost of infrastructure and construction works, and legal and professional fees incurred during development
prior to sale. net realisable value is estimated based upon the future expected selling price, less estimated costs to sell.
taxation
Current tax is the tax currently payable based on taxable profit for the period.
Deferred income taxes are calculated using the liability method on temporary differences. Deferred tax is generally provided on
the difference between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on
the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business
combination or affects tax or accounting profit. Temporary differences include those associated with shares in subsidiaries and joint
ventures unless reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur
in the foreseeable future. in addition, tax losses available to be carried forward as well as other income tax credits to the Group are
assessed for recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred tax assets are recognised to the extent that it is probable
that the underlying deductible temporary differences will be able to be offset against future taxable income. Current and deferred tax
assets and liabilities are calculated at tax rates that are expected to apply to their respective period of realisation, provided they are
enacted or substantively enacted at the year end date.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the Group income Statement except
where they relate to items that are recognised in other comprehensive income (such as the revaluation of the investment property
not included in inventories) or directly in equity in which case the related deferred tax is also recognised in other comprehensive
income or equity respectively.
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Leased assets
lease payments (excluding costs for services such as insurance and maintenance) applicable to operating leases where substantially all
the benefits and risks of ownership remain with the lessor are recognised as an expense on a straight line basis over the lease term.
employee benefits
Defined contribution pension scheme
The pension costs charged against operating profits are the contributions payable to the scheme in respect of the accounting period.
equity-settled share-based payment
All share-based payment arrangements are recognised in the Group financial statements. All goods and services received in
exchange for the grant of any share-based payment are measured at their fair values using the Black–Scholes options pricing model.
where employees are rewarded using share-based payments, the fair values of employees’ services are determined indirectly by
reference to the fair value of the instrument granted to the employee. This fair value is appraised at the grant date and excludes the
impact of any non-market vesting conditions.
All equity-settled share-based payments are ultimately recognised as an expense in the Group income Statement with a
corresponding credit to retained earnings.
if vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication
that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period. no adjustment is made to any expense recognised in prior periods if share options ultimately
exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and, where
appropriate, share premium.
Financial assets
Financial assets are divided into the following categories: loans and receivables and financial assets at fair value through profit or
loss. Financial assets are assigned to the different categories by management on initial recognition, depending on the purpose for
which they were acquired.
All financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument. Financial assets
other than those categorised as at fair value through profit and loss are initially recognised at fair value plus finance costs. Financial
assets categorised as at fair value through profit or loss are recognised initially at fair value with transaction costs expensed through
the Group income Statement.
Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or are
designated by the entity as at fair value through profit or loss upon initial recognition. Subsequent to initial recognition, the financial
assets included in this category are measured at fair value with changes in fair value recognised in the Group income Statement.
Financial assets originally designated as financial assets at fair value through profit or loss may not be reclassified subsequently.
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1. aCCOuntIng POLICIeS COnTinUED
Financial assets continued
loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. Trade receivables and loans to associate are classified as loans and receivables. loans and receivables are measured
subsequent to initial recognition at amortised cost using the effective interest method, less provision for impairment. Any change in
their value through impairment or reversal of impairment is recognised in the Group income Statement.
Provision against trade receivables is made when there is objective evidence that the Group will not be able to collect all amounts
due to it in accordance with the original terms of those receivables. The amount of the write-down is determined as the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective
interest rate.
interest and other cash flows resulting from holding financial assets are recognised in the Group income Statement, regardless of
how the related carrying amount of financial assets is measured.
A financial asset is derecognised only where the contractual rights to the cash flows from the asset expire, or the financial asset
is transferred and that transfer qualifies for derecognition. A financial asset is transferred if the contractual rights to receive the
cash flows of the asset have been transferred or the Group retains the contractual rights to receive the cash flows of the asset, but
assumes a contractual obligation to pay the cash flows to one or more recipients. A financial asset that is transferred qualifies for
derecognition if the Group transfers substantially all the risks and rewards of ownership of the asset, or if the Group neither retains
nor transfers substantially all the risks and rewards of ownership but does transfer control of that asset.
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the Group becomes a party to the
contractual provisions of the instrument.
All financial liabilities are recorded at amortised cost using the effective interest method, with interest-related charges recognised as an
expense in finance cost in the Group income Statement. Finance charges, including premiums payable on settlement or redemption and
direct issue costs, are charged to the Group income Statement on an accruals basis using the effective interest method and are added
to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Financial liabilities are categorised as at fair value through profit or loss where they are classified as held-for-trading or designated
as at fair value through profit or loss on initial recognition (including deferred purchase consideration). Financial liabilities are
designated as at fair value through profit or loss where they eliminate or significantly reduce a measurement (or recognition)
mismatch.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled
or expires.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits, together with other short term, highly liquid investments
that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Dividends
Dividend distributions payable to equity shareholders are included in other short term financial liabilities when the dividends are
approved in a general meeting prior to the year end date.
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equity
An equity instrument is a contract which evidences a residual interest in the assets after deducting all liabilities. Equity comprises
the following:
• ‘Share capital’ represents the nominal value of equity shares;
• ‘Share premium’ represents the excess over nominal value of the fair value of consideration received for equity shares, net of
expenses of the share issue;
• ‘Treasury shares’ represent the purchase of the Company’s own shares and are deducted from total equity as treasury shares
until they are sold or cancelled where such shares are subsequently sold or reissued – any consideration received is included in
total equity;
• ‘Special reserve’ represents the distributable surplus created by the transfer of an amount from the share premium to rectify the
deficit on the profit and loss reserve; and
• ‘Profit and loss reserve’ represents retained profits.
2. FInanCIaL rISk ManageMent
Financial risk factors
The Group’s activities expose it to a variety of financial risks: credit risk; liquidity risk; cash flow risk; and fair value interest rate risk.
The Group’s overall risk management programmes focus on the unpredictability of financial markets and seek to minimise potential
adverse effects on the Group’s financial performance.
Risk management is carried out centrally under policies approved by the Board of Directors.
(a) Credit risk
The Group has no significant concentrations of credit risk. it has policies in place to ensure that sales of products and services are
made to customers with an appropriate credit history.
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the year end date, as
summarised below:
Classes of financial assets — carrying amounts
listed investments held for trading
loan to Howarth (former associate)
Cash and cash equivalents
Trade and other receivables
Receivables due in more than one year
2014
£000
1
—
11,169
13,983
55
25,208
2013
£000
1
1,000
12,154
15,085
55
28,295
The Group’s policy is to deal with creditworthy counterparties.
The Group’s management considers that all the above financial assets for each of the reporting dates under review are of good credit
quality. The Directors consider that none of the receivables are past due or impaired.
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2. FInanCIaL rISk ManageMent COnTinUED
Financial risk factors continued
(a) Credit risk continued
Some of the Group’s financial assets are secured by collateral. This collateral is a second charge over land owned by DGvl and in the
opinion of the Directors, it mitigates the credit risk of the DGvl debtor.
The credit risk for liquid funds and other short term financial assets is considered negligible, since the counterparties are reputable
banks with high quality credit ratings.
(b) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash balances and ensuring availability of funding through an
adequate amount of credit facilities. The Group aims to maintain flexibility in funding by keeping credit lines available. The Group also
purchases property under deferred consideration arrangements.
(c) Cash flow interest rate risk
The Group’s cash flow interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. All the Group’s borrowings are at variable rates but the Group does not consider the risk to be significant.
3. SegMent InFOrMatIOn
in accordance with iFRS8, information is disclosed to enable users of financial statements to evaluate the nature and financial effects
of the business activities in which the Group engages.
in identifying its operating segments, management differentiates between land sales, housebuilding, fee income and other income.
These segments are based on the information reported to the chief operating decision maker. An analysis of the Group’s results by
segment are disclosed in note 5.
4. CrItICaL aCCOuntIng eStIMateS anD juDgeMentS
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. Cost includes the
purchase of sites, the cost of infrastructure and construction works, and legal and professional fees incurred during development
prior to sale. Estimation of the selling price is subject to significant inherent uncertainties, in particular the prediction of future
trends in the market value of land.
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.
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(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. Critical accounting estimates relate to the profit forecasts used to determine
the extent to which deferred tax assets are recognised from available losses.
(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
investment properties are reviewed annually for impairment; critical accounting estimates relate to the forecasts prepared in order to
assess the carrying value.
(e) Discounting on deferred consideration of inventories
The Group discounts deferred consideration of inventories by discounted cash flow method; the Group considers that the cost of debt
capital is the most appropriate 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.
Zero Dividend Preference shares
The Group has in issue Zero Dividend Preference shares which are accounted for as debt. ZDP shares are repayable, plus accrued
interest to date, in the event of a takeover. The Directors consider that the potential early repayment meets the definition of a
derivative instrument under iAS39. However, they consider that this instrument is closely related to the host contract and therefore
have not accounted for the embedded derivative separately.
Investments
in December 2008 the Group entered into an Option and Development Services Agreement (the Agreement) with DGvl. The Directors
have considered the requirements of iAS27 ‘Consolidated and Separate Financial Statements’(revised 2008) and SiC12 ‘Consolidation
– special purpose vehicles’ and do not believe that the Group has the power to control DGvl. Firstly, the final decision on the funding,
financial and operational activities of DGvl resides with the director of DGvl himself, including the unilateral discretion over the
choice of supplier of development services. Secondly, the Group does not have the ability to use any power over DGvl to affect its
return. The director of DGvl has the unilateral right to determine and control the overall percentage of the profit surrendered to
the Group; inland has no rights to influence the ultimate percentage it receives, only the ability to influence the overall profit by
performing development services in an efficient manner. 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, after due
consideration of the applicable accounting standards and the way in which DGvl and inland operate in reality, the Board is of the
opinion that inland does not control DGvl. Accordingly, DGvl should not be consolidated in the financial statements of the Group.
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4. CrItICaL aCCOuntIng eStIMateS anD juDgeMentS COnTinUED
Investments continued
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 advisers, 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 is entitled to receive an increased share of
the profits from the development on the basis that the director of DGvl did not have to procure funding to meet the deferred land
consideration payments. Therefore, the Group is now entitled to receive 90% of all 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 13 and balances in note 16.
At 30 June 2014 the deferred land consideration had been met in full without the director of DGvl having to procure funding. As a
result, inland is now entitled to 90% of the profits expected to be realised from the sale of the property over the life of the project.
83.04% of the total profits are 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 iAS18. 6.96% of the profits are due to the Group for the
provision of the initial £3m to pay the first instalment of the deferred land payment and is therefore accounted for under iAS39 as
interest income.
in calculating the fee for the provision of planning application and property services to DGvl recognised in the year, under iAS18 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 year ended 30 June 2014 the Group has recognised £6.6 million (2013: £3.0 million) in revenue within the Group income
Statement for such services to DGvl.
in calculating the fee for the provision of finance to DGvl, under iAS39 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 iAS39 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 16.
During the year ended 30 June 2014 the Group has recognised £0.26 million (2013: £0.25 million) within interest income in the Group
income Statement in respect of such fees.
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Investments continued
As inland is required to recognise the income based on the development services delivered and as finance income, the results are
different to those recognised on the sale of property under UK GAAP within DGvl. The table below shows the revenue and interest
recognised by inland under iAS18 and iAS39 in comparison to the results recognised by DGvl on its sales under UK GAAP:
Total revenue and interest recognised by inland under iAS18 and 39
Results in DGvl (unaudited)
Residential and commercial plots & completed homes sold
Revenue (£000)
Gross profit (£000) as per DGvl’s unaudited management accounts
90% of gross profit (£000) (2013: 74.4%)
The accounting policy for revenue recognition by DGvl is as follows:
2014
£000
6,855
84
18,423
5,723
5,151
2013
£000
3,252
Cumulative
£000
18,009
76
5,300
1,668
1,241
426
47,369
15,820
14,238
Turnover comprises the sale of land acquired for resale, the sale of completed properties, the sale of equipment and materials and
amounts receivable by the company in respect of other services rendered during the period excluding value added tax. Turnover
in respect of the sale of land and properties is recognised at the point of completion, when the title passes. Turnover from other
services is recognised as the service is delivered. Turnover on the sale of equipment is recognised on the completion of the sale.
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5. InCOMe anD SegMentaL anaLYSIS
The Group generates income by way of land sales. it also generates income from housebuilding, fees from planning and property
management services and other related services. These operating segments are monitored and strategic decisions are made on the
basis of segment operating results. The segmental analysis of operations is as follows:
Segmental analysis by activity
2013
Segment
land sales
Housebuilding
Fee income
Rental income
Other property sale
Other
— Profit on investments
— Share of profit from Howarth
(former associate)
— Profit on sale of investment in
Howarth (former associate)
— Share of profit of joint venture
— Unallocated
2014
Segment
land sales
Housebuilding
S106 affordable homes
Contracting on behalf of DGvl
Fee income
Rental income
Other
— loss on investments
— Share of profit of joint venture
— Unallocated
Revenue
£000
16,353
11,426
3,027
300
10
—
—
—
—
—
31,116
revenue
£000
6,734
18,843
2,460
4,805
6,596
365
21
—
—
—
39,824
Cost of
sales
£000
(14,400)
(9,020)
—
(11)
—
—
—
—
—
—
(23,431)
Cost of
sales
£000
(3,443)
(13,664)
(2,214)
(4,805)
—
—
—
—
—
—
(24,126)
Gross
profit
£000
1,953
2,406
3,027
289
10
—
—
—
—
—
7,685
Admin
costs
£000
Other
£000
Operating
profit
£000
—
—
—
—
—
—
—
—
—
(2,652)
(2,652)
—
—
—
—
—
48
—
—
—
—
48
1,953
2,406
3,027
289
10
48
—
—
—
(2,652)
5,081
gross
profit
£000
admin
costs
£000
Other
£000
Operating
profit
£000
3,291
5,179
246
—
6,596
365
21
—
—
—
15,698
—
—
—
—
—
—
—
—
—
(4,353)
(4,353)
—
—
—
—
—
—
—
(822)
—
—
(822)
3,291
5,179
246
—
6,596
365
21
(822)
—
(4,353)
10,523
Finance
(cost)/
income
£000
(1,054)
(288)
254
—
—
—
—
—
—
(292)
(1,380)
Finance
(cost)/
income
£000
(947)
(1,751)
—
—
263
—
—
—
—
(65)
(2,500)
Profit
before
tax
£000
899
2,118
3,281
289
10
48
330
292
889
(2,944)
5,212
Profit
before
tax
£000
2,344
3,428
246
—
6,859
365
21
(822)
613
(4,418)
8,636
Other
£000
—
—
—
—
—
—
330
292
889
—
1,511
Other
£000
—
—
—
—
—
—
—
—
613
—
613
During the year DGvl identified a purchaser for 107 residential units at Drayton Garden village. The purchaser bought the land but
would only agree to enter into a build contract with inland limited. The risks associated with this contract have been substantially
mitigated by way of a fixed price construction contract with a main contractor. The counterparty risk is negligible as the purchaser is
a very well financed housing association. Consequently the Group is recognising no margin on this contract and instead is receiving
its share of the development contribution via the development services fee income from DGvl, which currently stands at 90% of the
total profit expected to be realised from the development.
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transactions with customers making up 10% or more of revenue
Fee income customer 1
land sales customer 2
Contracting customer 3
land sales customer 4
land sales customer 5
All activities arose solely in the United Kingdom.
Segment assets
land:
non-current assets — investment property
non-current assets — deferred tax
Current assets – inventories
Current assets – other
Housebuilding:
non-current assets — deposit match debtor
Current assets — inventories
Current assets — other
Fees:
non-current assets — investment
Current assets — debtor
Current assets — other
Other:
non-current assets — joint venture
non-current assets — other
non-current assets — deferred tax
Current assets — loan to Howarth (former associate)
Current assets — other
Cash
total segmental and entity assets
2014
£000
6,593
5,347
4,805
—
—
2013
£000
—
3,135
—
7,410
3,330
16,745
13,875
2014
£000
2013
£000
7,681
2,487
55,854
2,525
68,547
55
34,421
159
34,635
541
10,502
674
11,717
—
153
280
—
124
11,169
11,726
126,625
7,681
3,159
37,221
341
48,402
55
7,515
498
8,068
1,363
12,870
808
15,041
243
173
255
1,000
569
12,154
14,394
85,905
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 88 89
88 89
88 89
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
5. InCOMe anD SegMentaL anaLYSIS COnTinUED
Segment liabilities
land:
Current liabilities — trade creditors
Current liabilities — loans
Current liabilities — other
Current liabilities — purchase consideration
Housebuilding:
Current liabilities — trade creditors
Current liabilities — other loans
Current liabilities — bank loans
Current liabilities — other creditors
Fees:
Current liabilities — other creditors
Other:
Current liabilities — trade creditors
Current liabilities — other creditors
non-current liabilities — Zero Dividend Preference shares
total segmental and entity liabilities
6. exPenSeS bY nature
Depreciation
Operating lease rentals
Auditor’s remuneration:
— audit
— non-audit fees Parent Company
— non-audit fees Subsidiaries
Cost of sales
Other expenses
Total
Classified as:
— cost of sales
— administrative expenses
23697.04 22 October 2014 5:25 PM PROOF 9
2014
£000
2013
£000
2,203
2,000
1,416
9,324
14,943
3,607
7,231
19,192
2,013
32,043
—
—
159
3,907
11,552
15,618
62,604
2014
£000
71
64
52
16
10
24,126
4,140
28,479
24,126
4,353
28,479
851
832
1,056
7,947
10,686
1,216
3,878
1,613
363
7,070
200
200
65
433
9,721
10,219
28,175
2013
£000
49
68
41
16
10
23,431
2,468
26,083
23,431
2,652
26,083
note
12
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/
7. DIreCtOrS anD eMPLOYeeS
The employee benefit expense during the year was as follows:
wages and salaries
Social security costs
Pension costs — defined contribution plans
The average number of employees during the year was as follows:
Management
Administration
Remuneration in respect of Directors was as follows:
wages and salaries
Bonuses
Social security costs
Fees
Pension costs — defined contribution plans
During the year two Directors participated in a money purchase pension scheme.
The amounts set out above include remuneration in respect of the highest paid Director as follows:
Remuneration
2014
£000
2,730
342
48
3,120
2013
£000
1,637
206
80
1,923
2014
number
2013
number
4
20
24
2014
£000
953
640
242
80
32
1,947
2014
£000
622
4
10
14
2013
£000
866
200
140
80
60
1,346
2013
£000
436
Further information in respect of AiM rules regarding Directors’ remuneration disclosures can be found in the Directors and their
interests section of the Directors’ Report on page 62.
Short term employee benefits and share-based payments in respect of key personnel and the Directors were as follows:
wages and salaries
Bonuses
Social security costs
Pension costs — defined contribution plans
Share-based payment
2014
£000
1,072
671
264
42
161
2,210
2013
£000
989
215
156
65
58
1,483
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 90 91
90 91
90 91
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
7. DIreCtOrS anD eMPLOYeeS COnTinUED
Other long term benefits in respect of key personnel and the Directors were as follows:
Key personnel and Directors
as at 30 june 2014
As at 30 June 2013
number
of growth
shares
number
of share
options
number of
deferred
shares
number
of share
options
1,000
2,750,000
980
4,350,000
During the year the 2007 long term incentive plan was terminated and the 2013 lTiP was introduced. Further details can be found in
the Directors’ Remuneration Report on pages 56 to 61.
8. FInanCe COSt
interest expense:
— bank borrowings
— other loan interest
— notional interest on deferred consideration
— costs associated with arrangement of new facilities
9. FInanCe InCOMe
Other interest receivable
Bank interest receivable
interest income on DGvl arrangement
10. InCOMe tax
Tax charge on associate and joint venture profits
Current tax charge
Deferred tax asset released due to change of corporation tax rate
Deferred tax charge
2014
£000
618
1,393
57
740
2,808
2014
£000
33
12
263
308
2014
£000
—
2,183
469
178
2,830
2013
£000
169
881
270
369
1,689
2013
£000
78
5
226
309
2013
£000
73
625
—
861
1,559
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ 10. InCOMe tax COnTinUED
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:
Profit before tax
Profit on ordinary activities multiplied by the standard rate
of corporation tax in the UK of 22.5% (2013: 24%)
Expenses not deductible for tax purposes
Profit on disposal of associate
DGvl option impairment not deductible for tax purposes
ZDP interest not deductible for tax purposes
Other temporary differences
Utilisation of tax losses
Difference between capital allowances and depreciation
Tax charge
2014
£000
8,636
1,943
49
—
148
163
—
(120)
—
2,183
2013
£000
5,212
1,251
122
(207)
—
—
9
(554)
4
625
11. 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.
Profit attributable to equity holders of the Company (£000)
net assets attributable to equity holders of the Company (£000)
weighted average number of ordinary shares in issue (000)
Dilutive effect of options (000)
Dilutive effect of growth shares (000)
weighted average number of ordinary shares used in determining diluted EPS (000)
Basic earnings per share in pence
Diluted earnings per share in pence
Shares in issue (000)
net asset value per share in pence
2014
2013
5,806
64,021
202,093
1,441
11,314
214,848
2.87p
2.70p
202,799
31.57p
3,653
57,730
184,860
872
—
185,732
1.98p
1.97p
201,299
28.68p
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 92 93
92 93
92 93
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
12. PrOPertY, PLant, equIPMent anD InveStMent PrOPertY
Investment
property
£000
Leasehold
property
£000
Motor
vehicles
£000
Office
equipment
£000
Fixtures
and fittings
£000
total
£000
Cost or fair value
At 30 June 2012
Additions
Disposals
Transfer to inventories
At 30 June 2013
Additions
Disposals
at 30 june 2014
Depreciation
At 30 June 2012
Depreciation charge
Disposals
At 30 June 2013
Depreciation charge
Disposals
at 30 june 2014
net book value
at 30 june 2014
At 30 June 2013
At 30 June 2012
8,801
—
—
(1,120)
7,681
—
—
7,681
—
—
—
—
—
—
—
7,681
7,681
8,801
5
—
—
—
5
—
—
5
3
1
—
4
1
—
5
—
1
2
49
106
(32)
—
123
9
(17)
115
47
16
(30)
33
29
(17)
45
70
90
2
96
48
—
—
144
39
—
183
55
20
—
75
34
—
109
74
69
41
89
2
—
—
91
3
—
94
66
12
—
78
7
—
85
9
13
23
239
156
(32)
—
363
51
(17)
397
171
49
(30)
190
71
(17)
244
153
173
68
All investment property is stated at cost and reviewed annually for impairment.
The investment property was valued by CBRE ltd in March 2013 in accordance with the current edition of the RiCS valuation
Professional Standards, published by the Royal institution of Chartered Surveyors, at £9.64 million. investment property continues to
be held by the Group for long term investment. The property is recorded as an investment property and is valued by the Directors on a
deemed cost basis at £7,681,000, which was the fair value of the property on acquisition. The investment property is not depreciated,
as it is reviewed annually for impairment. An explanation of the fair value of the investment property is included in note 27.
The historical cost of the investment property at 30 June 2014 as noted in Poole investments limited’s financial statements is
£1,093,693 (2013: £1,093,693).
The direct operating expenses for the period arising from the investment property was £nil (2013: £11,000). The investment property
generated no rental income during the period.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ 13. InveStMentS
Cost or fair value
At 30 June 2012
Additions
Share of profit after tax
net proceeds on disposal of investment in Howarth (former associate)
Realised gain on sale of investment in Howarth (former associate)
Distributions from joint ventures
Fair value adjustment
Movement during the year to 30 June 2013
At 30 June 2013
Share of profit after tax
Distributions from joint ventures
Fair value adjustment
Movement during the year to 30 June 2014
net book value
at 30 june 2014
At 30 June 2013
Investment
in Howarth
(former
associate)
£000
Investment
in joint
venture
£000
Option
£000
822
—
250
(1,364)
292
—
—
(822)
—
—
—
—
—
—
—
1,114
200
—
—
—
—
49
249
1,363
—
—
(822)
(822)
541
1,363
2,563
—
676
—
—
(2,996)
—
(2,320)
243
613
(856)
(243)
—
243
total
£000
4,499
200
926
(1,364)
292
(2,996)
49
(2,893)
1,606
613
(856)
(822)
(1,065)
541
1,606
On 18 December 2008, inland entered into an Option and Development Services Agreement with DGvl 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 could 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, 2012 and 2013, the option period was extended
to expire on 15 January 2019 for a total consideration of £1,200,000. in accordance with the Group’s accounting policy for financial
assets, the option has been measured at fair value at 30 June 2014, which resulted in a fair value loss of £822,000 (2013: gain of
£49,000) that has been recognised in the Group income Statement, resulting in the option being valued at £659,000 below the actual
consideration paid for the option. The fair value of the option has decreased as the profits are being realised and are available for
distribution to the shareholder of DGvl. An explanation of the fair value is included in note 27.
The Group’s joint venture in Croxley Green, Hertfordshire has now come to an end. The Group’s 50% share of the profits after tax for
the period to 30 June 2014 amounts to £613,000 (2013: £676,000) that has been recognised in the Group income Statement.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 94 95
94 95
94 95
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
13. InveStMentS COnTinUED
At 30 June 2014 the Company, directly or indirectly, held 10% or more of the equity of the following:
Company name
inland limited
Poole investments limited
inland Housing limited
inland Finance limited
inland (Southern) limited
inland Homes (Essex) limited
inland Homes Developments limited
inland new Homes limited
Exeter Road (Bournemouth) limited
inland Homes 2013 limited
inland ZDP plc
Country of
registration
England & wales
England & wales
England & wales
England & wales
England & wales
England & wales
England & wales
England & wales
England & wales
England & wales
England & wales
14. DeFerreD tax
The net movement on the deferred tax account is as follows:
At 1 July 2013
income statement charge
at 30 june 2014
The movement in deferred tax assets is as follows:
At 1 July 2013
Charged to income statement
at 30 june 2014
Deferred tax to be recovered after 12 months:
Deferred tax asset on capital losses
Deferred tax liability on the gain on investment property
Principal activity
Holding
Real estate development
Real estate investment
Real estate development
Real estate investment
Real estate development
Real estate development
Real estate development
Real estate development
Real estate development
Holding company
Provision of finance
Losses
£000
2,636
(419)
2,217
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Other
£000
778
(228)
550
2014
£000
3,395
(1,302)
2,093
Class of
shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
£000
3,414
(647)
2,767
total
£000
3,414
(647)
2,767
2013
£000
4,075
(1,563)
2,512
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 £17,162,000 (2013: £17,162,000) that have not
been recognised as the Directors consider the realisation of the losses is not expected to crystallise in the future.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ 15. InventOrIeS
Stock and work in progress
2014
£000
90,275
2013
£000
44,736
During the year a total of £24,126,000 (2013: £23,431,000) of inventories was included in the Group income Statement as an expense.
The Group conducted a review of the net realisable value of its land bank in view of current market conditions. where the estimated
future net realisable value of the site is less than the carrying value within the Group Statement of Financial Position, the Group has
impaired the land value. This has resulted in an impairment of £nil (2013: £1.5 million). included in the value of inventories above
is £13.6 million (2013: £18.2 million) which is carried at fair value less costs to sell (net realisable value). The amount of inventories
pledged as security against borrowings is £61.1 million (2013: £29.5 million).
16. traDe anD OtHer reCeIvabLeS
Prepayments and accrued income
Other receivables
Other receivables due in more than one year
2014
£000
751
13,232
55
14,038
2013
£000
870
14,215
55
15,140
The carrying value of trade and other receivables is considered a reasonable approximation of fair value. no trade receivables are
considered to be impaired. There were no unimpaired trade receivables that were past due at the reporting date.
Other receivables includes an amount of £10.5 million (2013: £13.7 million) accrued in respect of costs and sales invoices that will be
reimbursed by DGvl when they have the funds to do so. The carrying value is considered a reasonable approximation of fair value.
All of the Group’s trade and other receivables have been reviewed for indicators of impairment.
17. LOan tO HOWartH (FOrMer aSSOCIate)
Advances to Howarth (former associate)
The loan was repaid in full during the year.
18. LISteD InveStMentS HeLD FOr traDIng
At 1 July 2013
Movements during the year
at 30 june 2014
2014
£000
—
2013
£000
1,000
£000
1
—
1
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 96 97
96 97
96 97
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
19. CaSH anD CaSH equIvaLentS
Cash at bank and in hand
20. SHare CaPItaL
authorised
239,990,000 (2013: 239,990,000) ordinary shares of 10p each
1,000 (2013: 1,000) redeemable shares of £1 each
allotted, issued and fully paid
202,799,432 (2013: 201,299,432) ordinary shares of 10p each
980 (2013: 980) redeemable shares of £1 each
180 (2013: 180) deferred shares of 10p each
2014
£000
11,169
2014
£000
23,999
—
23,999
2014
£000
20,280
—
—
20,280
2013
£000
12,154
2013
£000
23,999
1
24,000
2013
£000
20,130
1
—
20,131
The Company currently holds none (2013: 1,325,000) of its own shares in treasury. During the year 1,325,000 ordinary shares held as
treasury shares were sold on the open market at a price of 44 pence per ordinary share. The excess over the price originally paid for
the shares has been credited to share premium.
During the year ended 30 June 2014 1,500,000 shares were issued as a result of Stephen wicks exercising share options at a cash
consideration of 18.25p per share, generating a premium of 8.25p per share.
The Company operates a long term incentive plan as part of the remuneration packages of the Executive Directors. During the year
the 2007 Plan was cancelled and replaced with the 2013 Plan. The redeemable and deferred shares were redesignated as 9,800
valueless deferred shares of 10 pence each. Further information can be found in the Directors’ Remuneration Report on pages 56 to
61.
The Company operates an unapproved share option scheme. Awards under each scheme are made periodically to employees. Share
options vest three years after the date of grant and have an exercise period of seven years. The schemes are all equity-settled.
The Company has used the Black–Scholes formula to calculate the fair value of outstanding options and deferred shares. The
assumptions applied to the Black–Scholes formula for share options issued and the fair value per option are as follows:
Expected life of options based on options exercised to date
volatility of share price
Dividend yield
Risk free interest rate
Share price at date of grant
Exercise price
Fair value per option
Share
options
2012/13 grant
Share
options
2011/12 grant
Share
options
2010/11 grant
Share
options
2009/10 grant
3 years
67%
0%
2.05%
32.5p
32.5p
£0.14
3 years
67%
0%
2.05%
17.5p
17.5p
£0.05
3 years
76%
0%
2.05%
18.25p
18.25p
£0.09
3 years
69%
0%
2.11%
16.5p
16.5p
£0.05
growth
shares
6 years
40%
0.6%
1.96%
45.0p
45.0p
£0.17
The charge calculated for the year ended 30 June 2014 is £171,000 with a corresponding deferred tax asset at that date of £34,000.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ 20. SHare CaPItaL COnTinUED
volatility was assessed using the closing prices on the first business day of each month over the period since the shares have been
listed.
A reconciliation of option movements over the year ended 30 June 2014 is shown below:
Outstanding at 30 June 2012
Granted during the year
lapsed during the year
Outstanding at 30 June 2013
Exercised during the year
Outstanding at 30 june 2014
exercisable at 30 june 2014
Exercisable at 30 June 2013
At 30 June 2014 outstanding options granted over 10p ordinary shares were as follows:
exercise
price
pence
32.5p
18.25p
number
000s
4,720
550
(100)
5,170
(1,500)
3,670
2,815
1,315
Share option scheme
Company unapproved
Company unapproved
Company unapproved
Company unapproved
Company unapproved
21. MOveMent On reServeS
At 30 June 2012
Profit for the year
Ordinary shares issued during the year
Dividends paid to ordinary shareholders
Share-based compensation
At 30 June 2013
Profit for the year
Ordinary shares issued during the year
Dividends paid to ordinary shareholders
Cancellation of deferred shares
Sale of treasury shares
Share-based compensation
at 30 june 2014
Option
price
pence
50.0p
16.5p
18.25p
17.5p
32.5p
number
710,000
605,000
1,500,000
305,000
550,000
Dates exercisable
28 March 2010 to 27 March 2017
17 December 2012 to 16 December 2019
22 november 2013 to 21 november 2020
25 June 2015 to 24 June 2022
18 June 2016 to 17 June 2023
Share
premium
£000
treasury
shares
£000
Special
reserve
£000
Profit and
loss account
£000
30,794
—
2,901
—
—
33,695
—
124
—
—
214
—
34,033
(366)
—
—
—
—
(366)
—
—
—
—
366
—
—
6,059
—
—
—
—
6,059
—
—
—
—
—
—
6,059
(5,382)
3,653
—
(122)
62
(1,789)
5,806
—
(540)
1
—
171
3,649
A resolution was passed at the AGM in november 2011 for the capitalisation of the Parent Company’s reserves to allow for the
possibility of distributions in the future. A copy of this resolution is available from Companies House.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 98 99
98 99
98 99
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
22. traDe anD OtHer PaYabLeS
Trade payables
Other creditors
Social security, other taxes and vAT
Corporation tax
Accruals and deferred income
The carrying value of trade and other payables is considered to be a reasonable approximation of fair value.
23. OtHer FInanCIaL LIabILItIeS
Purchase consideration on inventories falling due within one year
Zero Dividend Preference shares
2014
£000
5,970
2,995
53
2,808
1,479
13,305
2014
£000
9,324
11,552
20,876
2013
£000
2,131
745
47
625
636
4,184
2013
£000
7,947
9,721
17,668
During the year the Group’s subsidiary, inland ZDP plc issued 934,900 Zero Dividend Preference (ZDP) shares of 10p each for a total
cash consideration of £1.1 million. The ZDP shares will be repaid on or before 10 April 2019. An explanation of the fair value of the
ZDP shares is included in note 27.
24. COntIngenCIeS
The Group has the following contingent liability as at 30 June 2014:
A subsidiary undertaking, Poole investments limited (formerly Poole investments plc) (“Poole”), ceased to participate in its operating
subsidiary’s pension scheme when it disposed of former subsidiaries in May 2004. The Scheme’s principal employer, Pilkington’s
Tiles limited went into administration on 14 June 2010 and as a result Poole may be liable for a share of the cost of securing the
liabilities of the Scheme pertaining to its two former employees should there be a deficit on the Scheme’s fund. The Directors
consider that, as at the balance sheet date, material uncertainty exists over the basis and calculation of any obligation that may fall
due to Poole. Advice has been sought to clarify the Company’s position. A provision has therefore not been made in the financial
statements as the basis of any provision cannot be reliably established.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.ukInland Homes plcAnnual Report andAccounts 2014/Inland Homes plcAnnual Report andAccounts 2014Inland Homes plcAnnual Report andAccounts 2014/ 25. COMMItMentS
The Group leases an office and some plant and machinery under non-cancellable operating lease agreements. The leases have
varying terms, escalation clauses and renewal rights.
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Due in less than one year
Due later than one year and not later than five years
2014
£000
8
10
18
2013
£000
72
10
82
The break clause in the rental contract for the office building rented since 28 April 2009 at 2 Anglo Office Park, 67 white lion Road,
Amersham, HP7 9FB was exercised in August 2014. A new rental contract was entered into for the new registered office at Decimal
Place, Chiltern Avenue, Amersham, HP6 5FG on 10 July 2014. This contract has a non-cancellable term of five years with an annual
rent of £127,000.
26. CaPItaL ManageMent POLICIeS anD PrOCeDureS
The Group’s objectives when managing capital are:
• to safeguard its ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for
other stakeholders; and
• to ensure sufficient liquid resources are available to meet the funding requirement of its projects and to fund new projects
where identified.
This is achieved through ensuring sufficient bank and other facilities are in place; further details are given in note 27 to the Group
accounts. The Group monitors capital on the basis of the carrying amount of the equity less cash and cash equivalents as presented
on the face of the Group Statement of Financial Position.
The movement in the capital to overall financial ratio is shown below. The target capital to overall financing ratio has been set by the
Directors at 50% and results over this amount are considered to be a good performance against the target.
Equity
less: cash and cash equivalents
Capital
Equity
Borrowings
Overall financing
Capital to overall financing
2014
£000
64,021
(11,169)
52,852
2014
£000
64,021
39,975
103,996
50.8%
2013
£000
57,730
(12,154)
45,576
2013
£000
57,730
16,044
73,774
61.8%
The Group manages the capital structure and makes adjustments in light of changes in economic conditions and the risk
characteristics of the underlying assets. in order to maintain or adjust the capital structure, the Group may adjust the level of
dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 100 /
100
100 /
101
101
Inland Homes plc
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
Accounts 2014
nOteS tO tHe grOuP
FinAnCiAl STATEMEnTS COnTinUED
27. FInanCIaL aSSetS anD LIabILItIeS
The carrying amounts presented in the Statement of Financial Position relate to the following categories of assets and liabilities:
Financial assets
listed investments held for trading
Loans and receivables
loan to Howarth (former associate)
Trade and other receivables
Cash and cash equivalents
Financial liabilities
Financial liabilities measured at amortised cost:
— current borrowings
— trade and other payables
— Zero Dividend Preference shares
— other financial liabilities
note
18
17
16
19
22
23
23
2014
£000
1
—
13,287
11,169
24,456
28,423
9,018
11,552
9,324
58,317
2013
£000
1
1,000
14,270
12,154
27,424
6,323
2,923
9,721
7,947
26,914
The fair values are presented in the related notes.
Current borrowings consist of housebuilding loan facilities of £41.8 million, of which £26.4 million (2013: £5.5 million) is drawn down,
and further loans of £2 million secured against land (2013: £0.8 million). The loans attract interest at varying rates.
The table below analyses the Group’s financial contractual liabilities into relevant maturity groupings based on the remaining period
at the Statement of Financial Position date to the contractual maturity date. The amounts disclosed are the contractual undiscounted
cash flows.
less than one year
More than one year and less than five
Over five years
2014
2013
trade
and other
payables
£000
37,388
—
—
37,388
zero
Dividend
Preference
shares
£000
—
11,552
—
11,552
Purchase
consideration
£000
9,324
—
—
9,324
Trade
and other
payables
£000
9,199
—
—
9,199
Zero
Dividend
Preference
shares
£000
—
—
9,721
9,721
Purchase
consideration
£000
8,004
—
—
8,004
The following tables present financial assets and liabilities measured at fair value in the Group Statement of Financial Position in
accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance
of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:
level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices); and
level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair
value measurement.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.uk/
27. FInanCIaL aSSetS anD LIabILItIeS COnTinUED
The financial assets and liabilities measured at fair value in the Group Statement of Financial Position are grouped into the fair value
hierarchy as follows:
assets
net fair value at 1 July 2013
Fair value movements during the year
net fair value at 30 june 2014
Liabilities
net fair value at 1 July 2013
Additions
Fair value movements during the year
net fair value at 30 june 2014
note
27(a) & (b)
note
27(a)
level 1
£000
level 2
£000
1
—
1
level 1
£000
10,262
1,108
1,383
12,753
—
—
—
level 2
£000
—
—
—
—
level 3
£000
11,000
(822)
10,178
level 3
£000
—
—
—
—
Total
£000
11,001
(822)
10,179
Total
£000
10,262
1,108
1,383
12,753
(a) Listed securities and debentures
All the listed equity securities and debentures are denominated in Sterling and are publicly traded in the United Kingdom. Fair values
have been determined by reference to their quoted mid prices at the reporting date. The ZDP shares are carried at their accrued
value of 111.34p per share (2013: 103.78p) however their closing price on the main market of the london Stock Exchange on 30 June
2014 was 124.00p (2013: 109.75p). During the year 934,900 shares were issued at a price of 118.5p per share.
(b) Assets not based on observable market data
The option to purchase the share of Drayton Garden village limited is measured at fair value annually and a fair value loss was
recognised during the year. The investment property is stated at cost and reviewed annually for impairment. The current carrying
value is £7.68 million. The investment property was valued by CBRE ltd in March 2013 in accordance with the current edition of the
RiCS valuation Professional Standards, published by the Royal institution of Chartered Surveyors, at £9.64 million. The method used
involved the calculation of the gross development value of the site (using the comparable method) based on the planning permission
in place and the resulting residual land value. The key assumptions relate to property prices, construction prices and the extent of
any remediation required with a profit margin of 17% of gross development value. The Directors consider this to be a reasonable
approximation of fair value.
28. reLateD PartY tranSaCtIOnS
During the year ended 30 June 2010 the Group entered into a joint venture with Howarth Homes plc for the development of 51 units
at a site in Croxley Green, Hertfordshire. The Group’s 50% share of the profits after tax for the period to 30 June 2014 amounts to
£613,000 (2013: £676,000) that has been recognised in the Group income Statement. no further profits will be received from this joint
venture and inland’s involvement has come to an end.
The Group’s share of the results and its share of net assets of the joint venture are as follows:
net assets
net result
2014
£000
—
613
2013
£000
373
676
29. COMPanY InFOrMatIOn
The Company is a public limited company registered in England and wales. The registered office and principal place of business is
Decimal Place, Chiltern Avenue, Amersham, Buckinghamshire, HP6 5FG.
The principal activity of the Group is to acquire residential and mixed use sites and seek planning consent for development. The
Group develops a number of the plots for private sale and sells consented plots to housebuilders.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL
102 /
102
102
103
103
Inland Homes plc
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
Accounts 2014
InDePenDent auDItOr’S rePOrt
TO THE MEMBERS OF inlAnD HOMES PlC
we have audited the Parent Company financial statements of inland Homes plc for the year ended 30 June 2014 which comprise
the Company balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit 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 auditor’s 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 audit work, for this report, or for the
opinions we have formed.
reSPeCtIve reSPOnSIbILItIeS OF DIreCtOrS anD auDItOr
As explained more fully in the Directors’ Responsibilities Statement set out on page 66, the Directors are responsible for the
preparation of the Parent Company financial statements and for being satisfied that they give a true and fair view. Our responsibility
is to audit and express an opinion on the Parent Company financial statements in accordance with applicable law and international
Standards on Auditing (UK and ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s) Ethical
Standards for Auditors.
SCOPe OF tHe auDIt OF tHe FInanCIaL StateMentS
A description of the scope of an audit of financial statements is provided on the APB’s website at www.frc.org.uk/apb/scope/private.cfm.
OPInIOn On FInanCIaL StateMentS
in our opinion the Parent Company financial statements:
• give a true and fair view of the state of the Company’s affairs as at 30 June 2014;
• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
OPInIOn On OtHer Matter PreSCrIbeD bY tHe COMPanIeS aCt 2006
in our opinion the information given in the Strategic Report and in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the Parent Company financial statements.
MatterS On WHICH We are requIreD tO rePOrt bY exCePtIOn
we have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received
from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
OtHer Matter
we have reported separately on the Group financial statements of inland Homes plc for the year ended 30 June 2014.
grant thornton uk LLP
nicholas Watson
Senior Statutory Auditor
for and on behalf of Grant Thornton UK llP
Statutory Auditor, Chartered Accountants
Reading
15 October 2014
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.uk/ COMPanY
BAlAnCE SHEET AT 30 JUnE 2014
Fixed assets
investments
Current assets
Debtors
listed investments
Deferred tax
Cash at bank and in hand
Creditors: amounts falling due within one year
net current assets
total assets less liabilities
Capital and reserves
Called up share capital
Share premium
Treasury shares
Special reserve
Profit and loss account
Shareholders’ funds
note
4
5
6
7
8
8
8
8
2014
£000
12,472
12,472
37,588
1
280
10,473
48,342
(350)
47,992
60,464
20,280
34,033
—
6,059
92
60,464
2013
£000
12,472
12,472
36,385
1
246
12,169
48,801
(210)
48,591
61,063
20,131
33,695
(366)
6,059
1,544
61,063
The financial statements on pages 103 to 107 were approved and authorised for issue by the Board of Directors on 15 October 2014
and signed on its behalf by:
Stephen Wicks
Director
nishith Malde
Director
Company number 5482990
The accompanying accounting policies and notes form part of these financial statements.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 104 /
104
104
105
105
Inland Homes plc
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
Accounts 2014
nOteS tO tHe COMPanY
FinAnCiAl STATEMEnTS
1. PrInCIPaL aCCOuntIng POLICIeS
basis of preparation
The financial statements have been prepared in accordance with applicable United Kingdom accounting standards and under
the historical cost convention. The Directors have reviewed the principal accounting policies and consider they remain the most
appropriate for the Company. The principal accounting policies of the Company have remained unchanged from the previous year.
Investments
investments are included at cost less amounts written off.
equity-settled share-based payment
All share-based payment arrangements are recognised in the financial statements.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair values using the
Black–Scholes options pricing model. where employees are rewarded using share-based payments, the fair values of employees’
services are determined indirectly by reference to the fair value of the instrument granted to the employee. This fair value is
appraised at the grant date and excludes the impact of any non-market vesting conditions.
All equity-settled share-based payments are ultimately recognised as an expense in the profit and loss account with a corresponding
credit to reserves brought forward.
if vesting periods or other non-market vesting conditions apply, the expense is allocated over the vesting period, based on the best
available estimate of the number of share options expected to vest. Estimates are subsequently revised if there is any indication
that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period. no adjustment is made to any expense recognised in prior periods if share options ultimately
exercised are different to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable transaction costs are credited to share capital and, where
appropriate, share premium.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more
tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised
when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or
substantively enacted by the balance sheet date on an undiscounted basis.
2. PrOFIt attrIbutabLe tO MeMberS OF tHe Parent COMPanY
As permitted by Section 408 of the Companies Act 2006, the Parent Company has not presented its own profit and loss account.
The Company’s loss for the year of £1.1 million (2013: profit of £1.4 million) has been transferred to reserves.
auditor’s remuneration
The audit fees for the Company were £5,000 (2013: £5,000). The auditor’s remuneration for other services is disclosed in note 6 to the
Group financial statements.
Fees paid to the Company’s auditor, Grant Thornton UK llP, and its associates for services other than statutory audit of the Company
are not disclosed in inland Homes plc’s financial statements since the Group financial statements of inland Homes plc are required
to disclose non-audit fees on a consolidated basis.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.uk/ 3. DIreCtOrS’ reMuneratIOn
See note 7 to the Group financial statements and the Directors’ Remuneration Report.
4. InveStMentS
Cost
At 1 July 2013
at 30 june 2014
amortisation
At 1 July 2013
at 30 june 2014
net book amount to 30 june 2014
net book amount to 30 June 2013
See note 13 of the Group financial statements for details on the Group undertakings.
5. DebtOrS
Amounts owed by Group undertakings
loan to Howarth (former associate)
Other debtors
6. CreDItOrS: aMOuntS FaLLIng Due WItHIn One Year
Trade creditors
Accruals and other creditors
7. SHare CaPItaL
authorised
239,990,000 (2013: 239,990,000) ordinary shares of 10p each
1,000 (2013: 1,000) redeemable shares of £1 each
Investment
in group
undertakings
£000
12,472
12,472
—
—
12,472
12,472
2014
£000
37,182
—
406
37,588
2014
£000
159
191
350
2014
£000
23,999
—
23,999
total
£000
12,472
12,472
—
—
12,472
12,472
2013
£000
34,923
1,000
462
36,385
2013
£000
65
145
210
2013
£000
23,999
1
24,000
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 106 /
106
106
107
107
Inland Homes plc
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Annual Report and
Accounts 2014
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nOteS tO tHe COMPanY
FinAnCiAl STATEMEnTS COnTinUED
7. SHare CaPItaL COnTinUED
allotted, issued and fully paid
202,799,432 (2013: 201,299,432) ordinary shares of 10p each
980 (2013: 980) redeemable shares of £1 each
180 (2013: 180) deferred shares of 10p each
2014
£000
20,280
—
—
20,280
2013
£000
20,130
1
—
20,131
The Company currently holds none (2013: 1,325,000) of its own shares in treasury. During the year 1,325,000 ordinary shares held as
treasury shares were sold on the open market at a price of 44 pence per ordinary share. The excess over the price originally paid for
the shares has been credited to share premium.
During the year ended 30 June 2014 1,500,000 shares were issued as a result of Stephen wicks exercising share options at a cash
consideration of 18.25p per share, generating a premium of 8.25p per share.
The Company operates a long term incentive plan as part of the remuneration packages of the Executive Directors. During the year the
2007 Plan was cancelled and replaced with the 2013 Plan. The redeemable and deferred shares were redesignated as 9,800 valueless
deferred shares of 10 pence each. Further information can be found in the Directors’ Remuneration Report on pages 56 to 61.
Details of the Company’s share option schemes can be found in note 20 to the Group accounts.
8. reServeS
At 30 June 2013
loss for the year
Dividends paid to ordinary shareholders
issue of shares
Cancellation of deferred shares
Sale of treasury shares
Employee share-based compensation
at 30 june 2014
Share
premium
£000
treasury
shares
£000
Special
reserve
£000
33,695
—
—
124
—
214
—
34,033
(366)
—
—
—
—
366
—
—
6,059
—
—
—
—
—
—
6,059
Profit
and loss
account
£000
1,544
(1,084)
(540)
—
1
—
171
92
A resolution was passed at the AGM in november 2011 for the capitalisation of the Parent Company’s reserves to allow for the
possibility of distributions in the future. A copy of this resolution is available from Companies House.
9. CaPItaL COMMItMentS
The Company had no outstanding capital commitments at 30 June 2014 or 30 June 2013. On 10 July 2014 the Company entered
into a five year non-cancellable rental contract for its new registered office at Decimal Place, Chiltern Avenue, Amersham,
Buckinghamshire, HP6 5FG.
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.uk/ 10. COntIngent LIabILItIeS
The Company has the following contingent liabilities as at 30 June 2014:
a. inland Homes plc has guaranteed the obligations of inland Housing limited in respect of borrowings relating to the subsidiary
undertaking’s developments. in the Directors’ opinion there is unlikely to be any such shortfall.
b. inland Homes plc has guaranteed the obligations of inland limited in respect of a housebuilding facility relating to the subsidiary
undertaking’s development at Chelmsford.
c.
inland Homes plc has guaranteed any cost overruns and shortfall of interest payable by inland Homes Developments limited in
respect of borrowings relating to the subsidiary undertaking’s developments. in the Directors’ opinion there is unlikely to be any
such shortfall.
d. inland Homes plc has guaranteed the build performance obligations of inland limited on a contract with a housing association.
no provisions have been made in these financial statements in respect of these contingent liabilities.
11. reCOnCILIatIOn OF MOveMentS In SHareHOLDerS’ FunDS
(loss)/profit for the year
issue of shares
Payment of dividend to ordinary shareholders
Sale of treasury shares
Share-based compensation
net (decrease)/increase in shareholders’ funds
Opening shareholders’ funds
Closing shareholders’ funds
2014
£000
(1,084)
274
(540)
580
171
(599)
61,063
60,464
2013
£000
1,392
4,731
(122)
—
62
6,063
55,000
61,063
12. reLateD PartY tranSaCtIOnS
The Company is exercising its right to withhold disclosure of related party transactions between itself and its wholly owned subsidiary
undertakings in line with FRS8.3 Related Party Disclosures.
23697.04 22 October 2014 5:25 PM PROOF 9
Stock code: INLStock code: INLStrategic ReportOur GovernanceOur FinancialsShareholder InformationStock code: INL 108 /
108
108
PB
iBC
Inland Homes plc
Inland Homes plc
Inland Homes plc
Annual Report and
Annual Report and
Annual Report and
Accounts 2014
Accounts 2014
Accounts 2014
SHareHOLDer
nOTES
23697.04 22 October 2014 5:25 PM PROOF 9
www.inlandhomes.co.uk/ aDvISerS anD
COMPAny inFORMATiOn
COMPanY regIStratIOn
nuMber
5482990
COMPanY SeCretarY
nishith Malde FCA
nOMInateD aDvISer
anD brOker
finnCap Limited
60 new Broad Street
london, EC2M 1JJ
SOLICItOr
Dorsey & Whitney LLP
199 Bishopsgate
london, EC2M 3UT
auDItOr
grant thornton uk LLP
Chartered Accountants
Statutory Auditor
1020 Eskdale Road
iQ winnersh
wokingham
Berkshire, RG41 5TS
banker
barclays bank PLC
Fourth Floor
Apex Plaza
Forbury Road
Reading
Berkshire, RG1 1AX
regIStrar
Capita registrars
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
InLanD HOMeS PLC
registered office
and website
Decimal Place
Chiltern Avenue
Amersham
Buckinghamshire, HP6 5FG
Tel: 01494 762450
Fax: 01494 765897
Email: info@inlandplc.com
www.inlandhomes.co.uk
Cover: Proposed development at
Meridian, Southampton
Stock code: INL
23697.04 22 October 2014 5:25 PM PROOF 9
Strategic ReportOur GovernanceOur FinancialsShareholder Information Inland Homes plc
Decimal Place
Chiltern Avenue
Amersham
Buckinghamshire
HP6 5FG
Tel: 01494 762450
Fax: 01494 765897
Email: info@inlandplc.com
www.inlandhomes.co.uk
23697.04 22 October 2014 5:25 PM PROOF 9