Inland Homes Plc Annual Report 2015

Plain-text annual report

Annual Report and Accounts for the year ended 30 June 2015 Stock Code: INL CReAtIve tHINkINg IN BRowNFIELD DEvELoPMENT 24303.04 10 November 2015 12:43 PM proof 6 24303.04 10 November 2015 12:43 PM proof 6 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. 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 24303.04 10 November 2015 12:43 PM proof 6 Cover — Artist’s impression of Meridian Waterside, SouthamptonIFC — Artist’s impression of Lily’s Walk, High Wycombe town centreouR AgILe buSINeSS modeL See pAge 11 CoNteNtS oveRvIew who we Are Land Portfolio Highlights StRAtegIC RepoRt Chairman’s Statement our Marketplace our Agile Business Model our Strategy Q&A on Strategy with CEo Stephen wicks Q&A on Finance with Finance Director Nishith Malde Q&A on Land Strategy with Land Director Paul Brett Q&A on Planning with Planning Director Mark Gilpin Case Study — wilton Park, Beaconsfield our KPIs Chief Executive’s Review Case Study — Meridian waterside, Southampton Finance Director’s Review Risk and Risk Management Corporate, Social, Ethical and Environmental Responsibilities Case Study — Brooklands College, Ashford ouR goveRNANCe Board of Directors Senior Management our Governance Directors’ Remuneration Report Directors’ Report ouR FINANCIALS Independent Auditor’s Report (Group) Group Income Statement 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 Shareholder Notes Advisers and Company Information 02 03 04 08 10 11 14 16 18 20 21 22 24 26 30 32 35 36 40 44 46 48 49 53 58 60 61 62 63 64 107 109 110 118 120 01 Completed houses at Drayton Garden village, west Drayton in Middlesex ouR StRAtegy See pAge 14 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 Showhome at Queensgate, Farnborough in Hampshire ouR kpIS See pAge 24 Showhome at Drayton Garden village, west Drayton in Middlesex gettINg ARouNd tHe RepoRt Introduction to signposting devices: Find out more information on specific pages Read more online at www.inlandhomes.co.uk 24303.04 10 November 2015 12:43 PM proof 6 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 maximise 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 provides healthy 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. Find out more about our Strategy on pages 14 & 15 Read the Chief executive’s Review on pages 26 to 29 Completed development of 152 apartments at west Plaza, Ashford in Middlesex pRIvAte HouSINg pLotS SoLd 2015 ReSIdeNtIAL LANd pLotS SoLd 2015 LANd bANk pLotS 248 440 5,176 pLotS wItH pLANNINg peRmISSIoN pLotS wItHout pLANNINg peRmISSIoN CuRReNt ANNuAL ReNt INCome 1,200 3,976 £1.1m 02 24303.04 10 November 2015 12:43 PM proof 6 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015LANd poRtFoLIo Inland Homes has a diverse land portfolio which consists of 5,176 plots with the vast majority in the South and South East of England. we continuously look to build sustainable homes whilst delivering our commitment to quality and comfort. This commitment extends to creating developments that not only serve the needs of the residents into the future, but that sustainably enrich the wider community. we want our projects to stand testament to our values and leave a positive legacy to the area. without compromising on our excellence in design or the quality of our build, we ensure that each of our projects contributes to the sustainable development of six core areas. Read about our Corporate, Social, ethical and environmental Responsibilities on pages 36 to 39 SUSTAINABILITY AT THE HEART OF EVERYTHING WE DO Find out more about our Land Strategy in the Q&A with paul brett on page 20 Find out more about our Agile business model on pages 11 to 13 BIRMINGHAM LEIGHTON BUZZARD LITTLE CHALFONT IPSWICH CHESHAM AYLESBURY AMERSHAM WENDOVER HOLMER GREEN HIGH WYCOMBE & LOUDWATER WOOBURN GREEN BEACONSFIELD GARSTON COLCHESTER FRATING MARKYATE TIPTREE BOREHAM CHELMSFORD IVER UXBRIDGE ALPERTON ACTON BASILDON WEST DRAYTON FARNBOROUGH SOUTHAMPTON SOUTHALL ASHFORD STAINES BASINGSTOKE BOURNEMOUTH POOLE SIteS uNdeR CoNStRuCtIoN otHeR INLANd SIteS 24303.04 10 November 2015 12:43 PM proof 6 03 Stock Code: INL2014/15 FINANCIAL ANd opeRAtIoNAL HIgHLIgHtS ReveNue £114.2m 2014 restated: £58.9m bASIC eARNINgS peR SHARe 14.67p 2014 restated: 3.46p pRoFIt beFoRe tAx £34.0m 2014 restated: £9.6m FINANCIAL HIgHLIgHtS • Revenue has increased by 94% to £114.2m (2014 restated: £58.9m); • Profit before tax (including £14.5m revaluation surplus) has increased by 254% to £34.0m (2014 restated: £9.6m); £114.2m 14.67p £34.0m • Earnings per share has increased by 324% to 14.67p (2014 £58.9m £31.1m* £21.4m* £6.1m* 2.10p* 1.98p* 0.41p* 3.46p £9.6m £3.5m* £1.6m* £5.2m* • Net assets per share increased by 48% to 43.92p (2014 restated: 29.63p) excluding any unrealised gains within inventories; restated: 3.46p); • Total dividend (interim 0.3p plus proposed final 0.7p) per share increased by 67% to 1.0p (2014: 0.6p); 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 • Year end cash balance of £21.4m (2014 restated: £11.1m); Net ASSet vALue peR SHARe 43.92p yeAR eNd CASH bALANCeS £21.4m dIvIdeNd peR SHARe 1.00p 2014 restated: 29.63p 2014 restated: £11.1m 2014: 0.60p 43.92p £21.4m 1.00p 26.5p* 27.0p* 28.0p 29.63p £12.2m £11.1m 0.60p 0.27p 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 £2.2m* £0.6m* 0.067p 0.00p * Due to the introduction of IFRS 10 the Group has consolidated the results of Drayton Garden village Ltd (DGvL) for the years ending 30 June 2015 and 2014. Prior years were accounted for under IAS 27 and SIC 12 and these standards did not require the consolidation of DGvL. 04 24303.04 10 November 2015 12:43 PM proof 6 • Net gearing** of 39% (2014 restated: 68%). ** Total borrowings less cash as a proportion of shareholders’ funds opeRAtIoNAL HIgHLIgHtS • Record performance, well ahead of market expectations; • Expansion of housebuilding programme adding significantly to results. 248 private homes sold this year (2014: 114); • Creation of residential investment property portfolio contributed £14.5m of revaluation surplus and annual rental income has exceeded £1.1m post year end; • Land bank has continued to grow and currently stands at 5,176 plots (2014: 3,734 plots), 1,200 of which are consented (2014: 1,318). Read the Chief executive’s Review on pages 26 to 29 Read the Finance director’s Review on pages 32 to 34 Read more online at www.inlandhomes.co.uk 5,176 pLotS IN tHe LANd bANk Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.uk1,200 CoNSeNted pLotS IN LANd bANk Site entrance at Drayton Garden village, west Drayton in Middlesex Marketing suite at Carter’s Quay, Poole in Dorset 248 pRIvAte HouSINg CompLetIoNS tHIS yeAR Completed development at Queensgate, Farnborough in Hampshire Showhome at Queensgate, Farnborough in Hampshire 5,176 pLotS IN tHe LANd bANk Marketing suite at west Plaza, Ashford in Middlesex Artist’s impression of Swallow Street, Iver in Buckinghamshire 24303.04 10 November 2015 12:43 PM proof 6 StRAtegIC REPoRT 06 Artist’s impression of The vale, Acton in west London 24303.04 10 November 2015 12:43 PM proof 6 INSIde tHIS SeCtIoN Chairman’s Statement our Marketplace our Agile Business Model our Strategy Q&A on Strategy with CEo Stephen wicks Q&A on Finance with Finance Director Nishith Malde Q&A on Land Strategy with Land Director Paul Brett Q&A on Planning with Planning Director Mark Gilpin Case Study — wilton Park, Beaconsfield our KPIs Chief Executive’s Review Case Study — Meridian waterside, Southampton Finance Director’s Review Risk and Risk Management Corporate, Social, Ethical and Environmental Responsibilities Case Study — Brooklands College, Ashford £1.1m CuRReNt ANNuAL ReNtAL INCome with purchasers’ confidence high, supported by a removal of political uncertainty and continuing strong demand for homes and building land, we have every confidence in delivering further significant progress in the current financial year Stephen wicks Chief Executive Officer Showhome at Drayton Garden village, west Drayton in Middlesex 24303.04 10 November 2015 12:43 PM proof 6 08 10 11 14 16 18 20 21 22 24 26 30 32 35 36 40 07 CHAIRmAN’S StAtemeNt This has been a significant year for Inland Homes, with record breaking financial results achieved through the delivery of a well- balanced strategy of new homes, land sales, land purchases and rental income. The Group’s results demonstrate that our small team has been highly successful in delivering and managing the significant increase in both turnover, profitability and shareholders’ funds achieved from our expanding housebuilding and the sale of consented land. our focus remains on development opportunities in Southern England in locations where the economy is strong and demand is high. Inland built and sold 248 private homes and 39 homes for housing associations with an average sale price of £264,000 for our private units. This is a 52% increase in overall completions when measured against the comparable period last year. we completed the sale of 440 building plots (2014: 169 building plots) and our rental income was £0.8m, although this has increased significantly since the year end to £1.1m per annum. During the financial year, Inland acquired 76 existing houses, together with undeveloped land, that was released by the Defence Infrastructure organisation at wilton Park in Beaconsfield, Buckinghamshire. The Group intends to hold the houses as investment properties and we have seen a revaluation surplus on these properties of £14.5m at the balance sheet date. These transactions have resulted in a record profit before tax of £34.0m (including the revaluation surplus on investment properties of £14.5m), an increase of 254% over the previous year. our varied portfolio of mainly 1, 2 and 3 bed homes are particularly popular with first time buyers and investors. The Government’s ‘Help to Buy’ initiative is a very attractive incentive with 31% of our buyers taking advantage of this scheme during the financial year. we are pleased to note that this scheme has been extended by the Government to 2020. The forward sales position of homes that have been reserved or where contracts have been exchanged, is very strong at £31.1m. The Group’s balance sheet has strengthened significantly over the previous period with cash balances of £21.4m at the year end and shareholders’ funds of £88.8m. Net borrowings amounted to £34.9m (2014 restated: £40.9m). Borrowings have increased post the year end date due to continuing investment in land opportunities and a further increase in work in progress. Despite the substantial increase in plot sales with planning permissions and completed homes, I am pleased to report that the land bank has increased to a record 5,176 plots (2014: 3,734 plots), a significant achievement by any measure. The Group’s administrative expenses have increased as we continue to invest in quality personnel in a competitive marketplace and as a result of the substantial increase in the activities of the Group. Given the Group’s strong earnings, forward sales position and sound balance sheet, the Board is proposing to increase the final dividend by 17% to 0.7p per share (2014: 0.6p) subject to shareholders’ approval at the AGM which is to be held on 14 December 2015. The final dividend will be paid to shareholders on 22 January 2016. Together with the interim dividend of 0.3p per share paid in July 2015 this brings the total dividends for the year to 1.0p, an increase of 67%. Finally, I should like to extend my thanks once again to our small, highly motivated team led by our CEo, Stephen wicks, for their continued hard work during the year which has made these outstanding results possible. terry Roydon Non-executive Chairman 28 October 2015 24303.04 10 November 2015 12:43 PM proof 6 terry Roydon Non-executive Chairman this has been a significant year for Inland Homes, with record breaking financial results achieved through the delivery of a well-balanced strategy of new homes, land sales, land purchases and rental income Find out more about our Strategy on pages 14 & 15 Read the Chief executive’s Review on pages 26 to 29 Read more online at www.inlandhomes.co.uk 08 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015Artist’s impression of witley Gardens, Southall in west London 24303.04 10 November 2015 12:43 PM proof 6 ouR mARketpLACe vicki Noon Sales & Marketing Director Annual uk housing completions in the 12 months to June 2015 were up 15% to 131,060. to keep up with demand the industry should be building 220,000 dwellings per year Find out more about our Strategy on pages 14 & 15 Read more online at www.inlandhomes.co.uk 10 The UK housing market slowed down in the early part of 2015 but has recovered since the general election in May 2015. House prices in the South East, where the Group predominantly operates have increased by 6.7% in the year to July 2015 according to the office for National Statistics. This is in contrast to the 11.6% increase in the previous year. sold by Inland used this scheme and this shows that certain types of purchaser are still very reliant on the Government’s help to obtain a deposit. The Council of Mortgage Lenders have forecast an 8% increase in lending during 2015 and mortgage rates are still at historic lows. The rapid growth that we have seen is widely attributed to the Government’s ‘Help to Buy’ Scheme, which has enabled 120,000 households, most of them first time buyers, get onto the property ladder who had been unable to do so since the credit crunch. This sudden increase in demand pushed the prices up but these levels of price increases could only ever be temporary and we have now seen them normalise. with the fundamental undersupply of homes, prices will inevitably continue to rise, especially when expectations in interest rate increases in the near future have softened. Recent research by the housing charity Shelter has shown that in the two and a half years since its launch 3% has been added to the average cost of a UK home as a direct result of the scheme. The scheme has now been extended to 2020, bringing some certainty back into the sector. This year, 31% of the homes Annual UK housing completions in the 12 months to June 2015 were up 15% compared to the previous year at 131,060 but the housing starts during the same period were down by 1%. To keep up with demand we should be building 220,000 dwellings per annum. with such a shortage of homes, increases in mortgage availability and an expected increase in employment growth we expect house prices to continue to rise in our operating area, albeit at a slower rate than that experienced over the last two years. The new Government is putting housing at the forefront of their list of priorities and Inland has been involved in the consultation process on Starter Homes, even receiving Prime Minister David Cameron on a site visit to our Carter’s Quay development in Poole, Dorset. LeveL oF HouSINg StARtS ANd CompLetIoNS ANd QuARteRLy New HouSINg output 8,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Housing starts England and Wales Housing completions England and Wales New housing output 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 0 1 0 2 2 Q 1 1 0 2 2 Q 2 1 0 2 2 Q 3 1 0 2 2 Q 4 1 0 2 2 Q 5 1 0 2 2 Q Source: office for National Statistics 24303.04 10 November 2015 12:43 PM proof 6 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.uk ouR AgILe buSINeSS modeL The key to our agile business model is balancing resources, both land and cash, to enable regular land purchases and a constantly developing land bank. This feeds opportunities to the planning team who begin the value adding process by securing important planning permission. The asset can then be monetised in several different ways: selling the land with planning permission, selling a proportion of the plots to developers, or utilising our housebuilding capabilities and selling houses directly to homeowners. Each of these processes is underpinned by an ongoing dual assessment — of the market conditions and customer demands, and our own cash and opportunity flow. The continual decision making and plan refining process based on these considerations means that Inland not only produce highly sought after homes and developments, but deftly balance their assets and cash, maintaining a responsive forward- looking financial strategy. ASSeSSmeNt oF mARket CoNdItIoNS The planning teams undertake thorough research into sites before, during and after purchase, to establish the factors at play, from local authority restrictions or demands on the site and community pressures, to the nature of the landscape and its surrounding areas. Before an application is submitted, extensive consultation is undertaken with planning bodies to establish the parameters for a project. our in-depth knowledge and experience as well as research into the specific area ensures that the proposed project is not only likely to be supported by the local council, but that there is high demand for the resultant properties and the project will be profitable. External consultants are used to advise on a range of aspects of the project, including sustainability, and once a plan is drawn up we continue to refine and adjust it based on the constant monitoring of local and market forces. As a result, we have a stellar track record of achieving planning permission even on the most difficult sites, and the resulting developments are tailor-made for the local community, completely transforming brownfield land into attractive homes and landscapes. HoLIStIC ASSeSSmeNt oF ouR poRtFoLIo when it comes to deciding on whether to sell the site with planning to developers or undertake the build internally, we assess influencing factors such as cost of labour, timescales and location to decide on the most appropriate route to take. Considering the financing of a project build is critical to this decision making process, and we crucially assess this not only on a project basis, but in terms of how it will affect the cash flow of the Group as a whole. Inland procures funding from a number of sources, including joint ventures and loan finance. However, a major source of funding is using our own equity, and a holistic decision has to be made on whether certain consented sites should be realised into cash to finance future projects and overheads. The inbuilt flexibility and agility of this model allows us to operate sustainably, and undertake projects which deliver sound returns for our shareholders. See our key performance Indicators on pages 24 & 25 Find out more about Risk and Risk management on page 35 Revenue released for future land portfolio development or housebuilding projects, and returns to shareholders DELIVERY TO CUSTOMERS HOMEOWNERS DEVELOPERS • Part or all of the site can be developed by Inland in partnership with contractors • Part or all of sites can be sold to developers Longer term cash generation Short to medium term cash generation The agility of the Inland approach means either or a combination of the above can be pursued in response to market conditions and cash flow requirements DEVELOP LAND PORTFOLIO Identify opportunities Select acquisitions Purchase of strategic sites with future potential • • • • Joint ventures Enabled by long term relationships with agents and sellers Pipeline of opportunities of different sizes and timescales Maintaining a balanced portfolio of land and cash, and a sustainable stream of opportunities Rigorous assessment of market conditions and Inland’s need for cash release in the short, medium and longer terms VALUE ADDED TO LAND • Prudent timing • Consulting regulators and communities • Achieving valuable planning permission Inland’s experienced team have an in-depth knowledge of processes and stellar track record of securing planning 11 24303.04 10 November 2015 12:43 PM proof 6 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INL ouR AgILe buSINeSS modeL CoNtINued This value chain describes the stages of a project, showing the value that Inland add to a brownfield site, transforming it for their customers, and the returns subsequently delivered to shareholders and broader stakeholders. RETURN VALUE TO SHAREHOLDERS ADDING VALUE AND CREATING VALUE RIGHT THROUGH THE CHAIN REINVEST IdeNtIFy LANd our local insight and established relationships with vendors and public sector bodies mean that we are always aware of opportunities to increase our land bank. ACQuIRe LANd our financing resources and strong reputation as being trustworthy and reliable mean that we can act quickly to secure promising sites. ACHIeve pLANNINg peRmISSIoN once a site is acquired, extensive research and stakeholder consultations continue to prepare our bids for planning permission. our record of achieving planning permissions on sites is second to none. 12 24303.04 10 November 2015 12:43 PM proof 6 SHORT TERM RETURNS MEDIUM TERM RETURNS LONG TERM RETURNS Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukRETURN VALUE TO SHAREHOLDERS ADDING VALUE AND CREATING VALUE RIGHT THROUGH THE CHAIN REINVEST SHORT TERM RETURNS MEDIUM TERM RETURNS LONG TERM RETURNS SeLL LANd wItH pLANNINg peRmISSIoN to deveLopeRS once consent is achieved, we have the opportunity to sell the site with planning permission to developers or housing associations for a short term return. SeLL pARt oF tHe SIte By selling a portion of a site while carrying out infrastructure works and housebuilding on other parts, we deliver revenue in the medium term. deveLop tHe wHoLe SIte Building a whole development takes longer but maximises the revenue a site can deliver over the long term. we undertake construction using trusted contractors, establishing strategic partnerships that are cultivated over many years. 24303.04 10 November 2015 12:43 PM proof 6 13 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLouR StRAtegy INLANd’S CLeAR StRAtegy HAS deLIveRed gRowtH ANd A NumbeR oF outStANdINg pRoJeCtS oveR tHe LASt yeAR. we HAve mAINtAINed exIStINg ReLAtIoNSHIpS ANd deveLoped New oNeS, ANd ReFINed ouR HouSebuILdINg CApAbILItIeS So tHAt we CoNtINue to Compete wItH otHeR HouSebuILdeRS. HoweveR, we HAve StILL RetAINed tHe eSSeNCe oF wHAt mAkeS uS uNIQue. Read our case study on wilton park, beaconsfield on pages 22 & 23 Read our case study on meridian waterside, Southampton on pages 30 & 31 Read our case study on brooklands College, Ashford on pages 40 & 41 Completed houses at Carter’s Quay, Poole in Dorset 24303.04 10 November 2015 12:43 PM proof 6 Having proved our credentials as a quality housebuilder with award-winning developments such as Drayton Garden village and Carter’s Quay, we continue to build momentum and develop our quality portfolio. we currently have 223 residential units under construction across nine sites and this is likely to increase in the medium term. This will in part be achieved by our move towards undertaking larger projects. our housebuilding capabilities have bolstered our reputation and attracted some significant partnerships, for example the project in Chapel Riverside, Southampton. Lastly, our varied range of financing options gives us flexibility. our business plan includes the sale of consented land, which we can tailor to our cash flow requirements. Additionally, we have an increasing bank of properties, which are providing a steady stream of rental income and cash that contributes to our overheads. we wILL CoNtINue to FLouRISH by FoCuSINg oN ouR FouR key StRAtegIC goALS: 1 Increase the size of our land bank year on year 2 Continue the core activity of plot sales to other developers to generate cash to fund our operations 3 Maximise the value from our land bank by expanding our housebuilding programme 4 Maintain borrowings at a manageable level through a strong focus on cash management and vendor financing our strong land team continues to focus on increasing the size of the land bank. with the recent introduction of our Strategic Land Team, the purchases now range from sites ready for immediate development, to tactical acquisitions of sites which open up the potential of neighbouring land, to areas which will become key housebuilding terrain in the future. All these purchases are funded by our careful financial strategy, which balances loan finance, joint venture funding and cash released by sales of other sites and completed residential units. As our planning team adds value to land through achieving planning permission, we are able to make attractive short term margins through sales to developers. In this strong housebuilding climate there is high demand for quality land, so our strategy means that we are well poised to take advantage of this and generate strong revenue streams to feed back into our land buying programme. FASt FACt 223 ReSIdeNtIAL uNItS uNdeR CoNStRuCtIoN FASt FACt 9 sites wHeRe INLANd ARe CuRReNtLy buILdINg See our key performance Indicators on pages 24 & 25 Find out more about Risk and Risk management on page 35 Read about our Corporate, Social, ethical and environmental Responsibilities on pages 36 to 39 24303.04 10 November 2015 12:43 PM proof 6 15 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLQ&A oN StRAtegy wItH Ceo StepHeN wICkS Q dId tHe pRe-eLeCtIoN uNCeRtAINty IN tHe uk HAve ANy ImpACt oN tHe CompANy’S gRowtH StRAtegy? A The market cooled slightly ahead of the general election; there was a decrease in activity across the sector. The uncertainty over the general election impacted the housing market as mortgage and housing approvals slowed down. Despite this, we exceeded our land bank growth estimates for the year and the market has picked up under the new Government. Q LASt yeAR you weRe veRy poSItIve About dRAytoN gARdeN vILLAge; CAN you updAte uS oN tHe pRogReSS? A Drayton Garden village has had its most successful year yet and is now approaching its end. In June 2015, 205 apartment building plots were sold to a national housebuilder for £19m. This was the last significant parcel of land on the site. A phase of 43 housing units is being built by Inland and 13 of these had completed at the year end at prices in excess of budget. we intend to obtain planning on eight more apartment plots in the next few months. Q CouLd you expLAIN tHe LogIC beHINd tHIS SIgNIFICANt gRowtH IN HouSebuILdINg ACtIvIty ANd do you INteNd to CoNtINue tHIS IN FutuRe? A 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 our long track record of planning success positions the Group as a housebuilder with exceptional skills in large-scale brownfield development. we have capitalised on favourable market conditions in order to significantly increase our housebuilding activity. we intend to maintain our growth strategy to enhance our land bank; however, should there be a change in these conditions, the Company may realign its strategy accordingly. Q INLANd HomeS’ LANd bANk HAS INCReASed CoNSIdeRAbLy to oveR 5,000 pLotS. wHAt IS youR tARget FoR gRowtH oveR tHe Next 12 moNtHS? A our target is to increase the land bank by net 10% by the end of June 2016. The Group has exhibited solid performance throughout the financial year and exceeded consensus estimates. we have a strong land bank in which I am confident that other housebuilders will see the development opportunity. As and when we deem it financially beneficial to the Company, we will sell sites to other housebuilders. Q wHICH oF youR CuRReNt pRoJeCtS do you expeCt to be tHe pRImARy CASH geNeRAtoRS IN tHe FINANCIAL yeAR eNdINg 30 JuNe 2016? A Inland Homes is currently working on a number of projects that will be cash generative in the current year. one of the most notable developments is expected to be Meridian Tv Studios in Southampton. Additionally, our joint venture with CPC Group Limited to develop the Brooklands College site in Ashford, Middlesex, will accommodate approximately 300 new homes, subject to planning permission, and has a gross development value in the order of £90m. 24303.04 10 November 2015 12:43 PM proof 6 Stephen wicks Chief Executive Officer our target is to increase the land bank by net 10% by the end of June 2016 Find out more about our business model on pages 11 to 13 Read more online at www.inlandhomes.co.uk 16 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015Stock Code: INL Strategic Report Q INLANd HomeS HAS moved INto tHe pRIvAte ReNtAL SeCtoR FoLLowINg tHe ACQuISItIoN oF 76 HouSeS At tHe CompANy’S wILtoN pARk, beACoNSFIeLd deveLopmeNt. wHAt ImpACt wILL tHIS HAve oN tHe buSINeSS movINg FoRwARd? do you INteNd to INCReASe tHe NumbeR oF ReNtAL pRopeRtIeS owNed IN tHe CuRReNt FINANCIAL yeAR? A we intend to hold the existing houses as investment properties, where significant value uplift is envisaged over the cost of these properties. we have already agreed to lease 31 of these houses, which confirms the strong demand for rental stock. once fully let the 76 houses are expected to generate gross rental income in excess of £1m per annum. There are other short term income generating opportunities that the Group is in the course of securing, whilst the scheme is being progressed for the wider development of this site. The private rental sector in the South East continues to play an important role in providing people with opportunities to rent good quality housing and we will assess the commercial viability of investing in sites that have existing rental properties. Q tHe CompANy IS HeAvILy expoSed to pRopeRty pRICeS ANd demANd IN tHe SoutH eASt; do you HAve ANy CoNCeRNS oveR tHe poteNtIAL FoR gRowtH IN tHe mARket, pARtICuLARLy IF INteReSt RAteS StARt to RISe? A Historical growth trends show that housing demand and, consequently, house prices tend to increase faster in the South East as compared to the rest of the UK. As London is an international hub, as well as the UK’s capital city, we are confident that demand for jobs and homes will continue to increase demand for housebuilders. Growth forecasts suggest that employment in the South East will increase over the next decade, which gives us confidence in our strategy to focus on developing brownfield sites in this region. Q wHAt ImpACt HAS tHe HeLp to buy SCHeme HAd oN tHe gRoup? A The Help to Buy scheme is expected to help an additional 120,000 households to buy a new build home by 2020. In 2015, the Group sold 31% of its open market units through the Government’s Help to Buy. Under the scheme, the Government provides up to 20% of the purchase price, which they send to us on completion, and this allows the purchaser to exchange contracts with us for a 5% deposit. 24303.04 10 November 2015 12:43 PM proof 6 17 Our GovernanceOur FinancialsShareholder InformationQ&A oN FINANCe wItH FINANCe dIReCtoR NISHItH mALde Q tHe gRoup HAS INCReASed ItS dIvIdeNd; How dId you deteRmINe tHIS LeveL? ALSo, tHe gRoup ISSued ItS mAIdeN INteRIm dIvIdeNd IN JuLy 2015; IS tHIS INdICAtIve oF A RevISed dIvIdeNd poLICy? A The Group commenced a dividend policy in 2013, albeit at a low level, with a maiden dividend of 0.067p. This increased over time to 0.60p in January 2015. The Group paid an interim dividend of 0.3p per share in July 2015 and is proposing a final dividend of a further 0.7p per share. The Board believes that most of the Company’s investors are seeking capital growth as opposed to high levels of dividends. However, the Board has adopted a progressive dividend policy in line with the growth in earnings. The policy will ultimately be influenced by the Group’s cash requirements. Q AS HouSebuILdINg beComeS moRe SIgNIFICANt to tHe buSINeSS wHAt ARe tHe FINANCIAL kpIs tHAt you ARe LookINg At? A The business monitors the revenue generated by the various business segments as well as the gross margins on its various developments and land disposals. we also continue to review the proportion of our land bank that is consented and the net growth in the portfolio. A measure of our forward order book in housebuilding is an important statistic to provide comfort over the level of borrowings taken on by the Group. Q tHe CompANy’S SHAReS ARe tRAdINg At A SIgNIFICANt pRemIum to NAv. do you beLIeve tHe NAv ReFLeCtS tHe tRue vALue oF ALL oF tHe ASSetS, gIveN tHAt INveNtoRIeS ARe HeLd oN tHe bALANCe SHeet At tHe LoweR oF CoSt ANd Net ReALISAbLe vALue? A The Company’s shares are perceived to be trading at a significant premium to stated NAv. However, the stated NAv does not reflect the underlying value of all of the Group’s assets. Inland generally purchases all its sites unconditionally without planning permission and then adds value through the planning process. The sites within the land bank will be at various stages of this process with some having built up substantial unrealised value as they have either achieved or are very close to securing planning permission. The cumulative unrealised value will significantly increase the underlying NAv. NAv is a key performance measure used in the real estate industry. However, IFRS NAv does not provide shareholders with the most relevant information on the fair value of the assets within an ongoing real estate company with a long term strategy. Accordingly, after consultation with our advisers, we have decided to adopt the accounting practices of the European Public Real Estate Association (“EPRA”) to address this issue. Specifically, the EPRA NAv measure highlights the fair value of net assets on a long term, ongoing basis. while not recognising unrealised gains due to planning gains in the income statement, the adjusted value of trading assets and land subject to planning gains would reflect their current fair value under EPRA’s NAv measure. we intend to introduce this additional disclosure for the six months ending 31 December 2015. 24303.04 10 November 2015 12:43 PM proof 6 Nishith malde Group Finance Director the board has adopted a progressive dividend policy in line with the growth in earnings. the policy will ultimately be influenced by the group’s cash requirements Read more in the Finance director’s Review on pages 32 to 34 Read more online at www.inlandhomes.co.uk 18 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukQ ARe you FINdINg tHAt SeCuRINg FINANCe FoR LARge deveLopmeNtS IS eASIeR poSt-geNeRAL eLeCtIoN? A The housebuilding sector has had a boost since the general election which has made lenders more comfortable about the longevity of the market. Having said that, we are seeing lending criteria being tightened up a little by some clearing banks. Funding for acquisition of land without planning consent is still extremely difficult and the joint venture with CPC Group Ltd provides the Group with further firepower in this area. Q wHAt ARe youR expeCtAtIoNS FoR NAv ANd pRoFIt gRowtH FoR tHe CuRReNt FINANCIAL yeAR? A with a sound environment in our marketplace along with the Group’s balanced business model, we expect the net asset value and profits to continue to grow. 24303.04 10 November 2015 12:43 PM proof 6 19 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLQ&A oN LANd StRAtegy wItH LANd dIReCtoR pAuL bRett Q wHAt tReNdS oR CHANgeS IN tHe mARket HAve tHeRe beeN oveR tHe LASt 12 moNtHS? Q How HAS INLANd’S LANd StRAtegy CoNtINued to SeRve tHe CompANy weLL deSpIte mARket CHANgeS? A The major development in the last year has been the increased housebuilding activity, as more companies respond to the uplift in the economy and undertake developments. This has led to greater competition for site purchases, and an increased pressure on labour and material resources, pushing prices up. It is the nature of our markets to have fluctuations and, as always, Inland remain true to our core values of integrity and openness when dealing with our customers and suppliers. we continue to cultivate strong working relationships which accounts for these market changes. Additionally, Inland’s key strengths of our speed, agility and efficiency mean that despite challenging market forces, there is no shortage of opportunities, successful site purchases and developments. Q wHAt CHANgeS HAve oCCuRRed INteRNALLy At INLANd IN tHe LASt 12 moNtHS? A The Land and Planning teams have expanded this year, and crucially have introduced a Strategic Land department. This department researches and undertakes purchases of sites that Inland have identified as strategically important — land which may be a gateway to unlocking other key sites (such as the purchase which enabled the wilton Park, Beaconsfield project, see page 22), or land that in the future may become a prime housebuilding opportunity. The strategic land department is complementary to Inland’s main focus of brownfield land purchase and development, but adds depth to the land portfolio, acquiring sites with more of a long term focus. There is a major housing crisis in the UK, with insufficient residential properties available, and whilst brownfield regeneration is a major contributor to the solution, there is not enough brownfield land to solve the crisis alone. Therefore, adding this Strategic Land Department will help Inland continue to respond (in a sustainable way) to the housing shortage into the future. A Inland continues to focus on its core attributes of expedient and rigorous risk assessments together with decisive action on potential opportunities. our skilled planning and stakeholder negotiation and flexible approach to realising the value of developments with sales at different stages of completion. By remaining true to the Inland ethos, the talented team at Inland are able to be competitive in different market climates. Inland are retaining the traditional focus on the South East of England; however, the land team are willing to consider sites of outstanding potential further afield, for example the highly successful projects on the South coast. our responsive and agile acquisition strategy means Inland are well poised to pursue new opportunities, such as those generated by relationships with local authorities. with recent successes in city centre regeneration projects, as well as large developments, Inland will continue to build on this momentum and seek similar projects in the future. Q How do JoINt veNtuReS FIt INto tHe LANd StRAtegy? A Carefully selected joint ventures can bring many advantages, particularly in financing a broader range of projects. Having considered several options, we are very pleased to be in partnership with CPC Group, whose experience in the South East and approach to due diligence and risk matches very well with Inland’s. This ongoing complementary partnership and further cash resources will contribute to the opportunity pipeline, and enable us to take on more exciting sites for development going forwards. 24303.04 10 November 2015 12:43 PM proof 6 paul brett Land Director Inland’s key strengths of our speed, agility and efficiency mean that despite challenging market forces, there is no shortage of opportunities, successful site purchases and developments Find out more about our Strategy on pages 14 & 15 Read more online at www.inlandhomes.co.uk 20 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015Q&A oN pLANNINg wItH pLANNINg dIReCtoR mARk gILpIN Q wHAt NeedS to be tAkeN INto ACCouNt wHeN pLANNINg A deveLopmeNt? Q wHo ARe tHe moSt ImpoRtANt ReLAtIoNSHIpS wItH FoR tHe pLANNINg teAm? A Producing a brief is one of the most important components of the planning process. From this brief we can generate a design which is appropriate to the site and our capabilities, and is likely to receive planning approval. The brief is an assessment and response to all the constraints and issues that need to be considered when looking at any site, such as the technical, urban design and planning constraints, the political environment and sales and marketing considerations. Technical constraints include issues such as levels, sunlight services, highways, ecology and archaeology; and urban design constraints include all those physical issues that define the environment within which a scheme is being developed. we also consider planning constraints and the political environment within which a scheme is being developed, looking at the planning policy at national, regional and local level, as well as the nature of the scheme whether it be a location that is micromanaged, regeneration led, open for ideas, or tied by party politics. Having considered these external factors, we carefully summarise all of our findings in a brief, so that we can begin to propose a solution appropriate to the location and local environment, and produce responsive and sensitive designs, that take on board all the appropriate issues and maximise the opportunity for us. As part of this preparatory stage we consider the strategy for achieving a planning approval, which may be short or long term, drawing on the extensive public consultation which runs alongside the whole planning process. we also try and establish relationships with local councils, seeking support from stakeholders throughout the local community and Government. A In addition to the relationships we develop with local stakeholders, it is of critical importance to understand and manage the relationship with the planning committee. Through these efforts we can make sure that we reflect their position on new developments, and garner as much support from influencers as possible, such as local communities, council members and other stakeholders. we closely monitor feedback on our proposals, and ensure that our planning applications are coordinated, consistent and honest. Q How HAve tHe LASt 12 moNtHS beeN FoR tHe pLANNINg teAm? wHAt mAJoR CHALLeNgeS oR oppoRtuNItIeS HAve tHeRe beeN? A Adapting to the uplift in the economy and responding to the increase in workload has been both the biggest challenge and the biggest opportunity for the planning team. we are now working on around twice the number of schemes than we were last year. Furthermore, the opportunities and locations are more diverse, and the projects are considerably larger and often more complex. our very skilled core team are drawing on their significant experience and expertise, and a network of external consultants, to continue to respond to these opportunities, and deliver excellent planning applications to feed Inland’s development pipeline. we continue to aspire to deliver ever-improving ambitious projects in an efficient way, and anticipate many more exciting opportunities in the future. 24303.04 10 November 2015 12:43 PM proof 6 21 mark gilpin Planning Director we are now working on around twice the number of schemes than we were last year. Furthermore, the opportunities and locations are more diverse, and the projects are considerably larger and often more complex Find out more about our Agile business model on pages 11 to 13 Read more online at www.inlandhomes.co.uk Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLExisting military buildings Some of the 76 existing homes now being offered for rent Paul Brett answering questions from members of the local community at the public consultation 24303.04 10 November 2015 12:43 PM proof 6 Existing military buildings Stock Code: INL CASe Study — wILtoN pARk, beACoNSFIeLd HIgHLy deSIRAbLe 114 acre deveLopmeNt SIte SCope FoR 350 AttRACtIve HomeS Find out more about our Agile business model on pages 11 to 13 Read more online at www.inlandhomes.co.uk The ongoing wilton Park project in Beaconsfield is a prime example of our strategy in action. The acquisition of the site demonstrates careful planning, a strategic land purchase and sensitive management of relationships. As a result of the delicate and skilful work of the land buying and planning teams, we are now in possession of this highly desirable 114 acre development site, which has potential for 350 attractive homes. The site, previously the home of the Ministry of Defence (MoD) School of Languages, has always had great potential for a residentially led mixed use development, but had a number of difficulties, particularly the road access. The existing access is through a bottleneck junction, inconvenient for the local community and unsuitable for a major new housing development. The one appropriate option was to develop a new road from a nearby roundabout, that would eventually form part of a relief road planned by the council. However, the land necessary for this new access was owned by a number of parties. Aware of its critical importance, we negotiated the purchase of this key piece of land, releasing the immense potential of the wilton Park site. This forward-looking and strategic purchase meant that the council and MoD then supported our bid for acquiring the site. This is a prime example of careful research and consultation with local government, alongside conversations and negotiations with land owners and the community, demonstrating the value of investing in strategic land. A further reason we were successful in the acquisition of the wilton Park site was our existing relationship with the MoD. wilton Park was the fourth site Inland has purchased from the MoD, and this proven track record meant that the MoD were confident in our ability to deliver on promises, and solve the unique challenges that come with such a site. For example, there is an active air cadets training base within the site, which we have made provisions for, enabling it to continue functioning before relocating to a new base elsewhere on the site when development commences. Such attention to detail and care for local causes is another reason the MoD entrusted Inland with this site, as we previously demonstrated by transforming the RAF west Drayton site into the successful Drayton Garden village development. 24303.04 10 November 2015 12:43 PM proof 6 As this site has significant potential, we are exercising another aspect of our strong business model by ensuring meticulous planning is undertaken, and scheduling development to begin at the most appropriate time. Public consultations and research are currently under way. During this process we are generating rental income from the site in its present state. As part of the purchase Inland has acquired 76 existing homes, which are currently offered for rent; we are also leasing other parts of the land for filming and storage uses. The site is also being used for community activities, including the air cadets and police dog training. Infrastructure planning and preparation is under way, and we are considering how best to roll out the development of the project, but crucially the site is earning an income during this preparatory stage. The finished project will be an attractive development, that will respect the surrounding greenbelt. There will be neighbourhood resources including a nursery, community hub, shop, and café, meaning that as well as catering for the needs of the local and neighbouring residents, the development will also provide employment. The acquisition of this site has been a tremendous success, and the future development will provide desirable, quality housing that will transform the area. 23 Strategic ReportOur GovernanceOur FinancialsShareholder InformationouR kpIs FINANCIAL kpI ReveNue StRAtegIC FoCuS Revenue from housebuilding activities is expected to increase significantly and this will be supplemented by land sales peRFoRmANCe During the year the number of completions of private homes increased by a significant amount, causing a large increase in revenue pRoFIt beFoRe tAx The Board’s expectation is to continue to build on the recurring profitability achieved over the last two years and will seek to secure this by the planned expansion of housebuilding and the sale of consented building plots During the year the number of completions of private homes increased by a significant amount, causing a significant increase in profit before tax. Demand for consented land also increased during the year and this resulted in several highly profitable land sales Net ASSet vALue peR SHARe 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 Growing recurring profits and a revaluation of investment properties have caused a significant increase in net asset value per share dIvIdeNd peR SHARe It is the Group’s intention to progressively increase the dividend annually as profits rise The Group paid an interim dividend of 0.3p per share in July 2015 and has proposed a further dividend of 0.7p per share payable in January 2016 bASIC eARNINgS peR SHARe The increase in profitability mentioned above will have a proportional impact on earnings per share which should continue to improve This has increased dramatically during the year due to general growth in all our activities. 7.17p per share relates to the revaluation of the 76 houses at wilton Park, Beaconsfield CHARt 93.9% 2015 2014 2013 £114.2m £58.9m restated £31.1m* 2012 £6.1m* 2011 £21.4m* 254.0% 2015 2014 2013 £9.6m restated £5.2m* 2012 £1.6m* 2011 £3.5m* 48.2% £34.0m 2015 2014 2013 2012 2011 43.9p 29.6p restated 28.0p restated 27.0p* 26.5p* 66.7% 2015 2014 2013 1.00p 0.60p 0.27p 2012 0.067p 20110.00p 324.0% 2015 2014 2013 2012 2011 14.67p 3.46p restated 1.98p* 0.41p* 2.10p* * Due to the introduction of IFRS 10 the Group has consolidated the results of DGvL for the years ending 30 June 2015 and 2014. Prior years were accounted for under IAS 27 and SIC 12 and these standards did not require the consolidation of DGvL. 24 24303.04 10 November 2015 12:43 PM proof 6 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukNoN-FINANCIAL kpI NumbeR oF pLotS wItH oR wItHout pLANNINg CoNSeNt StRAtegIC FoCuS The Group’s target is to have a land bank of approximately 10,000 residential plots as a medium term target peRFoRmANCe The Group achieved the 2015 target of 5,000 units despite sales of a large number of plots during the year totAL ReSIdeNtIAL pLotS SoLd The Group’s objective is to sell consented plots to raise working capital or those plots that are unlikely to be developed by Inland Homes There was a large demand for consented plots from housebuilders during the year so more plots than expected were sold ReSIdeNtIAL Home SALeS The Group expects to sell a similar number of residential units in the year to June 2016 at a slightly higher average selling price and the plan is to increase this target over the medium term to approximately 500 units The Group sold 248 residential units during the year, which is slightly below the target of 270 set in the last annual report but is still a significant increase over the previous period 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 The Group gained planning permission or resolutions to grant planning permission on 885 plots during the year, a record number for the Group CHARt 38.6% 2015 3,976 1,200 5,176 2014 2,416 1,318 3,734 2013 1,249 1,057 2,306 2012 727 1,215 1,942 2011 481 1,109 1,590 Without planning With planning 440 451 248 160.4% 2015 2014 2013 2012 2011 169 183 256 117.5% 2015 2014 2013 2012 9 2011 35 114 55 134.1% 2015 2014 2013 2012 2011 378 496 283 885 871 AveRAge NumbeR oF empLoyeeS The average number of employees to rise modestly as the volume of housebuilding increases Due to the increase in housebuilding activities the average number of employees increased during the year 37.5% 33 24 2015 2014 2013 2012 2011 14 13 13 25 24303.04 10 November 2015 12:43 PM proof 6 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLCHIeF exeCutIve’S RevIew I am delighted to report on a record year for Inland with the business achieving 48% growth in net assets per share to 43.92p (2014 restated: 29.63p per share) and a profit before tax of £34.0m (2014 restated: £9.6m). As set out in the Chairman’s Statement, this has been a significant year for our Group, with record sales of 440 building plots, together with the sale of 248 private homes and 39 for housing associations. our average selling price of £264,000 for our private units means that we are at the end of the market where our product is affordable and where demand from buyers is strongest. This outstanding set of results has been helped by a revaluation surplus of £14.5m on the existing housing portfolio at wilton Park, Beaconsfield, Buckinghamshire where 76 houses are being held as investment properties. This revaluation should help give shareholders an indication of some of the underlying value behind Inland’s stated NAv per share. These properties are being rented out on assured shorthold tenancy agreements with 31 properties going under offer to tenants in the first few months. once all the houses at wilton Park are let, we expect gross residential rental income on this project to exceed £1m per annum. Despite the utilisation of 727 plots through sale of land and construction of homes, our land bank has continued to rise and now stands at a record 5,176 plots. This is testament to our small land team led by Paul Brett, the Group Land Director. The status of the land portfolio is as follows: owned or contracted with planning consent or resolution to grant planning consent owned or contracted without consent Held within joint ventures without consent Plots controlled or terms agreed with consent or resolution to grant planning consent Plots controlled or terms agreed without consent total Plots 1,086 1,344 1,329 114 1,303 5,176 whilst our primary business is residentially led brownfield regeneration, wherever possible we ensure that our assets generate an income stream that contributes significantly towards the running costs of the business. our short term target is to achieve a rental income in excess of £2m per annum. The substantial increase in work in progress within our housebuilding operations and the continuing investment into good land opportunities, particularly into major projects such as wilton Park, has led to an increase in our borrowings after the year end and the Board is comfortable with the position as the underlying asset value of the business has also grown substantially. The increased borrowings are also supported by a strong forward sales position and growing recurring rental income. The Group has in the order of 50 projects at various stages of the development cycle and I set out below further details on a number of the more significant ones. wILtoN pARk, beACoNSFIeLd, buCkINgHAmSHIRe we achieved adoption of the planning brief for the development of this site during the course of the year. This confirms the capacity for at least 300 new homes, together with commercial space and the retention of a substantial number of existing former MoD houses. we now intend to apply for planning permission based on the principles set out in the brief and, in the meantime, expect to commence the construction of the first section of the new access road into the site from the Pyebush roundabout. This will also serve as the first section of the long awaited Beaconsfield relief road which will connect to Amersham Road (A355) in due course. In the short term, and until consent is granted, our focus will be on generating short term income and preparing the site for development. This site is our ‘jewel in the crown’ and is geographically situated in one of the most affluent parts of the country outside Central London. we estimate the gross development value to be in the order of £250m. Shareholders can rest assured that we are managing and nurturing this asset very carefully. 24303.04 10 November 2015 12:43 PM proof 6 Stephen wicks Chief Executive Director this has been a significant year for our group, with record sales of 440 building plots, together with the sale of 248 private homes and 39 to housing associations Read our Chairman’s Statement on pages 08 & 09 Read more online at www.inlandhomes.co.uk 26 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukReveNue £114.2m 2014 (restated): £58.9m pRoFIt beFoRe tAx £34.0m 2014 (restated): £9.6m Showhome at Drayton Garden village, west Drayton in Middlesex dRAytoN gARdeN vILLAge, weSt dRAytoN, mIddLeSex we are very proud of what has been achieved on this project. we have turned what was a derelict wasteland of rundown buildings into a superb community of new homes in a highly landscaped environment with a number of beautifully laid out village greens and children’s play areas. The development has been extremely profitable and has demonstrated the ability of Inland to manage a large-scale complex development from inception through to completion, creating an excellent living environment in the process. The development is also experiencing additional value brought about by the new Cross Rail station at west Drayton which will be an easy walking distance away. A combined heat and power system was installed with a new energy centre that delivers hot water and heating to the development in an extremely efficient manner, with estimated carbon savings of 40% when compared to a more conventional system. The sale of 205 building plots to a major housebuilder in June 2015 means that our work is now nearly finished. The development of 43 new homes by Inland, which are all pre-sold, will also conclude in this financial year. weSt pLAZA, ASHFoRd, mIddLeSex The development of 152 apartments on a complex, brownfield former hospital site was completed during the year. The apartments proved to be very attractive to a substantial number of first time buyers and investors. A block of 59 units was sold to an investor prior to commencement of the development and this underpinned the financing for the project. The demand for the homes was very strong with all units sold well ahead of completion of the building works. 24303.04 10 November 2015 12:43 PM proof 6 27 Strategic ReportOur GovernanceOur FinancialsShareholder InformationCHIeF exeCutIve’S RevIew CoNtINued Net ASSet vALue peR SHARe 43.92p 2014: 29.63p* 43.92p 26.5p* 27.0p* 28.0p 29.63p 2011 2012 2013 2014 2015 ReveNue SegmeNtS (%) 0.13% 0.69% 6.65% 34.64% TOTAL REVENUE £114,219,000 57.89% Land sales 34.64% Rental income 0.69% Housebuilding 57.89% Other 0.13% Contract income 6.65% * Due to the introduction of IFRS 10 the Group has consolidated the results of DGvL for the years ending 30 June 2015 and 2014. Prior years were accounted for under IAS 27 and SIC 12 and these standards did not require the consolidation of DGvL. 28 tHe vALe, ACtoN, LoNdoN This site is a former builder’s merchant yard, located in a prime location on a one acre plot. The property was acquired during the year and leased back to the former owner whilst it is being taken through the planning process. we have now made a planning application for 95 apartments, including some affordable housing, and commercial space. we expect to receive planning consent during the current financial year for a scheme that is expected to generate a gross development value of approximately £35m. meRIdIAN wAteRSIde, SoutHAmptoN This seven acre brownfield site is the former home of ITv Meridian Studios fronting the River Itchen. A resolution to grant planning consent for 351 units plus some commercial space was secured during the year, with no affordable housing provision. Site clearance has commenced and construction of the first phase of 54 homes will start in the current financial year. we expect the entire development to achieve a gross development value of £65m. CARteR’S QuAy, pooLe, doRSet our development of a small part of the former Pilkington’s Tiles factory, where we have consent for 268 homes, is now well under way with 41 homes now completed. we are currently selling on average over four homes per month on this project, where 3 bedroom houses are achieving an average price of £320,000. This site has undergone a dramatic transformation from what was a derelict industrial estate. CALLIS yARd, wooLwICH During the course of the year we obtained consent for 152 apartments on this derelict town centre site and subsequently completed a very profitable sale of the site to another housebuilder. JoINt veNtuRe wItH CpC gRoup The following two sites have now been acquired by our joint venture with CPC Group Limited: LILY’S WALK, HIGH WYCOMBE This former gasworks site is in the town centre opposite the Eden Shopping Centre and is subject to significant remediation to prepare for development. Detailed plans are due to be submitted shortly to the local authority for approximately 240 homes and circa 16,000 ft² of commercial space. BROOKLANDS COLLEGE, CHURCH ROAD, ASHFORD, MIDDLESEX This is a ten acre site in the town centre where a scheme is being prepared for approximately 300 residential units and some commercial space. A planning application is expected to be submitted in spring 2016. During the nine months since the inception of the Jv, a total of £13.3m has been committed on the above two projects, of which Inland’s share is £2.6m. we continue to maintain our success rate in securing planning permissions on our brownfield sites and are pleased to see a growing recognition of our regeneration skills by landowners, particularly local authorities where we are working in partnership with a number of councils to bring forward regeneration and much needed homes in Southern England. of particular note on this front is our joint venture with Southampton City Council where we have signed heads of terms on a site, ‘Chapel Riverside’. This opportunity is for approximately 350 homes and a new commercial centre and will regenerate ten acres of land owned by the Council. we expect the Development Agreement with the Council to be signed within the next few months. 24303.04 10 November 2015 12:43 PM proof 6 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukmARket The UK housing market slowed down in the early part of 2015, in all likelihood due to the uncertainty caused by the May 2015 general election. Due to the continual undersupply of new housing and the expectation of low interest rates for the foreseeable future, it is more likely that house prices in Southern England will continue to rise. The market has recovered since the general election and the changes to stamp duty and the ‘Help to Buy’ scheme have been of significant assistance. The introduction of the National Planning Policy Framework has led to a much needed increase in residential consents; however, this increase is insufficient to meet the country’s demand especially in areas of greatest need. outLook with purchasers’ confidence high, supported by a removal of any political uncertainty and continuing strong demand for homes and building land, we have every confidence in delivering further significant progress in the current financial year. Stephen wicks Chief Executive Officer 28 October 2015 Artist’s impression of The vale, Acton in west London 24303.04 10 November 2015 12:43 PM proof 6 29 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLArtist’s impression of Meridian waterside Aerial view of Meridian waterside Artist’s impression of Meridian waterside 24303.04 10 November 2015 12:43 PM proof 6 Artist’s impression of Meridian waterside CASe Study — meRIdIAN wAteRSIde, SoutHAmptoN The former Meridian Tv studios in Southampton is a site of great local significance, in terms of both its heritage and its waterside location fronting the River Itchen. The seven acre site has changed hands a number of times, but none of the historical plans for its development have been crystallised. As part of Southampton City Council’s major regeneration project, the Meridian site is a key priority for a flagship development, and has great potential despite requiring careful and knowledgeable planning. As part of our due diligence into the site, there was extensive consultation with the council about their ambitions for the area and its relationship to major transport infrastructure. The conversation saw Inland advising the council as well as consulting with them to gauge where this site fits into their plans for the city as a whole. Key to our bid for the site was proving our ability to ‘place make’, to transform a previously neglected site into an attractive place to live. Inland’s great track record of turning around sites and capturing homeowners’ interest served us well in this instance. For example, in Poole, Dorset, we created a real buzz transforming a previously dormant site into a flagship regeneration development, not only rapidly selling out the development but also attracting award shortlistings including Sunday Times ‘Development of the Year’ 2015. The level of community consultation that goes into planning at Inland ensures that the homes developed are attractive to potential buyers, and as such we were a natural choice for Southampton to work with to spearhead the regeneration of the area. The plans developed for the site reflect the needs of both the community and the wider city, including infrastructure works contributing a portion of a new flood defence system the city are building along the water bank. Building work will commence soon, with Inland undertaking the infrastructure works. This is an example of our agile business model in action, where Inland and our partners benefit from a clear vision as well as the flexibility to release cash in different timescales dependent on the sale of the plots before or after their completion. our purchase of this site, which was previously in receivership, is already contributing momentum to the development of the area, following stalled attempts in the past. once the development is complete, our ability to add value to an area will once again be seen in the 351 quality new homes delivered. The project will also be a great addition to our portfolio, and a strong example of the recent shift into more city centre builds, and particularly in ‘place- making’ regeneration projects. Furthermore, in a city with so much potential for future projects, establishing a strong relationship with Southampton City Council is very valuable for the future, and the success of this project may open the way for further fruitful partnerships in the region. 24303.04 10 November 2015 12:43 PM proof 6 31 SIte SIZe: 7 acres wItH HeRItAge ANd A wAteRSIde LoCAtIoN ReSoLutIoN to gRANt pLANNINg FoR 351 AttRACtIve New HomeS Find out more about our Agile business model on pages 11 to 13 Read more online at www.inlandhomes.co.uk Strategic ReportOur GovernanceOur FinancialsShareholder InformationFINANCe dIReCtoR’S RevIew once again the Group has produced a tremendous set of results which has been the product of a better balanced business model, with an increased amount of housebuilding alongside the sale of a number of consented plots from the land portfolio. The recovery within the housebuilding sector is now well recognised and evidenced by the significant improvement in performance reported by the UK’s major housebuilders. Inland Homes generally purchases its sites unconditionally without planning consent and funding for such acquisitions remains very difficult to procure. The debt market for residential development has become more relaxed than it was five years ago, which has also supported the momentum in the sector. In December 2014, the Group entered into an option arrangement with wilton Park Developments Ltd (wPDL), a company owned by funding partners, to acquire the land and 76 existing freehold residential properties at wilton Park in Beaconsfield, over a period of time. The site was acquired by wPDL for £35.0m, of which £29.0m was deferred over a period of three years. As at the balance sheet date, £19.0m of the deferred consideration remains outstanding and is non-recourse to the Group. In accordance with IFRS 10, the Group is required to consolidate wPDL within its financial statements and this has led to the inclusion of that company’s results, part of which has then been deducted as a minority interest as they are not attributable to the shareholders of Inland Homes plc. Further information on the treatment of wPDL within the Group accounts is provided in notes 4, 14 and 22 to the accounts. In June 2015 the Conduct Committee of the Financial Reporting Council (Committee) wrote to the Group requesting information and explanations as to why the Company did not consolidate Drayton Garden village Limited (DGvL) in the Interim Results for the half year ended 31 December 2014 in accordance with IFRS 10 Consolidated Financial Statements which was effective for the Group for the first time this year. Following discussions with the Committee, the Board has concluded that the Group controls DGvL because of the following reasons: • The Group has power over DGvL because it has the practical ability to direct the relevant activities that significantly affect DGvL’s returns. Such relevant activities would include obtaining planning permission to develop the site and subsequently managing the property to realise its value. The Group also has an option to acquire the share capital of DGvL which provides it with a mechanism by which it can direct the relevant activities. • The services that the Group provides to DGvL and the arrangement by which the Group receives its fees are such that it has rights to variable returns as a result of its involvement in delivering the various property services to DGvL. The Group is currently entitled to 90% of the profits from the project at Drayton Garden village and thus provides it with a very significant part of the returns generated from its involvement with DGvL. • The Group also has the ability to use its power to affect its returns by virtue of its involvement with DGvL. In view of the above the Group believes that under the principles of IFRS 10 it had control over DGvL from the date it entered into the agreement with DGvL and has therefore consolidated the results and financial position of DGvL within the Group accounts. Accordingly, the comparatives for earlier financial years have been restated. The profit share attributable to the shareholder of that company has been included within non-controlling interests and more information can be found in notes 4, 14 and 22 to the accounts. The consolidation of wPDL and DGvL has led to an increase in revenue, inventories and borrowings amongst other items and has had a corresponding effect on reported cash flow movements. These effects are shown in note 32 to the accounts. 24303.04 10 November 2015 12:43 PM proof 6 Nisith malde Group Finance Director once again the group has produced a tremendous set of results which has been the product of a better balanced business model, with an increased amount of housebuilding alongside the sale of a number of consented plots from the land portfolio Find out more about finance in the Q&A with Nisith malde on pages 18 & 19 Read the Chairman’s Statement on pages 08 & 09 Read the Chief executive’s Review on pages 26 to 29 32 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukFINANCIAL peRFoRmANCe The key highlights of our financial performance are: • Revenue has increased by 94% to £114.2m (2014 restated: £58.9m); • Profit before tax (including the £14.5m revaluation surplus) has increased by 254% to £34.0m (2014 restated: £9.6m); • Earnings per share has increased by 324% to 14.67p (2014 restated: 3.46p); • Total dividend (interim 0.3p plus proposed final 0.7p) per share increased by 67% to 1.0p (2014: 0.6p); • Net assets per share increased by 48% to 43.92p (2014 restated: 29.63p) excluding any unrealised gains within inventories; • Year end cash balance of £21.4m (2014 restated: £11.1m); • Net gearing* of 39% (2014 restated: 68%). gRoup INCome StAtemeNt Group revenues have increased significantly by 94% to £114.2m (2014 restated: £58.9m). The main driver of this has been the increased housebuilding activity which generated £66.1m (2014 restated: £29.2m) of revenue from 248 (2014 restated: 114) private residential unit completions of which 123 units were at our development in Ashford, Middlesex. The sale of 440 (2014 restated: 169) plots with planning consent contributed £39.6m (2014 restated: £15.1m) to revenue. Gross profit has increased by 114%, from £16.1m (restated) to £34.4m and represents a gross margin of 30.1%. The significant increase in the Group’s activities has been reflected in an increase in administrative overheads of £1.6m over the previous period. During the year, the Group acquired part of the land and 76 existing freehold residential properties at wilton Park in Beaconsfield. It is the Group’s intention to hold the existing freehold properties for their rental value and for the longer term. These properties have therefore been revalued at the balance sheet date resulting in a surplus of £14.5m being recognised in the Group income statement. This reflects a change in accounting policy and the effects of this change are explained below in ‘Financial position’. * Total borrowings less cash as a proportion of shareholders’ funds. The fair value of the option over the issued share capital of DGvL of £541,000 has been written off during the year as the future profits from Drayton Garden village that would be available for distribution to the shareholder have decreased. The Group’s loan interest expense has increased significantly to £8.4m (2014 restated: £4.3m) in line with the increased debt funding used in our house building activities. The increase has also been due to some relatively more expensive debt used to acquire land, as funding for unconsented land is still very difficult to procure at competitive rates. A notional interest charge of £1.2m (2014: £57,000) has resulted due to the discount applied to deferred consideration on site acquisitions. £948,000 of this charge relates to wPDL. The net finance expense is £8.2m and is covered 3.4 times (2014 restated: 2.6 times) by earnings before interest and tax and excluding revaluations of investment properties. tAxAtIoN The total tax charge of £5.1m represents 14.9% of the profit before tax. This is lower than the effective tax rate of 20.75% principally due to the unrealised revaluation surplus on investment properties not being subject to any tax in the current year. As the Group has sufficient capital losses brought forward, a deferred tax charge has been offset against recognition of capital losses in respect of the revaluation surplus on investment properties. eARNINgS peR SHARe ANd dIvIdeNdS Basic earnings per share were 324% higher at 14.67p (2014 restated: 3.46p). The Group paid its maiden interim dividend of 0.3p per share in July 2015. The total dividend payable for the year has been increased by 67% to 1.0p per share, with the proposed final dividend also increasing by 17% to 0.7p per share (2014: 0.6p per share) and will be payable on 22 January 2016 subject to shareholders’ approval. The dividend will be payable to shareholders on the register as at the close of business on 29 December 2015. The ex dividend date is 24 December 2015. 24303.04 10 November 2015 12:43 PM proof 6 dIvIdeNd peR SHARe 1.00p 2014: 0.60p 1.00p 0.60p 0.27p 0.067p 0.00p 2011 2012 2013 2014 2015 yeAR eNd CASH bALANCeS £21.4m 2014 (restated): £11.1m 33 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLFINANCe dIReCtoR’S RevIew continued CASH FLowS During the year ended 30 June 2015, we increased net cash inflows from operating activities before movements in working capital by £16.6m to £28.4m and after taking account of movements in working capital, cash flow generated from operations amounted to £36.8m. This is a significant change from the previous year where we experienced net cash outflows of £27.5m. This was due to the 94% increase in turnover and gross profitability mentioned earlier in my report. Investment in fixed assets, which includes the acquisition of the 76 existing properties at wilton Park, amounted to £11.5m. The Group also arranged two joint ventures into which we invested £4.9m by way of loans and equity. These investments are included in outflows from investing activities of £16.7m (2014: inflows of £1.9m). Net cash outflows from financing activities amounted to £9.8m with net inflows from borrowings of £nil, interest paid of £7.2m and £1.2m of dividends paid. FINANCIAL poSItIoN Investment properties include our property at Hamworthy, Poole and the 76 residential properties at wilton Park in Beaconsfield. The property in Poole was valued by the Board at £8.0m, which was the fair value of the property after any transfers to inventories. The 76 residential properties at wilton Park were professionally valued at £26.0m at the year end resulting in a surplus of £14.5m. This increase was due to a certificate of lawfulness having been obtained by the Group from the local authority as well as an increase in the value of houses in Beaconsfield since the site was purchased from the MoD. During the year the Group changed its accounting policy for investment properties from a deemed cost basis to a fair value basis. This has resulted in a restatement of the figures for the years ended 30 June 2013 and 2014, where both fixed assets and the profit and loss reserve have improved by £4.1m less an associated deferred tax asset of £2.1m, which had been previously recognised. Investments in and loans to joint ventures of £4.7m represents the fair value of our share of investment into three sites within the two joint ventures, referred to in the Chief Executive’s Review. Inventories have increased by 16.1% to £121.0m, which includes the land and buildings at wilton Park and DGv which are held for trading. Debtors have decreased from £10.4m (restated) to £8.0m. Cash balances at the balance sheet date were £21.4m (2014 restated: £11.1m) and net debt amounted to £34.9m (2014 restated: £40.9m), which represented a decrease in net gearing by 41.4% to 39.2% (2014 restated: 66.9%). The substantial increase in work in progress within our housebuilding operations and the continuing investment into good land opportunities, particularly into major projects like wilton Park, has led to an increase in our borrowings after the year end and the Board is comfortable with this position as the underlying asset value of the business has also grown significantly. The increased borrowings are also supported by a strong forward sales position and growing recurring rental income. Land creditors were £23.5m (2014 restated: £9.3m), of which £16.1m relates to wilton Park and is non-recourse to the Group. Net assets attributable to shareholders were £88.8m at 30 June 2015 equating to 43.92p (2014 restated: 29.63p) per share. The major part of the Group’s land bank is held as inventories at the lower of cost and net realisable value and it should be noted that the unrealised value within the portfolio of sites is significantly higher than the stated value. NAv is a key performance measure used in the real estate industry. However, IFRS NAv does not provide shareholders with the most relevant information on the fair value of the assets within an ongoing real estate company with a long term strategy. Accordingly, after consultation with our advisers, we have decided to adopt the accounting practices of the European Public Real Estate Association (“EPRA”) to address this issue. Specifically, the EPRA NAv measure highlights the fair value of net assets on a long term, ongoing basis. while not recognising unrealised gains due to planning gains in the income statement, the adjusted value of trading assets and land subject to planning gains would reflect their current fair value under EPRA’s NAv measure. we intend to introduce this additional disclosure when we report the Group’s half year results for the six month period ending 31 December 2015, expected in March 2016. Nishith malde Finance Director 28 October 2015 34 24303.04 10 November 2015 12:43 PM proof 6 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukRISk ANd RISk mANAgemeNt RISk ANd deSCRIptIoN LANd The inability to source, acquire, promote and dispose of land poteNtIAL ImpACt The Group would not be able to generate profit and cash flow for the longer term StRAtegy/mItIgAtIoN The Group has an experienced management team with a strong track record in the industry which mitigates this risk pLANNINg Increased complexity and delay in the planning process The adoption of the Community Infrastructure Levy by local authorities mARket A severe fall in the housing market in the regions in which the Group chooses to operate May have a detrimental effect on the financial position of the Group May impede sales and thus affect the rate of growth of the business May have a detrimental effect on the supply and pricing of land being marketed by landowners The Group undertakes extensive pre-acquisition due diligence on planning, technical and environmental issues together with acquiring housing sites identified in councils’ Local Plans Inability to realise maximum value in a timely fashion Adverse effect on land values Adverse effect on the timing of sales 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 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 May have a detrimental effect on the Group’s business The Group mitigates any adverse exposure to interest rate changes by controlling its gearing and, if necessary, by using hedging instruments 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 CoNStRuCtIoN • Cost overruns • Material shortages • Delays May adversely impact margins on housebuilding and increase the cost of infrastructure works The Group tries to build strong relationships with main contractors and projects are reviewed frequently in order to mitigate these risks FINANCe The availability of bank funding for land acquisition May have an adverse effect on the Group’s progress The Group continues to seek finance from alternative lending sources to improve its liquidity 24303.04 10 November 2015 12:43 PM proof 6 35 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLCoRpoRAte, SoCIAL, etHICAL ANd eNvIRoNmeNtAL ReSpoNSIbILItIeS INtRoduCtIoN At Inland, ensuring sustainable operations and development is of paramount importance. our caring attitude to our colleagues, partners and the communities and environments in which we work means we strive to function in a way that is best for everyone. our key values of integrity, openness and trust dictate our interactions with each of our major stakeholder groups: • communities • homeowners • developers • colleagues • local and national government • the environment The value we place on meeting the needs of each of our stakeholder groups intuitively informs all of our policies. with sustainability at the heart of everything we do, the following six areas describe our main focuses, and include many of our achievements. CommuNIty Care for the community permeates all our activities, and our core focus of transforming potentially contaminated land into desirable family homes and community spaces is always undertaken with the needs of future residents and neighbours firmly in mind. our ongoing consultations with communities anticipate the wider needs of the homeowners, with green spaces, care homes, shops and communal facilities included to make sure our developments improve the neighbourhood. Inland ensures that sites are used to benefit community initiatives, such as at wilton Park where the site is used for Air Cadet training. At Brooklands College, we contributed financially and used our expertise to ensure the community gym was maintained at the site until it could be relocated, saving it from closing down (read more in the case study on page 40). This is one of many examples of Inland as a company going above and beyond to support local communities, and a similar attitude is seen within our team, such as the nine colleagues who tackled the tricky 5k Colour Rush obstacle Run, raising over £10,000 for local hospice charity Shooting Star Chase. SUSTAINABILITY AT THE HEART OF EVERYTHING WE DO 36 24303.04 10 November 2015 12:43 PM proof 6 Colour Rush Charity obstacle Run Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukCuStomeRS Maintaining strong relationships with our customer groups, homeowners and developers is key to the sustainability of our agile business model (see page 11). Ensuring customers have a positive experience throughout their interaction with us increases the likelihood of recurring project partnerships with developers, and repeat custom or recommendations from homeowners. our strong reputation for quality, reliability and delivery leads to many opportunities, for example, land vendors trust Inland to honour promises and offer sales opportunities, while council and community groups seriously consider our bids knowing we have the capability to transform difficult sites. when sales are made to developers, we retain them as partners in the development of the site, co-ordinating over branding and ensuring the site retains a clear identity. The intimate insight we achieve into the site and local community remains a key source of knowledge for developers, and they continue to receive value from us as we advise and collaborate on the project. The relationship with homeowners also continues after the sale of a house, with close monitoring and support provided, and customer feedback used in future projects. CuStomeR teStImoNIAL CARteR’S QuAy “I have since learned that the houses can very easily be converted into four bedrooms, as the loft is enormous and comes fitted with electricity and provision for velux windows,” she adds. Since valerie moved in she has been delighted by the friendliness of the new community at Carter’s Quay. “All the people living here are so welcoming. I even know of one family who are so happy here that other family members are moving here too! It’s been a fantastic way to meet new people when you are moving somewhere completely new. I really do feel like I am on holiday every day!” eveRy dAy IS A HoLIdAy At CARteR’S QuAy, pooLe when retiree valerie Rossides decided to downsize from her home of 40 years in Bishops Stortford, Hertfordshire, she wanted a fresh, new start. Little did she know she would end up feeling like she was on a permanent holiday. “My son has a boat building workshop over the bridge in Poole and I decided to move to be nearer to him,” valerie explains. “I looked at a few places nearby and then walked into the show house at Inland Homes’ Carter’s Quay. Straight away I was 100% sure that this was the place for me.” valerie instantly realised the benefit of living close to Poole town centre. “Carter’s Quay is so close to the waterside and everything the town has to offer,” she says. Having moved from a large house with a big garden which had become a chore rather than a pleasure, she loved the fact that her home was fresh and new and she could move in with minimum hassle. “The layout is very well thought out and I loved the kitchen/diner and the fact that I could have my family sitting with me when cooking in the kitchen,” she explains. “I wanted three bedrooms so I could have a spare room for when people come and stay and also a study, so it’s perfect.” Paul Brett, David Cameron and Mark Gilpin on a visit to Carter’s Quay to discuss the Starter Homes Scheme Apartments at Carter’s Quay, Poole in Dorset 37 24303.04 10 November 2015 12:43 PM proof 6 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLCoRpoRAte, SoCIAL, etHICAL ANd eNvIRoNmeNtAL ReSpoNSIbILItIeS CoNtINued HeALtH ANd SAFety In the last year, the Construction (Design and Management) Regulations 2015 were released, formalising the need to consider, anticipate and respond to health and safety issues from the earliest stage of planning a project. All projects are now required to appoint a ‘lead designer’, who amongst other duties must “plan, manage, monitor and coordinate health and safety in the pre-construction phase of a project” and “provide relevant information to the principal contractor to help them plan, manage, monitor and coordinate health and safety in the construction phase” (HSE CDM 2015). over the last year, we have focused on training to accommodate these new policies. our integrated business model, and ownership of projects from conception to completion means we are able to fulfil these regulations, and are able to naturally appoint a ‘lead designer’ from our skilled team to ensure all necessary health and safety procedures are instigated at the earliest stages of the project, and followed through on. our internal focus on health and safety, combined with the wide pool of external experts we draw upon for advice, means we are positioned to achieve a high standard health and safety design and planning. SuppLy CHAIN The uplift in the economy and booming housing industry in recent years has placed more pressure on material and labour supplies, and as such, prices have risen. Achieving a steady supply of resources at competitive prices is a challenge for all housebuilders. we pride ourselves on reliability, transparency, and the ability to build and maintain strong relationships with strategic partners. The relationships we have nurtured with contractors in the past are now supporting us through this period, as contractors know that they will get a fair deal and so continue to work with us. our legacy of fairness and honesty means that our ongoing relationships help us to maintain an even and sustainable supply chain despite market fluctuations. Additionally, there are broad challenges to the sustainability of the industry as a whole, with limited labour availability and a lack of skilled workers. we are committed to contributing to the future of housebuilding, and require contractors to include apprentices in projects, to ensure new talent develops. Internally there is also a strong focus on training, to support future generations of planners and land buyers (see our People, page 39). SuStAINAbLe HomeS Planning the sustainability of developments begins at the earliest stages of a project, when potential sites are assessed — for example, considering what materials are present on the site and if these could be reused in construction. Throughout the planning of the infrastructure, buildings, and construction strategies, sustainability is a core focus, and decisions are taken which make both financial and ecological sense. on larger projects we have the scope to undertake ambitious sustainable projects, such as installing energy centres, and all of our projects use a range of environmentally friendly materials and construction methods. our efforts to achieve sustainable builds have been recognised in recent awards. Prestigious prizes have included the Thames valley Property Awards House Builder of the Year 2015, as well as awards for specific projects such as Drayton Garden village, which was commended for the Sunday Times British Homes Awards ‘Development of the Year’ (100+ houses) 2014 and awarded the whatHouse ‘Best Landscape Design’ 2014 silver prize. The whatHouse judges were particularly impressed by the planting used to encourage ecological protection, and the site-wide water management strategy in the communal spaces and gardens, deeming the development “a refreshing example of what can be achieved”. 38 24303.04 10 November 2015 12:43 PM proof 6 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukRob Stone Amanda Billins Chloe Knights Rob williams ouR peopLe we pride ourselves on our open, supportive and caring atmosphere. we develop and encourage our colleagues by offering them responsibility, stimulating teamwork and the opportunity to learn both from others in the Company and through qualifications and courses. The warmth of atmosphere and pride individuals take in working for Inland is what encourages people to stay with us and ensure that our team remains strong into the future. we think our colleagues can explain this best: “there is a strong sense of teamwork throughout the Company across the various departments, and as a relatively new member of the team it has been great to be able to draw upon the directors’ vast experience.” Rob Stone, Assistant Project Manager “Inland trust their employees with the opportunity to take on as much workload as they can handle which in turn offers a chance to progress within the Company.” Chloe knights, Sales & Marketing Administrator “I am currently studying CImA (Chartered Institute of management Accountants), which Inland are fully funding. by studying CImA, I am gaining greater knowledge and experience which enhances my work performance and progresses my career.” Amanda billins, Assistant Accountant “I am studying ACCA, supported by Inland Homes, in order to further my career in accountancy and to be more productive in my role.” Rob williams, Management Accountant AwARdS 2015 woN Received thames valley property Awards — House Builder of the year CommeNded evening Standard Homes & property best regeneration highly commended Drayton Garden village Sunday times — Carter’s Quay development of the year SHoRtLISted whatHouse? Best Brownfield — Carter’s Quay; Best House — Drayton Garden village; Best Apartment — west Plaza; Best Mixed Use — Drayton Garden village. Best Medium Housebuilder 2014 woN whatHouse? — silver best landscaping Drayton Garden village CommeNded Sunday times — Drayton Garden village development of the year bricks — west Plaza, Ashford highly commended development of 51+ units Housebuilder awards best regeneration highly commended Drayton Garden village 24303.04 10 November 2015 12:43 PM proof 6 39 Strategic ReportOur GovernanceOur FinancialsShareholder InformationStock Code: INLBrooklands College building Former Brooklands College site, Ashford in Middlesex 24303.04 10 November 2015 12:43 PM proof 6 From left to right: Mark Gilpin, Mike Coombs from Spelthorne Gymnastics Club, gym owner Bob Cooper, and Stephen wicks on the evening that Inland saved the gym from closing Brooklands College building CASe Study — bRookLANdS CoLLege, ASHFoRd The finished development will also serve the community well, with around 350 attractive homes featured alongside communal space, a three acre public park, and educational facilities including the health and beauty college. As well as the strong relationships with the local council, communities and institutions which this project demonstrates, another key partnership this project rests on is that with CPC Group, our joint venture partner, who have provided funding to the project. whilst Inland retains control of planning and development stages of a project, CPC enable us to have greater buying power to acquire land opportunities. Following the infrastructure and early development stages of the Brooklands College site, Inland and CPC Group will decide whether to sell plots to developers, or whether Inland will complete the housebuilding themselves. The land previously occupied by Brooklands College in Ashford is a desirable ten acre town centre site, with extremely good transport links. with the college moving to new local premises, the land became available for purchase with certain conditions, including the retention of a health and beauty college on site. After the purchase had been completed, we became aware that a community gym on-site, which had been served notice to leave the premises, had not yet been able to raise enough funds to build a newly located facility, and as such was going to have to close down. The well-loved and famous gym had been behind Britain’s Got Talent’s dance troupe Spellbound, as well as a number of olympic athletes, and was frequented by both professional sportspeople and members of the local community, including over 1,000 children a week. Despite not being contractually required to, we identified with the cause and as part of our commitment to the local community, decided to restructure the contract of the sale and offer both financial aid and free expert assistance for the relocation of the gym. we have thus far been able to save the gym from closing down, to the delight of its members. our assistance has been critical to the gym’s survival. Following our lease renegotiations we generously donated £50,000 to help towards the fundraising that will enable the construction of the new gym facility nearby, whilst also contributing project management and advice regarding the planning and build stages of the new facility. when the new building is ready, we will be able to commence the full build project on the Brooklands College site, knowing that the local population will still be served by the great gym facility. our sense of duty to local communities is central to all project planning and development, but going above and beyond to ensure the local community was content with the development plans in this case was particularly rewarding for all involved. 24303.04 10 November 2015 12:43 PM proof 6 41 ARouNd 350 AttRACtIve HomeS pLANNed INLANd doNAted £50,000 to HeLp ReLoCAte tHe CommuNIty gym Read about our Corporate, Social, ethical and environmental Responsibilities on pages 36 to 39 Read more online at www.inlandhomes.co.uk Strategic ReportOur GovernanceOur FinancialsShareholder InformationouR GovERNANCE 24303.04 10 November 2015 12:43 PM proof 6 INSIde tHIS SeCtIoN Board of Directors Senior Management our Governance Directors’ Remuneration Report Directors’ Report Completed houses at St. Johns, Chelmsford in Essex the directors recognise the importance of sound corporate governance and have reported on our Corporate governance arrangements by drawing upon best practice available, including those aspects of the uk Corporate governance Code 2012 we consider to be relevant to the Company and best practice Showhome at The Comptons, wooburn Green in Buckinghamshire 24303.04 10 November 2015 12:43 PM proof 6 44 46 48 49 53 43 boARd oF dIReCtoRS 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, group 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 it 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. A Member of the Audit Committee R Member of the Remuneration Committee 44 A R terry Roydon Non-executive Chairman Stephen wicks Chief Executive AppoINtmeNt to tHe boARd March 2007 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 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 an 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 24303.04 10 November 2015 12:43 PM proof 6 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015A R Nishith malde Group Finance Director paul brett Land Director Simon bennett Non-executive Director AppoINtmeNt to tHe boARd June 2005 AppoINtmeNt to tHe boARd october 2011 AppoINtmeNt to tHe boARd March 2007 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 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 onto 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 • Head of Corporate Broking at Fairfax IS plc • Head of Corporate Broking at Sanlam Securities exteRNAL AppoINtmeNtS • He established Incremental Capital LLP in 2004 to provide corporate finance advice to mid and small cap companies • Chairman of the Grown Up Chocolate Company 24303.04 10 November 2015 12:43 PM proof 6 45 Our FinancialsShareholder InformationStock Code: INLStrategic ReportOur GovernanceSeNIoR mANAgemeNt mark gilpin Planning Director vicki Noon Sales & Marketing Director melanie Hyland Financial Operations Director pedro Longras Development Director tIme wItH gRoup 5 years tIme wItH gRoup 4 years tIme wItH gRoup 6 years tIme wItH gRoup 8 years 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) 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 12 years and has extensive knowledge of statutory reporting, forecasting and securing funding pRevIouS expeRIeNCe • worked with board of Country & Metropolitan plc through to the acquisition by Gladedale as Sales & Marketing Director • Regional Sales & Marketing Director at 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) • Design and Planning Director at Fairview Gladedale plc New Homes • Head of Sales & Marketing at Prowting • Land, Design & Planning Director at Howarth Homes Central Homes plc SkILLS He bRINgS to tHe gRoup Pedro has a wide-ranging knowledge of the construction, health & safety, technical, land and planning aspects of the business pRevIouS expeRIeNCe • Land Management graduate from the University of Reading 46 24303.04 10 November 2015 12:43 PM proof 6 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015des wicks Senior Land Manager matt Corcoran Planning Manager Claire Fahey Financial Controller Ruth white Sales & Marketing Manager tIme wItH gRoup 8 years tIme wItH gRoup 4 years tIme wItH gRoup 3 months tIme wItH gRoup 2 years 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, negotiating on both purchases and disposals of land. Specialises in complex land assemblies using considerable negotiation skills in order to obtain valuable and attractive terms pRevIouS expeRIeNCe • Joined the Group as a Trainee Land Buyer SkILLS He bRINgS to tHe gRoup He has 11 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 SHe bRINgS to tHe gRoup over the past ten years Claire has worked on a number of UK and European real estate funds and has experience in financial modelling, corporate structuring and debt implementation. SkILLS SHe bRINgS to tHe gRoup She has worked in the property sector for 15 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 Certified Accountant pRevIouS expeRIeNCe • Qualified with the Chartered Institute of in 2008 Marketing • Associate Director at Savills Investment Management (formerly Cordea Savills) • Divisional Marketing Manager at St. George Homes (Part of Berkeley Group Holdings plc) • Associate Director at AEw Europe • Divisional Marketing Manager at Barratt • Fund Controller at Jones Lang LaSalle Developments plc 24303.04 10 November 2015 12:43 PM proof 6 24303.04 10 November 2015 12:43 PM proof 6 47 Our FinancialsShareholder InformationStock Code: INLStrategic ReportOur GovernanceouR 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. poLItICAL CoNtRIbutIoNS There were no political donations made during the year (2014: £nil). CoRpoRAte goveRNANCe whilst the Company does not comply with the UK Corporate Governance Code 2012, the Directors recognise the importance of sound corporate governance and have reported on our Corporate Governance arrangements by drawing upon best practice available, including those aspects of the UK Corporate Governance Code 2012 we consider to be relevant to the Company and best practice. 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 Group Finance Director and the Chief Executive. In June 2015 the Conduct Committee of the Financial Reporting Council (Committee) wrote to the Group requesting information and explanations as to why the Company did not consolidate DGvL in the Interim Results for the half year ended 31 December 2014 in accordance with IFRS 10 Consolidated Financial Statements which was effective for the Group for the first time this year. Following discussions with the Committee, the Board concluded that the Group controls DGvL from the date it entered into the agreement with DGvL and has therefore consolidated the results and financial position of DGvL within the Group accounts. As this was a change in accounting policy, the comparatives have been restated. Since 30 June 2014 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 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 Group 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 Group Finance Director. During the year the committee met four 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. 48 24303.04 10 November 2015 12:43 PM proof 6 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015dIReCtoRS’ RemuNeRAtIoN RepoRt (uNAudIted) 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 and is not included within the scope of the audit. This report sets out the remuneration paid to the Directors for the year ended 30 June 2015 and sets out the remuneration policy for the forthcoming financial year and beyond. CompoSItIoN ANd RoLe oF tHe RemuNeRAtIoN CommIttee The Board has 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, Group 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 at least 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 was approved by shareholders in general meeting in December 2013. The key elements of the scheme are set out below. 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 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. 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. 49 24303.04 10 November 2015 12:43 PM proof 6 Our FinancialsShareholder InformationStock Code: INLStrategic ReportOur GovernancedIReCtoRS’ RemuNeRAtIoN RepoRt CoNtINued 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 ended 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 commenced 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. 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 was set as a price of 60.5 pence per ordinary share (the “First Target Performance Price”), which was 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. 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 are 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. 50 24303.04 10 November 2015 12:43 PM proof 6 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015SeRvICe CoNtRACtS ANd NotICe peRIodS All 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 which contain confidentiality provisions and restrictive covenants for the Company’s protection. Non-executive Directors’ 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 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. 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 2015 A review of the financial results for the year ended 30 June 2015, as more fully set out in the Chairman’s Statement, the Chief Executive’s Review and the Finance Director’s Review, demonstrates that Inland Homes has had another year of outstanding performance with record profits for the year and a £14.5m uplift in investment properties at wilton Park. The financial results have been equally strong with revenue having increased by 94% and, excluding the revaluation of investment properties, operating profit up 158% and profit before tax for the year up 167%. Net assets per share up 48%, which excludes any unrealised profits within the land bank and dividends up 67%. 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 £204,000 £204,000 £134,000 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 (uNAudIted) The remuneration of each of the Directors during the year ended 30 June 2015 is set out in detail below: executive directors S D wicks* N Malde* P Brett Non-executive directors T Roydon S Bennett 2015 Salary/ fees £000 348 348 197 50 40 bonus £000 benefits £000 pension £000 total remuneration £000 204 204 134 — — 29 26 11 — — — — 20 — — 581 578 362 50 40 Social security costs £000 total remuneration & social security £000 94 92 55 — — 675 670 417 50 40 * S wicks and N Malde have taken their pension entitlement as part of their salaries. No share options were exercised during the year and no LTIPs vested. 24303.04 10 November 2015 12:43 PM proof 6 2014 Total £000 715 707 445 45 35 51 Our FinancialsShareholder InformationStock Code: INLStrategic ReportOur GovernancedIReCtoRS’ RemuNeRAtIoN RepoRt CoNtINued dIReCtoRS’ INteReStS IN SHAReS ANd tHe uNAppRoved SHARe optIoN SCHeme ANd tHe 2013 LtIp (AudIted) 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 are set out below: 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 2014 Exercised during the year total options outstanding at 30 June 2015 Stephen wicks Nishith malde — — 1,500,000 1,500,000 — 1,500,000 — — — — — — paul brett 700,000 400,000 — 1,100,000 — 1,100,000 2013 LtIp The initial price for determination of awards under the 2013 LTIP was 46.5 pence per ordinary share. The share price performance of Inland Homes over the last 18 months has been strong and I can report that both the initial performance target of 60.5 pence per ordinary share and the next target performance target of 69.5 pence per ordinary share have now been achieved. As a result, 4,000,000 of the 11,350,504 ordinary shares, representing approximately 35.2% of the total number of ordinary shares that can be issued in exchange for vested Growth Shares, have now been earned. These shares, which do not vest until December 2016, will then be allocated in accordance with the rules of the 2013 LTIP scheme, as follows: Stephen wicks Nishith Malde Paul Brett ordinary shares of 10p each 1,880,000 1,520,000 600,000 The next target performance target under the 2013 LTIP, to earn the equivalent of a further 2,000,000 ordinary shares, will be achieved once the Inland Homes share price has reached 76.5 pence per ordinary share for the qualifying period. 52 24303.04 10 November 2015 12:43 PM proof 6 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015dIReCtoRS’ RepoRt the directors present their report and the financial statements of the group and the Company for the year ended 30 June 2015. 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. 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 60 and the Group’s financial position at the end of the year is set out in the Group Statement of Financial Position on page 61. 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 0.7p per share (2014: 0.6p). 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 8 and the Chief Executive’s Review on page 26. The Group’s key performance indicators are monitored closely by the Board and the details of performance against these are on page 24. 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 existence of these financial instruments exposes the Group to a number of financial risks, which are described in more detail below. 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. 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. 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 27 to the Group financial statements. 24303.04 10 November 2015 12:43 PM proof 6 53 Our FinancialsShareholder InformationStock Code: INLStrategic ReportOur GovernancedIReCtoRS’ RepoRt CoNtINued dIReCtoRS ANd tHeIR INteReStS Each of the Directors listed on pages 44 and 45 held office as at 30 June 2015. The Directors of the Company and their respective beneficial interests in the shares of the Company as at 30 June 2015 were as follows: S D wicks N Malde P Brett T Roydon S Bennett As at 30 June 2015 As at 30 June 2014 Number of ordinary shares 16,237,332 11,270,029 3,504,214 325,000 110,000 Number of ‘growth’ shares 470 380 150 — — Number of share options — 1,500,000 1,100,000 — — Number of ordinary shares 16,237,332 11,270,029 3,504,214 325,000 110,000 Number of ‘Growth’ shares 470 380 150 — — Number of share options — 1,500,000 1,100,000 — — S wicks and N Malde are retiring by rotation in accordance with the Company’s Articles of Association and have offered themselves for re-election. Further information on the 2013 LTIP can be found in the Directors’ Remuneration Report on page 49. dIReCtoRS’ RemuNeRAtIoN Details of Directors’ remuneration can be found in the Directors’ Remuneration Report on page 49. 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 26 october 2015, 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 Shareholding 20,000,000 % 9.86 empLoyee beNeFIt tRuSt on 29 october 2014 the Group’s Employee Benefit Trust purchased 643,216 shares of 10p each in Inland Homes plc under the terms of the Long Term Incentive Plan. The total consideration paid was £382,000. 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. 54 24303.04 10 November 2015 12:43 PM proof 6 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015dIReCtoRS’ 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. 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 14 December 2015. 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 28 October 2015 24303.04 10 November 2015 12:43 PM proof 6 55 Our FinancialsShareholder InformationStock Code: INLStrategic ReportOur Governanceour financials artist’s impression of Witley Gardens, southall in Middlesex inside this section independent auditor’s Report (Group) Group income statement 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 58 60 61 62 63 64 107 109 110 once again the Group has produced a tremendous set of results which has been the product of a better balanced business model, with an increased amount of housebuilding alongside the sale of a number of plots from the land portfolio nishith Malde Group finance Director 57 0,000 plots in land bank showhome at Queensgate, farnborough in Hampshire 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 2015 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 55, 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/auditscopeprivate. 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 2015 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. 58 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015Matters 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 2015. Grant thornton uk llp nicholas watson Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Reading 28 October 2015 59 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur FinancialsGroup incoMe stateMent for the year ended 30 June 2015 continuing operations Revenue cost of sales Gross profit administrative expenses loss on investments Revaluation of investment properties operating profit finance cost — interest expense finance cost — cost associated with arrangement of new facilities and other finance related costs finance cost — notional interest on deferred consideration finance income — interest receivable and similar income profit before tax and share of profits from joint ventures share of (loss)/profit of joint ventures profit before tax income tax total profit and comprehensive income for the year attributable to: — shareholders of the company — non-controlling interests earnings per share for profit attributable to the equity holders of the company during the year — basic — diluted note 5 5/6 6 14 12 8 8 8 9 14 10 22 11 11 The accompanying accounting policies and notes form part of these financial statements. 2015 £000 114,219 (79,841) 34,378 (6,021) (541) 14,519 42,335 (4,836) (2,322) (1,215) 201 34,163 (135) 34,028 (5,078) 28,950 29,680 (730) 14.67p 13.76p 2014 £000 Restated 58,909 (42,857) 16,052 (4,440) (822) 2,300 13,090 (3,459) (740) (57) 166 9,000 613 9,613 (2,137) 7,476 6,997 479 3.46p 3.26p 60 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015Group stateMent of financial position at 30 June 2015 assets non-current assets investment properties Property, plant and equipment investments Joint ventures loans to joint ventures due in more than one year Receivables due in more than one year Deferred tax total non-current assets current assets inventories Trade and other receivables loan to former associate company listed investments 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 Employee benefit trust special reserve Retained earnings total equity attributable to shareholders of the company non-controlling interests 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 Other financial liabilities total non-current liabilities total equity and liabilities note 2015 £000 2014 £000 Restated 2013 £000 Restated 12 13 14 14 17 17 15 16 17 18 19 20 21 21 21 21 21 22 28 28 23 23 24 24 24 34,000 332 — 1,488 3,246 55 548 39,669 121,031 7,998 — 1 21,377 150,407 190,076 20,281 34,033 — (382) 6,059 28,806 88,797 272 89,069 25,192 18,724 14,862 6,347 10,881 76,006 12,372 12,629 25,001 190,076 11,800 153 541 — — 55 1,476 14,025 104,282 10,432 — 1 11,064 125,779 139,804 20,280 34,033 — — 6,059 (281) 60,091 1,002 61,093 19,192 21,180 14,654 2,809 9,324 67,159 11,552 — 11,552 139,804 9,500 173 1,363 243 — 55 1,411 12,745 67,234 5,966 1,000 1 12,159 86,360 99,105 20,131 33,695 (366) — 6,059 (9,372) 50,147 2,985 53,132 1,613 12,266 7,074 625 14,674 36,252 9,721 — 9,721 99,105 The financial statements were approved and authorised for issue by the Board of Directors on 28 October 2015. stephen wicks Director nishith Malde Director company number 5482990 The accompanying accounting policies and notes form part of these financial statements. 61 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur FinancialsGroup stateMent of chanGes in equity for the year ended 30 June 2015 share capital £000 share premium £000 treasury shares £000 employee benefit trust £000 special reserve £000 retained earnings £000 non- controlling interests £000 total £000 total equity £000 20,131 33,695 (366) — — — at 30 June 2013 (pre- adjustment) adjustments for the change in accounting policy for investment properties adjustments for the application of ifRs 10 (amended) at 30 June 2013 (restated) share-based payments Dividend payment cancellation of deferred shares Reduction of non-controlling interest's profit share sale of treasury shares issue of equity Transactions with owners Total comprehensive income for the year Total changes in equity at 30 June 2014 (restated) share-based payments Dividend payment Reinstatement of deferred shares Purchase of own shares for deferred bonus plan Transactions with owners Total comprehensive income for the year Total changes in equity at 30 June 2015 — 20,131 — — (1) — — 150 149 — 149 20,280 — — 1 — 1 — 33,695 — — — — 214 124 338 — 338 34,033 — — — — — — (366) — — — — 366 — 366 — 366 — — — — — — — — — — 1 20,281 — — 34,033 — — — — — — — — — — — — — — — — — (382) (382) — (382) (382) 6,059 (1,789) 57,730 — 57,730 — (693) (693) — (693) — 6,059 — — — — — — — — — 6,059 — — — — — (6,890) (9,372) 171 (540) 1 2,462 — — 2,094 6,997 9,091 (281) 625 (1,217) (6,890) 50,147 171 (540) — 2,462 580 274 2,947 6,997 9,944 60,091 625 (1,217) (1) — — (593) (382) (974) 2,985 2,985 — — — (2,462) — — (2,462) 479 (1,983) 1,002 — — — — — (3,905) 53,132 171 (540) — — 580 274 485 7,476 7,961 61,093 625 (1,217) — (382) (974) — — 6,059 29,680 29,087 28,806 29,680 28,706 88,797 (730) (730) 272 28,950 27,976 89,069 During the year the company paid a dividend of 0.6p per share (2014: 0.27p). The accompanying accounting policies and notes form part of these financial statements. 62 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015note 13 14 13 12 cash flow from operating activities Profit for the year before tax adjustments for: — depreciation — profit on disposal of property, plant and equipment — share-based payments — fair value adjustment for the value of the DGVl option — revaluation of investment properties — interest expense — interest and similar income — share of loss/(profit) of joint ventures — corporation tax payments change in working capital: — decrease/(increase) in inventories — decrease/(increase) in trade and other receivables — (decrease)/increase in trade and other payables net cash inflow/(outflow) from operating activities cash flow from investing activities interest received Purchases of property, plant and equipment Purchases of investment property sale of property, plant and equipment Distribution from joint venture acquisition of subsidiaries loans provided to joint ventures investment in joint venture Receipt of loan repayment from former associate company net cash (outflow)/inflow from investing activities cash flow from financing activities interest paid Repayment of borrowings new loans Equity dividends paid to ordinary shareholders Purchase of own shares for long Term incentive Plan net proceeds on sale of treasury shares net proceeds on issue of ordinary shares net cash (outflow)/inflow from financing activities net increase/(decrease) in cash and cash equivalents net cash and cash equivalents at beginning of year net cash and cash equivalents at end of year 2015 £000 2014 £000 Restated 34,028 9,613 Group stateMent of cash flows for the year ended 30 June 2015 120 — 625 541 (14,519) 8,373 (201) 135 (678) 13,819 2,434 (7,870) 36,807 199 (299) (11,481) — — (250) (3,246) (1,622) — (16,699) (7,172) (36,568) 35,544 (1,217) (382) — — (9,795) 10,313 11,064 21,377 71 (3) 171 822 (2,300) 4,256 (166) (613) — (37,048) (4,362) 2,047 (27,512) 45 (51) — 3 856 — — — 1,000 1,853 (3,351) (10,107) 37,708 (540) — 580 274 24,564 (1,095) 12,159 11,064 The accompanying accounting policies and notes form part of these financial statements. 63 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents for the year ended 30 June 2015 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 certain financial instruments and investment properties 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. These financial statements have also been prepared in accordance with those parts of the companies act 2006 that are relevant to companies that prepare their financial statements in accordance with ifRs. 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 and this has resulted in a restatement of prior year results where necessary for changes in accounting policies which took place. During the period the Group changed its policy for investment properties from a deemed cost basis to a fair value basis. The introduction of ifRs 10 has resulted in the requirement for the Group to consolidate the results of DGVl into its financial statements, further information on this assessment can be found in note 4. further information on the financial impact of these changes in accounting policies can be found in note 32. Other than these two areas the accounting policies have been applied on a consistent basis. These accounting policies comply with each ifRs that is mandatory for accounting periods ended on 30 June 2015. as mentioned previously, ifRs 10 became effective during the period and this has resulted in the consolidation of Bucks Developments ltd (BDl) and Wilton Park Developments ltd (WPDl), which are not owned by the Group, but where the Group controls the companies. as this was the first year that these companies were in existence this has not caused a change in policy from prior years. as ifRs 10 requires the question of control to be reassessed on an ongoing basis the matter of the consolidation of BDl, WPDl and DGVl will be kept under review. further information can be found in note 4. certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements. 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. Standards in issue but not yet effective new standards and interpretations currently in issue but not effective, based on EU mandatory effective dates, for accounting periods commencing on 1 July 2014 are: • Defined Benefit Plans: Employee contributions (amendments to ias 19) (EU effective date 1 february 2015) • annual improvements to ifRss 2010–2012 cycle (EU effective date 1 february 2015) • annual improvements to ifRss 2011–2013 cycle (EU effective date 1 January 2015) none of the standards above are expected to have an impact on the Group’s financial statements. 64 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20151. accountinG policies cOnTinUED 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. 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 2015. subsidiaries are entities over which the Group is exposed, or has rights to, the variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. The Group obtains and exercises control through voting rights, development agreements and option agreements. further information can be found in note 4. 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 and non-controlling interests 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 and non-controlling interests of the acquired subsidiary at the date of acquisition. Joint ventures Joint ventures are entities in which the Group has shared control with another entity, established by contractual agreement. Jointly controlled entities are accounted for using the equity method from the date that the jointly controlled entity commences to the date that the joint control of the entity ceases. 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 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. if the share of losses equals its investment, the Group does not recognise further losses, except to the extent that there are amounts receivable that may not be recovered or there are further commitments to provide funding. Both realised and unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s investment in joint ventures. Realised and unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The accounting policies of the joint ventures are consistent with those of the Group. 65 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 66 1. accountinG policies cOnTinUED Business combinations acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration is measured as the aggregate of the fair values (at the date of exchange) of assets given and liabilities incurred or assumed by the Group in exchange for control of the acquiree. identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. acquisition related costs are recognised in the Group income statement as incurred. 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. Sale of land Revenue from the sale of land is recognised on legal completion 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 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 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 Revenue is recognised on legal completion, which is when the title passes. Contract income The Group acts as a main contractor on certain building projects, primarily on behalf of housing associations where the Group must provide social housing units as part of its s106 obligations under the planning consent. 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. The stage of completion is determined by reference to the valuation certificate provided by a third party surveyor engaged to certify the value of works completed at various intervals in respect of the contract sum. 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, 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. www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20151. 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 Office equipment Motor vehicles leasehold property — 25% — 25% — 25% — Over shorter of lease term and useful economic life Material residual value estimates are updated as required, but at least annually. Investment property investment properties are those properties which are not occupied by the Group and which are held for long term rental yields, capital appreciation or both. investment property also includes property that will be developed for future use as investment property. investment properties are initially measured at cost, including related transaction costs. at each subsequent reporting date they are remeasured to their fair value. Movements in fair value are included in the Group income statement. subsequent expenditure is capitalised to the asset’s carrying value only where it is probable that the future economic benefits associated with the expenditure will flow to the Group. any gain or loss resulting from the sale of an investment property is immediately recognised in the Group income statement. an investment property shall be derecognised on disposal. When the Directors consider that the status of the property has changed to being a development property it is transferred to inventories. a property is transferred to inventories when it has been decided that the units being constructed will be sold and no future rental income is expected. When a partial disposal or transfer is made, the proportion relating to the disposal or transfer is derecognised. Where the Group employs professional valuers the valuations provided are subject to a comprehensive review to ensure they are based on accurate and up-to-date tenancy and market information. Discussions are also held with the valuers to test the valuation assumptions applied and comparable evidence utilised to ensure they are appropriate in the circumstances. Previously the Group carried investment properties at cost and reviewed the carrying amount annually for impairment. This year the policy has changed and there has been a restatement of prior year figures as a result. 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. 67 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 68 1. accountinG policies cOnTinUED Taxation current tax is the tax currently payable based on taxable profit for the period calculated using tax rates and laws substantively enacted at the reporting date. 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 and laws 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 or directly in equity in which case the related deferred tax is also recognised in other comprehensive income or equity respectively. 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 retirement benefit 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 shared-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 for share options and the Monte carlo simulation technique for lTiPs. 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/lTiPs expected to vest. Estimates are subsequently revised if there is any indication that the number of share options/lTiPs 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/lTiPs ultimately exercised are different to that estimated on vesting. Upon exercise of share options/lTiPs the proceeds received net of attributed transactions costs are credited to share capital and, where appropriate, share premium. www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20151. accountinG policies cOnTinUED The Executive Directors receive 50% of bonuses in shares which are purchased by the Employee Benefit Trust. The number of shares purchased corresponds to the number of shares which would have been able to be purchased at the closing price on 30 June for the relevant year. The shares will be transferred to the Directors three years after the period to which they relate. further information can be found in the remuneration report. Employee Benefit Trust The Directors consider that the Employee Benefit Trust (EBT) is under the de facto control of the company as the trustees look to the Directors to determine how to dispense the assets. Therefore, the assets and liabilities of the EBT have been consolidated into the Group accounts. The EBT’s investment in the company’s shares is eliminated on consolidation and shown as a deduction against equity. any assets in the EBT will cease to be recognised in the Group statement of financial Position when those assets vest unconditionally in identified beneficiaries. 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 transaction costs. financial assets categorised 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 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. 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 flow, discounted at the original effective interest rate. interest and other income resulting from holding financial assets are recognised in the Group income statement. 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. 69 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 1. accountinG policies cOnTinUED Borrowing costs The Group capitalises borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset where developments are considered to fall under the requirements of ias 23 Borrowing costs (Revised). Qualifying assets are those which are being constructed over a significant period of time. The Directors consider a significant period of time to be over 12 months. Otherwise the Group expenses borrowing costs in the period to which they relate through the Group income statement 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. 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. 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. interim dividends are recognised when paid. 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; ‘Employee benefit trust’ represents the purchase of the company’s own shares and are deducted from total equity until they are issued to employees under the long Term incentive Plan; ‘special reserve’ represents the distributable surplus created by the transfer of an amount from the share premium to rectify the deficit which existed on the profit and loss reserve; and • ‘Profit and loss reserve’ represents retained profits. 70 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20152. financial risk ManaGeMent Financial risk factors The Group’s activities expose it to a variety of financial risks: credit risk; and liquidity 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 other than its loans to joint ventures which are secured over the assets of the joint ventures. further information can be found in notes 14 and 17. 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 loans to joint ventures due in more than one year Trade and other receivables The Group’s policy is to deal with creditworthy counterparties. 2015 £000 3,246 7,342 10,588 2014 £000 — 10,189 10,189 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. 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. 3. seGMent inforMation in accordance with ifRs 8, 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, rental income and other income. These segments are based on the information reported to the chief operating decision maker and represent the activities which generate significant revenues, profits and use of resources within the Group. an analysis of the Group’s results by segment are disclosed in note 5. 71 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 72 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 cost of acquisition 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 receipt of planning consent (see below) further increases the level of estimation uncertainty in this area. (b) Income taxes The Group recognises tax/deferred tax assets and liabilities for anticipated tax based on estimates of when the tax/deferred tax will be paid or recovered. When the final outcome of these matters is different from the amounts initially recorded, such differences impact the period in which the determination is made. critical accounting estimates relate to the profit forecasts used to determine the extent to which deferred tax assets are recognised from available losses and the period over which they are estimated. (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 makes assumptions that are mainly based on market conditions existing. (d) Fair value of investment properties The fair value of completed investment property is determined by independent valuation experts using the open market value of existing use method, subject to current leases and restrictions, as this has been assessed currently as the best use of these assets. investment properties awaiting construction are valued by the Directors using an appraisal system; critical accounting estimates relate to the forecasts prepared in order to assess the carrying value. This system has been used to establish the fair value of the investment property in Poole when restating the results of 2014 and 2013. (e) Fair value of assets and liabilities acquired with business combinations The fair value of assets and liabilities is determined by the Directors at the date of acquisition using residual valuation model for property assets,the recoverable amount for debtors and the discounted cash flow method for deferred consideration of inventories in accordance with ias 39. critical accounting estimates relate to the experience of the Directors in reaching their valuations and the cost of debt capital used as an appropriate discount rate. (f) Discounting on deferred consideration of inventories The Group discounts deferred consideration of inventories using the discounted cash flow method; the Group considers that the cost of debt capital is the most appropriate discount rate and this is a significant estimate. www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20154. critical accountinG estiMates and JudGeMents cOnTinUED Critical judgements in applying the entity’s accounting policies Inventories The Group values inventories at the lower of cost and net realisable value. The net realisable value is based on the judgement of the probability that planning consent will be granted 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 a 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 ias 39. However, they consider that this instrument is closely related to the host contract and therefore have not accounted for the embedded derivative separately. Consolidation of Drayton Garden Village Limited in December 2008 the Group entered into an Option and Development services agreement (the agreement) with DGVl. The Board has reviewed the requirements of ifRs 10, to assess whether the Group controls DGVl and has concluded that, although it does not own any of its share capital it does control DGVl because of the nature of the contractual arrangements between the Group and DGVl. in particular: • The Group has power over DGVl because it has the practical ability to direct the relevant activities that significantly affect DGVl’s returns. such relevant activities would include obtaining planning permission to develop the site and subsequently managing the property to realise its value. The Group also has an option to acquire the share capital of DGVl which provides it with a mechanism by which it can direct the relevant activities. • The services that the Group provides to DGVl and the arrangement by which the Group receives its fees are such that it has rights to variable returns as a result of its involvement in delivering the various property services to DGVl. The Group is entitled to 90% of the profits from the project at Drayton Garden Village and thus provides it with a very significant part of the returns generated from its involvement with DGVl. • The Group also has the ability to use its power to affect its returns by virtue of its involvement with DGVl. in view of the above the Group believes that it had control over DGVl from the date it entered into the agreement with DGVl and has therefore consolidated the results and financial position of DGVl within the Group accounts. accordingly, the comparatives with prior years have been restated. see note 32 for further details. Consolidation of Bucks Developments Ltd and Wilton Park Developments Ltd in December 2014, the Group entered into an Option with WPDl. The Option entitles the Group to acquire land from WPDl within ten days of the date that the land is released from the vendor’s charge, as payment of deferred consideration is made by WPDl to the vendor and this could be before any decisions about the relevant activities take place. The terms of the option allow the Group to purchase the land from WPDl at a price of cost plus 20% plus indexation. The Directors have considered the requirements of ifRs 10 ‘consolidated financial statements’ and have consolidated WPDl as part of these results from the date the Option was granted. The Directors are of the opinion that the Group controls WPDl, and therefore also its parent undertaking BDl, as it has an option to acquire the only significant asset of that group and because these entities were incorporated solely for the purpose of purchasing the land under Option. The Group does not own any of the share capital of either WPDl or BDl and has none of the voting rights. 73 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 4.critical accountinG estiMates and JudGeMents cOnTinUED Investment in joint ventures The Group’s joint venture investments in aston clinton s.a.R.l. and Project Helix Holdco limited (Project Helix) are not in equal share (the Group owns 10% of the share capital of aston clinton s.a.R.l. and 20% of the share capital of Project Helix); however, the Group has joint control over the activities of the companies with the other parties due to its entitlement to veto any decisions. in addition, the Group and the other parties to the agreements only have rights to the net assets of these companies through the terms of the contractual arrangements. With aston clinton s.a.R.l. the Group is entitled to 50% of the net assets and with Project Helix there is a ratchet mechanism which depends on the amount of profit each development contributes to the joint venture. Therefore, these entities are classified as joint ventures and are accounted for using the equity method. 5. incoMe and seGMental analysis The Group generates income by way of land sales. it also generates income from housebuilding, rental property 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 2014 Restated segment land sales Housebuilding contract income Rental income Other — loss on investments — gain on revaluation of investment properties — share of profit of joint venture — unallocated Revenue £000 15,100 29,168 14,265 372 4 — — — — 58,909 cost of sales £000 (8,975) (20,575) (13,307) — — — — — — (42,857) Gross profit £000 6,125 8,593 958 372 4 — — — — 16,052 admin costs £000 Operating profit £000 Other £000 finance (cost)/ income £000 Other £000 — — — — — — — — (4,440) (4,440) — — — — — (822) 2,300 — — 1,478 6,125 8,593 958 372 4 (822) 2,300 — (4,440) 13,090 (2,157) (2,099) — — — — — — 166 (4,090) — — — — — — — 613 — 613 Profit before tax £000 3,968 6,494 958 372 4 (822) 2,300 613 (4,274) 9,613 74 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20155. incoMe and seGMental analysis cOnTinUED 2015 segment land sales Housebuilding contract income Rental income Other — loss on investments — Gain on revaluation of investment properties — share of loss of joint venture — Unallocated revenue £000 cost of sales £000 Gross profit £000 admin costs £000 operating profit £000 other £000 39,560 66,119 7,592 787 161 — (22,553) (52,317) (4,943) (28) — — 17,007 13,802 2,649 759 161 — — — — — — — — 17,007 — 13,802 2,649 — 759 — 161 — (541) (541) — — — 114,219 — — — (79,841) 14,519 — 14,519 — — — — — — (6,021) — (6,021) 42,335 (6,021) 13,978 34,378 finance (cost)/ income £000 (4,816) (2,567) — — — — — (990) 201 (8,172) profit before tax £000 other £000 — 12,191 — 11,235 2,649 — 759 — 161 — (541) — (135) — 14,519 (1,125) — (5,820) 34,028 (135) items included within ‘Other’ above do not produce significant income streams and are therefore not monitored separately by the Board, but as a group. transactions with customers making up 10% or more of revenue land sales customer 1 land sales customer 2 Housebuilding bulk sale customer 3 contracting customer 4 all activities arose solely in the United Kingdom. 2015 £000 19,000 12,000 11,420 — 42,420 2014 £000 Restated 7,607 — — 11,805 19,412 75 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financials notes to the Group financial stateMents continued for the year ended 30 June 2015 5. incoMe and seGMental analysis cOnTinUED segment assets land: non-current assets — deferred tax current assets — inventories current assets — other Housebuilding: non-current assets — deposit match debtor current assets — inventories current assets — other contracting: current assets — inventories current assets — other investment property: non-current assets — investment property current assets — other Other: non-current assets — investment in joint ventures non-current assets — loans to joint ventures non-current assets — other non-current assets — deferred tax current assets — other cash total segmental and entity assets 76 2015 £000 142 90,530 2,252 92,924 55 29,709 426 30,190 792 26 818 34,000 158 34,158 1,488 3,246 332 406 5,137 21,377 31,986 190,076 2014 £000 Restated 1,196 66,527 4,337 72,060 55 37,279 159 37,493 476 320 796 11,800 — 11,800 — — 694 280 5,617 11,064 17,655 139,804 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20155. incoMe and seGMental analysis cOnTinUED segment liabilities land: current liabilities — trade creditors current liabilities — other loans current liabilities — other current liabilities — purchase consideration non-current liabilities — purchase consideration Housebuilding: current liabilities — trade creditors current liabilities — other loans current liabilities — bank loans current liabilities — other contracting: current liabilities — trade creditors current liabilities — other Rental investment: current liabilities — bank loans Other: current liabilities — trade creditors current liabilities — other creditors non-current liabilities — Zero Dividend Preference shares total segmental and entity liabilities 2015 £000 1,966 10,178 4,860 10,881 12,629 40,514 2,322 8,546 9,692 2,392 22,952 25 1,272 1,297 15,500 15,500 70 8,302 12,372 20,744 101,007 2014 £000 Restated 1,786 11,275 2,772 9,324 — 25,157 4,594 9,905 19,192 2,013 35,704 675 79 754 — — 159 5,385 11,552 17,096 78,711 77 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 6. expenses by nature Depreciation Operating lease rentals auditor’s remuneration: — fees payable to the company’s auditor for the audit of the annual financial statements fees payable to the company’s auditor for other services: — audit of the financial statements of the company’s subsidiaries pursuant to legislation — other services pursuant to legislation — other services relating to taxation cost of sales Other expenses Total classified as: — cost of sales — administrative expenses 2015 £000 120 134 6 84 26 25 79,841 5,626 85,862 79,841 6,021 85,862 2014 £000 Restated 71 64 5 47 25 22 42,857 4,206 47,297 42,857 4,440 47,297 fees payable to the company’s auditor, Grant Thornton UK llP, for non-audit services to the company itself are not disclosed in the individual financial statements of the company because the company’s Group financial statements are required by the companies (Disclosure of auditor Remuneration) Regulations 2005, regulation 5(1), to disclose such fees on a consolidated basis. 78 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20157. 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, one Director participated in a money purchase pension scheme. The amounts set out above include remuneration in respect of the highest paid Director as follows: Remuneration 2015 £000 3,680 416 50 4,146 2015 £000 4 29 33 2015 £000 959 541 242 90 20 1,852 2015 £000 675 2014 £000 Restated 2,788 342 48 3,178 2014 £000 4 20 24 2014 £000 953 640 242 80 32 1,947 2014 £000 715 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 54. 79 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 7. directors and eMployees cOnTinUED 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 Other long term benefits of key personnel and the Directors were as follows: 2015 £000 1,125 581 269 28 614 2,617 2014 £000 1,072 671 264 42 161 2,210 Key personnel and Directors as at 30 June 2015 as at 30 June 2014 number of growth shares 980 number of share options 4,400,000 number of growth shares 980 number of share options 4,350,000 a long term incentive plan is in place for the benefit of the Directors. further details can be found in the Directors’ Remuneration Report on pages 49 to 52. . 8. finance cost interest expense: — bank borrowings — other loan interest — notional interest on deferred consideration — costs associated with arrangement of new facilities and other finance related costs 2015 £000 2,023 2,813 1,215 2,322 8,373 2014 £000 Restated 618 2,841 57 740 4,256 80 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20159. finance incoMe Other interest receivable Bank interest receivable 10. incoMe tax current tax charge Deferred tax charge/(credit) total 2015 £000 198 3 201 2015 £000 4,150 928 5,078 2014 £000 Restated 154 12 166 2014 £000 Restated 2,184 (47) 2,137 The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the tax rate applicable to profit on the consolidated companies as follows: Profit before tax Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 20.75% (2014: 22.5%) Expenses not deductible for tax purposes ZDP interest not deductible for tax purposes Other Joint venture tax losses not recognised Utilisation of tax losses Prior year capital losses now recognised Tax charge 2015 £000 34,028 7,061 70 129 166 (28) — (2,320) 5,078 2014 £000 Restated 9,613 2,163 84 163 364 — (120) (517) 2,137 81 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 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 Diluted net asset value per share in pence 2015 29,680 88,797 202,368 1,985 11,351 215,704 14.67p 13.76p 202,156 43.92p 41.18p 2014 Restated 6,997 60,091 202,093 1,441 11,351 214,885 3.46p 3.26p 202,799 29.63p 28.26p On 29 October 2014 the Group’s Employee Benefit Trust purchased 643,216 shares in inland Homes plc under the terms of the long Term incentive Plan. These have been deducted from the weighted average number of ordinary shares in issue and also from the shares in issue at the year end. 12. investMent properties cost or fair value at 30 June 2013 restated fair value adjustment at 30 June 2014 restated additions fair value adjustment Transfer to inventories at 30 June 2015 at 30 June 2014 at 30 June 2013 residential properties level 3 £000 development land level 3 £000 — — — 11,481 14,519 — 26,000 — — 9,500 2,300 11,800 — — (3,800) 8,000 11,800 9,500 total £000 9,500 2,300 11,800 11,481 14,519 (3,800) 34,000 11,800 9,500 82 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201512. investMent properties cOnTinUED The different valuation method levels are defined below. level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. level 2: inputs other than quoted prices included in 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). These levels are specified in accordance with ifRs 13 fair Value Measurement. Our property valuation approach and process is set out within the ‘Valuation and sensitivity’ section of this note below. Property valuations are inherently subjective as they are made on the basis of assumptions made by the valuer which may not prove to be accurate. for these reasons we have classified the investment property valuations as level 3 as defined by ifRs 13. The Group’s policy is to recognise transfers between fair value hierarchy levels as of the date of the event or change in circumstances that caused the transfer. There have been no transfers during the period. at 30 June 2015, the Group’s investment properties were valued at £34m (2014 restated: £11.8m) and the historical costs were £12.3m (2014: £1.1m). During the year the Board took the decision to change the accounting policy for investment properties from a ‘deemed cost’ basis to a ‘fair value’ basis. further information on the effects of this change can be found in note 32. During the year a decision was made to build 65 homes at Poole for sale to the public. Therefore, a transfer at a fair value of £3.8m was made to inventories to reflect this decision. The direct operating expenses for the period arising from the investment property was £nil (2014: £nil). The investment property generated no rental income during the period and is being held as an investment property as the Directors intend to let the land or construct rental properties on the site. Both the Poole and Wilton Park investment properties are pledged as security on borrowings. Valuation and sensitivity The Group’s residential investment properties were valued by an independent external valuer, cluttons llP, on the basis of ‘existing use’ in accordance with the Valuation standards, Guidance notes and appendices contained in the Rics Valuation — UK & Global (January 2014). The valuer used the comparable method of valuation involving the assimilation of relevant lettings, as well as analysing data obtained from internet based research in order to form an opinion of annualised market rent for the entire portfolio, by property type. a similar method was used to ascertain the capital values of the properties, but with sales information used rather than lettings information. a discount was then applied to the capital value to ensure a minimum rental yield of 4%. if market rental values decreased by 5% this would result in a reduction in fair value of £1.25m. The Group’s development property at Poole is now carried at fair value which has been established using an internal appraisal model based on the ‘residual method’. The inputs for this model are the market value of units to be constructed in accordance with the planning permission, the costs of any housebuilding, infrastructure, local authority fees and professional fees. The market value of the units has been assumed to be at a similar level to the prices obtained by the Group on earlier phases of the same development for similar property types. Housebuilding and infrastructure costs have been forecast using costs incurred by the Group on this or other similar developments with an allowance for cost increases. local authority fees were agreed at the time of the signing of the planning permission and are therefore known costs. Professional fees are input using costs incurred on similar projects and finance holding costs are the Group’s cost of debt capital. Using a profit margin of 20% this generated a land value for the remaining site of £8m. The Directors are of the opinion that developing the site reflects the highest and best use of this asset. 83 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 12. investMent properties cOnTinUED as a residual valuation model is used, if house prices were to fall by 5% this would result in a reduction in fair value of £2.2m in order to maintain a profit margin of 20% on the development. if costs should increase by 5% this would result in a reduction in fair value of £1.8m in order to maintain the required 20% profit margin. 13. property, plant and equipMent cost at 30 June 2013 additions Disposals at 30 June 2014 additions at 30 June 2015 depreciation at 30 June 2013 Depreciation charge Disposals at 30 June 2014 Depreciation charge at 30 June 2015 net book value at 30 June 2015 at 30 June 2014 at 30 June 2013 no property, plant or equipment is pledged as security. leasehold property £000 Motor vehicles £000 office equipment £000 fixtures and fittings £000 5 — — 5 8 13 4 1 — 5 2 7 6 — 1 123 9 (17) 115 — 115 33 29 (17) 45 29 74 41 70 90 144 39 — 183 126 309 75 34 — 109 54 163 146 74 69 91 3 — 94 165 259 78 7 — 85 35 120 139 9 13 total £000 363 51 (17) 397 299 696 190 71 (17) 244 120 364 332 153 173 84 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201514. investMents cost or fair value at 30 June 2013 share of profit after tax Distributions from joint ventures fair value adjustment Movement during the year to 30 June 2014 at 30 June 2014 additions share of loss after tax fair value adjustment Movement during the year to 30 June 2015 net book value at 30 June 2015 at 30 June 2014 option £000 investment in joint ventures £000 1,363 — — (822) (822) 541 — — (541) (541) — 541 243 613 (856) — (243) — 1,623 (135) — 1,488 1,488 — total £000 1,606 613 (856) (822) (1,065) 541 1,623 (135) (541) 947 1,488 541 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. although the Group consolidates DGVl, none of the share capital is owned by the Group and the payments for the option were made to the shareholder of DGVl, not to DGVl itself. 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, 2013 and 2014, 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 2015, which resulted in a fair value loss of £541,000 (2014: loss of £822,000) which has been recognised in the Group income statement, resulting in the option being valued at £1,200,000 less than 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. The Group’s joint venture in croxley Green, Hertfordshire came to an end during the year ended 30 June 2014. The Group’s 50% share of the profits after tax for the year ended 30 June 2014 amounted to £613,000 and has been recognised in the Group income statement. 85 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 86 14. investMents cOnTinUED at 30 June 2015, the company, directly or indirectly, held 20% or more of the equity of the following: company name subsidiary undertakings inland Homes 2013 limited 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 ZDP plc inland Helix limited inland Property limited inland commercial limited Drayton Developments limited leighton Developments limited Basildon United football, sports & leisure limited company name interests in joint ventures 10 ant south limited aston clinton s.a.R.l. Project Helix Holdco limited country of registration principal activity holding and voting rights class of shares England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales England & Wales Holding company Real estate development Real estate investment Real estate development Real estate development Real estate development Real estate development Real estate development Real estate development Real estate development Provision of finance Real estate development Real estate investment Real estate investment Real estate development Real estate development sports club 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary country of registration principal activity holding and voting rights class of shares England & Wales luxembourg England & Wales Real estate investment Real estate development Holding company 50% 10% 20% Ordinary Ordinary Ordinary The joint ventures listed above are accounted for using the equity method. further details can be found in critical Judgements in note 4 and below. INTERESTS IN SUBSIDIARY UNDERTAKINGS WITH SIGNIFICANT NON-CONTROLLING INTERESTS (NCI) Drayton Garden Village Ltd The Group has consolidated DGVl, a property development company based in the UK. The Group, neither directly nor indirectly, owns any of the equity of that entity or has any voting rights. further details of the relationship with DGVl can be found in note 4. all the risks associated with DGVl are non-recourse to the Group. set out below is the summarised financial information for DGVl, as this subsidiary has non-controlling interests that are material to the Group. amounts disclosed are before intercompany eliminations and therefore contain adjustments to recognise the Group’s profit share: www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201514. investMents cOnTinUED DGVL — Summarised statement of financial position current assets current liabilities current net assets non-current assets non-current liabilities non-current net liabilities net assets accumulated nci (post intercompany eliminations) DGVL — Summarised statement of total comprehensive income Revenue Profit for the period total comprehensive income profit allocated to nci (post intercompany eliminations) dividends paid to nci DVGL — Summarised cash flow statement cash flows from operating activities cash flows from investing activities cash flows from financing activities net increase/(decrease) in cash and cash equivalents 2015 £000 21,463 (11,884) 9,579 — (1,973) (1,973) 7,606 (1,196) 2015 £000 27,148 2,303 2,303 (194) — 2015 £000 8,786 — (8,685) 101 2014 £000 33,493 (26,820) 6,673 — (1,370) (1,370) 5,303 (1,002) 2014 £000 25,678 4,668 4,668 (479) — 2014 £000 (2,986) — 2,877 (109) Bucks Developments Group During the year the Group consolidated Bucks Developments ltd (BDl) and Wilton Park Developments limited (WPDl), a real estate investment group based in the UK. The Group, neither directly nor indirectly, owns any of the equity of that entity or has any voting rights. The Group has an option to purchase the site owned by WPDl and the rights to all profits and cash flows generated by sales to the Group reside with the shareholder of that company. all the risks associated with BDl and WPDl are non-recourse to the Group. set out below is the summarised financial information for BDl and WPDl, as these subsidiaries have non-controlling interests that are material to the Group. amounts disclosed are before intercompany eliminations: 87 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 14. investMents cOnTinUED Bucks Developments Group — Summarised statement of financial position current assets current liabilities current net assets non-current assets non-current liabilities non-current net assets net assets accumulated nci (post intercompany eliminations) Bucks Developments Group — Summarised statement of total comprehensive income Revenue Profit for the period total comprehensive income profit allocated to nci (post intercompany eliminations) dividends paid to nci Bucks Developments Group — Summarised cash flow statement cash flows from operating activities cash flows from investing activities cash flows from financing activities net increase in cash and cash equivalents 2015 £000 21,958 (4,853) 17,105 — (15,000) (15,000) 2,105 924 2015 £000 18,010 2,105 2,105 924 — 2015 £000 514 — (514) — Aston Clinton S.A.R.L. in november 2014, the Group acquired a 10% interest in aston clinton s.a.R.l. (lux) whose purpose is to acquire a site near aylesbury, Buckinghamshire, and obtain planning permission. The site has the potential for 400 residential plots. Under the terms of the joint venture agreement, the Group has an obligation to fund 50% of the costs of the site and is entitled to receive 50% of the net returns. The Group has made a capital investment of £1,375,000, which is accounted for as an investment in Joint Ventures. The Group has also provided loans of £2,119,000 as at the balance sheet date, and this is accounted for as loans to Joint Ventures within non-current assets in the Group statement of financial Position. This investment is valued using the equity method and further details of this can be found in critical Judgements in note 4. aston clinton s.a.R.l. is based in luxembourg. 88 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201514. investMents cOnTinUED Aston Clinton S.A.R.L. — Summarised statement of financial position current assets cash and cash equivalents Other current assets total current assets current liabilities financial liabilities (excluding trade payables and provisions) Other current liabilities total current liabilities net assets Reporting entity's share in % Reporting entity's share in £000 Goodwill £000 carrying amount at year end £000 Aston Clinton S.A.R.L. — Summarised statement of total comprehensive income Revenue interest income Operating expenses shareholder interest charge income tax expense total comprehensive income 8 months to 30 June 2015 £000 8 6,764 6,772 4,428 52 4,480 2,292 50% 1,146 95 1,241 8 months to 30 June 2015 £000 54 1 (319) (191) (5) (460) Project Helix Group in December 2014, the Group entered into a joint venture with christian candy’s cPc Group ltd (cPc) to purchase land, obtain planning permission and ultimately sell the land. Under the terms of the joint venture, the Group owns 20% of the share capital and is obliged to fund 20% of the costs of the sites acquired by the joint venture. a ‘waterfall’ calculation determines the amount of profit to be received by the Group, using performance hurdles. along with the Group’s capital investment of £247,000, £1,127,000 of loans have been provided, which is accounted for as loans to Joint Ventures within non-current assets in the Group statement of financial Position. This investment is valued using the equity method and further details of this can be found in critical Judgements in note 4. Project Helix is based at the company’s registered office. at 30 June 2015 there were no significant commitments. since the year end Project Helix has purchased land in ashford, Middlesex for £12.9m, £6.5m of which has been deferred and is outstanding at the date of signing of the financial statements. Under the terms of the joint venture agreement the Group must fund £1.3m of this amount. The results below are for both Project Helix Holdco ltd and its subsidiary undertaking, High Wycombe Developments ltd. 89 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 14. investMents cOnTinUED Project Helix Group — Summarised statement of financial position current assets cash and cash equivalents Other current assets total current assets current liabilities financial liabilities (excluding trade payables and provisions) Other current liabilities total current liabilities net liabilities Reporting entity's share in % Reporting entity's share in £000 Goodwill in £000 carrying amount at year end in £000 Project Helix Group — Summarised statement of total comprehensive income Revenue Operating expenses shareholder interest income tax expense total comprehensive income 5 months to 31 March 2015 £000 1,034 5,543 6,577 6,653 100 6,753 (176) 20% (35) 282 247 5 months to 31 March 2015 £000 — (4) (173) — (177) 90 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201515. deferred tax The net movement on the deferred tax account is as follows: at 1 July 2014 (restated) income statement charge at 30 June 2015 The movement in deferred tax assets is as follows: capital losses recognised on revaluation gain £000 477 revaluation gain £000 (477) 2,320 2,797 (2,320) (2,797) losses £000 118 share-based compensation £000 280 notional interest on deferred consideration £000 276 (118) 0 126 406 14 290 other £000 802 (950) (148) at 1 July 2014 (restated) (charged)/credited to income statement at 30 June 2015 £000 1,476 (928) 548 total £000 1,476 (928) 548 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 £24,783,000 (2014 restated: £36,202,000) that have not been recognised as the Directors consider the realisation of the losses is not expected to crystallise in the future. 16. inventories stock and work in progress 2015 £000 121,031 2014 £000 Restated 104,282 During the year, a total of £79,841,000 (2014: £42,857,000) 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 £300,000 (2014: £nil). included in the value of inventories above is £7.4m (2014: £13.6m) which is carried at fair value less costs to sell (net realisable value). The amount of inventories pledged as security against borrowings is £70.1m (2014: £61.1m). Within inventories is land transferred from investments properties at a fair value of £3.8m. 91 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 17. trade and other receivables Trade receivables Prepayments and accrued income Other receivables loans to joint ventures due in more than one year Other receivables due in more than one year 2015 £000 167 656 7,175 3,246 55 11,299 2014 £000 Restated 589 243 9,600 — 55 10,487 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. The Group has provided loans of £2,119,000 to aston clinton s.a.R.l. (lux), a company in which it holds a 10% equity interest as shown in note 14. at the balance sheet date, the Group has provided loans of £1,127,000 to its joint venture with cPc as shown in note 14. all of the Group’s trade and other receivables have been reviewed for indicators of impairment. 18. listed investMents held at fair value throuGh profit and loss at 1 July 2014 Movements during the year at 30 June 2015 19. cash and cash equivalents cash at bank and in hand £000 1 — 1 2015 £000 21,377 2014 £000 Restated 11,064 92 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201520. share capital authorised 239,990,000 (2014: 239,990,000) ordinary shares of 10p each 9,800 (2014: 9,800) redeemable shares of 10p each 180 (2014: 180) deferred shares of 10p each allotted, issued and fully paid 202,799,432 (2014: 202,799,432) ordinary shares of 10p each 9,800 (2014: 9,800) redeemable shares of 10p each 180 (2014: 180) deferred shares of 10p each 2015 £000 23,999 1 — 24,000 2015 £000 20,280 1 — 20,281 2014 £000 23,999 1 — 24,000 2014 £000 20,280 — — 20,280 Ordinary shares Each share has the right to one vote and is entitled to participate in any distribution made by the company, including the right to receive a dividend. Redeemable & deferred shares Deferred shares shall not confer the right to be paid a dividend or to receive notice of or attend or vote at a general meeting. On a winding up, after the distribution of the first £10,000,000 of the assets of the company, the holders of the deferred share (if any) shall be entitled to receive an amount equal to the nominal value of such deferred shares pro rata to their respective holdings. On 29 October 2014 the Group’s Employee Benefit Trust purchased 643,216 shares of 10p each in inland Homes plc for £382,000 under the terms of the long Term incentive Plan. This is a separate entity which is consolidated in the Group’s financial statements. 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 from the date of vesting. 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 detailed in the table below. 93 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 20. share capital cOnTinUED The company also operates a long term incentive plan (2013 lTiP) for the Executive Directors. further details of this can be found in the Directors’ Remuneration Report. The company has used the Monte carlo simulation technique to determine the fair value of the grant of the awards as the outcome of the performance targets depends on the Parent company’s share price. The assumptions applied to the Monte carlo simulation and the fair value per growth share are detailed in the table below. 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 unapproved share options 2014/15 grant unapproved share options 2012/13 grant unapproved share options 2011/12 grant unapproved share options 2010/11 grant unapproved share options 2009/10 grant 2013 ltip Growth shares 3 years 30% 2% 2.25% 70.25p 70.25p £0.07 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 6 years 33% 1% 2.10% 46.5p 0.0p £0.22 Volatility was calculated using historical share price information. The charge calculated for the year ended 30 June 2015 is £625,000 with a corresponding deferred tax asset at that date of £126,000. 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 2015 is shown below: Outstanding at 30 June 2013 Exercised during the year Outstanding at 30 June 2014 Granted during the year outstanding at 30 June 2015 exercisable at 30 June 2015 Exercisable at 30 June 2014 weighted average exercise price pence 18.25p 26.18p 70.25p 30.61p 16.74p number 000s 5,170 (1,500) 3,670 410 4,080 3,120 2,815 94 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201520. share capital cOnTinUED at 30 June 2015, outstanding options granted over 10p ordinary shares were as follows: share option scheme company unapproved company unapproved company unapproved company unapproved company unapproved company unapproved option price pence 50.0p 16.5p 18.25p 17.5p 32.5p 70.25p number 710,000 605,000 1,500,000 305,000 550,000 410,000 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 22 June 2018 to 21 June 2025 The weighted average remaining life of share options outstanding at 30 June 2015 is five and a half years. 21. MoveMent on reserves at 30 June 2013 (restated) Profit for the year Ordinary shares issued during the year Dividends paid to ordinary shareholders cancellation of deferred shares Reduction in minority interest's profit share sale of treasury shares share-based compensation at 30 June 2014 (restated) Profit for the year Dividends paid to ordinary shareholders Reinstatement of deferred shares Purchase of own shares for deferred bonus plan share-based compensation at 30 June 2015 share premium £000 33,695 — 124 — — — 214 — 34,033 — — — — — 34,033 treasury shares £000 (366) — — — — — 366 — — — — — — — — employee benefit trust £000 — — — — — — — — — — — — (382) — (382) special reserve £000 6,059 — — — — — — — 6,059 — — — — — 6,059 retained earnings £000 (9,372) 6,997 — (540) 1 2,462 — 171 (281) 29,680 (1,217) (1) — 625 28,806 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 and this was put in the special Reserve. a copy of this resolution is available from companies House. 95 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 22. non-controllinG interests (minority interests) The movement in the non-controlling interests is presented below. Balance at 1 July 2014 non-controlling interests in the net result of subsidiaries balance as at 30 June 2015 wpdl £000 — 924 924 dGvl £000 (1,002) (194) (1,196) total £000 (1,002) 730 (272) further information on the arrangements with these companies can be found in notes 4 and 14. Within WPDl is land and property which the Group does not control as they are not part of the Option agreement disclosed in notes 4 and 14. There is also a land creditor of £19m which is non-recourse to the Group. Post-tax profits of £2.2m made by WPDl, which have been eliminated on consolidation, will be available for distribution to the shareholder of WPDl as a dividend at a future date. a further explanation of this Option is included within note 4. further details of the results of this entity can be found in note 14. 23. 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. 24. other financial liabilities Purchase consideration on inventories falling due within one year Purchase consideration on inventories falling due in more than one year Zero Dividend Preference shares 2015 £000 4,425 3,675 3,802 6,347 2,960 21,209 2015 £000 10,881 12,629 12,372 35,882 2014 £000 Restated 7,216 4,214 1,489 2,809 1,735 17,463 2014 £000 9,324 — 11,552 20,876 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 28. 96 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201525. continGencies The Group has no contingent liabilities as at 30 June 2015 and 30 June 2014. 26. 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 2015 £000 134 395 529 2014 £000 8 10 18 The break clause in the rental contract for the office building rented since 8 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. During the year the Group entered into two joint venture agreements. Under the terms of the aston clinton s.a.R.l joint venture the Group is committed to contributing 50% of all costs. from the date of signing of the financial statements, the Group expects to contribute a further £250,000 to the joint venture. Under the terms of the Project Helix joint venture the Group is committed to contributing 20% of all costs. The initial agreement has a limit of £41.25m and inland would be liable for £8.25m, including what has already been contributed. 97 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued 27. 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 28 to the Group financial statements. 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. for the year ended 30 June 2015 The movement in the capital to overall financing ratio is shown below. The target capital to overall financing ratio has been set by the Directors at 40% and results over this amount are considered to be a good performance against the target. Equity less: cash and cash equivalents Equity Borrowings Overall financing capital to overall financing 2015 £000 88,797 (21,377) 67,420 2015 £000 88,797 56,288 145,085 46.5% 2014 £000 Restated 60,091 (11,064) 49,027 2014 £000 Restated 60,091 51,924 112,015 43.8% 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. Every quarter the Group must report to the ZDP shareholders that the covenants attached to the ZDP shares have not been breached. The most significant covenant is the gearing ratio which is calculated as adjusted gross assets:financial indebtedness. This covenant is monitored on a monthly basis by the Board and has not been breached at any time. further details can be found in the inland ZDP Prospectus on the company’s website at www.inlandhomes.co.uk/inland-zdp-plc. 98 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201528. 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 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 The fair values are presented in the related notes. note 2015 £000 2014 £000 Restated 18 17 19 23 24 24 1 1 10,643 21,377 32,020 43,916 11,902 12,372 23,510 91,700 10,244 11,064 21,308 40,372 12,919 11,552 9,324 74,167 current borrowings consist of housebuilding loan facilities of £29.2m, of which £9.4m (2014 restated: £26.4m) is drawn down, and further loans of £34.5m secured against land and investment properties (2014 restated: £14.0m). The loans attract interest at varying rates. The restated figures for 2014 include £11.9m of land and development loans relating solely to DGVl. 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 trade, other payables & borrowings £000 52,016 — 52,016 2015 Zero dividend preference shares £000 — 16,034 16,034 purchase consideration £000 — — — Trade, other payables & borrowings £000 51,802 — 51,802 2014 (restated) Zero Dividend Preference shares £000 — 16,034 16,034 Purchase consideration £000 9,324 — 9,324 99 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 28. financial assets and liabilities cOnTinUED 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 in 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. 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 2014 (restated) fair value adjustments during the year net fair value at 30 June 2015 liabilities net fair value at 1 July 2014 fair value adjustments during the year net fair value at 30 June 2015 note 28(a)&(b) note 28(a) level 1 £000 1 — 1 level 1 £000 12,753 900 13,653 level 2 £000 — — — level 2 £000 — — — level 3 £000 541 (541) — level 3 £000 — — — total £000 542 (541) 1 total £000 12,753 900 13,653 (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 120.20p per share (2014: 111.34p); however, their closing price on the main market of the london stock Exchange on 30 June 2015 was 132.75p (2014: 124.00p). (b) Assets not based on observable market data The option to purchase the share of DGVl is measured at fair value using an option valuing model. However, during the year the Directors decided that, as the project is nearing an end and the profits are available for the shareholder of DGVl to extract, that option no longer has a fair value and the entire value should be written off. 100 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201529. related party transactions Howarth Homes plc 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 involvement with this joint venture came to an end in 2014. The Group’s 50% share of the profits after tax for the period to 30 June 2015 amounts to £nil (2014: £613,000) that has been recognised in the Group’s income statement. no further profits will be received from this joint venture. The Group’s share of the results and its share of net assets of this joint venture are as follows: net assets net result 2015 £000 — — 2014 £000 — 613 During the year the Group entered into three new joint ventures, two of which are considered to be material. The Group’s share on the net assets and net results of these joint ventures can be found in note 14. further information on loans to joint ventures can be found in note 17. During the year the beneficial interests of the Directors in the ordinary share capital of the company received dividends as follows: stephen Wicks nishith Malde Paul Brett Terry Roydon simon Bennett 2015 £000 97 68 21 2 1 2014 £000 44 30 9 1 — for details of compensation paid to the Directors and key management please see the Remuneration Report and note 7. Due to the consolidation of DGVl the following are now classed as related party transactions: • Mr a K Brett, the shareholder of DGVl, has provided a loan of £250,000 to DGVl (2014 restated: £250,000) which attracts interest at a rate of 4.5%. To date £60,000 has been accrued and remains unpaid. • DGVl has provided a loan of £461,000 (2014 restated: £370,000) to Mr s D Wicks. • DGVl has provided a loan of £848,000 (2014 restated: £898,000) to first Place nurseries limited, a company in which Mr a K Brett, Mr n Malde and Mr s D Wicks are shareholders. • DGVl has provided a loan of £1,442,000 (2014 restated: £1,400,000) to a subsidiary of Energiser investments plc, a company in which Mr n Malde and Mr s D Wicks are shareholders and directors. This loan attracts interest of 10% per annum and as at 30 June 2015 £229,000 (2014 restated: £83,000) has been accrued and remains unpaid. • DGVl has provided a loan of £723,000 (2014 restated: £620,000) to a subsidiary of Energiser investments plc, a company in which Mr n Malde and Mr s D Wicks are shareholders and directors. This loan attracts interest of 4.5% per annum and as at 30 June 2015 £114,000 (2014 restated: £83,000) has been accrued and remains unpaid. 101 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 30. business coMbinations Acquisition of Drayton Developments Limited On 2 July 2014, the Group acquired 100% of the share capital of Drayton Developments limited, a residential and mixed use site developer, for £100,000. The acquisition provided the Group with additional land opportunities. no goodwill has been recognised on acquisition. The following table summarises the consideration paid for Drayton Developments limited and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date. Consideration at 2 July 2014 cash total consideration Recognised amounts of identifiable assets acquired and liabilities assumed land Trade and other payables total identifiable net liabilities 2015 £000 100 100 acquiree's book value £000 8,679 (8,773) (94) fair value on acquisition £000 8,873 (8,773) 100 no revenue contributed by Drayton Developments limited has been included within the consolidated statement of comprehensive income since 2 July 2014. no profit has been contributed by Drayton Developments limited in that period. There were no significant costs incurred in relation to this acquisition. Acquisition of Basildon United Football, Sports & Leisure Limited On 10 april 2015, the Group acquired 100% of the share capital of Basildon United football, sports & leisure limited, a football club, for £150,000. The acquisition provided the Group with a long lease which may form part of a wider land assembly. all other trade, assets and liabilities were transferred out of the entity before acquisition. no goodwill has been recognised on acquisition. The following table summarises the consideration paid for Basildon United football, sports & leisure limited and the amounts of the assets acquired and liabilities assumed recognised at the acquisition date. Consideration at 10 April 2015 cash total consideration 2015 £000 150 150 102 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201530. business coMbinations cOnTinUED Recognised amounts of identifiable assets acquired and liabilities assumed lease classified as inventories total identifiable net liabilities acquiree's book value £000 — — fair value on acquisition £000 150 150 no revenue contributed by Basildon United football, sports & leisure limited has been included within the consolidated statement of comprehensive income since 10 april 2015. no profit has been contributed by Basildon United football, sports & leisure limited in that period. There were no significant costs incurred in relation to this acquisition. Acquisition of Wilton Park Developments Limited in December 2014, the Group entered into an option agreement to purchase the land owned by Wilton Park Developments limited. The requirements of ifRs 10 necessitate that Wilton Park Developments limited is accounted for as a subsidiary. The following table summarises the amounts of the assets acquired and liabilities assumed recognised at the date of control. Consideration in December 2014 cash total consideration Recognised amounts of identifiable assets acquired and liabilities assumed inventories Debtors Other creditors Other loans Purchase consideration on inventories falling due within one year Purchase consideration on inventories falling due after more than one year total identifiable net liabilities 2015 £000 — — acquiree's book value £000 26,453 5,724 (2,066) (4,000) (10,000) (19,000) (2,889) fair value on acquisition £000 26,453 5,724 (3,043) (4,000) (9,600) (15,534) — no revenue contributed by Wilton Park Developments limited has been included within the consolidated statement of comprehensive income since December 2014. no profit has been contributed by Wilton Park Developments limited in that period. There were no costs incurred in relation to this acquisition. There were interest costs and tax on intercompany profits which have been eliminated on acquisition. These make up the amounts attributed to non-controlling interests. The difference between the acquiree’s book value and the fair value of purchase consideration due at a later date is the discount which is applied to these amounts under ias 39. 103 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the Group financial stateMents continued for the year ended 30 June 2015 31. events after the balance sheet date On 13 august 2015 inland ZDP plc, a wholly owned subsidiary of the Group, issued 1,028,400 new zero dividend preference shares of 10 pence each at a price of 131 pence each. They were admitted to trading on the london stock Exchange plc’s main market on 20 august 2015. net proceeds of this issue were approximately £1.3m. 32. chanGe in accountinG policies During the year the Group changed its investment property accounting policy from a ‘deemed cost’ basis to a ‘fair value’ basis. further information on the valuation methods used can be found in note 13. The Directors are of the opinion that the revaluation model gives a more accurate reflection of the value of the investment properties held by the Group. The Group also adopted ifRs 10 and this resulted in the consolidation of DGVl. further information on the reasons for this change can be found in note 4. The impact of these changes in policy on each line item of the Group income statement, Group statement of financial Position and Group statement of cash flows for the current and the prior year is shown in the table below for investment properties and for the prior year only for the adoption of ifRs 10 as we have taken advantage of the ifRs 10 transition exemption: prior to change in accounting policies adjustments restated 2015 £000 2014 £000 2013 £000 revalu- ation 2015 £000 Revalu- ation 2014 £000 DGVl 2014 £000 Revalu- ation 2013 £000 DGVl 2013 £000 2015 £000 2014 £000 2013 £000 114,219 39,824 (79,841) (24,126) 34,378 15,698 (6,021) (4,353) — 27,816 (8,172) 19,509 — 10,523 (2,500) 8,636 — — — — — 19,085 — (18,731) — 354 — (87) — — — — — 14,519 — 14,519 — — 14,519 — 267 — (1,590) (1,323) 2,300 2,300 — 2,300 — — — — — — — — — 114,219 58,909 — (79,841) (42,857) — 34,378 16,052 — (6,021) (4,440) — 14,519 — 42,335 — (8,172) — 34,028 2,300 13,090 (4,090) 9,613 — — — — — — — — prior to change in accounting policies adjustments restated 2015 £000 2014 £000 2013 £000 revalu- ation 2015 £000 Revalu- ation 2014 £000 DGVl 2014 £000 Revalu- ation 2013 £000 DGVl 2013 £000 2015 £000 2014 £000 2013 £000 7.50 2.87 7.03 2.70 — — 7.17 6.73 0.59 0.56 — 14.67 3.46 — 13.76 3.26 — — Group income statement — turnover — cost of sales — gross profit — administrative expenses — revaluation of investment properties — operating profit — net interest — profit before tax earnings per share — basic earnings per share in pence — diluted earnings per share in pence 104 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015 32. chanGe in accountinG policies cOnTinUED prior to change in accounting policies adjustments restated 2015 £000 2014 £000 2013 £000 revalu- ation 2015 £000 Revalu- ation 2014 £000 DGVl 2014 £000 Revalu- ation 2013 £000 DGVl 2013 £000 2015 £000 2014 £000 2013 £000 Group statement of financial position — investment properties — deferred tax — total non-current assets — inventories — trade and other receivables — cash and cash equivalents — total current assets — retained earnings — total equity attributable to shareholders — other loans — trade and other payables — corporation tax — other financial liabilities — total current liabilities 15,362 7,681 2,641 2,767 23,124 11,197 121,031 90,275 7,998 13,983 21,377 11,169 150,407 115,428 12,261 3,646 18,638 (2,093) 16,545 7,681 3,414 12,929 44,736 15,085 12,154 72,976 (1,789) 16,545 — 802 802 — 14,007 — (3,551) — (105) — 10,351 (5,953) 4,119 (2,093) 2,026 — 509 509 — 22,498 — (9,119) — 5 — 13,384 (6,890) 2,026 1,819 (2,512) 34,000 548 (693) 39,669 11,800 1,476 14,025 — 121,031 104,282 — 7,998 10,432 — 21,377 11,064 — 150,407 125,779 (281) (693) 28,806 72,252 18,724 14,862 6,347 10,881 76,006 64,018 9,231 10,497 2,808 9,324 51,052 57,730 4,710 3,559 625 7,947 18,454 16,545 (5,953) — 11,949 — 4,157 — 1 — — — 16,107 (6,890) 2,026 7,556 — 3,515 — — — — 6,727 — 17,798 (693) 88,797 — 18,724 — 14,862 — 6,347 — 10,881 — 76,006 60,091 21,180 14,654 2,809 9,324 67,159 9,500 1,411 12,745 67,234 5,966 12,159 86,360 (9,372) 50,147 12,266 7,074 625 14,674 36,252 105 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financials notes to the Group financial stateMents continued for the year ended 30 June 2015 32. chanGe in accountinG policies cOnTinUED prior to change in accounting policies adjustments restated 2015 £000 2014 £000 2013 £000 revalu- ation 2015 £000 Revalu- ation 2014 £000 DGVl 2014 £000 Revalu- ation 2013 £000 DGVl 2013 £000 2015 £000 2014 £000 2013 £000 Group statement of cash flows — profit for the year before tax — revaluation of investment properties — interest expense — interest and similar income — decrease/(increase) in 19,509 8,636 — 14,519 (1,323) 2,300 — 8,373 (201) — 2,808 (308) — (14,519) — — — 1,448 — 142 — (2,300) — — inventories 13,819 (45,540) — decrease/(increase) in trade and other receivables 2,434 1,365 — (decrease)/increase in trade and other payables (7,870) 8,133 — net cash inflow/(outflow) from operating activities — interest paid — repayment of borrowings — new loans — net cash (outflow)/inflow from financing activities — net increase/(decrease) in cash and cash equivalents — net cash and cash equivalents 36,807 (24,458) (7,172) (1,902) (36,568) (3,039) 35,544 26,247 (9,795) 21,620 10,313 (985) at beginning of year 11,064 12,154 — net cash and cash equivalents at end of year 21,377 11,169 — — — — — — — — — — — — 8,492 — (5,727) — (6,086) — (3,054) — (1,449) — (7,068) — 11,461 — 2,944 — — — (110) 5 (105) — — — — — — — — — — — — — — — — — — — — — — — — — — — 34,028 9,613 — (14,519) — 8,373 (201) — (2,300) 4,256 (166) — 13,819 (37,048) — 2,434 (4,362) — (7,870) 2,047 — 36,807 (27,512) — (7,172) (3,351) — (36,568) (10,107) — 35,544 37,708 — (9,795) 24,564 — 10,313 (1,095) — 11,064 12,159 — 21,377 11,064 — — — — — — — — — — — — — — — 33. 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. 106 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015 We have audited the Parent company financial statements of inland Homes plc for the year ended 30 June 2015 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 55, 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 2015; • 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 the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the Parent company financial statements. independent auditor’s report to the MeMbers of inland hoMes plc 107 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsindependent auditor’s report to the MeMbers of inland hoMes plc continued 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 2015. nicholas watson Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Reading 28 October 2015 108 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 2015fixed assets Tangibles 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 Employee benefit trust special reserve Profit and loss account shareholders' funds coMpany balance sheet at 30 June 2015 note 4 5 6 7 8 9 10 10 10 2015 £000 7 12,472 12,479 35,488 1 406 21,020 56,915 (376) 56,539 69,018 20,281 34,033 (382) 6,059 9,027 69,018 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 The financial statements were approved and authorised for issue by the Board of Directors on 28 October 2015 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. 109 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financials1. principal accountinG policies Basis of preparation The financial statements have been prepared in accordance with applicable United Kingdom accounting standards and under the historic 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 or the Monte carlo simulation. 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/growth shares 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. Employee benefit trust The Directors consider that the Employee Benefit Trust (EBT) is under the de facto control of the company as the trustees look to the Directors to determine how to dispense the assets. Therefore, the assets and liabilities of the EBT have been consolidated into the company accounts. The EBT’s investment in the company’s shares is eliminated on consolidation and shown as a deduction against equity. any assets in the EBT will cease to be recognised in the company Balance sheet when those assets vest unconditionally in identified beneficiaries. 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. notes to the coMpany financial stateMents for the year ended 30 June 2015 110 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20152. 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 profit for the year of £9.5 million (2014: loss of £1.1 million) has been transferred to reserves. Auditor’s remuneration The audit fees for the company were £5,500 (2014: £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. 3. directors’ reMuneration see note 7 to the Group financial statements and the Directors’ Remuneration Report. 4. tanGible assets cost or fair value at 30 June 2013 at 30 June 2014 additions at 30 June 2015 depreciation at 30 June 2013 at 30 June 2014 Depreciation charge at 30 June 2015 net book value at 30 June 2015 at 30 June 2014 at 30 June 2013 leasehold property £000 — — 8 8 — — 1 1 7 — — 111 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financials5. investMents cost at 1 July 2014 at 30 June 2015 amortisation at 1 July 2014 at 30 June 2015 net book amount to 30 June 2015 net book amount to 30 June 2014 see note 14 to the Group financial statements for details on the Group undertakings. 6. debtors amounts owed by Group undertakings VaT debtor corporation tax debtor Other debtors Prepayments and accrued income 7. deferred tax The net movement on the deferred tax account is as follows: at 1 July 2014 income statement credit on share-based charge at 30 June 2015 investment in Group undertakings £000 12,472 12,472 — — 12,472 12,472 2015 £000 34,947 30 152 302 57 35,488 total £000 12,472 12,472 — — 12,472 12,472 2014 £000 37,182 — — — 406 37,588 £000 280 126 406 notes to the coMpany financial stateMents continued for the year ended 30 June 2015 112 www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 20158. creditors: aMounts fallinG due within one year Trade creditors Other creditors accruals 9. share capital authorised 239,990,000 (2014: 239,990,000) ordinary shares of 10p each 1,000 (2014: 1,000) redeemable shares of £1 each allotted, issued and fully paid 202,799,632 (2014: 202,799,432) ordinary shares of 10p each 980 (2014: 980) redeemable shares of £1 each 180 (2014: 180) deferred shares of 10p each 2015 £000 70 60 246 376 2015 £000 23,999 1 24,000 2015 £000 20,280 1 — 20,281 2014 £000 159 — 191 350 2014 £000 23,999 — 23,999 2014 £000 20,280 — — 20,280 On 29 October 2014 the Group’s Employee Benefit Trust purchased 643,216 shares in inland Homes plc under the terms of the long Term incentive Plan. Details of the company’s share option schemes can be found in note 20 to the Group financial statements. 113 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsnotes to the coMpany financial stateMents continued for the year ended 30 June 2015 114 10. reserves at 30 June 2014 Profit for the year Dividends paid to ordinary shareholders Employee share-based compensation at 30 June 2015 share premium £000 34,033 — — — 34,033 special reserve £000 6,059 — — — 6,059 profit and loss account £000 92 9,527 (1,217) 625 9,027 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. 11. capital coMMitMents The company leases an office under a non-cancellable operating lease agreement. The future aggregate minimum lease payments under a non-cancellable operating leases are as follows: Due in less than one year Due later than one year and not later than five years 2015 £000 127 383 510 2014 £000 — — — a 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. 12. continGent liabilities The company has the following contingent liabilities as at 30 June 2015: 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. in the Directors’ opinion there is unlikely to be any cash outflow in relation to this. 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. in the Directors’ opinion there is unlikely to be any cash outflow in relation to this. no provisions have been made in these financial statements in respect of these contingent liabilities. www.inlandhomes.co.ukInland Homes plc Annual Report and Accounts for the year ended 30 June 201513. reconciliation of MoveMents in shareholders’ funds Profit/(loss) for the year issue of shares Payment of dividend to ordinary shareholders Purchase of shares for Employee Benefit Trust sale of treasury shares share-based compensation net increase/(decrease) in shareholders' funds Opening shareholders' funds closing shareholders' funds 2015 £000 9,529 — (1,217) (382) — 625 8,555 60,464 69,019 2014 £000 (1,084) 274 (540) — 580 171 (599) 61,063 60,464 14. 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 fRs 8.3 Related Party Disclosures. 115 Our GovernanceStock Code: INLShareholder InformationStrategic ReportOur Financialsshareholder infORMaTiOn 0,000 plots in land bank inside this section shareholder notes advisers and company information 118 120 117 shareholder notes 118 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.uk119 Our GovernanceOur FinancialsStock Code: INLStrategic ReportShareholder Informationadvisers and coMpany inforMation 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 coMpany reGistration nuMber 5482990 coMpany secretary nishith Malde fca noMinated adviser and broker stifel nicolaus Europe ltd 7th floor One Broadgate london, Ec2M 2Qs 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 120 Inland Homes plc Annual Report and Accounts for the year ended 30 June 2015www.inlandhomes.co.ukStock Code: INL 24303.04 10 November 2015 12:43 PM proof 4 121 Our GovernanceOur FinancialsStock Code: INLStrategic ReportShareholder InformationInland Homes plc Decimal Place Chiltern Avenue Amersham Buckinghamshire HP6 5FG Tel: 01494 762450 Fax: 01494 765897 Email: info@inlandplc.com www.inlandhomes.co.uk 24303.04 10 November 2015 12:43 PM proof 6

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