Bringing
land to life
Report and Accounts
for the year ended 30 September 2021
Key financials
£181.7m
Revenue
+46.5%
(2020: £124.0m)
£13.2m
Profit before tax
+288.2%
(2020: £3.4m)
£12.1m
Cash balances
-22.9%
(2020: £15.7m*)
107.84p
EPRA NTA per share
+3.9%
(2020: 103.75p)
£118.1m
Net debt
-20.3%
(2020: £148.2m)
£3.0bn
Land portfolio GDV
-3.2%
(2020: £3.1bn)
£164.7m
Partnership housing
forward order book
+55.7%
(2020: £105.8m)
*Of cash balances in 2020, £4.7m was restricted
Bringing
land to life
Incorporated in the UK in 2005, Inland Homes plc is
an AIM-listed specialist housebuilder and brownfield
developer, dedicated to achieving excellence in
sustainability and design.
Inland Homes acquires brownfield land in the South and South East
of England principally for residentially led development schemes. The
business then enhances the land value by obtaining planning permission,
before building open market and affordable homes or selling surplus
consented land to other developers to generate cash.
Inland Homes has a proud history of brownfield site regeneration, creating
new homes which leave a positive legacy for future generations. The
Company is committed to extensive public and community consultation
in order to ensure that, where possible, local community needs and
objectives are met.
Inland’s aim is to create sustainable communities and homes which set
a benchmark for all future developments in the South and South East
of England, where there is sustained demand for additional housing
which outstrips the available supply. The Company is always looking for
brownfield sites without planning permission for future development.
Inland Homes plc
Stock code: INL
Overview
Group at a glance
02
A focused portfolio
06
Chairman’s statement
08
Strategic report
Chief Executive’s review
13
Key aspects of our marketplace
16
Our strategy
20
Asset management case study:
Patchworks, Walthamstow
24
Key performance indicators
28
Our business model
30
Business model in action case study:
Cheshunt Lakeside, Cheshunt
32
Operations review
36
Group Finance Director’s review
42
Our principal risks
46
Environmental, Social and
Governance (ESG)
55
Section 172 reporting
65
Governance
Board of Directors
70
Corporate governance statement
72
Governance and risk committee report
76
Audit committee report
77
Remuneration committee report
78
Directors’ report
83
Financial statements
Independent Auditor’s report
86
Group statement of comprehensive
income
95
Group statements of financial position
96
Company statements of financial position
97
Statements of changes in equity
98
Group statements of cash flows
99
Notes to the financial statements
100
Five-year summary
153
List of definitions
154
Advisers and Company information
155
CONTENTS
www.inlandhomesplc.com
Annual Report and Accounts 2021
01
OVERVIEW
↑
Cavalry Barracks, Hounslow
Group at a glance
HOW WE DO IT
WHAT WE DO
To lead the way in transforming brownfield sites into thriving, sustainable
communities which people are proud to call home.
We use our land, planning and housebuilding expertise to maximise
the value of land.
Sourcing and securing attractive viable land opportunities is at the heart of
what we do and where we have a competitive edge. We have an exceptional
success rate in securing planning consent on these sites, working closely
with local authorities and other stakeholders to ensure our plans add long-
term value to each locality.
With planning consent achieved, our flexible business model provides
access to several income streams to maximise value and deliver strong
shareholder returns.
Wilton Park,
Beaconsfield
↑
OUR VISION
Inland Homes plc
Stock code: INL
02
HOW WE GENERATE VALUE
Land sales
Strategic land asset
sales on sites which
benefit from planning
permission
Asset management
Acting as an asset
manager to third-party
landowners, providing
land management and
planning services
Housebuilding
Building private and
affordable homes for sale
to individuals or private
investors
Rental income
Generating rental
income as cost
mitigation in the short
and medium term from
large development sites
Contract income
Building private and
affordable housing
projects for third-party
landowners through
partnership housing
activity
Investment properties
Generating long-term
rental income from
investment properties
Land and
planning are our
core
expertise
See pages 30–31
for our business
model for more
information on
how we generate
value
OUR VALUES
OUR VALUES LEAD EVERY ASPECT OF OUR
BUSINESS OPERATIONS AND DECISION-MAKING:
We are stronger
together
We value our
supply chain
partners and
subcontractors,
recognising we are
stronger together
We always
put safety first
We do not
compromise on
safety
We create a
lasting legacy
Our ambitious
developments
combine quality,
value and
sustainability to
create a lasting
legacy
Our people
are our
greatest asset
We attract talented
people, give them
responsibility
and successfully
retain experienced
employees
www.inlandhomesplc.com
Annual Report and Accounts 2021
03
OVERVIEW
£3.0bn
Land bank GDV
1,831
Homes granted planning
over the reporting period
INVESTMENT CASE
£3.0bn
Land bank GDV
1,831
Homes granted planning
over the reporting period
Read more in the Chief Executive's
review on pages 13–15
Read more in our
strategy on pages 20–23
See pages 6–7 to read more about
our land portfolio
See pages 20–23 to read more about
our strategy
OUR STRATEGY
Our strategy is focused
on activity that will
enhance EPRA NTA
value and support
further reductions in
net debt and gearing
01.
Optimise returns
from our valuable
land portfolio
▼
02.
Grow the capital-light
asset management
business
▼
03.
Maximise the value
of land with planning
consent
▼
04.
Deliver homes which
meet market needs in the
most cost-effective way
▼
05.
Embed sustainability
within all areas of our
business
Strong and balanced
land portfolio
Our land portfolio is in the South and
South East of England where there is
sustained demand for additional housing
that exceeds available supply. This
land bank is principally brownfield and
includes sites both with and without
planning permission, plus strategic
sites which are usually held as discount
to market value options and, therefore,
require only a limited amount of capital.
The gross development value of our
entire land bank is £3.0bn. It comprises
10,055 plots, of which 3,689 have planning
consent and 2,934 where planning
applications have been submitted.
Land-planning
experts
Our versatility, local insight and
community-centred approach
give us a competitive edge in
identifying and securing viable and
attractive land opportunities. Our
highly experienced management
and specialist development teams
maximise each project’s potential.
Our success is driving demand for our
asset management services, whereby
we provide our land and planning
expertise to third-party investors.
Inland Homes plc
Stock code: INL
04
Group at a glance CONTINUED
6
Key revenue streams to
maximise value
1,547
Private and partnership
homes under construction
41/50
Considerate Constructors
Scheme average score
6
Key revenue streams to
maximise value
1,547
Private and partnership
homes under construction
41/50
Considerate Constructors
Scheme average score
See pages 55–64 to read more about
our ESG strategy
See pages 36–41 to read more about
our housebuilding activity
See pages 30–31 to read more about
our business model
Environmental, Social and
Governance focus and principles
We have extensive site remediation
experience, including on sites
with challenging and complex
environmental issues. We add
further long-term value through our
infrastructure and social investment
in the communities where we
operate. We are building on this track
record, developing a business-wide
Environmental, Social and Governance
(ESG) strategy that will embed our
ESG principles within every area of
the business and support us on our
journey to carbon net zero.
Proven self-build and
partnership capability
We have self-built the majority of our
homes since 2016, giving us greatest
control over quality. Our ambitious,
high-quality and affordably priced
developments are in high demand
from first-time buyers and private
investors. There is strong demand
from housing associations and Build
to Rent operators for our partnership
housing offer, where we provide both
the land and construction of the homes.
With our proven credentials, we are
well positioned to maximise market
opportunities.
A balanced and flexible
business model
The flexibility in our business model
allows us to adapt our activity to suit
market conditions and business needs.
It includes the strategic disposal
of consented land, as well as the
construction and forward sales of private
homes and partnership housing. Demand
for our asset management services, a
capital-light activity, continues to grow
quickly. Our brownfield sites and portfolio
of rental properties also provide a steady
stream of rental income.
www.inlandhomesplc.com
Annual Report and Accounts 2021
05
OVERVIEW
A focused portfolio
Land is at the heart of what we do
We use our expertise to find, secure and achieve planning
permission on viable sites across the South and South East of
England, an area where housing demand exceeds supply.
In line with our experience and expertise, more than two-thirds of our land portfolio is
brownfield, namely land that has had a previous use. Our growing portfolio of strategic land
sites offers longer-term opportunities.
IN NUMBERS
10,055
Land plots
(2020: 11,045)
2,934
Plots with planning
submitted
(2020: 1,819)
2,870
Strategic land bank
plots
(2020: 2,795)
1,831
Plots granted
planning permission
during the period
(2020: 112)
Cheshunt Lakeside,
Cheshunt
(joint venture)
Chapel Riverside,
Southampton
Meridian Waterside,
Southampton
Randalls,
Uxbridge
Lily’s Walk,
High Wycombe
(joint venture)
Wessex Hotel,
Bournemouth
Buckingham House,
High Wycombe
Exclusive House,
Maidenhead
Templar Green,
Cressing
Patchworks,
Walthamstow
Hillingdon Gardens,
Hillingdon
Cavalry Barracks,
Hounslow
Gallions Close,
Barking
Thames Road,
Barking
Telephone Exchange,
Staines
Cheshunt Lakeside,
Cheshunt
Patchworks,
Walthamstow
Church Road,
Ashford
Merrielands,
Dagenham
Afrex House,
Alperton
Randalls,
Uxbridge
Aylesbury
Basildon
Beaconsfield
Birmingham
Chesham
Dagenham
Hitchin
Poole
Amersham
Barnham
Beaconsfield
Billericay
Birmingham
Burleighfield
Chelmsford
Colnbrook
Datchet
Elstree
Farnborough
Framfield
Fulmer
Hazlemere
High Wycombe
Holmer Green
Hyde Heath
Ickleford
Iver
Little Chalfont
Maidenhead
Meppershall
Ockley
Poole
Slough
Upminster
West Hyde
PARTNERSHIP
HOUSING SCHEME
ASSET MANAGEMENT
PROJECTS
STRATEGIC
SITES
OTHER LAND
SITES
DEVELOPMENT/
SALES SITES
Inland Homes plc
Stock code: INL
06
Little Chalfont
West
Hyde
Elstree
Meppershall
Cressing
Billericay
Basildon
Cheshunt
Holmer Green
Walthamstow
Uxbridge
Hounslow
Staines
Fulmer
Colnbrook
Southampton
Bournemouth
Farnborough
Datchet
Maidenhead
Slough
Beaconsfield
High Wycombe
Hazlemere
Amersham
Chesham
Birmingham
Hyde Heath
Hillingdon
Poole
Hitchin
Barking
Dagenham
Upminster
Alperton
Framfield
Ashford
Barnham
Aylesbury
Burleighfield
Chelmsford
Ickleford
Ockley
Iver
Map as at 30 September 2021, including asset management agreements where plots are owned by third parties
3,689
Plots with planning
permission
(2020: 2,470)
562
Pre-planning
application plots
(2020: 3,961)
601
1
Plots sold during
the period
(2020: 107)
1 Includes plots within the asset
management division owned by third parties.
● Development/sales sites
● Asset management projects
● Partnership housing schemes
● Other land sites
● Strategic sites
www.inlandhomesplc.com
Annual Report and Accounts 2021
07
OVERVIEW
Inland Homes started the financial year
with cautious optimism and finished the
financial year strongly... it has been a year
of tangible progress in the delivery of the
Group’s strategic priorities.”
£13.2m
Profit before tax
2020: £3.4m
Introduction
Inland Homes started the financial year with cautious
optimism and finished the financial year strongly. The
Group generates income from multiple sources and
this flexibility enabled Inland Homes to move decisively
and quickly to meet the challenges presented by
both the COVID-19 pandemic and the changing
market conditions.
It has been a year of tangible progress in the delivery of
the Group’s strategic objectives. One of the priorities has
been to reduce net debt and I am therefore pleased to be
able to report that the Group was successful in achieving
a 20.3% reduction, whilst simultaneously extending the
maturity of Inland Homes’ borrowing facilities. Further
progress has also been made in maximising the value
of the Group’s excellent land bank, growing the asset
management division and sustaining the demand for
Inland Homes’ high-quality, affordably priced homes.
Financial and operational highlights
The heart of the Group’s business is land, and both
the land trading and asset management businesses
performed well. Inland Homes delivered record
revenue for the year ended 30 September 2021 of
£181.7m (30 September 2020: £124.0m), an increase
of 46.5% over the previous year. The Government
has continued to support the UK housing market
and, excluding joint ventures, the Group sold 216
new homes (30 September 2020: 96). The average
selling price of our new homes increased to £262,000
(30 September 2020: £240,000), as buyers took
advantage of the relaxation of the Stamp Duty Land Tax
and the Help to Buy scheme.
The asset management business, which enables
Inland Homes to leverage the expertise, experience
and skills within the Group, has had another good year.
The Group now has six projects with the potential to
deliver approximately 3,300 new homes. Management
fees earned on these projects during the year
increased by 13.9% to £27.8m (30 September 2020:
£24.4m) and delivered very healthy gross profits.
The Group continues to see increased demand from
Build to Rent (BtR) operators, looking for a turn-key
solution to their housing requirements. As a result,
the contract income from our partnership housing
activities, undertaken by Inland Partnerships, grew
substantially, with turnover increasing by 16.4%
to £60.3m (30 September 2020: £51.8m). Inland
Partnerships also continued to win new contracts and
its forward order book, including two build contracts at
our site in Walthamstow worth £131.3m, increased by
55.7% to £164.7m (30 September 2020: £105.8m).
Buoyed by increased demand, the housebuilding
division reported significantly increased turnover
of £69.9m (30 September 2020: £23.8m), including
the sale of a hotel earlier in the financial year for
£13.3m. The margins of both the partnership housing
and housebuilding divisions were adversely affected
by unforeseen costs, cost inflation and extended
construction periods and whilst the Group has taken
a number of steps to remedy this situation, these
factors will continue to affect margins in the current
financial year. Since the financial year end, one of our
subcontractors has gone into administration which has
cost the Group approximately £0.3m.
As a result of the reduction in net debt, the Group’s
net interest costs have fallen to £7.8m (30 September
2020: £8.4m). The Group has continued to manage
overheads effectively and administrative expenses
have reduced by 40.5% to £7.5m (30 September
2020: £12.6m). The Group’s profit before tax was
substantially ahead of the previous financial year and
amounted to £13.2m (30 September 2020: £3.4m). The
Board does not intend to recommend a dividend (30
September 2020: nil).
Group net assets at 30 September 2021 increased
to £183.0m (30 September 2020: £173.0m). Net
asset value per ordinary share increased to 80.10p
(30 September 2020: 76.31p) and the EPRA net
tangible assets per ordinary share increased to
107.84p (30 September 2020: 103.75p).
Land portfolio
The strong sales performance of the Group is reflected
in the estimated gross development value (GDV) of
the land portfolio, which at 30 September 2021 is now
£3.0bn (30 September 2020: £3.1bn).
Simon Bennett
Chairman
Inland Homes plc
Stock code: INL
08
Chairman’s statement
This portfolio consists of an aggregate of 10,055 plots
(30 September 2020: 11,045 plots), 3,689 of which now
have planning consent (30 September 2020: 2,470 plots).
Inland Homes has a proud record of delivering planning
consents and during the year, the Group achieved a
resolution to grant planning or obtained full planning
approval for 1,831 new homes (30 September 2020:
112 new homes). In October 2021, planning consent
was achieved at the Group’s Gardiners Park Village
development in Basildon, following receipt of the
resolution to grant planning permission, announced in
May 2021. The estimated GDV of the site, which is being
developed in conjunction with Homes England, is £200m
and will include 700 new homes, commercial space, a
new school and other community facilities.
Inland Homes has also recently obtained a resolution
to grant planning permission, subject to the signing of
a Section 106 agreement, for a mixed-use scheme of
380 new homes, including 103 affordable homes and
commercial space in Dagenham Dock, Dagenham.
This strategically important site in the Borough will
provide a new gateway to the area and act as a catalyst
for the regeneration of South Dagenham.
Work at the Group’s flagship development at Wilton
Park, Beaconsfield continues, with Phases 2 and
3, comprising 90 plots, having been sold during the
year to the specialist, high-quality developer Bewley
Homes. In addition, a total of 10 houses, which were
originally acquired with the site and were formerly
let to the Ministry of Defence service personnel,
have been completely renovated and sold, for a total
consideration of £6.7m.
At Cheshunt Lakeside, Cheshunt, construction of
the first 195 homes on behalf of a local housing
association is progressing well. The first homes will be
handed over in the first half of 2022 and the remainder
before the end of the calendar year. We received
reserved matters approval for 22 homes and 350sqm
of commercial space in Parcel 14, which forms part of
Phase 1C, in March 2021 and for Phase 1B, comprising
205 homes, in June 2021. The 22 homes will be offered
for private sale. We are at advanced negotiations with a
major BtR fund for the development of the 205 homes
within Phase 1B.
The Group also concluded the sale of a 105-bedroom
hotel at the Wessex Hotel site in Bournemouth, pre let
to Premier Inn, to Aviva for £13.3m. At 30 September
2021, 64 of the 94 apartments at the same site had
been sold, realising in aggregate proceeds of £18.7m
(30 September 2020: £nil).
The Group’s nine-acre regeneration project on a
former derelict brownfield site at Chapel Riverside,
Southampton, will deliver, on a phased basis, 520 new
one, two, and three-bedroom homes and 5,945sqm
of commercial space. The site has required extensive
remediation and civil engineering works. Between
1 October 2020 and 30 September 2021, 93 apartments
were sold (including 24 units within a bulk sale), with
sales proceeds of £20.7m (30 September 2020: £9.1m).
Read more about
partnership
housebuilding on
pages 36–37
Read more
about asset
management on
pages 40–41
↑
Abbey Wharf,
Alperton
£181.7m
Revenue
2020: £124.0m
Asset management
Investors in projects within the Group’s asset
management division benefit from Inland Homes'
expertise and experience in identifying and securing
attractive, viable sites and achieving planning consent
on these. The capital-light nature of this funding
model, together with the management fees earned
at various milestones of the project (including the
successful gaining of planning permission), enable the
Group to generate attractive and significant returns.
The asset management activity benefits Inland
Homes in a number of ways: it optimises the planning
expertise within the Group; it significantly reduces
the capital investment and it enables Inland Homes
to earn management fees as the various defined
milestones are achieved. The capital required for these
projects is sourced from external investors, who earn
a priority return on the capital invested typically on a
fixed coupon rate. One of the principal risks for the
www.inlandhomesplc.com
Annual Report and Accounts 2021
09
OVERVIEW
Group with these projects is delays to the anticipated
timetable. Typically, these transactions are structured
so that any debt incurred is generally non-recourse to
the Group.
One of the Group’s strategic aims was to grow this
division, which now has six projects, the largest being
the 36.7-acre site Cavalry Barracks in Hounslow,
with an estimated GDV of £600m. Inland Homes has
submitted a planning application and we currently
understand that a decision on planning permission will
be made in 2022.
During the year, the Group achieved planning consent
for two projects within the asset management division:
for 514 homes at Hillingdon Gardens, Hillingdon and
583 homes at Patchworks in Walthamstow.
The sale of 228 plots within the Walthamstow site to
the charitable housing association, Newlon Housing
Trust, for a consideration of £22.5m was announced
in October 2021 and these houses will be built by the
Group, the contract value being £42.4m. In addition,
Inland Homes arranged the disposal strategy for the
sale of 355 residential plots (173 completed and 182
due to complete by September 2022) at the same site
to London BTR Investments (London BTR), one of the
leading providers of BtR housing. Inland Partnerships
has secured the contract to build these homes, in what
is the largest partnership housing contract secured by
the Group to date, with a value of £88.9m.
Strategic objectives
The Group continues to deliver on its strategic
objectives, namely: reducing net debt, optimising the
returns from the land bank and maximising its value,
growing the capital light asset management business
and delivering high-quality homes which meet the
market’s needs. Inland Homes is well placed to deliver
further progress on these strategic objectives and
I look forward to reporting on this progress in the
coming year.
Dividend
As referred to above, one of the key strategic aims
for Inland Homes has been to reduce the Group’s net
debt. A significant step towards this objective has been
achieved this year. Further reductions of Group net
debt remains a priority and subject to the timing of the
grant of planning permission(s), land sales and receipt
of management fees receivable, we presently expect to
report a further significant reduction in net debt in the
coming financial year. The Board will look to resume
the payment of dividends as soon as this strategic aim
has been achieved.
↑
Templar Green,
Cressing
Inland Homes plc
Stock code: INL
10
Chairman’s statement CONTINUED
Environmental, Social and Governance
Inland Homes is committed to ensuring that its land,
housebuilding and partnership housing activities
leave a positive and lasting legacy. As specialists
in complex brownfield site regeneration, the Group
has a proud history of adding value and applying its
expertise in land remediation, to allow the Group to
take derelict land and regenerate it into new, thriving
and sustainable communities which people are proud
to call home.
Inland has an excellent reputation in brownfield site
regeneration and this year the Group has made a
commitment to embed sustainability within all areas of
the business. It has created an Environmental, Social
and Governance (ESG) framework that sets high-
level commitments and targets, including targets for
achieving carbon net zero by 2050.
In recognition of the importance of ESG considerations
and in line with our commitment to embed
sustainability across all areas of the business, a
Governance and Risk Committee has been created
to provide a focal point for the coordination of risk
management activity across the Group. The focus
of this Committee is to ensure that Inland Homes
maintains an appropriate level of risk in achieving its
corporate objectives.
I look forward to reporting on the Group’s progress in
each of the three areas in the year ahead.
Engaging with our stakeholders
Stakeholder engagement is a critical part of the
Board’s role and the Board takes into account the
views of stakeholders in determining its agenda. As
the Government’s COVID-19 restrictions were eased
in the second half of the financial year, the Board
was able to resume its normal site visits, holding
productive meetings with stakeholders at a number of
the Group’s sites.
I have also made it my priority, in my first year as
Chairman, to visit the Group’s key construction sites on
a regular basis and have enjoyed meeting with Inland
Homes’ Operational Board and staff, to gain further
insight into the challenges and opportunities they
face. The health and safety of our staff, customers,
suppliers and subcontractors remains a key priority
for the Group. Inland Homes is a flexible business and
so are its staff. I would like to take this opportunity
to thank them all for their support, hard work and
commitment during the course of this financial year.
Our 2020 Annual General Meeting (AGM) was
held virtually to ensure compliance with the
Government’s COVID-19 health restrictions in place
at that time; however, we were keen to ensure that
our shareholders had the opportunity to raise any
questions ahead of the meeting. A designated email
address allowed our shareholders to pose questions
relating to the business to be transacted at the
AGM. Each query was responded to on an individual
basis. The arrangements for this year’s AGM are set
out below.
There is more information about how we engage with
our stakeholders and how their priorities impact on
the Board’s decision-making on pages 65–68.
AGM
I am pleased to be able to announce that our 2021
AGM will be held on 21 March 2022 at 11 am. We
recognise the importance of engaging with investors
face to face and will endeavour, if at all possible, to
hold this AGM in person. However, a final decision
will be made closer to the date, based on the
Government’s COVID-19 guidelines and any other
public health restrictions in place at that time. The
Notice of AGM will be sent to all shareholders in
February 2022 and will provide further details.
Changes to the Board
In March 2021, we were pleased to welcome Carol
Duncumb to the Board. An experienced Non-executive
Director with a 35-year track record of brand-building
experience across a range of consumer-related
businesses, Carol brings a strong skillset and
perspective to the Board.
Having been on the Board at Inland Homes since 2007,
I was delighted to accept the position of Chairman of
the Board in March 2021, replacing Terry Roydon who,
after 14 years with the Group, decided not to seek
re-election at the 2021 AGM. We would like to place on
record our thanks to Terry for his contribution to the
Group over the years.
The Board is committed to upholding the principles of
good and sound governance as set out in the Quoted
Companies Alliance (QCA) Corporate Governance
Code, the Group’s chosen Code.
Looking ahead
This has been a year of tangible progress for the Group
in achieving its strategic objectives. We continue to
work on initiatives to reduce net gearing, to crystallise
value from our land bank and to drive returns for
shareholders.
The Group is therefore maintaining its focus on
reducing its net debt and supporting the growth of
both the more capital-light asset management and
partnership housing divisions to deliver sustainable
long-term growth.
I look forward to seeing the Group build on its strong
performance this year, in the year ahead.
Simon Bennett
Chairman
31 January 2022
107.84p
EPRA NTA per share
2020: 103.75p
www.inlandhomesplc.com
Annual Report and Accounts 2021
11
OVERVIEW
Strategic
report
Chief Executive's review
13
Key aspects of our marketplace
16
Our strategy
20
Asset management case study:
Patchworks, Walthamstow
24
Key performance indicators
28
Our business model
30
Business model in action case study:
Cheshunt Lakeside, Cheshunt
32
Operations review
36
Group Finance Director’s review
42
Our principal risks
46
Environmental, Social and
Governance (ESG)
55
Section 172 reporting
65
Stock code: INL
12
I am pleased to present our results for the year
ended 30 September 2021 which set out how we are
delivering on our strategy of maximising the value of
our land bank and reducing the Group’s net debt.
Land is at the heart of all that we do as a Group and
these results reflect the resilience and flexibility of
Inland’s unique business model. We have responded
well to the rapidly changing market conditions in the
past year and our success is underpinned by a land
portfolio which provides opportunities in the short,
medium and long term.
Over the course of this financial year, we have
witnessed sustained demand from investors, Build
to Rent (BtR) operators, registered providers and
housebuilders for our land, for the services the Group
provides and the quality new homes we build for our
customers. We are well positioned to make further
progress in the year ahead.
Our performance
Optimising the returns from our valuable
land portfolio
Inland Homes’ valuable land portfolio is the foundation
on which our success is built. We have a highly
experienced and talented team, skilled in identifying
and procuring attractive and viable land opportunities
and in achieving planning consent.
The estimated gross development value (GDV) of the
land portfolio now stands at £3.0bn (30 September
2020: £3.1bn) and consists of 10,055 plots (30
September 2020: 11,045 plots). Of these 3,689 have
planning consent (30 September 2020: 2,470). A
further 2,870 plots are within the Group’s strategic
land sites (30 September 2020: 2,795), the majority
of which are held by way of discount to market value
options. The slight reduction to the number of plots
in the land bank this year is in line with the Group’s
strategy, which is focused on reducing net gearing and
crystallising value from within the existing portfolio.
We have maintained our strong track record in
delivering planning approvals, achieving a resolution
to grant or full planning approval for 1,831 new homes
during the period (30 September 2020: 112). This
includes approval for 700 homes at Gardiners Park
Village, Basildon, 583 homes at the former Homebase
site in Walthamstow and 514 homes at Hillingdon
Gardens, Hillingdon. The schemes at Walthamstow
and Hillingdon are both projects within our asset
management division.
The dismissal in December 2021 of the London
Borough of Hillingdon’s application to seek a judicial
review of the Mayor of London's approval at Hillingdon
Gardens cleared the final obstacle in the way of its
development. Consent has taken over three years to be
validated and has been extremely difficult to achieve.
While it is very disappointing that it should be such a
long and torturous process to develop on an allocated
brownfield site in a highly sustainable location, we can
now press ahead with delivery of these much-needed
homes.
Planning consent at Gardiners Park Village, Basildon
was granted in October 2021, following a resolution to
grant earlier in the year. This 54-acre site will deliver
up to 700 new homes, together with 25,000sqm of
commercial space, a new school and other community
facilities. The development is being delivered in
partnership with Homes England and more than 30%
of the new homes will provide much needed affordable
housing for the local community. The estimated GDV
of the site is in excess of £200m and construction
of the first phase of 74 new homes is anticipated to
commence in 2022.
The Group has also recently announced a resolution
to grant planning permission, subject to the signing
of a Section 106 agreement, for a mixed-use scheme
including 380 new homes and commercial space in
South Dagenham.
Grow the capital-light asset management
division
Our asset management business continues to
produce excellent results. This business enables
Stephen Wicks
Chief Executive
Officer
Read more in
the operations
review on
pages 36–41
£3.0bn
Land portfolio GDV
2020: £3.1bn
Land is at the heart of all that we do as
a Group and these results reflect the
resilience and flexibility of Inland’s unique
business model.”
www.inlandhomesplc.com
Annual Report and Accounts 2021
13
STRATEGIC REPORT
Chief Executive’s review
the Group to leverage the expertise, experience and
core competencies in brownfield site acquisition,
remediation, planning and construction within
the Group on behalf of external investors. The
management fees earned on the active projects were
significantly ahead of the comparative period and
amounted to £27.8m (30 September 2020: £24.4m),
with significant gross profits.
We now have six projects within our asset
management division, which combined have the
potential to deliver approximately 3,300 new homes.
We received approval for 1,097 of these homes during
the period and have submitted application for a further
2,199 homes. This includes an application for 1,629
homes on the former Ministry of Defence 36.7-acre
Cavalry Barracks site in Hounslow, one of the largest
brownfield sites in London with an estimated GDV of
£600m. It is currently anticipated that a decision on
planning permission will be made in 2022.
Having secured planning permission at the former
Homebase in Walthamstow in April 2021, we were
delighted to exchange contracts with London BTR
Investment Holdings, one of the leading providers
of Build to Rent (BtR) housing, for 355 homes within
the site in June 2021. We secured the sale of the
remaining 228 homes to the housing association
Newlon Housing Trust in September 2021. The
combined value of both these sales was £50.1m.
The new homes on this site will be built by Inland
Partnerships, with the contracts being valued at
£88.9m and £42.4m respectively, the former being
the largest partnership housing contract that the
Group has secured to date. Following site demolition
and other preparatory works, construction has just
started on the project and we expect the works to be
completed in 2025.
Maximise the value of land beyond planning
consent
Our flexible business model enables us to maximise
the value of land on receipt of planning consent. We
then make a decision to sell, build or partner with
others, based on our assessment of which activity will
deliver the highest returns, subject to the overriding
cash requirements of the Group.
As at 30 September 2021, the Group had 1,547
homes under construction (30 September 2020:
1,717). Of these, 1,257 are being built on behalf of
affordable housing providers and BtR operators
(30 September 2020: 1,302).
Land sales
At present, the market for consented land is
particularly strong in the areas in which Inland
Homes operates.
We continue to monetise the Group’s flagship
development at Wilton Park, Beaconsfield. During the
year, a further 90 plots were sold, which form Phases
2 and 3 of the overall development, to the high-quality
housebuilder Bewley Homes. I am pleased with the
progress being made at Wilton Park and enjoyed
visiting the Bewley show homes when they opened in
January 2022.
Partnership housing
Our partners recognise the Group's ability to add
value across all stages of a project and we continue to
focus our efforts on growing this part of the Group’s
business, as it achieves both immediate land sales
for the Group and regular revenue throughout the
construction process thereafter. The Group continues
to see growing demand from BtR operators, looking
for turn-key solutions to growing their housing
portfolios. As a result, our partnership housing
division continues to grow from strength to strength,
with the forward order book increasing now to a
record £164.7m at the year end (30 September 2020:
£105.8m). As outlined above, Inland Partnerships
secured two build contracts at Walthamstow
totalling £131.3m.
We have delivered on behalf of the Group’s BtR partners
this year, completing the first of our BtR contracts in
March 2021, comprising 123 homes and amenity space
at our Centre Square joint venture in High Wycombe.
We will complete construction of the 85 units at
Buckingham House, High Wycombe on behalf of a
second BtR operator in the first half of 2022.
We are at advanced negotiations with another major
BtR fund for the development of the next phase of
205 plots at the Group's joint venture development
at Cheshunt Lakeside, Cheshunt where we have
masterplan consent for 1,725 new homes, commercial
space and other community amenities. The Group sold
the first phase of this scheme to an affordable housing
provider last year and is now constructing the 195 new
homes on its behalf, with the first homes set to be
delivered in June 2022 and the remainder before the
end of the calendar year.
Since the year end, the Group has made further
progress in partnership housing, announcing in
November 2021 the forward sale of the final phase of
the Group’s development at Carters Quay, in Poole,
to the Bournemouth, Christchurch and Poole (BCP)
Council. This last phase of the development will
provide 161 new homes and 750sqm of commercial
space. The Group will build the new homes on behalf
of BCP in a development with a contract value of
£43.5m. The site is ready for construction and piling
works are set to commence in April 2022, with build
completion anticipated by the end of 2024.
The Carters Quay development is an example of
Inland Homes' business model and skill set in action.
The Group originally acquired the brownfield land
site, formerly the Pilkington Tile Factory, and worked
with BCP on a long-term basis to regenerate an old,
unused industrial site, to create much needed new
homes and commercial space. To date, Inland Homes
has completed three phases of this development,
which has already provided 165 new homes.
Private housebuilding
Revenue from our private housebuilding activity this
year has been exceptionally strong, with revenue of
£69.9m, including the £13.3m sale of the 105-bedroom
hotel in Bournemouth, (30 September 2020: £23.8m).
The Group achieved 216 private home completions
(30 September 2020: 96) equating to a weekly net
reservation rate per active sales outlet of 1.09
(30 September 2020: 0.65). The average selling price
Inland Homes plc
Stock code: INL
14
Chief Executive’s review CONTINUED
was £262,000 (30 September 2020: £240,000) and
nearly half (45%) of all buyers were able to access
the Government’s Help to Buy product. Sales of a
further 167 new homes (30 September 2020: 130) were
achieved across our sites which are in joint ventures.
The temporary stamp duty holiday provided welcome
support during the turbulent period of COVID-19
lockdowns and Government restrictions. I am pleased
to report that since the scheme tapered off with effect
from July 2021, the demand for our high-quality,
award-winning homes has continued to be strong.
During the year, we sold a significant number of
new homes at the Group’s developments at Chapel
Riverside and Meridian Waterside in Southampton,
new apartments at our Wessex Hotel site in
Bournemouth and at Exclusive House, Maidenhead.
We were very pleased to win a number of prestigious
industry awards during the reporting period, including
'Private Developer of the Year' at the First Time Buyer
Readers' Awards, the WhatHouse? Gold Award for
Best Regeneration scheme and 'Best UK Mixed Use
Development' at the International Property Awards.
Our people
The health and safety of our staff, suppliers and sub-
contractors continues to be our primary focus for the
Group. The team responded well to the difficulties
posed by the COVID-19 pandemic and construction
at almost all sites has continued throughout. Inland
Homes has a talented, experienced and agile
workforce and I would like to thank them all for their
contributions to the business during this financial year.
Embedding sustainability within all areas of
our business
Sustainability is a key focus for the Group. This year
we have developed our Environmental, Social and
Governance (ESG) framework, bringing together high-
level commitments in each area, together with targets
to reach carbon net zero as a core priority.
Our commitment is to embed sustainability within all
areas of the Group’s business. The Board is providing
oversight and setting leadership of this through its
Risk and Governance Committee and at an operational
level, we have created cross-departmental working
groups to develop the full ESG strategy.
Cladding and fire safety
We make no compromises on safety and the safety of
our buildings and the people who live in them is our
number one priority.
In the wake of the Grenfell Tower tragedy, we
proactively carried out a comprehensive review which
confirmed that Aluminium Composite Material (ACM)
cladding has not been used on any Inland home or
building. This includes both the homes we have built
and those where third parties have constructed the
homes on our behalf.
We are aware that some remedial work related to fire
safety has been proposed at one historic development
which is owned by a third party, and we are currently
liaising with the property’s managing agent and
subcontractor to review what, if any, works are required.
Government policy
The Government committed £1.8bn in the 2021 Budget
to support brownfield site regeneration. Building
on brownfield land is the common-sense approach
to alleviating the housing crisis and the funding, in
principle, is welcome. Inland Homes has recognised
the value of brownfield regeneration for many years
and it is pleasing to see the Government come to the
same conclusion.
However, funding without planning reform will not
result in the country meeting its housing delivery
targets. What is needed is a commitment to the
promised overhaul of our archaic and overly complex
planning system. Reports that the Government is
considering watering down its proposed 'once in a
lifetime' planning reform will, as a consequence, make
it even harder to reach its own target of delivering
300,000 new homes a year by the mid-2020s.
Looking ahead
Our strategy of maximising the value of our land bank
and reducing the Group’s net borrowings will continue
in the year ahead. While there are headwinds for the
housebuilding sector to navigate, Inland Homes is well
set to adapt to these challenges.
We will look to grow the Group’s asset management
and partnership housing businesses, where the
demand from investors, affordable housing providers
and BtR operators for our land, planning and build
expertise remains strong.
The underlying strength of the housing market in
the UK shows no signs of slowing down and without
significant planning reform, housing demand will
continue to exceed supply. This shortfall will continue
to drive demand for the land we own and the new
homes we build.
Stephen Wicks
Chief Executive Officer
31 January 2022
↑
Meridian
Waterside,
Southampton
www.inlandhomesplc.com
Annual Report and Accounts 2021
15
STRATEGIC REPORT
Our business decisions and activity are shaped against the context of the
broader housing market. In a year of recovery following the COVID-19 induced
housing market pause, opportunities are emerging which Inland Homes is well
positioned to seize. There are headwinds too, as the long-term ramifications
of the pandemic start to be felt. The fundamental shortfall of housing supply
across the UK, however, continues to underpin the market and drive demand for
our land, planning and build expertise.
2021
2020
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0
Economy rebounds faster than predicted
Context
The economy is expected to grow by 6.5% in 2021 (2.4% faster than predicted in March) as a result of
the high degree of effectiveness of the COVID-19 vaccine, combined with consumers’ and businesses’
adaptability to public health restrictions1.
This rebound, however, has resulted in supply constraints in several markets, exacerbated by changes in
the migration and trading regimes following Brexit. The Consumer Prices Index (CPI) rose by 3.1% in the 12
months to September 2021 and to 5.4% by December 20212, higher than the OBR’s forecasted peak for 2022
in its October 2021 outlook3.
▼
Our response
The Group adapted quickly to COVID-19
restrictions and was able to maintain operations
at most sites throughout. This operational
continuity has provided a sound platform for
us to spring back from, and adapt again, to the
emerging Omicron variant guidance.
Productivity has increased across sites and
pent-up buyer demand has seen record levels
of interest for our high-quality, yet affordably
priced, homes. Revenues for the year reflect this
backdrop at a record £181.7m (2020: £124.0m)
for the year, of which £69.9m (2020: £23.8m) has
been generated from our private housebuilding
segment.
Like others in the industry though, we are not
immune to rising labour costs and material
shortages. These challenges have put further
pressure on margins across our private
housebuilding and contract income activities.
Looking ahead
We continue to work closely with our supply
chain to ensure continuity of critical supplies and
workforce. We have negotiated bulk purchasing
agreements to mitigate against the risk of supply
chain shortages. Quarterly status reports provide
oversight of our supply chain lead times and price
increases, enabling us to prepare and respond
appropriately.
Improving margins is a strategic focus for the
Group. Increased site costs along with extended
construction periods on some sites have continued
to affect margins this year and rising inflation is
adding additional pressure on achieving this goal.
The Group has taken a number of steps to remedy
this situation, including improved internal cost
controls and reporting tools, and a renewed focus
on design and build standardisation.
1
OBR: obr.
uk/efo/
economic-and-
fiscal-outlook-
october-2021/
2
ONS: www.
ons.gov.uk/
economy/
inflationand
priceindices/
bulletins/
consumerprice
inflation/
december2021
3
OBR: obr.
uk/efo/
economic-and-
fiscal-outlook-
october-2021/
Inland Homes plc
Stock code: INL
16
Key aspects of our marketplace
CPI 12-month increase
New homes/year target
300,000
21 Q1
20 Q2
20 Q3
20 Q4
(1.3)
17.6
1.5
5.4
21 Q3
1.1
(19.4)
21 Q2
UK GDP (%)
Source: Office for National Statistics –
GDP quarterly national accounts
w
21
166,860
20
19
18
17
126,120
164,060
162,830
162,680
Strong housing market
Context
House sale transactions are expected to reach 1.6m in 2021, the highest since before the credit crunch.
This figure is roughly 35% higher than the average for the five years prior to the pandemic4.
In parallel, annual house price growth in September 2021 stood at 10.0%, the fifth month in a row in double
digits. As a result, house prices remain c.13% higher than before the pandemic began in early 2020. In the
Outer Metropolitan area, where the Group is focused, the average house price at the end of September 2021
was £402,317, an annual 8.2% increase on the previous quarter5.
The expectations of a slow down or even a crash in the housing sector in the final quarter of the year on
removal of the Government’s stamp duty holiday, did not materialise. Several UK banks reported strong
mortgage demand in their third-quarter results, including Santander, NatWest and Lloyds, and Savills is
predicting annual house price growth across the UK as a whole to end 2021 at 9.0%6.
However, with interest rates increasing for the first time in more than three years in December 2021 in response
to rising inflation, housing growth could slow as borrowing becomes more expensive and more difficult to
access7. The emergence of the Omicron variant could also slow consumer spending, putting further pressure on
growth.
▼
Our response
Our performance can be measured against this
broader market backdrop. Buoyed by increased
demand, the Group’s housebuilding revenue was
significantly ahead of the comparative period,
with the number of completions more than
doubled when compared to the previous year.
The affordably priced homes that the Group
builds are renowned for their quality. Our homes
continue to be well within reach of our first-time
buyer market, with nearly half of all buyers being
able to make use of the Government’s Help to
Buy product. The quality of our homes is further
demonstrated by the prestigious industry awards
we have received over the reporting period,
including Private Developer of the Year at the
2021 First Time Buyer Readers’ Awards, the What
House 2020 Gold Award for Best Regeneration
Scheme and ‘Best UK Mixed Use Development’ at
the 2020–21 International Property Awards.
Looking ahead
While it is still difficult to make long-term housing
market predictions, we have built a robust and
valuable land portfolio which provides a mix of
short, medium and long-term opportunities. Our
portfolio consists of sites suitable for both private
and partnership housing activity, which will provide
some protection against any softening of the private
housebuilding market.
We remain focused on delivering high-quality
homes and first-class customer service at all
times.
4
Savills: www.
savills.co.uk/
research_
articles/
229130/316864-0
5
Nationwide: www.
nationwide
houseprice
index.co.uk/
reports/annual-
house-price-
growth-slows-
in-september-
but-remains-in-
double-digits
6
Savills: www.
savills.co.uk/
research_
articles/
229130/316864-0
7
Bank of
England: www.
bankofengland.
co.uk/
monetary-policy-
summary-and-
minutes/2021/
december-2021
www.inlandhomesplc.com
Annual Report and Accounts 2021
17
STRATEGIC REPORT
2019–20
2020–21
217,350
2018–19
2017–18
2016–17
222,280
241,880
242,700
216,490
Net dwelling increase
New build starts
2021
2018
2019
2020
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
16
14
12
10
8
6
4
2
0
-2
Annual house price growth
Source: Department for Levelling Up,
Housing and Communities: Housing
supply; net additional dwellings,
England: 2020-21
Source: Department for Levelling Up,
Housing and Communities: housing
supply: indicators of new supply,
England: April to June 2021
Housing delivery shortfall
Context
The Government remains at risk of not meeting its 300,000 new homes per annum by the mid-2020s and
housing demand continues to exceed supply. The Department for Levelling Up, Housing and Communities
reports that annual net housing supply in England fell to 216,490 from 1 April 2020 to 31 March 2021. With
the early impact of the COVID-19 pandemic affecting completions, the figures represent the first annual fall
in net supply since 2012/138.
▼
Our response
Our Environmental, Social and Governance
(ESG) strategy makes a commitment to building
homes across a range of tenures to meet
housing need across the South and South East
of England. This means building homes for
private sale, as affordable housing on behalf of
partners and for private rent on behalf of Build
to Rent operators (BtR). Through our subsidiary
Rosewood Housing, we are also able to offer
homes for shared ownership and affordable
rent. Our Hugg Homes offering supports local
authorities in providing crisis accommodation
and private renters with a high-quality rental
home at a discount to market rate.
We ended the financial year with 290 private
homes and 1,257 partnership homes under
construction (30 September 2020: 415 private
homes;1,302 partnership homes) across
10 sites. Over the year, Rosewood Housing
launched nine shared ownership homes within
the Randalls development in Uxbridge and
acquired 26 affordable homes within Phase
1 at Wilton Park, Beaconsfield. We were also
granted permission to deliver 48 Hugg Homes at
Cheshunt Lakeside, Cheshunt.
Looking ahead
Our partnership housing forward order book
increased by 55.7% to £164.7m over the year
(30 September 2020: £105.8m) and we anticipate
higher demand in the coming year for this activity.
Inland Partnerships began construction of 583
homes at Walthamstow in September 2021 on
behalf of an affordable housing provider and a BtR
operator.
Our land portfolio supports the growth of our
partnership housing activity. We will continue
to seek further affordable housing and BtR
opportunities in the year ahead.
COP26 puts climate crisis top of the political agenda
Context
Countries reaffirmed their commitment to keeping global warming to under 1.5% at the 26th UN Climate
Change Conference of the Parties (COP26) in November 2021. The UK Government has set a commitment
to achieving carbon net zero by 2050, with the Future Homes Standard driving huge gains in housebuilding
efficiency by 2025.
▼
Our response
Sustainability continues to be a key focus for
the Group. This year we have developed our
ESG framework, bringing together high-level
commitments in each area alongside targets to
reach net zero as a core priority.
Our commitment is to embed sustainability within
all areas of the business. With this objective, we
have established a cross-departmental working
group to develop the full ESG strategy and a
Governance and Risk Committee with delegated
authority which will oversee delivery.
Looking ahead
The ESG strategy will set clear targets and
measures of success, building on our brownfield
regeneration legacy and enabling us to measure
our progress to net zero.
8
Department
for Levelling
Up,Housing and
Communities:
www.gov.uk/
government/
statistics/
housing-supply-
net-additional-
dwellings-
england-2020-
to-2021
Inland Homes plc
Stock code: INL
18
Key aspects of our marketplace CONTINUED
Government recognises value in brownfield regeneration
Context
The Government has announced it will invest £1.8bn in bringing brownfield land back into use for housing
and other infrastructure, enough to bring 3,700 acres of brownfield land into use and unlock 160,000 new
homes.
The total includes £300m in locally led grant funding, which will be distributed to combined authorities
and councils 'to unlock smaller brownfield sites for housing and improve communities in line with their
priorities'. The remaining £1.5bn is earmarked for regenerating under-used land and delivering transport
links and community facilities9.
The Budget investment follows the allocation of almost £58m of the £75m Brownfield Land Release Fund
announced in January 202010.
▼
Our response
We welcome the Government’s recognition of the
value of brownfield regeneration.
More than two-thirds of our land portfolio is
brownfield so we are well positioned to benefit
from this investment, having both the experience
and expertise needed to regenerate what are
often challenging sites.
However, funding alone is not enough if projects
cannot get approval in the current overly
complex planning system. What was missing
from the Budget is a commitment to fixing the
broken planning system so that viable projects
can actually be delivered. Without much needed
planning reform, there will continue to be a
shortfall between housing need and the number
of new homes being built.
.
Looking ahead
Our expertise means that we have an excellent
success rate in getting sites allocated for
development in local plans. However, the current
system remains cumbersome and bureaucratic,
with local government planning teams under-
resourced and a ‘one size fits all’ approach taken to
the process.
We urge the Government to continue to press ahead
with its ‘once in a lifetime’ overhaul of the planning
system announced in August 2020. We are keen to
continue dialogue to enable this to happen.
9
HM Treasury:
www.gov.uk/
government/
publications/
budget-2021-
documents
10 Department for
Levelling Up,
Housing and
Communities:
www.gov.uk/
government/
news/
thousands-of-
new-homes-to-
be-built-and-
derelict-land-
transformed
www.inlandhomesplc.com
Annual Report and Accounts 2021
19
STRATEGIC REPORT
Oct 20
Jan 21
Apr 21
Jul 21
105
100
95
90
85
80
75
70
98,500
104,300 101,500
97,400
87,400
82,600
85,300 86,000
79,900
75,700 73,600 72,000
New mortgage approvals
£1.8bn
Brownfield regeneration fund
Source: Bank of England: Approvals for lending secured on dwellings
As an agile business, we review our strategic objectives annually.
Our strategy is focused on activity that will enhance EPRA NTA value and support further reductions in net debt and gearing. The
strategic pillars which sit underneath articulate how we will achieve this and lay the foundations for sustainable growth.
This year, we have added a fifth strategic pillar around our Environmental, Social and Governance (ESG) commitments. We believe
that ESG should not be a stand-alone division, operating in silo to the rest of the business, but a key consideration in all business
decisions. Including ESG as one of our pillars clearly states our commitment to achieving this.
OUR STRATEGIC PILLARS
Our strategy
01.
Optimise returns from
our valuable land
portfolio
Building a valuable and robust land
portfolio which will provide short,
medium and long-term opportunities
is key to the Group’s success,
enabling a balanced return from our
various revenue streams. Short and
medium-term returns are achieved
by the sale of plots with planning
consent or the sale of whole
consented sites, partnership housing
contracts with housing associations,
local authorities and Build to Rent
(BtR) investors and our private
housebuilding activity. Longer-term
returns are delivered from the
Group’s strategic land bank, where
plots are usually controlled by way of
a discount to market value option.
▼
Financial driver
•
Short-term returns from the sale of consented land plots
•
Medium-term returns via partial land sales, residential development and
partnership housing contracts
•
Strategic land portfolio delivers medium to long-term returns with low initial
capital investment
Performance
•
Land bank gross development value (GDV): £3.0bn (30 September 2020: £3.1bn)
•
EPRA NTA: £246.4m (30 September 2020: £235.2m)
•
Total land portfolio plots: 10,055 (30 September 2020: 11,045)
•
Land plots sold: 6011 (2020: 107)
•
Land sales revenue: £21.9m (2020: £21.7m)
•
Strategic land plots: 2,870 (30 September 2020: 2,795)
1 Includes plots within the asset management division owned by third parties.
2022 priorities
Our focus is as much on maximising the value within this existing portfolio as it is
on growing it further. In the short term, this means the selective disposal of land
assets with planning consent where attractive returns can be made. In parallel, we
will continue to seek land opportunities which support our asset management and
partnership housing activities, where there is strong demand from stakeholders for
our services.
Link to KPIs
1
2
5
6
Inland Homes plc
Stock code: INL
20
↑
Cavalry Barracks,
Hounslow
02.
Grow the capital-light
asset management
division
We will grow the asset management
division of the Group, managing
the acquisition of the land and
securing planning permission on
behalf of third-party investors.
This activity enables the Group
to earn substantial management
fees at various milestones of the
project with a significantly reduced
investment and working capital
requirement. The transactions are
generally structured so that they
are non-recourse to the Group. At
present, there is strong demand
for our asset management services
from investors.
▼
Financial driver
•
Capital-light activity
•
High return on capital
•
Potential for Inland Partnerships to secure build contract following receipt of
planning consent and subsequent sale, generating further revenue
Performance
•
Asset management revenue: £27.8m (2020: £24.4m)
•
Six live projects with the potential to deliver c.3,300 new homes
(30 September 2020: 3,100)
•
Planning consent achieved on behalf of investors for 583 units at Walthamstow,
generating c.£20.0m net fees for the Group over the life of the contract and
leading to the award of contracts worth £131.3m to the partnership housing
division forward order book
•
Planning applications submitted on behalf of investors during the reporting
period for 2,199 units across three sites, including on the 36.7-acre site Cavalry
Barracks in Hounslow, which is one of the largest brownfield sites in London,
with an estimated GDV of £600m
2022 priorities
We will continue to look for new opportunities in this area and progress existing
projects through the planning system.
Planning applications submitted during the reporting period at Cavalry Barracks,
Hounslow and two sites in Barking and Dagenham are expected to go to
Committee in 2022.
Link to KPIs
2
3
6
KPIs key
1 EPRA net tangible assets per share 2 Net gearing 3 Revenue 4 Profit before tax
5 Number of plots with or without planning consent 6 Planning permissions gained during the period
7 Private home sales 8 Carbon intensity ratio
www.inlandhomesplc.com
Annual Report and Accounts 2021
21
STRATEGIC REPORT
Our strategy CONTINUED
03.
Use the flexibility within
our business model to
maximise the value of land
that has planning consent
We will continue to make the
decision to sell, build or partner
with others based on an assessment
of which activity will deliver the
highest returns and the Group’s cash
requirements.
Demand from housing associations
and BtR operators, for projects
where we can provide the land and
build out the projects, continues to
grow.
We will continue to target our private
housebuilding activity to the first-
time buyer market, building high-
quality, affordably priced homes.
▼
Financial driver
• Short-term returns from the sale of consented land plots, with cash inflows
used to reduce borrowing and fund other activities
• Partnership housing offers immediate cash inflow from the land sale, with
recognition of revenue and cash flow through monthly valuation of work done on
site
• Medium-term returns from our private housebuilding activity
Performance
• Number of plots with planning permission: 3,689 (30 September 2020: 2,470)
• Partnership homes under construction: 1,257 (30 September 2020: 1,302)
• Partnership housing forward order book: £164.7m (30 September 2020: £105.8m)
• Private home completions (excluding joint venture sales): 216 (2020: 96)
• Forward sales of private homes: £33.4m (30 September 2020: £37.5m)
2022 priorities
Currently, the market for consented land is strong and we will continue to take
advantage of these market conditions in the short term, using the funds generated
to further reduce borrowings.
In parallel, we will continue to increase our partnership housing activity, targeting
both affordable housing providers and the growing BtR market. With several
schemes in development and a healthy land portfolio, we are well placed to
increase our activity in this area.
As several of our large, flatted developments complete, our private housebuilding
activity is now focused on houses rather than apartments, to meet buyer demand.
Link to KPIs
1
2
3
5
6
Inland Homes plc
Stock code: INL
22
↑
Wilton Park,
Beaconsfield
04.
Deliver homes which
meet market needs in
the most cost-effective
way
Our award-winning developments
underline our credentials as a
high-quality housebuilder and there
is sustained demand for both our
private and partnership housing.
We are now focused on improving
the efficiency of our private
and partnership housebuilding
operations and controlling costs,
whilst maintaining high levels of
quality and customer satisfaction.
Doing so will, over time, enhance our
margins.
▼
Financial driver
• Shortage of affordably priced homes across the South and South East of
England drives demand from first-time buyers for our high-quality homes
• Site revenue maximised over the medium to long term
• Build efficiencies to increase margins and profit
Performance
• Revenue: £181.7m (2020: £124.0m)
• Profit before tax: £13.2m (2020: £3.4m)
2022 priorities
We are standardising our product offering both in design and fit-out and have
completed 80% of the range, with the remainder to be finalised in early 2022. We
have piloted one of our standardised build types at our Templar Green development
in Cressing and will roll this and the other types out across our developments
throughout 2022.
Our new house type ranges maintain our high standards of design whilst benefiting
from reduced architect fees and group purchasing deals.
Link to KPIs
2
3
05.
Embed sustainability
within all areas of the
business
This year, we have added a fifth
strategic pillar around our ESG
commitments. As specialists in
brownfield regeneration, we already
have a proud history of adding
lasting value through our site
remediation work, but we recognise
that as our business has grown and
diversified, so too has the impact
of our operations. As a responsible
business, we want to continue to be
leaders in this industry.
It is with this experience in place and
against the broader backdrop of the
rapidly escalating climate emergency
that we have developed our ESG
framework. Under three key pillars,
our ESG framework sets out our
high-level commitments and how we
measure our performance, progress
and success.
▼
Financial driver
•
The right thing to do – we have a responsibility to ensure our activity adds
lasting value to the communities in which we operate
•
We consider that having a robust, authentic strategy will drive investment in
the business
Performance
•
Created an ESG framework, led at Board level through the Governance and
Risk Committee
•
Set high-level targets in each of the three pillars (Environmental, Social and
Governance)
•
Achieved a reduction in our carbon intensity ratio from 0.0078kgCO2e per £1
turnover to 0.0055kgCO2e per £1 turnover
•
Formed a Modern Methods of Construction task force
•
Entered into contracts to purchase 100% of renewable energy
•
Implemented a hybrid home/office working policy
•
Diverted 97% of waste from landfill
2022 priorities
With the framework and governance structure in place, we will continue to adapt
our ESG strategy in the year ahead. More information can be found in the ESG
report on pages 55–64.
Link to KPIs
8
KPIs key
1 EPRA net tangible assets per share 2 Net gearing 3 Revenue 4 Profit before tax
5 Number of plots with or without planning consent 6 Planning permissions gained during the period
7 Private home sales 8 Carbon intensity ratio
www.inlandhomesplc.com
Annual Report and Accounts 2021
23
STRATEGIC REPORT
Patchworks,
Walthamstow
Patchworks in Walthamstow is a prime
example of our asset management
skill set in practice, demonstrating
how this area of the business delivers
value to both the scheme investors
and the Group.
It is the most progressed scheme within our asset
management division, with planning consent delivered,
land sale achieved and construction of the homes,
through the Group’s partnership contract division,
underway.
Identifying attractive and viable sites
The success of our asset management division, as
with every area of the Group, lies in our ability to find
attractive and viable sites.
Patchworks lies in the London Borough of Waltham
Forest, considered one of the most ambitious and pro-
development Boroughs in London. The Borough has
plans to deliver 18,000 new homes in the next decade,
alongside a vision to regenerate their historic Town
Hall campus, masterplans for Lea Bridge and Leyton
and the provision of new sporting facilities, social
infrastructure and green space.
Within this pro-development Borough lies the
4.38-acre site. A former Homebase store, the site is
exceptionally well-located, approximately 0.8 miles
from Walthamstow town centre and just 0.5 miles
from Wood Street Station, with its regular overground
service to Liverpool Street Station.
CASE STUDY:
ASSET MANAGEMENT
Our estimates placed the gross development value of
Patchworks at approximately £265m.
We were delighted, therefore, to be successful in
securing the land in January 2020 on behalf of the
project investors.
Maximising the value of the land – achieving
planning consent
Asset management investors benefit from our
experience and expertise in navigating the planning
system to achieve planning consent. With the land
opportunity identified at Walthamstow and investors
secured, we supported investors with the pre-planning
matters relating to the site. This included liaising with
Waltham Forest Council to resolve access issues and
the owners of the Homebase store to obtain vacant
possession.
In August 2020, we were ready to submit the planning
application on behalf of the investors. The application
sought approval for a residentially led development of
583 new homes, including 174 affordable homes.
Our plans, which had been developed in close
consultation with the Borough, were approved in
February 2021. This was efficiently followed by the
signing of the Section 106 agreement in April 2021.
↑
Patchworks,
Walthamstow
c.£20.0m
Net fees generated over life of the
contract
Fees received as project milestones achieved
£131.3m
Partnership housing contracts
awarded
London BTR and Newlon Housing Trust
Inland Homes plc
Stock code: INL
24
Read more
about asset
management on
pages 40–41
www.inlandhomesplc.com
Annual Report and Accounts 2021
25
STRATEGIC REPORT
Maximising the value of land on receipt of
consent – site disposal
On receipt of planning consent, we provide investors
with access to the various site disposal options and
facilitate this process to maximise returns on the
project. As well as triggering fees for Inland, the
disposal gives an opportunity to secure a construction
contract for Inland Partnerships to build the homes,
generating ongoing revenue and cash flow for the
Group.
We were confident that there would be high levels of
interest for the homes at Patchworks, given the site’s
outstanding credentials, and were not disappointed,
with interest from housing associations, Build to Rent
operators and other housebuilders.
In June 2021, we were delighted for contracts to be
exchanged with London BTR Investments (London
BTR) for 355 plots within the site, with 173 of these
completing in September 2021. We also secured the
sale of the remaining 228 plots to leading housing
association Newlon Housing Trust (Newlon) in
September 2021 also, with 72 plots exchanged and
completed simultaneously and the remainder to
complete in early 2022. Combined, these land sales
will achieve £50.1m for the project investors.
Importantly for Inland, both sales generated separate
construction contracts, Inland Partnerships' largest
to date with London BTR at £88.9m. The contract
with Newlon secured a further £42.4m to the Group’s
partnership housing forward order book. These
contracts will deliver ongoing revenue for the Group
throughout construction, adding further value to the
Group.
Inland Partnerships began construction of the homes
at Patchworks in September 2021 and we anticipate
the build will complete in 2025.
CASE STUDY:
ASSET MANAGEMENT
TIMELINE OF ACTIVITY
2019
2020
September
Site
introduction
August
Planning
submitted
January
Purchased
Our role as asset managers involves:
•
Identifying and providing investors with the
opportunity to procure a site
•
Supporting the investor through pre-
planning matters
•
Preparing, submitting and achieving grant
of planning
•
Supporting the investor to realise
maximum value on receipt of planning
consent
Inland Homes plc
Stock code: INL
26
↑
Patchworks,
Walthamstow
2021
February
Resolution to grant
planning granted
June
Exchanged contract for land
and build with London BTR
September
Land sale and build
contract with Newlon
January
Vacant possession
achieved
April
Section 106
signed
July
Demolition works
commenced
September
Construction
underway
↑
Patchworks,
Walthamstow
www.inlandhomesplc.com
Annual Report and Accounts 2021
27
STRATEGIC REPORT
FINANCIAL KPIs
Key performance indicators
1 EPRA net tangible assets per share (previously EPRA NAV per share)
21
107.84p
171
20
191
181
96.22p
103.75p
113.69p
102.28p
1 New EPRA measures have been introduced
and reflected in the 2021 and 2020 metrics
of EPRA net tangible assets (NTA). The
metrics for previous years remain using
the old measures of EPRA net asset value
(NAV). See page 42 for further details.
Definition
EPRA net tangible assets
(NTA) per share is EPRA NTA
divided by the number of
shares at the period end. The
use of EPRA methodology
reveals how much ‘hidden
value’ is held within
inventories. The reconciliation
of EPRA NTA per share is set
out on page 45.
Performance
EPRA NTA per share is the
core metric of measuring the
value of the Group. The value
per share has increased in
2021 following solid planning
progress, increased values
of land and the profit before
tax of the Group.
Priorities for 2022
We are focused on growing
our EPRA NTA per share in
real terms.
2 Net gearing
21
64.5%
17
20
19
18
52.1%
85.7%
93.9%
56.0%
Definition
Net debt is calculated as a
proportion of borrowings
less cash to total equity
attributable to shareholders.
Gearing measures our
exposure to debt risk and
indicates the efficiency of the
Group’s capital structure.
Performance
Net debt has reduced
by £30.1m (20.3%), from
£148.2m to £118.1m. This
represents net gearing of
64.5% (30 September 2020:
85.7%) and net gearing
based on EPRA net assets
of £246.4m at 47.9%
(30 September 2020: 63.0%).
Priorities for 2022
We are focused on further
reducing net debt in the
year ahead.
3 Revenue
21
£181.7m
17
20
19
18
£90.7m
£124.0m
£147.9m
£147.4m
Definition
Revenue combines the major
income streams of the Group:
land sales, asset management
fees, sales of residential
homes, contract income,
rental income and investment
property income.
Performance
We delivered record revenue
for the year of £181.7m
(30 September 2020: £124.0m),
an increase of 46.5% over the
previous year.
Priorities for 2022
We expect the blend of our
revenue to change, with lower
housebuilding revenues but
greater contract income, as
our business evolves.
4 Profit before tax
21
£13.2m
17
20
19
18
£19.6m
£3.4m
£25.0m
£19.3m
Definition
Profit before tax gives an
indication of the underlying
performance of the Group
across all our activities.
Performance
Profitability was in line
with expectations but there
were one-off issues which
impacted the Group. The
gross profit margins of
the Group’s partnership
housing and housebuilding
businesses are currently
below expectation.
Priorities for 2022
The Group’s objective is to
increase profit before tax in
the year ahead. Action is being
taken to improve gross profit
margins in the partnership
housing and housebuilding
divisions.
In 2019, all KPIs were over a fifteen-month period. The years prior to 2019 were years to 30 June.
Inland Homes plc
Stock code: INL
28
NON-FINANCIAL KPIs
5 Number of plots with or without planning consent
21
10,055
17
20
19
18
6,776
11,045
7,796
6,870
Definition
The number of plots owned or
controlled by the Group with
the potential for homes to
be built.
Performance
Our land portfolio has
remained steady, with 6011
plots sold this year.
1 Includes plots within the asset
management division owned by
third parties.
Priorities for 2022
We have achieved our target
land portfolio of 10,000 plots.
This portfolio offers short,
medium and long-term
opportunities. We are focused
on maximising the value from
this portfolio.
6 Planning permissions gained during the period
21
1,831
17
20
19
18
1,856
112
1,939
594
Definition
Plots gained with planning
permission or resolution to
grant planning permission
during the reporting period.
Performance
Planning permission
granted for 583 homes at
Patchworks, Walthamstow,
700 at Gardiners Park Village
in Basildon, 514 at Master
Brewer in Hillingdon and
34 at Springfield Road,
Chesham.
Priorities for 2022
Our planning application at
Cavalry Barracks, Hounslow
is anticipated to go to
Committee in 2022.
7 Private home sales
21
383
17
20
19
18
188
226
201
275
Definition
The sale of the number of
homes where contracts have
been legally completed in the
financial year, including those
within our joint ventures.
Performance
Strong sales performance
with 383 residential home
completions (216 in the
Group and 167 in joint
ventures).
Priorities for 2022
We are focusing on building
houses rather than apartments
for private sale, as this is where
demand is greatest. In the year
ahead, given where the Group
is in its land portfolio cycle,
private home sales are expected
to reduce as the Group begins
to build new schemes and
complete older ones.
8 Carbon intensity ratio
21
0.0055kgCO₂e
per £1 turnover
20
0.0078kgCO₂e
per £1 turnover
2020 was the first year to
measure and report on our
carbon intensity.
Definition
The carbon intensity ratio
normalises our emissions
data against revenue. We
measure energy use and
associated greenhouse gas
emissions relating to gas,
electricity and fuel.
Performance
We have achieved a
reduction in our carbon
intensity ratio despite
increased activity in our
operations. We have
introduced a hybrid home/
office working policy
and encouraged virtual
communications where
possible.
Priorities for 2022
We have agreed contracts to
purchase 100% renewable
energy and this will drive
further reductions over the
year ahead. A number of other
measures are also being
implemented through our ESG
strategy. More details can be
found on pages 55–64.
In 2019, all KPIs were over a fifteen-month period. The years prior to 2019 were years to 30 June.
www.inlandhomesplc.com
Annual Report and Accounts 2021
29
STRATEGIC REPORT
Our business model
OUR PURPOSE
To maximise the value of land
using our land acquisition,
planning and build expertise
OUR VALUES
Inland Homes plc
Stock code: INL
30
Industry knowledge
Our land, planning and build
expertise stems from the
industry knowledge we have
gained through years of
experience.
Strong relationships
We have strong industry
relationships with public
sector bodies, vendors and
local communities which
place us in a strong position
to take advantage of future
opportunities.
ESG focus and principles
We have a proud history of
brownfield site remediation
and are building on this
track record, embedding
sustainability within all areas
of the business.
Land and
planning core
capabilities
Land is the foundation
of our business model.
Creating value from
land is where we
began and where our
core skills lie. Our
success is built on our
ability and expertise
in identifying and
securing viable sites
and in navigating the
complex planning
system to secure
planning consent.
Housebuilding
and landlord
expertise
Our in-house
construction capability
provides additional
revenue streams.
We build for private
sale and for partners,
including affordable
housing providers
and Build to Rent
operators. Our
portfolio of rental and
investment properties
also provides a steady
stream of rental
income.
Resources and key inputs
Value chain
Identify land
Sell or handover
finished homes
Generate short-term
revenue from rental
income
Secure planning
permission
Sell land with
planning permission
Build for private sale
Build on behalf
of partners
Our entrepreneurial
and agile approach
Our flexible business model
enables us to adapt quickly
to emerging opportunities.
We look to maximise the
value in our land portfolio,
with income streams
providing both large, one-
off returns and recurring
revenue over the short,
medium and long term.
Our people
Our people are our greatest
asset. We aspire to attract
talented individuals and
give them the opportunity
to develop their skills within
the Group. Our people
values of teamwork, strong
performance, integrity and
drive supports this and
assists our people to develop
and succeed.
Read more about our people
on pages 59–60
or
£69.9m
housebuilding revenue
1,547
homes under construction
£3.0bn
land portfolio
10,055
plots
Acquire land directly
or on behalf of third-
party investors
How we create value
Safety first
Lasting legacy
Our people are
our greatest asset
Stronger together
or
Customers
Affordably
priced homes of
exceptional quality
Communities
Thriving,
sustainable
communities
Investors
Strong
shareholder
returns
Colleagues
High levels
of employee
engagement and
satisfaction
Suppliers and
subcontractors
Shared rewards
Government
and regulators
New homes
delivered to
support housing
need
www.inlandhomesplc.com
Annual Report and Accounts 2021
31
STRATEGIC REPORT
Value generated
Read more about
our stakeholders
on pages 65–67
Land
sales
Contract
income
Housebuilding
Rental
income
Investment
properties
Asset
management
Po
te
nti
al
to
de
li
ve
r l
ar
ge
on
e-
off
re
tu
rn
s
H
o
u
s
e
b
u
i
l
d
i
n
g
a
n
d
l
a
n
d
l
o
r
d
e
x
p
e
r
t
i
s
e
L
a
n
d
a
n
d
p
l
a
n
n
i
n
g
c
o
r
e
c
a
p
a
b
i
li
t
i
e
s
Land at the core
We have a valuable and robust
land portfolio of brownfield and
strategic sites which enables
us to maximise the value
across the short, medium
and long term
Re
cu
rr
in
g r
ev
en
ue
Recurring revenue
Asset management
A 'capital-light' activity with
revenue generated on successful
achievement of set milestones
from land acquisition to disposal
Contract income
Partnership housing contracts
provide an exit for land disposals
with the added advantage of an
ongoing construction contract.
The forward income stream
delivers medium-term returns.
Housebuilding
Returns maximised over the
long term with the scale of
housebuilding activity generating
regular revenue
Investment and
rental income
Regular rental yields from
long-term investment properties
and rental properties held as
cost mitigation in the short and
medium term of site development
Potential to deliver large, one-off returns
Land sales
Strategic land asset sales
on consented plots deliver
attractive returns in a strong
land market
Investment properties
Disposal of investment assets
generate large,
one-off returns
Cheshunt Lakeside,
Cheshunt
We are playing a pivotal role in
the regeneration of a brownfield
site in Cheshunt. Our largest ever
development, delivered in joint
venture, Cheshunt Lakeside is set
to create a new ‘urban village’, with
planning approval granted for 1,725
residential plots and 21,325sqm of
commercial and educational space.
The scale of Cheshunt is enabling us to flex our
business model, using our various revenue streams to
maximise returns and deliver long-term value.
Land at the heart of what we do
Broxbourne Borough Council initiated the idea of
Cheshunt Lakeside in its Draft Local Plan. Formerly
home to Tesco headquarters, the relocation of the
supermarket had left a large part of the site vacant
and the Council was setting out its plan to meet
challenging housing and employment needs for the
next 20 years.
The site has excellent credentials for sustainable
regeneration: it is previously developed land that
can help avoid building in the Green Belt, it is within
walking distance of a railway station with good
services to London and Cambridge and it is located at
the entrance to a regional park.
Recognising its potential, the Group, in joint venture,
purchased the majority of the land at Cheshunt
Lakeside in 2016.
Planning expertise
Achieving planning consent on a project of this
scale takes several years of consultation. Like
many brownfield sites, as well as presenting many
opportunities, the site also presented its challenges,
being located adjacent to a high-density, residential
area.
Planning permission took three years of close
consultation with the local Councils and community
and was granted in June 2019, with the terms of the
Section 106 agreement agreed promptly and signed in
August 2019. The Group, in joint venture, owned and
controlled 1,253 of the residential plots and 4,905sqm
of the commercial and educational space with consent.
CASE STUDY:
BUSINESS MODEL IN ACTION: CHESHUNT LAKESIDE (joint venture)
A clear indicator of our success in working with local
councils on complex sites, the efficient signing of the
Section 106 meant that site enabling works were able
to begin before the end of 2019.
Adding long-term value
The strategic fundamentals of Cheshunt Lakeside
are excellent. Locally, the investment in Cheshunt
Lakeside will benefit Cheshunt and the area by helping
to improve the environment, the physical and social
infrastructure, access to jobs and businesses and by
meeting the shortfall in new homes.
Cheshunt Lakeside is not a housing estate but a new
neighbourhood, with the full range of services that
will provide a walkable, mixed-use neighbourhood.
In addition, there will be sufficient new space for
businesses, thereby improving the employment
prospects locally.
The masterplan evolved through an iterative
consultation process with the Council and interested
parties. Extensive public consultation was undertaken
and changes made to the masterplan design as a
result of views expressed during this process.
We are delighted to be working with Inland
Homes. This is a well-designed, attractive
development with plenty of green space.
We’re looking forward to playing our part in
helping regenerate this area of Cheshunt.”
Steve Woodcock, Chief Executive, B3Living
Inland Homes plc
Stock code: INL
32
↑
CGI of Cheshunt
Lakeside,
Cheshunt
↑
Construction
of the first
195 homes
at Cheshunt
Lakeside is
progressing
(images courtesy
of Upperlook)
LOW RESOLUTION IMAGE
www.inlandhomesplc.com
Annual Report and Accounts 2021
33
STRATEGIC REPORT
Read more
about our ESG
framework on
pages 55–64
CASE STUDY:
BUSINESS MODEL IN ACTION: CHESHUNT LAKESIDE (joint venture)
The approved masterplan will not only provide Cheshunt with much needed additional housing, but long-term value through
significant social, economic and environmental investment:
THE MASTERPLAN WILL DELIVER:
PLUS £14.1M COMMUNITY INFRASTRUCTURE
CONTRIBUTIONS, INCLUDING
1,725
new homes in a range of sizes and tenures,
including affordable housing
£4.5m
contribution to existing local secondary schools
19,000sqm
of brand new, flexible commercial space
for businesses, helping to boost the local
economy by up to £16m a year
through inward investment
£5m
to public realm and highway improvements,
including £2.1m to enhance the Old Pond area
8 acres
of new open space (the equivalent
of eight football pitches), plus a public square,
creating green spaces for the community to
enjoy and enhanced biodiversity
£1.9m
to public health initiatives: £630k to upgrading
the Laura Trott Leisure Centre and other local
sports facilities, £750k to Lee Valley Regional
Park and £500k to support local health facilities
250
construction jobs and 30 apprenticeships
during the build process, as well as new jobs
within the completed development
£870k
to sustainable transport, including new cycle
and pedestrian links, and traffic calming safety
measures along Delamare Road
£7.75m
new two-form entry primary and nursery
school
£1.5m
to deliver a new bus route to Cheshunt railway
station
Inland Homes plc
Stock code: INL
34
Maximising the value of land with planning
consent
Land sale – and a build contract for Inland
Partnerships
Cheshunt Lakeside will be delivered on a phased
basis, with detailed planning approval to be granted for
each phase of development.
We achieved detailed planning consent for the first
phase of 195 units in March 2020 and in July 2020
announced the sale of this part of the development
to local housing association, B3Living. The land sale
generated £15.0m with payment received in full on
completion in August 2020. Further and ongoing
returns were secured through a £34.5m contract with
the same housing association to construct the homes.
Construction began in November 2020 and the first
homes will be handed over in the first half of 2022.
In 2021, we achieved planning consent for Parcel 14
for 22 homes and 350m2 of commercial space. These
homes will be offered for private sale and construction
is underway.
We are now also at advanced negotiations with a
leading Build to Rent (BtR) fund for the development
of Phase 1B of 205 homes, following receipt of detailed
planning consent in June 2021. The site’s credentials
make it an extremely attractive proposition.
Rental income
On a project of this scale, there is an opportunity to put
to good use the land available prior to commencement
of construction.
We are managing approximately 20 short-term leases
to a variety of tenants, generating £0.4m during the
financial year.
Working with Broxbourne Borough Council, we have
also been able to provide 32 temporary homes for
those most in need in the Borough, through our
modular housing subsidiary, Hugg Homes. The homes
add to the Council’s temporary accommodation
portfolio, providing a high-quality and cost-
effective alternative to bed and breakfast or hostel
accommodation.
The Hugg units generated gross rental income of
£0.3m over the reporting year. It is currently envisaged
that this will be a growing source of revenue in the
year ahead, with a further 16 homes to be delivered in
2022.
Looking ahead
We look forward to continuing to develop this thriving,
sustainable community, using the flexibility within our
business model to maximise its value, be that through
land sales, private housebuilding or partnership
housebuilding activity.
In line with our Environmental, Social and Governance
commitments, we are developing a Sustainability Brief
for Cheshunt Lakeside that sets the vision, aspirations
and measurable outcomes for the scheme.
↑
Construction
of the first
195 homes
at Cheshunt
Lakeside is
progressing
(images courtesy
of Upperlook)
↑
Hugg Homes,
Cheshunt
Lakeside,
Cheshunt
www.inlandhomesplc.com
Annual Report and Accounts 2021
35
STRATEGIC REPORT
Land sales
£15.0m revenue
generated in joint
venture from the
sale of the first
phase of 195
homes (completed
August 2020)
Rental income
Commercial rental income of £0.4m
generated in joint venture in the
reporting period, plus an additional
£0.3m from the 32 Hugg Homes on site
Housebuilding
Future private and partnership
housing opportunities for the remaining
1,058 plots within control of the joint
venture
Contract income
£34.5m partnership contract
income to construct the 195
homes within the first phase
secured in parallel with the
land sale
Identifying land
and securing consent
The 30-acre brownfield
site presented a unique
regeneration opportunity in
a Borough supportive of
development
Delivering for our partners
Operations review
Gary Skinner
Group Managing Director
We are well placed to capitalise
on this demand for our in-
house construction capability,
with partners recognising the
value of our land assets, our
expertise and the quality of our
build offer.”
We secured our first partnership
housing contract in 2016, with Octavia
Housing Group at Witley Gardens,
Southall. Five years later, this area of
the business has grown rapidly, with
partnership housing now generating
nearly 35% of total revenue.
Our diversification into building on behalf of partners
preceded the strategic move to develop the Group’s
in-house construction capability. Partnership housing
offers immediate cash inflow from the land sale and
a forward income stream through construction. As
an additional income stream, partnership housing
provides some balance to the business model, as it
provides a natural hedge against any softening in the
private housing market.
Initially targeted to affordable housing providers,
where demand for ‘turn-key’ product was high, over
the last two years we have seen increasing demand for
our services from Build to Rent (BtR) operators.
We are well placed to capitalise on this demand for
our in-house construction capability, with partners
recognising the value of our land assets, our expertise
and the quality of our build offer.
Why partnership housing?
•
Partnership housing contracts often involve a land
sale on receipt of planning consent
•
Sustained demand and strong forecast growth
•
Land bank that is attractive in size and location to
affordable housing providers
•
Short-term returns from the land sale and
medium-term returns from build contracts
•
Regular cash flow through monthly valuations
•
Demonstrable track record in delivering on time
PROGRESS REPORT
•
£164.7m partnership housing forward order
book (30 September 2020: £105.8m).
•
1,257 partnership homes under construction
across six sites (30 September 2020: 1,302).
•
Largest contract to date secured at
Patchworks, Walthamstow. The contract,
totalling £88.9m, is with London Build to
Rent Investments (London BTR) and is for
the construction of 355 homes.
•
A second contract worth £42.4m was
signed in September 2021 for the
remaining 228 homes at Walthamstow with
Newlon Housing Trust, a leading housing
association. Construction at this important
inner-city site began in September 2021,
with the first handovers scheduled for the
summer of 2023.
•
Construction started in November 2020 on
the first 195 homes at Cheshunt Lakeside,
Cheshunt. Construction of these homes,
on behalf of local affordable housing
provider B3Living, started in November 2020
and will take approximately two years to
complete. The first homes will be handed
over in the first half of the 2021/22 financial
year. Cheshunt Lakeside is a joint venture
development with masterplan planning
consent for 1,725 new homes in total,
plus new commercial space, other related
community amenities and a new school.
•
Significant progress made at Merrielands,
Dagenham with the first 63 homes to be
handed over to Clarion Housing Group
in early 2022. Merrielands is the second
project with Clarion Housing Group.
•
A further 250 units handed over to A2
Dominion at our Church Road site in
Ashford, following the initial handover of 32
units in September 2020.
Inland Homes plc
Stock code: INL
36
Looking ahead
•
Subject to the signing of the Section 106
agreement, construction is anticipated to
commence in early 2022 on a residentially led,
mixed-use scheme of 380 homes plus 930sqm
of flexible commercial space at Dagenham Dock,
Dagenham. Of the 380 homes to be delivered,
103 will be offered as affordable, delivering much
needed additional housing to the Borough. This
is an attractive location for BtR operators and
housing associations, and a decision on whether
the project will be delivered by Inland Homes
directly or via a partnership contract will be
announced in due course.
•
Discussions are at an advanced stage with a BtR
operator for the sale of the next phase of 205 plots
within Cheshunt Lakeside, Cheshunt.
↑
Buckingham
House, High
Wycombe
Partnership housing forward order book
21
£164.7m
20
19
18
£105.8m
£123.7m
£100.0m
Partnership housing revenue
21
£60.3m
20
19
18
£51.8m
£62.6m
£12.0m
Partnership homes under construction
21
1,257
20
19
18
1,302
921
220
Note: 2019 data over a 15-month period
www.inlandhomesplc.com
Annual Report and Accounts 2021
37
STRATEGIC REPORT
Operations review CONTINUED
Delivering for our private
homebuyers
Quality of build, achievable
price point and a customer-first
commitment drive demand for our
homes. While the returns from
private housebuilding activity
take longer to be realised than
land sales or partnership housing
activity, private housebuilding also
offers attractive returns in a strong
housing market. The scale of our
private housebuilding operations
provides regular revenue for the
Group.
Our customer-first approach
We pride ourselves on the quality of our homes and
the level of customer service we provide at all stages
of the customer’s journey. Our dedicated team are
there to help through every step of the process – from
choosing the right home, to applying for a mortgage
and moving in. We continue this level of support
even after moving in, providing a two-year builder’s
warranty on each of our homes.
As the number of homes under warranty increases
year-on-year, so do the number of customers in our
care. Procedures and key performance indicators
(KPIs) introduced last financial year ensure we
maintain our exceptionally high level of care and can
identify and rectify any issues quickly.
It is the little details that make a difference. Our
property handover process ensures that on move-in
day, customers have nothing to worry about, with the
property inspected, cleaned, meters read and any
snagging issues reported and resolved in advance.
One of our Customer Services team contacts each
customer no more than three days after move-in to
make sure the move has gone well and answer any
questions they might have. A customer welcome
pack left at the premises provides local information,
appliance instructions and emergency contact details.
Should a customer be unhappy with our service, we
act quickly to find the root cause and resolve it. We
have set a KPI of resolving all complaints within 28
days. This year, the COVID-19 lockdowns and public
health restrictions have impacted on our ability to
access homes and 46.3% of complaints over the
reporting period were resolved within 28 days. By
September 2021, the average number of days to
resolve complaints was 16.5. We intend to continue to
improve on this performance over the year ahead.
Looking ahead
•
34 homes to be launched at Templar Green,
Cressing.
•
The first 22 private sale homes to be launched at
Cheshunt Lakeside, Cheshunt.
PROGRESS REPORT
•
Turnover, including the sale of a hotel for
£13.3m, was £69.9m (30 September 2020:
£23.8m)
•
Significantly more private home completions
during the year than the comparative period,
216 in aggregate (2020: 96), at an average
selling price of £262,000 (2020: £240,000). A
further 167 private home sales (2020: 130)
were sold across sites held with our joint
venture partners.
•
Excluding joint ventures, the weekly net
reservation rate per active sales outlet was
1.09 for the year (2020: 0.65).
•
Sales driven by high demand at The
Wessex, Bournemouth where 64 of the
94 apartments were sold this year and at
Meridian Waterside, Southampton, where
50 completions were achieved this year
within the third phase of this 352-home
development.
•
Sale of 10 existing homes within Wilton
Park, Beaconsfield with the proceeds used
to reduce borrowings.
Inland Homes plc
Stock code: INL
38
We were initially looking
at properties in Poole; we
viewed a couple online before
going in-person, and then
viewed The Wessex – we just
completely fell in love with
the apartments and stopped
our search there and then!
We would really recommend
buying a home with Inland.
The sales team, especially
Nadia and Jo, have been so
helpful in dealing with us,
and taking us through every
step of the process. They have
accommodated us and been
there when I have had any
questions or requests, from
big to small, and have just
been really great.”
Carly
Owner at The Wessex
£69.9m
£23.8m
£34.5m
£70.2m
21
20
19
18
Housebuilding revenue
Note: 2019 data over a 15-month period
290
Private homes under construction
(30 September 2020: 415)
216
Private home completions*
(2020: 96)
£262,000
Average selling price*
(2020: £240,000)
45%
Percentage of customers using Help to Buy*
(2020: 56%)
1.09
Net weekly reservation rate per active site*
(2020: 0.65)
1,089
Homes under warranty
(30 September 2020: 705)
*excluding joint ventures
www.inlandhomesplc.com
Annual Report and Accounts 2021
39
STRATEGIC REPORT
↑
Homeowners
Carly and Marc
ASSET MANAGEMENT SERVICES
HOW WE CREATE VALUE FOR INVESTORS
Identify land opportunity
Our core market is the South and South East of England where planning
gains can be significant
▼
Assess viability of land opportunity in
planning process
Our highly-experienced Land and Planning teams are skilled in assessing
the planning outcome
▼
Introduce investors to the opportunity
We give investors a clear and unobstructed window into land opportunities
▼
Manage land acquisition on behalf of investors
We have a demonstrable track record of success and six schemes currently
being managed on behalf of investors
▼
Secure planning permission on behalf of investors
We maintain a 100% track record in securing planning consent on
brownfield sites
▼
Propose a disposal plan for the site
Our Land team has access to a number of disposal methods giving investors
speedy realisation post planning approval
Why asset
management?
SITE
ABOUT
PROGRESS
Patchworks,
Walthamstow
▼
•
583 units
•
469sqm commercial space
•
4.4-acre brownfield site
•
Planning consent achieved in March 2021
•
Two land sales to a Build to Rent operator and affordable
housing provider
•
Two partnership housing contracts secured, adding
£131.3m to the partnership housing forward order book
•
c.£20.0m net fees generated over the life of the contract
•
Construction commenced in September 2021
Cavalry Barracks,
Hounslow
▼
•
1,629 units
•
36.7-acre site
•
£600m estimated GDV
•
Fifth MOD transaction and the largest to date
•
Planning application submitted in March 2021
•
Expected to be determined in 2022
Hillingdon Gardens,
Hillingdon
▼
•
514 units
•
Planning consent achieved in March 2021
•
Judicial Review upheld the planning permission
Gallions Close,
Barking
▼
•
233 units
•
250sqm commercial space
•
Planning application submitted in June 2021
•
Expected to be determined in the first half of 2022
Thames Road,
Barking
▼
•
131 units
•
2,000sqm commercial space
•
Planning application submitted in June 2021
•
Expected to be determined in early 2022
Telephone Exchange,
Staines
▼
•
206 units
•
Appeal against rejection submitted in August 2021 and
upheld in January 2022
Operations review CONTINUED
Maximises our land and
planning expertise
Limited capital
investment
High returns on receipt
of planning consent
Delivering for investors in our asset management division
Our rapidly growing asset management division supports third-party investors with land acquisition, planning approval and disposal
services. Investors benefit from our expertise and experience in identifying and securing attractive, viable sites and achieving planning
consent on these. In return, the Group is paid fees at agreed milestones throughout the project. In addition to receiving fees for our
services, the Group also benefits from significantly reduced equity investment.
Progress report
There are six projects within the Group’s asset management division as at 30 September 2021.
Inland Homes plc
Stock code: INL
40
Delivering
homes across
tenures
Through our subsidiary companies,
Rosewood Housing and Hugg Homes,
we are able to offer homes in a range
of tenures and across all affordability
levels.
Rosewood Housing is a for-profit, registered provider
of affordable housing, offering homes for both shared
ownership and affordable rent.
Hugg Homes provides local authorities and private
renters with high-quality, modular accommodation.
Located on dormant land waiting for planning
permission and construction to commence, the homes
are let in line with local housing allowance rates or at
discount to market rents.
PROGRESS REPORT
Progress
Rosewood Housing
•
Launch of nine Rosewood Housing shared ownership homes
within the Randalls development in Uxbridge following
completion in September 2021. Three reservations and two
completions were achieved by the end of the calendar year.
•
Acquisition of 26 affordable homes within Phase 1 at Wilton
Park, Beaconsfield (21 shared ownership, 5 affordable rent) in
December 2021.
•
Productive relationships built with sector specific lenders
across both its shared ownership and affordable rent
portfolio.
Hugg Homes
•
Schemes remain at high occupancy – in excess of 99% on the
privately let homes.
•
Resolution to grant planning permission for 48 units at
Cheshunt Lakeside, Cheshunt. These units will be located on
land adjacent to the existing 32 Hugg Homes. The 32 existing
units will be relocated to the new site alongside 16 new units.
LOOKING AHEAD
6
Asset management live projects
(2020: 6)
c.3,300
New home potential
(2020: 3,100)
2,199
Asset management plots submitted
for planning in the year
(2020: 1,127)
c.£20.0m
Walthamstow net fees generated
over the life of the contract
£27.8m
Asset management revenue
recognised
(2020: £24.4m)
1,097
Asset management plots granted
planning in the year
(2020: nil)
www.inlandhomesplc.com
Annual Report and Accounts 2021
41
STRATEGIC REPORT
Group Finance Director’s review
Introduction
Whilst COVID-19 had a disruptive effect on the first half
of the year operationally, the underlying strength of
the housing market and demand for the quality homes
built by the Group held sway over the wider economic
uncertainties. Following what was a period of record
sales activity, in the second half of the year, and with
the extension of the fiscal stimuli provided by the
Government, the land market heated up. Demand for
land and residential property in the South and South
East, the areas in which the Group operates, continues
to remain strong.
As a result, the Group has delivered on its
commitment to reduce net debt and will continue to
target further reductions. We have also successfully
grown our asset management, partnership housing
and housebuilding activities. Although the Group’s
share price continues to trade at a significant discount
to its published net EPRA value per ordinary share, the
focus on positive cash generation, when set alongside
our operational achievements, will continue to drive
value in the coming financial year.
Net debt and borrowings
The Board’s key strategic objective was to reduce the
Group’s net debt. I am therefore pleased to report that
the Group’s net debt has reduced by £30.1m, some
20.3%, from £148.2m (30 September 2020) to £118.1m
at the financial year end. This represents net gearing
of 64.5% (30 September 2020: 85.7%) and net gearing
based on EPRA net assets of £246.4m of 47.9% (30
September 2020: 63.0%).
Subsequent to the financial year end, there has
been further debt reduction arising as a result of the
advanced receipt of £8.3m from the contract for the
forward sale of 161 homes in Poole.
Changes in performance measures for EPRA
In October 2019, the European Public Real Estate
Association (EPRA) published new Best Practice
Recommendations for financial disclosures by
listed real estate companies. The Group supports
standardised reporting to improve the quality and
comparability of information for investors. The BPR
introduced two new measures of net asset value:
EPRA net tangible assets (NTA) and net disposal value
(NDV). We have adopted these guidelines in the year
ended 30 September 2021 and consider EPRA NTA to
be the most relevant measure for our business. EPRA
NTA will now be our primary measure of net asset
value, replacing our previously reported EPRA net
assets and EPRA net assets per share measures. We
have also restated the EPRA NAV to EPRA NTA as of 30
September 2020 for comparative purposes, including
the prior period adjustment as disclosed in Note 41.
Balance sheet
The Group’s net assets have increased to £183.0m at
30 September 2021 (30 September 2020: £173.0m),
mostly due to the retained profit after tax that the
Group has reported for this financial year.
The EPRA NTA at 30 September 2021 increased to
£246.4m (30 September 2020: £235.2m). Net asset
value per ordinary share increased to 80.10p (30
September 2020: 76.31p) and EPRA NTA per ordinary
share was 107.84p per share (30 September 2020:
103.75p). A reconciliation of EPRA tangible net asset
value is on page 45.
The Board is required to assess the fair value of the
Group’s sites held in current assets, when determining
EPRA NTA. For undeveloped sites (both owned and
controlled by way of options), a residual land valuation
is carried out to determine the expected value of
the site with planning consent. The valuation is then
discounted by a factor of between 0% to 90% to reflect
the probability of achieving planning permission.
There is not a ready market for sites where
construction has commenced. The Directors have,
therefore, assumed that fair value equates to the
carrying value for such sites unless the site is
forecast to make a gross margin of more than 16% (an
industry standard benchmark), in which case a fair
value adjustment is made to reflect the residual land
value uplift.
The Group transferred further residential and
commercial property from assets held for sale as
it is intended that these will be held for long-term
purposes. In addition, 18 residential properties at
Wilton Park, Beaconsfield have been transferred
from investment properties to inventories, as these
properties are being demolished to make way for
Nish Malde
Group Finance
Director
The Group has delivered on its
commitment to reduce net debt and will
continue to target further reductions. We
have also successfully grown our asset
management, partnership housing and
housebuilding activities.”
£118.1m
Net debt
2020: £148.2m
Inland Homes plc
42
Stock code: INL
£246.4m
EPRA net tangible assets
2020: £235.2m
107.84p
EPRA net tangible assets per
ordinary share
2020: 103.75p
the construction of a link road, which the Group is
required to construct under a legal agreement with the
local authority. The balance of investment properties,
amounting to £36.0m (2020: £43.5m), principally
comprises the remaining existing residential
properties at Wilton Park. In accordance with IFRS 16
Leases, the lease of our head office in Beaconsfield
and a car have been capitalised and classified as
right-of-use assets at £0.9m (2020: £1.2m), with a
corresponding lease liability of £0.9m (2020: £1.2m) at
the year-end.
Investment in joint ventures consists of the Group’s
four joint ventures, the most significant of which is
our investment at Cheshunt, held through Cheshunt
Lakeside Developments Limited (CLDL), which
amounted to £4.2m (30 September 2020: £6.3m).
In addition, there were amounts due from joint
ventures, held as a non-current asset, being £32.7m
(30 September 2020: £28.6m). Similarly, other
receivables due after more than one year, of £22.0m
(30 September 2020: £20.7m), represents the amount
due from our joint venture partner in CLDL, which is
secured by way of a charge over their share of profits
from the development.
Inventories have reduced to £163.9m (30 September
2020: £173.6m), due to land sales and sales of
residential property. Trade and other receivables
due within one year have increased to £116.9m
(30 September 2020: £60.9m), principally due to a
significant increase in management fees accrued from
our asset management activities. These fees will be
received as the relevant sites are monetised.
As explained above, net debt at the year end was
£118.1m (2020: £148.2m). Gross borrowings were
£130.2m (30 September 2020: £163.9m) with cash
balances of £12.1m (30 September 2020: £15.7m).
During the year, the Group repaid loan facilities with
Homes England, which financed our development at
Chapel Riverside in Southampton, and also repaid
facilities from mainstream lenders which financed
some of our land and housebuilding projects.
At the year end, the Group had drawn down £33.9m
of our £65.0m revolving credit facility with HSBC (30
September 2020: £42.4m), leaving headroom for future
housebuilding projects of £30.6m (30 September 2020:
£22.6m). This facility expires in March 2023.
At the year end, the accrued liability to holders of
Zero Dividend Preference (ZDP) shares was £32.0m
(30 September 2020: £30.2m). The accrued liability is
due to be repaid to the holders of ZDP shares in April
2024, unless extended with the agreement of the ZDP
holders, before that date.
Operational performance
The Group’s revenue for the year to 30 September
2021 has increased sharply to a record £181.7m (30
September 2020: £124.0m), boosted by the sales of
216 private homes (30 September 2020: 96) (excluding
those via joint ventures) and bulk sales to BtR
operators. The average selling price increased to
£262,000 (30 September 2020: £240,000).
The Group’s weekly net reservation rate per active
sales outlet, excluding joint ventures, was 1.09 for the
year (30 September 2020: 0.65), which underlined the
strength of the market in the areas in which Inland
Homes operates. Purchasers of 45% (30 September
2020: 56%) of our new homes made use of the Help
to Buy scheme, excluding joint ventures. Our forward
order book of homes reserved and exchanged as at
the year end amounted to £33.4m (30 September 2020:
£37.5m).
The total number of plots within our land bank
decreased marginally, after the sale of 6011 residential
plots by the Group, including plots from within our
asset management business.
The revenue from our partnership housing activity was
£60.3m (30 September 2020: £51.8m) from contracts
across six sites. As at 30 September 2021, the forward
order book for partnership housing contract income
was £164.7m (30 September 2020: £105.8m), with
two new contracts secured during the year for total
revenue of £131.3m. The Group’s focus will continue
to be in growing the partnership housing activity as it
1 Includes plots
within the asset
management
division owned by
third parties.
34
39
15
12
Land sales
Asset
management
Housebuilding
Contract income
Revenue by segment (%)
Annual Report and Accounts 2021
43
STRATEGIC REPORT
www.inlandhomesplc.com
Group Finance Director’s review CONTINUED
generally secures a land sale together with a forward
income stream, providing a good balance to the
Group’s business model.
The Group’s asset management division, which acts
on behalf of property investors to procure sites and
provide planning and management services, has
six live projects (30 September 2020: six projects) in
Greater London. During the financial year, the Group
earned management fees of £27.8m (30 September
2020: £24.4m) from these contracts. The transactions
are structured so that they require significantly
reduced investment and working capital from Inland
Homes and are also, generally, non-recourse to the
Group. Once these sites receive planning consent, they
are sold to Build to Rent (BtR) or other purchasers,
which can often lead to a partnership housing contract
for the Group.
Other revenue of £1.8m (30 September 2020: £2.3m)
includes letting income from investment properties
and short-term rents from brownfield sites being
processed through the planning system.
Gross profit increased to £32.0m (30 September
2020: £22.0m) because of higher profits from land
sales, management fees and private homes sold by
the Group.
The gross profit margins of the Group’s partnership
housing and housebuilding businesses are currently
unsatisfactory. As previously reported with the
Interim Results for the six-months ended 31 March
2021, the Group became aware of approximately
£3.5m of unforeseen additional costs relating to one
housebuilding site and a single partnership housing
contract. These costs were somewhat offset by £0.4m
of additional revenue from higher selling prices
achieved from the Group’s housebuilding sites.
In common with many in the industry, the Group has
also experienced mid-single digit cost inflation, some
of which has been mitigated by higher than forecast
selling price of its new homes. There are, however,
recent signs that some of the more pronounced price
rises over recent months are beginning to subside. The
industry has also witnessed some ongoing constraints
in the supply chain and intermittent labour shortages.
These factors have also impacted gross margins
during the year and will continue to have an impact in
the current financial year.
The Group wrote off £0.5m work-in-progress relating
to aborted land transactions (30 September 2020:
£2.1m) and made provisions for £3.4m where future
cost overruns are envisaged following detailed project
reviews (30 September 2020: £0.1m). At 30 September
2021, the Group has contingency provisions of £3.1m
(30 September 2020: £4.0m).
As a result, the Group has undertaken a number of
measures to improve both operational efficiency and
commercial delivery, with the objective of improving
margins in the partnership housing and housebuilding
businesses. The Group has moved to further
standardise drawings and specifications in order to
assist onsite construction efficiency and to deliver
costs savings through design evolution and centralised
procurement deals. Improvements have also been
made to the Group’s IT system, which has improved
transparency and accountability in the project
evaluation process. As a result of the steps taken
and the planned ongoing work in this area, the Board
currently expects to see some margin improvement in
the coming financial year.
Consequently, gross margin reduced to 17.6%
(30 September 2020: 17.7%) and operating margin
increased to 11.6% (30 September 2020: 9.5%).
A detailed analysis by operating segment is shown in
Note 10 to the Financial Statements on pages 119–123.
Administrative expenses have significantly
decreased to £7.5m (30 September 2020: £12.6m),
as the Group rationalised its operations into the six
operating businesses. Administrative overheads
comprise salary costs for the main Board (as
disclosed in the Remuneration Report on pages
78-82) and non-operational staff totalling £6.1m
(30 September 2020: £8.7m), central overhead of
£0.8m (30 September 2020: £4.4m) and depreciation of
£1.1m (30 September 2020: £1.3m).
Net finance costs
Finance costs of £9.3m (30 September 2020: £9.5m)
comprised principally of bank and other loan interest,
amortisation of arrangement fees and exit fees,
non-utilisation fees and interest rolled up on the Zero
Dividend Preference shares (ZDPs). Finance income of
£1.5m (30 September 2020: £1.1m) includes interest
from joint ventures and associates, other interest
receivable and notional interest income on long-term
receivables. Finance costs were relatively high until
near the end of the financial year, when the Group’s
borrowings fell as a result of the significant number
of land and private home sales affected. Interest on
development funding is capitalised as required by
IAS 23. No interest was capitalised during the year
(30 September 2020: £0.8m).
Taxation
The Group is domiciled in the United Kingdom and
does not make use of any tax structure that is not
domiciled in the United Kingdom.
The total tax charge of £3.6m combines a current
taxation charge of £4.3m and a deferred tax credit of
£0.7m and represents an effective rate of 27.3% of
the profit before tax. The current corporation tax rate
is 19% and the difference between the expected tax
charge and the actual tax charge is mainly due to the
interest accrued on the ZDPs, which are disallowed for
tax purposes.
Prior year adjustment
The Group has a prior year adjustment in respect of
deferred contingent consideration payments for the
site at Wilton Park, Beaconsfield not being recognised
in prior periods.
Site assembly occurred in 2010 when the Group
entered into two land option contracts which
committed to deferred contingent consideration
payments on grant of a planning permission for
the site over a period from the date of the planning
consent. The two land option contracts also contained
standard overage clauses which are triggered in
certain future circumstances based on the actual
delivery of housing for the site.
Inland Homes plc
Stock code: INL
44
The Group did not recognise in 2019 the deferred
contingent consideration payments on the grant of
a planning permission. The liability of £6.0m was
unconditionally triggered in September 2019 of which,
£4.8m remains unpaid at 30 September 2021.
Earnings per share and dividends
Basic earnings per share increased to 4.21p per
ordinary share (30 September 2020: 0.65p per ordinary
share), reflecting the Group’s improved retained profit
after tax in this financial year.
Going Concern
In preparing the forecasts, the Directors have
considered the continued adoption of stringent cash
management procedures, market disruptions already
brought about by COVID-19, the possibility of future
disruption in the Going Concern period, which could
potentially be caused by COVID-19, and other risks and
uncertainties, including credit risk and liquidity risk,
the present and possible future economic climate,
the current and possible future demand for land with
planning consent and the state of the housing market
in the geographic areas where the Group operates.
The Directors have performed detailed sensitivity
analyses to test the Group's future liquidity and
banking covenant compliance based on several
scenarios.
The Directors have a reasonable expectation that the
Group and parent Company have adequate resources
to continue in operational existence for the foreseeable
future. The Directors therefore consider it appropriate
to prepare the Financial Statements on the Going
Concern basis. Further details can be found in Note 2
on pages 102–103.
Outlook
We ended this financial year having achieved a
significant reduction in the Group’s net debt to
£118.1m, whilst holding a land bank of 10,055
plots. We are well positioned to serve the private
housebuilding and partnership housing sectors with
land, asset management and construction services
over the short, medium and long term.
Demand for housing in our market of the South
and South East of England continues apace and in
the Budget on 27 October 2021, the Government
announced its desire to utilise Britain’s brownfield
land to help address the housing crisis, investing
£1.8bn to deliver 160,000 new homes. Brownfield
land is at the heart of Inland Homes’ business and
the Group is accordingly well placed to benefit from
the Government’s stated intention to unlock more
brownfield sites.
The focus for the coming financial year continues
to be the reduction in Group net debt and the
improvement of margins in the partnership housing
and housebuilding businesses. Externally, our award-
winning new homes continue to delight customers and
investors alike. The Group’s land pipeline of brownfield
and strategic sites located in the South and South
East of England leaves the Group well placed to make
further progress in the coming year.
Nish Malde
Group Finance Director
31 January 2022
Previously reported
measures
New measures
EPRA net
assets
£m
EPRA
triple
net asset
value
£m
EPRA NTA
£m
EPRA NDV
£m
At 30 September 2021
Net assets attributable to equity
shareholders
183.0
183.0
183.0
183.0
Adjustments for:
Revaluation of projects
61.8
61.8
61.8
61.8
Deferred tax on investment
property revaluation
1.7
1.7
1.7
-
Other intangible assets
-
-
(0.1)
-
Adjustment for:
Deferred tax on investment
property revaluation
-
(1.7)
–
–
Deferred tax on project
revaluation
-
(15.4)
–
–
EPRA net asset value used in
per share calculation
246.5
229.3
246.4
244.8
EPRA net asset value
(pence per share)
107.88
100.38
107.84
107.14
Previously reported
measures
New measures
EPRA net
assets
£m
EPRA
triple
net asset
value
£m
EPRA NTA
£m
EPRA NDV
£m
At 30 September 2020
Net assets attributable to equity
shareholders
173.0
173.0
173.0
173.0
Adjustments for:
Revaluation of projects
59.8
59.8
59.8
59.8
Deferred tax on investment
property revaluation
2.6
2.6
2.6
-
Other intangible assets
-
-
(0.2)
-
Adjustment for:
Deferred tax on investment
property revaluation
-
(2.6)
–
–
Deferred tax on project
revaluation
-
(11.4)
–
–
EPRA net asset value used in
per share calculation
235.4
221.4
235.2
232.8
EPRA net asset value
(pence per share)
103.84
97.66
103.75
102.69
www.inlandhomesplc.com
Annual Report and Accounts 2021
45
STRATEGIC REPORT
Our principal risks
Our principal risks
Successful risk management is a fundamental part of
our business as we pursue our strategic objectives.
Risk management overview
The Board has overall responsibility for stewardship of
risk management and ensuring the Group maintains
the appropriate level of risk to achieve its objectives.
During the year, the Board further strengthened its
governance of risk arrangements and established a
Governance and Risk Committee to provide a focal
point for the coordination of risk management activity.
Further information about the Governance and Risk
Committee can be found on page 76.
Risks and opportunities are factors which are
continually considered when the Board is making
decisions about future strategy. Our approach to risk
management and assurance ensures we maintain
a balance between risk and reward that achieves
our strategic objectives without exposing the Group
to unacceptable levels of risk. This is set within the
context of the rapidly changing external environment
resulting from the pandemic, climate issues,
regulatory and economic change; all of which have a
significant and immediate impact on our business.
Risk framework
The Board seeks to embed a culture of risk
awareness and control in all business activities. Risk
management controls are built into every aspect of the
Group’s daily operation, ranging from the assessment
of the prospects of planning success, building safely
and selling effectively to achieve long-term success
through the property market cycle.
Risk assessment
Our risk appetite is defined by the level of risk we
are willing to take in order to execute our strategy or
deliver on a project. Whilst some risk is inevitable,
we believe that risks which relate to health and
safety, our financial viability and our reputation
must always be actively managed and mitigated to
minimise the probability of them crystallising. Our risk
appetite at any time is also influenced by the external
environment (legal, economic, political), the Group’s
perceived internal strengths and weaknesses and the
Group’s financial capacity.
Formal assessment at Board level includes
consideration of the principal risks to ensure they
remain appropriate, as well as a review of the key
and emerging risks identified by the business, their
risk profile and mitigating factors. This takes place
annually and was completed at the Governance and
Risk Committee meeting in November 2021, with
formal sign off by the Board following that meeting.
At an operational or micro level, our senior
management team applies specialist local and
professional knowledge to identify new risks and
monitor existing operational and strategic risks. An
effective and formal system of risk management and
internal controls exists across all our sites.
The roles and responsibilities of the Board, its committees and all levels of management in the identification and
management of risk are summarised below:
Risk management framework
▼
The Board
The Board has overall responsibility for risk oversight, for maintaining a robust risk management and
internal control system, and for determining the Group’s appetite for exposure to the principal risks to
the achievement of its strategy.
▼
Governance and Risk Committee
The Governance and Risk Committee supports the Board in the management of risk and has delegated
authority to review the effectiveness of risk management and internal controls within the business.
The Committee identifies and keeps under review the Group’s principal and emerging risks and related
mitigation strategies.
▼
Operational level
Operationally, the Group maintains an effective system of site-level risk management and internal
control which is embedded in every aspect of our daily operations. Local knowledge and expertise are
utilised to identify and monitor new and existing risks.
Inland Homes plc
Stock code: INL
46
Updates to the principal risk register
COVID-19
At the time of writing, we are experiencing a surge
in cases of COVID-19 as the Omicron variant drives
up infection rates. The health and safety of our staff
continues to be our number one priority and we will
respond to changing Government guidance as soon as
it is announced. The Board continues to monitor the
impact to the business of the ongoing pandemic.
Supply chain and labour markets
The economic recovery to date remains fragile with
labour market and supply chain disruption affecting
the price and availability of goods, services and
skilled labour, with significant volatility in inflation.
The Board identified the risks associated with this
ongoing disruption in the Interim Report and it is
now a principal risk. Work to establish effective
mitigation strategies to prevent this risk impacting
on our delivery programme is ongoing and is closely
monitored by the Governance and Risk Committee on
behalf of the Board.
Brexit
Brexit-related uncertainties have diminished although
we remain in a period of transition with businesses
still adapting to life outside the EU. As such, any
ongoing potential impacts or factors associated with
Brexit are reflected as part of broader Group risks
around supply chain and economic uncertainty.
www.inlandhomesplc.com
Annual Report and Accounts 2021
47
STRATEGIC REPORT
↑
Chapel Riverside,
Southampton
Our principal risks CONTINUED
Key to risks:
A A major incident impacts the UK
B Adverse economic conditions
C Adverse Government policy and planning regulations
D Climate-related risk
E Inability to source and develop suitable land at the
appropriate cost and quality
F Access to site labour and materials
G Failure to effectively manage major projects to
industry standard margins
H Health and safety
I Staff
J Solvency and liquidity
K Cyber and business continuity
Inland Homes plc
Stock code: INL
48
Principal risks heat map
The heat map opposite illustrates the relative inherent
and residual positioning of our principal risks from
an impact and likelihood perspective. The increasing
regulatory climate and current economic uncertainty
we are experiencing, driven largely by COVID-19 and
leaving the EU, has resulted in an increase in the residual
rating of two of our principal risks (Government policy
and planning regulations and impact of the market
environment on mortgage availability and housing
demand). Further information is detailed in the principal
risk table on the following pages.
Risk scale explanation
Likelihood scale
Definition
1
Rare – not likely to happen, or will only happen in exceptional circumstances
2
Unlikely – not expected to happen, but there is a remote possibility that it will occur
3
Possible – may occur on some occasions but not frequently
4
Likely – is likely to occur or will happen on more occasions than not
5
Certain – likely to occur in the majority of cases
Impact scale
Definition
1
Insignificant – one or more of the following: no impact on service, slight impact on
reputation, complaint possible, litigation possible
2
Minor – one or more of the following: slight impact on service, slight impact on reputation,
complaint possible, litigation possible
3
Moderate – one or more of the following: some service disruption, potential for adverse
publicity (avoidable with careful handling), complaint probable, litigation probable
4
Significant – one or more of the following: service disruption, adverse publicity unavoidable
(local media), complaint probable, litigation probable
5
Major – one or more of the following: service interrupted for significant time, major adverse
publicity not avoidable (national media), major litigation expected, resignation of senior
management and Board, widespread loss of beneficiary confidence
A
B
G
E
F
D
C
High
Low
Impact
Low
High
Likelihood
H
K
J
I
Environmental, Social, Governance and
climate-related risks
The newly established Governance and Risk
Committee has been tasked with ensuring the
Group has an effective Environmental, Social and
Governance (ESG) framework in place. A crucial
element of this is our assessment of ESG-related
risks. The Committee recognises the importance
of ensuring that we define the most relevant
ESG risk factors for the Group and that these are
incorporated into our risk management framework.
Further details on our ESG framework can be found
on pages 55–64, including details of our cross-
departmental working parties established to develop
and implement strategy in the specific areas of ESG.
Environmental risks
We know that one of the key emerging risks for the
Group is climate change, which has short, medium
and long-term implications for our business and is
now considered a principal risk to the business. To
fully understand the implications, the Committee
has instigated a detailed review of key risks and
opportunities to the Group’s business model. This
review incorporates both the physical effects of
changing weather, as well as transition risks, such
as the uncertainty caused by legislation, policy and
societal changes to reduce the impact of climate
change. The review will also take into account the
financial implications of the risks associated with
climate change.
Social risks
We recognise that climate change is only one aspect
of our ESG framework. COVID-19 has brought social
risks into sharp focus and the Committee recognises
the importance of identifying these risks as part of
our overall assessment. Staff well-being, workforce
engagement, diversity and inclusion are just some
of the social factors that we have identified in our
ESG framework and details of our commitments in
these areas are set out on pages 55–64. Our cross-
departmental working parties will have a key role in
defining, assessing, and managing social risk in the
short term as we look to incorporate ESG risks into
our overall risk management framework.
Governance risks
Whilst governance risks can be difficult to
quantify, we recognise that the reputational
impact can be significant. Therefore, identifying
governance-related risks is a critical element of our
assessment of overall ESG risk. Our ESG framework
sets out our commitment to strong leadership
and a robust corporate governance framework
that promotes accountability and ethical business
practice. As with social risk, cross-departmental
working parties will have a key role in defining,
assessing, and managing governance risks in the
short term as we look to incorporate ESG risks into
our overall risk management framework.
www.inlandhomesplc.com
Annual Report and Accounts 2021
49
STRATEGIC REPORT
↑
Dagenham Dock,
Dagenham
Our principal risks CONTINUED
Principal risks
The pandemic had the effect of magnifying the principal risks facing the Group, including those that would threaten our business
model, future performance, solvency or liquidity. The following table outlines our principal risks and sets out how these key risks
are managed:
Risk
Description
Consequences of risk
Existing mitigations and
internal controls
Rating
Change since
last year
A
A major
incident
impacts the
UK
A major incident or
event, such as the
COVID-19 pandemic,
could lead to
national restrictions
which have a
material impact on
the Group
•
Significantly reduced
revenue or no revenue
for a period of time
•
Severe impact on cash
flow
•
Difficulties in meeting
the Group’s liabilities
•
Danger of breaching
banking covenants
•
Significant impact on
staff welfare, health
and well-being
•
Balanced business model
with private housebuilding
and contracting activities
complementing each
other and its land trading
business
•
The Group’s response to
the unforeseen pandemic
has resulted in many
operational changes
to help mitigate the
impacts of potential
future outbreaks, such as
ensuring IT capabilities
to accommodate efficient
home working
•
Maintaining sufficient
headroom within existing
borrowing facilities
High
↑
B
Adverse
economic
conditions
A decline in macro-
economic conditions
in the UK and/
or a downturn in
conditions affecting
the UK residential
housing market,
or a decline in the
propensity of people
to buy homes
•
A fall in the demand
for housing and a
material decline of
both transaction levels
and house prices as a
result of low consumer
confidence impacted
by:
•
higher
unemployment
or fear of
unemployment
•
ongoing economic
uncertainty
•
weak real wage
growth and
reduced disposable
income
•
rising interest rates
•
growing inflation
•
restriction in the
availability of
mortgages
•
business
uncertainty due to
policy changes
•
downward land
and investment
property portfolio
valuation
•
Economic environment
considered before
committing to significant
transactions or events,
such as land purchases and
sales launches
•
Control over land
acquisitions
•
Refined strategic priorities
to maximise market
opportunities
•
Sound financial forecasting
and scenario planning
High
↑
↑ Increased
↑
No change N New risk
Inland Homes plc
Stock code: INL
50
Risk
Description
Consequences of risk
Existing mitigations and
internal controls
Rating
Change since
last year
C
Adverse
Government
policy and
planning
regulations
Potential changes
in Government
policy and its local
implementation,
such as changes
to the planning
system, the tax
regime, housing,
environmental or
building regulations,
or amendment of the
Help to Buy scheme
•
Risk of delay or refused
planning decisions
•
Uncertainty around
design solutions
•
Programmes and
commencements on
site disrupted
•
Increased costs
due to excessive
planning conditions
(CIL and Section
106), increasing
environmental and
other taxes
•
Increased costs due
to more challenging
sustainability targets
and fire and safety
regulations
•
Adverse effect on
revenues, margins and
asset values
•
Failure to comply with
the requisite laws or
regulations may lead
the Group to be fined
and suffer reputational
damage
•
Reduction in sales
resulting from changes
to the Help to Buy
scheme
•
Considerable in-house
technical and planning
expertise available to
address the prevailing
regulations
•
Relationships maintained
with local authorities,
planning officers and local
communities to better
understand underlying
policy and planning
prospects
•
Regularly review prospects
of the strategic land
portfolio, with processes
and appraisals in place to
minimise disruption
•
Focus on acquiring
development sites already
allocated for development
•
Potential impact of
changes in regulations are
communicated throughout
the relevant departments
•
Ensuring a greater
proportion of future product
is within the price range
of the revised Help to Buy
scheme, extended until
spring 2023
High
↑
D
Climate-
related risk
Climate-related
risks are continually
evolving. In the short
term, the risks are
focused on meeting
regulation reporting
requirements
and customer
and shareholder
expectations in
our approach to
sustainability. In
the medium to long
term, the Group
must adapt to the
new ways of working
and changes to the
climate in which we
operate.
•
Reputational damage
as a result of failure to
meet Environmental,
Social and Governance
targets leading to
inability to secure
finance
•
Increased costs
resulting from
implementation of
new technologies
and methods of
construction
•
Reduced supply
availability as a result
of changes in climate
patterns
•
Disruption to build as
a result of extreme
weather events
•
Established a number of
cross-departmental working
parties to oversee the
business response to climate
risk which feed into the newly
formed Governance and Risk
Committee
•
Additional resource allocated
within the business to
develop our approach to
meeting carbon net zero
targets
•
Review of Future Homes
Standard to adapt and plan
for compliance
•
Engaged external consultant
to assist the Group in
understanding the regulatory
and legislative requirements,
and help us develop our
approach to meeting these
Medium/
High
N
www.inlandhomesplc.com
Annual Report and Accounts 2021
51
STRATEGIC REPORT
Risk
Description
Consequences of risk
Existing mitigations and
internal controls
Rating
Change since
last year
E
Inability to
source and
develop
suitable
land at the
appropriate
cost and
quality
An inadequate supply
of suitable land in
the right location,
or the inability
to convert the
unconsented land
portfolio into viable
consented sites, may
frustrate the Group’s
growth
•
Portfolio depletion
– fewer longer-term
sites to replenish
the portfolio at good
margins
•
Impact to in-house
construction arm/self-
build function
•
Operational start dates
delayed on site
•
All potential land
acquisitions are subject to a
robust appraisal process to
ensure viability
•
Highly experienced Land
and Planning teams
employed with strong track
record of securing sites and
planning consents
•
Targeted approach to
land acquisitions through
dedicated Land team
•
Local insight and
established relationships
with agents and vendors
give us a competitive edge
•
Focus on optimising our
existing land bank
Low
↑
F
Access
to site
labour and
materials
Shortage of
materials and
skilled labour
leads to increased
costs and delays in
construction
•
Costs may increase
beyond budget
impacting on
profitability
•
Failure of a key
supplier as a result of
increased costs and
ongoing economic
uncertainty
•
Reduction in build
quality as a result of
lack of skilled labour
and certain build
materials
•
Identification and
rationalisation of key supply
chain partners
•
Strong relationships
developed with key partners
which has improved
service delivery and cost
management
•
Fixed price agreements in
place with suppliers and
subcontractors
•
Key supplier audit
programme to assess risks
to the reliability of supply
continuity
•
Continuous visibility of
build forecast changes
communicated to the
suppliers to ring-fence
stock and mitigate long-
lead materials and lengthy
delays
High
N
Our principal risks CONTINUED
↑ Increased
↑
No change N New risk
Inland Homes plc
Stock code: INL
52
Risk
Description
Consequences of risk
Existing mitigations and
internal controls
Rating
Change since
last year
G
Failure to
effectively
manage
major
projects to
industry
standard
margins
Unforeseen
operational delays
caused by disputes
with third parties,
adverse weather
conditions or lack
of project oversight
could lead to delay,
increased costs or
termination of a
project
•
Increased costs and
reduced margins
•
Reduced quality of
product
•
Health and safety
issues
•
Reputational damage
•
Sites are monitored
as a portfolio by the
Board before any major
acquisitions are made
•
Each site has a detailed
plan prepared, including
costs, labour utilisation
and timing and is managed
by the Group’s Operating
Board and by on-site
management
•
Checks in place to ensure
personnel adhere to
internal controls
•
Regular management and
project team monitoring
•
Ensuring appropriate
insurance is in place
•
Dedicated COVID-19
resource to monitor on site
compliance
Medium/
High
↑
H
Health and
safety
A deterioration in the
Group’s health and
safety measures,
including future
COVID-19 spikes of
variants, put people
at risk
•
Immediate personal
injury or damage to
property
•
Reputational damage
•
Prosecution/
imprisonment/
significant fines
•
Remediation or legal
costs
•
Programme delays
and inability to reach
forecast figures/market
expectation
•
Strong safety culture driven
by Directors and senior staff
•
Experienced health and
safety professionals provide
advice and support, monitor
culture and undertake
regular reviews
•
Health and safety
workshops for all staff
•
Monitoring of COVID-19
situation nationally
Medium/
High
↑
www.inlandhomesplc.com
Annual Report and Accounts 2021
53
STRATEGIC REPORT
Risk
Description
Consequences of risk
Existing mitigations and
internal controls
Rating
Change since
last year
I
People
Inability to attract
and retain high-
calibre employees at
all levels
•
Inability to meet
strategic objectives
•
Pressured workloads
where teams are
under-resourced
•
Over reliance on
consultants and agency
staff
•
Inefficiencies and
delays to operations
resulting in increased
costs could adversely
affect the Group’s
financial results and
prospects
•
Remuneration packages
are regularly benchmarked
against industry standards
to ensure competitiveness
•
Dedicated HR team which
monitors pay structures
and market trends
•
Providing quality training
and professional
development
opportunities, including
through our graduate
and apprenticeship
programmes
•
Development of preferred
supplier list of specialist
recruitment firms
•
Implementation of People
Plan and associated
measurement of KPIs to
ensure we have the support
systems, policies and
practices in place to attract
and retain the right people
Low
↑
J
Solvency
and liquidity
Difficulty in
procuring borrowing
facilities at
competitive rates
and insufficient cash
headroom
•
Liquidity crisis and
inability to meet
ongoing operational
costs and other
commitments
•
Danger of breaching
banking covenants
•
Lack of development
funding limits our
ability to be agile in
response to changes
in the economic
environment and to
future development
opportunities
•
Regular review at Board
level of detailed cash flow
forecasts which are subject
to sensitivity analysis
•
Strong relationships with
financial institutions
through regular
engagement
•
Monitoring our current
facilities to ensure sufficient
headroom to allow us to
take advantage of land
opportunities
•
Realising sales where
capital can be better
deployed elsewhere
High
↑
K
Cyber and
business
continuity
Cyber security
risks such as data
breaches, hacking
and failure of the
Group’s IT security
systems
•
Financial penalties and
sanctions
•
Reputational damage
•
Loss of personal
and/or business
information
•
Outage of IT systems
leading to operational
disruption
•
Phishing attacks and
ransom demands
•
Fraud leading to
financial loss
•
Group has a fully tested
disaster recovery system
that is tested regularly by a
third-party supplier
•
Deep-dive review by a third-
party security specialist
•
Boundary firewall at each
location
•
Email encryption and two-
factor authentication in
place
•
Anti-virus software on all
devices
Medium
↑
Our principal risks CONTINUED
↑ Increased
↑
No change N New risk
Inland Homes plc
Stock code: INL
54
Environmental, Social and Governance (ESG)
Inland Homes has a clear purpose: to
maximise the value in land using its
land, build and planning expertise.
Maximising the value of land goes beyond shareholder
returns. It is about delivering long-lasting social,
environmental and economic value through our activity
for our employees, suppliers and subcontractors, and
the communities in which we operate.
We already have a proud history of adding value
through our land remediation and construction activity,
but we want to do more. Our business has grown and
diversified and so too, therefore, has the impact of our
operations. As a responsible business, and against
the rapidly escalating climate emergency, we want to
embed sustainability within every area of the business
and play our part in tackling climate change.
We have started on this journey this year, putting in
place an Environmental, Social and Governance (ESG)
framework. The framework sets out the scope of our
ambition, with high-level commitments and timelines
for success in each of the three areas. The framework
has supported the business in putting in place the
structures and support systems which will enable us
to roll out our full ESG strategy in the year ahead.
We have aligned our framework to the UN Sustainable
Development Goals (SDGs), identifying four
goals where our ESG activity will make a positive
contribution:
www.inlandhomesplc.com
Annual Report and Accounts 2021
55
STRATEGIC REPORT
↑
Patchworks,
Walthamstow
Promote sustained, inclusive and sustainable
economic growth, full and productive
employment and decent work for all
Make cities and human settlements inclusive,
safe, resilient and sustainable
Ensure sustainable consumption and
production patterns
Protect, restore and promote sustainable
use of terrestrial ecosystems, sustainably
manage forests, combat desertification,
and halt and reverse land degradation and
halt biodiversity loss
Environmental
Our commitment
We will ensure our business activities
protect and enhance the environment
around us
We will ensure that our planning, procurement and
build policies and practices set clear standards for
responsible environmental management and support
us in becoming a carbon net zero business by 2050.
Our responsibilities span throughout the project life
cycle, from land acquisition to after sales care.
SDGs
Link to our corporate values
Lasting
legacy
Stronger
together
Focus area: net zero
By building homes which are more energy efficient,
making changes to how we operate as a business
and implementing lower-carbon technologies, we will
reduce our carbon emissions year-on-year, meeting
the requirements of the Future Homes Standard and
achieving net zero by 2050.
The targets below have been developed in consultation
with an external sustainability consultant who has
assessed our business against others in the industry
and identified where and in what timeframe carbon
reductions can be achieved.
We have received a reduction in our carbon intensity
this year from 0.0078kgCO2e per £1 turnover to
0.0055kgCO2e per £1 turnover. This has been achieved
despite operational activity levels increasing across
sites as COVID-19 public health restrictions eased,
with the move to hybrid working patterns for office-
based staff and greater use of virtual meetings
delivering benefits. We are committed to making year-
on-year improvements, as outlined below.
Objective
Target
Progress
Build homes which are more
energy efficient to reduce
operational carbon
•
Minimum 31% reduction from
2013 Building Regulations
in line with Future Homes
Standard 2021 Part L
•
70% reduction from Group
2021 baseline data by 2030
•
100% reduction from Group
2021 baseline data by 2050
•
All new planning applications
compliant with 2021 changes
to Building Regulations Part
F and L
•
Two partnership housing
schemes under construction
already comply with the 2021
Future Homes Standard Part L
requirements
•
Completed a desktop cost
analysis of energy efficiency
measures that can be
implemented across our
house types to achieve
compliance with 2025
Standard
Use lower-carbon building
materials and manufacturing
methods to reduce embodied
carbon
•
Achieve year-on-year
improvements to reach net
zero by 2050
•
Off-site manufacturing
and Modern Methods of
Construction task force
formed
•
Costing exercise complete and
case study to be implemented
in the year ahead
Become a more energy efficient
business in our daily operations to
reduce on site carbon
•
20% reduction from Group
2021 baseline data by 2025
•
40% reduction from Group
2021 baseline data by 2030
•
100% reduction from Group
2021 baseline data by 2050
•
Contracts entered into to
purchase 100% renewable
energy across our offices and
development sites
•
Hybrid home/office working
policy implemented
Inland Homes plc
Stock code: INL
56
Focus area: biodiversity and conservation
The Environment Bill was passed into law in November 2021, making it law for developments to achieve a
minimum 10% biodiversity net gain (BNG) across developments. With our history of brownfield site remediation,
our projects often already deliver much greater gains.
Objective
Target
Progress
Work with local governments,
wildlife groups, landowners
and other stakeholders to
support their priorities for
nature conservation to enhance
biodiversity both on site and in the
wider community
Deliver 10% BNG at a minimum
Our planning application
submitted this year at Cavalry
Barracks, Hounslow will, if
approved, deliver a 51% BNG
Our approved plans for Hillingdon
Gardens, Hillingdon will achieve
a 26% BNG and a 0.4 Urban
Greening Factor
Habitat units at Patchworks,
Walthamstow will increase by an
estimated 232% as a result of our
activity
Focus area: circular economy
A circular economy is based on the principles of designing out waste and pollution, keeping products and
materials in use and regenerating natural systems.
Objective
Target
Progress
Divert construction waste material
from landfill
Year-on-year improvements to
reach 100% of waste material
diverted from landfill
97% of waste over the reporting
period was diverted from landfill,
with 3,156 tonnes of waste
removed in total and 3,063 tonnes
diverted
Implement lower waste
manufacturing methods across
developments
To be developed
Off-site manufacturing and
Modern Methods of Construction
task force formed to research
feasibility
www.inlandhomesplc.com
Annual Report and Accounts 2021
57
STRATEGIC REPORT
↑
Hillingdon
Gardens,
Hillingdon
Environmental CONTINUED
Statement of carbon emissions
This is our second-year reporting carbon emissions. The report is compliant with UK legislation as set out in the Streamlined Energy
and Carbon Reporting (SECR) and covers energy use and associated greenhouse gas emissions relating to gas, electricity and
transport, intensity ratios and energy efficiency actions.
This reporting period
(Oct 2020–Sep 2021)
Prior reporting period
(Oct 2019–Sep 2020) *
Total electricity use
2,189,607kWh
2,048,864kWh
Total gas use
732,822kWh
330,753kWh
Total transport fuel
496,187kWh
2,131,833kWh
Total energy from other fuels
92,041kWh
Combined with above
Total energy use (all sources)
3,510,657kWh
4,511,450kWh
Total carbon emissions (electricity)
638tCO2e**
478tCO2e
Total carbon emissions (gas)
157tCO2e
61tCO2e
Total carbon emissions (transport fuel)
169tCO2e
517tCO2e
Total carbon emissions (other sources)
29tCO2e
Combined with above
Total carbon emissions
993tCO2e
1,055tCO2e
Total number of staff (average for period)
138 staff
156 staff
Carbon Intensity ratio 1
0.0055kgCO2e per £1 turnover
0.0078kgCO2e per £1 turnover***
Carbon Intensity ratio 2
7,198kgCO2e per member of staff
6,765kgCO2e per member of staff
* All data covering reporting period October 2019 to September 2020 produced and supplied by ECA Business Energy
** Includes 131.8tCO2e Well to Tank WTT and Transmission and Distribution emissions (not included in previous period)
*** Data covering reporting period 1 October 2019 to September 2020 calculated using ECA Business Energy data and turnover supplied by Inland Homes
Carbon and energy efficiency actions
We have implemented the policies below for the purpose
of increasing the business' energy efficiency in the relevant
financial year:
•
Moved to hybrid working for office-based staff
•
Implemented and encouraged use of video conferencing
•
Reduced travel and client visits as a result of the COVID-19
pandemic
•
Signed contracts to purchase 100% green energy
Methodology used in the calculation of disclosures
ESOS methodology (as specified in Complying with the
Energy Savings Opportunity Scheme version 6, published by
the Environment Agency, 21.01.21) used in conjunction with
Government GHG reporting conversion factors.
For carbon only related matters, the SECR methodology as
specified in ‘Environmental reporting guidelines: including
Streamlined Energy and Carbon Reporting and greenhouse
gas reporting’ was used in conjunction with Government GHG
reporting conversion factors:
•
assets.publishing.service.gov.uk/government/uploads/
system/uploads/attachment_data/file/850130/Env-reporting-
guidance_inc_SECR_31March.pdf
SECR methodology notes
1.
SECR methodology as specified in 'Environmental reporting
guidelines: including Streamlined Energy and Carbon
Reporting and greenhouse gas reporting' used in conjunction
with Government GHG reporting conversion factors:
•
assets.publishing.service.gov.uk/government/uploads/
system/uploads/attachment_data/file/850130/Env-
reporting-guidance_inc_SECR_31March.pdf
2.
Intensity ratios calculated using:
Number of staff.
•
Number of employees at beginning of period = 127
•
Number of employees at end of period = 149
•
Average number of staff = 138
Turnover.
•
Turnover £181.7m
3.
The calculations have been approved by a PAS51215
compliant body
4.
Data estimation – none
5.
All data covering reporting period October 2019 to September
2020 produced and supplied by ECA Business Energy
6.
Carbon Intensity ratio 1 for reporting period Oct 2019–Sep
2020 calculated using ECA Business Energy data and
turnover supplied by Inland Homes
Inland Homes plc
Stock code: INL
58
Social
Our commitment
We will deliver long-term social and
economic value through investment in
people and communities
Our investment goes beyond bricks and mortar. We are
committed to meeting the needs of our stakeholders
and adding long-term social and economic value
through what we do. We foster strong partner and
employee relationships, recognising we are stronger
together, to support us in delivering thriving,
sustainable communities which people are proud
to call home.
SDGs
Link to our corporate values
Lasting legacy
Stronger together
Our people are our
greatest asset
Focus area: people and skills
We aspire to build a high-performing team of
empowered individuals who give their best to the
business, their colleagues and our communities. We
know our people are our greatest asset and we want
to ensure we have the support structures, systems,
policies and procedures in place to enable them
to succeed.
To do this, we are developing our People Plan. We have
identified five key objectives within this people strategy
and in the year ahead we will implement activities and
Key Performance Indicators (KPIs) to measure our
performance in each area.
Focus area: equality and inclusion
Embracing equality and diversity is a cornerstone
of good business – it allows us to draw on the wide
range of skills and talents available so that we can
be innovative and creative as a business. Everyone,
regardless of their colour, race, religion or belief,
whether they are pregnant or on maternity leave,
gender, gender reassignment, marital or civil
partnership status, sexual orientation, disability or
age will be treated with fairness, honesty, respect
and dignity.
Everyone working for, or with, us is responsible for
helping us achieve these commitments so that we
have a positive and happy working environment,
where people are treated with dignity and respect, and
where individual differences and the contributions of
everyone is recognised and valued.
We updated our Diversity and Equality Policy this year
and in the year ahead will focus on ensuring all our
employment practices are in line with our diversity
and equality principles. This work will form part of
our People Plan.
The year in summary
Our workforce
As at
30 September 2021
Number of employees
149
Gender diversity
69% male
31% female
Average length of
service
2.8 years
Number of apprentices
in role
10
Our workforce
As at
30 September 2020
Number of employees
128
Gender diversity
67% male
33% female
Average length of
service
3.16 years
Number of apprentices
in role
7
Our People Plan objectives
Attract and select
Recruit and select people
with the knowledge, skills and
attitude to make our business a
success
Empower and engage
Our people are supported to do
a great job and feel passionate
about our business
Policies and procedures
Develop policies and procedures
that support the business and
our people to reflect compliance
and best practice
Value and reward
Our pay and reward reflects
business success, is competitive
and drives exceptional personal
performance
Develop and succeed
Our people are encouraged to
drive their own development and
are given the opportunity to grow
www.inlandhomesplc.com
Annual Report and Accounts 2021
59
STRATEGIC REPORT
Social CONTINUED
Oct 20
Nov 20
Dec 20
Jan 21
Feb 21
Mar 21
Apr 21
May 21
Jun 21
Jul 21
Aug 21
Sep 21
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Leavers in month (resignations & retirements)
Staff turnover year to date % (rolling 12-month period. Resignations & retirements)
14
12
10
8
6
4
2
0
Oct 20
Dec 20
Feb 21
Apr 21
Jun 21
Aug 21
170
160
150
140
130
120
110
100
No. staff
Linear (No staff)
Staff turnover – 12-month rolling period
Number of staff – 12-month rolling period
Workforce breakdown as at 30 September 2021
Oct 20
Nov 20
Dec 20
Jan 21
Feb 21
Mar 21
Apr 21
May 21
Jun 21
Jul 21
Aug 21
Sep 21
0
5
10
15
20
25
30
0
2
0
2
0
17
22
8
8
8
7
11
Number of training days – 12-month rolling period
Commercial and
Procurement
Construction
Technical
Pre-construction
Customer Service
New Business
Land and Planning
Sales and Marketing
Finance
Board, BTR and
Corporate Services
0
5
10
15
20
25
30
17%
31%
9%
3%
6%
1%
9%
9%
8%
7%
35
Inland Homes plc
Stock code: INL
60
↑
Chapel Riverside,
Southampton
Focus area: communities
A new community is more than just new houses. Our commitment to placemaking ensures we add long-term
social and economic value to the lives of those in the communities in which we operate.
Objective
Performance
Priorities for the year ahead
Actively engage with stakeholders,
including local authorities,
property owners, businesses,
schools and residents’
associations to ensure their
aspirations for a project are heard,
understood and help shape our
plans
•
Engagement with resident
groups, Chiltern Society
and local authority led to
amended planning application
at Glynswood, with building
height reduced and a more
landscape-led design
•
Active members of the
Broxbourne and Hounslow
Chambers of Commerce
•
Presented and exhibited at
the Hounslow Chamber of
Conference Regeneration and
Recovery forum
•
Ongoing stakeholder
engagement a core function
of the business in shaping
project plans
Invest in parks and public open
spaces, education and community
buildings and roads and other
infrastructure to add long-term
value
•
Contributed £1.4m via Section
106, legal agreements and CIL
payments (2020: £1.4m)
•
Complete the ‘missing link’
of the A355 Relief Road and
(subject to approval) deliver
a new community hub, café,
purpose-built premises for a
nursery and nearly five acres
of parkland at Wilton Park,
Beaconsfield
Be active members of the
communities in which we operate
•
Participated in and sponsored
numerous community events
and charities including
community fairs, local sporting
groups and charity fundraisers
•
Engaged two apprentices
within our Cheshunt Lakeside
development
•
Finalise and implement a
calendar of community events
at Cavalry Barracks, Hounslow
as part of our commitment
to opening up the site for
community benefit
•
Implement a Community
Investment Programme to
formalise our sponsorship and
partnership activity
•
Engage an additional resource
to support our community
engagement activity
Be responsible members of the
communities in which we operate
•
Achieved an average
Considerate Constructors
Scheme score of 41/50,
with all schemes receiving
a rating of 7 (Very Good) or
higher against each of the
five assessment criteria –
appearance, community,
environment, safety and
workforce
•
Core part of our business
operations
www.inlandhomesplc.com
Annual Report and Accounts 2021
61
STRATEGIC REPORT
Social CONTINUED
Focus: support housing need by delivering homes across a range of tenures
We work with partners and through our subsidiaries Rosewood Housing and Hugg Homes to offer homes in a
range of tenures and across all affordability levels.
We have built collaborative and strong partnerships to date with Clarion Housing Group, A2 Dominion, Newlon
Housing Trust, Sigma Capital Group, PGIM, Homes England, B3Living, Bournemouth, Christchurch and Poole
Council, and Kooky, building homes for both affordable and private rent.
Our subsidiary, Rosewood Housing, is a registered provider of affordable housing, offering homes for both shared
ownership and affordable rent. Hugg Homes supports local authorities in meeting crisis accommodation need,
providing high-quality, modular accommodation on land within our portfolio where construction is yet to begin.
Objective
Performance
Priorities for the year ahead
Maintain our commitment to
delivering homes for private sale
which are of exceptional quality
and at a price point that is within
reach of our target first-time
buyer market
•
Average selling price of
£262,000 (2020: £240,000)
•
45% customers (excluding
joint ventures) bought using
Help to Buy
•
Meet buyer demand by
delivering more houses than
apartments
Support local authorities in
meeting short-term housing need
through our subsidiary Hugg
Homes
•
54 Hugg Homes tenanted
•
Resolution to grant planning
permission for 48 units at
Cheshunt Lakeside, Cheshunt
•
Sign lease with Broxbourne
Borough Council for the 48
units
Deliver affordable homes through
our subsidiary Rosewood Housing
•
26 homes added to
Rosewood’s portfolio at Phase
1, Wilton Park, Beaconsfield
(21 shared ownership, 5
affordable rent) in December
2021
•
Nine shared ownership
homes launched to market at
Randalls, Uxbridge
•
Complete construction of
the homes at Wilton Park,
Beaconsfield
Support the delivery of affordable
and private rental homes by
working in partnership with local
authorities, affordable housing
providers and Build to Rent
operators
•
£164.7m partnership housing
forward order book (30
September 2020: £105.8m)
•
1,257 partnership homes
under construction across
six sites (30 September 2020:
1,302)
•
Complete construction at
Church Road, Ashford, Afrex
House, Alperton and Randalls,
Uxbridge
Inland Homes plc
Stock code: INL
62
Governance
Our commitment
We will act responsibly and lead by
example
Strong leadership and commitment from the
Board, together with a robust corporate governance
framework, promotes accountability and ethical
business practice across all activities. We will make
no compromises on safety as we focus on achieving
our objectives. These values and behaviours extend to
dealings with our supply chain and partnerships.
SDGs
Link to our corporate values
Safety
first
Our people are
our greatest
asset
Focus area: strong governance structure
In recognition of the importance and breadth of ESG
matters, and in line with our commitment to embed
sustainability within all areas of the business, we have
established a Governance and Risk Committee with
delegated authority to oversee delivery in the short
term. The Board recognises that as work in this area
develops, a separate committee focused solely on this
area may be needed and will review this need in the
year ahead. An ESG management group and cross-
departmental working parties are responsible for
developing the strategy and its implementation.
Focus area: health and safety
Making no compromises on safety is one of our
key values. The safety culture is driven by strong
leadership from the top down. Each employee is
empowered to intervene to reduce risk and prevent
injury or harm.
We seek to recruit the best-quality staff with a wealth
of experience from across the residential construction
sector and this is reflected in the standards on site.
We also hold a strong belief in investment in people,
promoting individuals and providing support for their
career progression.
Objective
Performance
Priorities for the year ahead
Make no compromises on safety
•
60% reduction in total
accidents compared to the
previous reporting year
•
Accident Frequency Rate
of 0.16
•
Implemented a robust home-
working and hybrid-working
policy to ensure staff can
be flexible in their working
arrangements, while providing
the appropriate health and
safety support
•
Reinstate our annual safety
conferences in early 2022.
These conferences reinforce
safety messages and enable
staff to test and challenge
current working procedures,
embrace new technology
and be at the centre of the
decision-making process for
future improvements.
www.inlandhomesplc.com
Annual Report and Accounts 2021
63
STRATEGIC REPORT
Governance CONTINUED
Focus area: ethical standards and values
Our commitment is to lead by example, ensuring that we set ethical business practices that extend to our
dealings with our supply chain and subcontractors. These practices are subject to ongoing review to ensure best
practice across our operations.
Objective
Performance
Priorities for the year ahead
Ensure a zero-tolerance approach
to modern slavery, both in our
business operations and across
our supply chain
•
Formalised our process for
ensuring subcontractors
are not engaged with
modern slavery or labour
exploitation practices. The
process is documented within
the Standard Operating
Procedures which forms part
of the Quality Management
System (QMS) process. It
allows us to understand our
supply chain, where it sources
its labour from and how that
labour is treated
•
Heat-mapping exercise
underway to trace where
the products we install are
sourced from and identify if
any of those products trace
back to known modern slavery
hot spots
•
Agreement signed with
Construction Line who
will provide us with access
to their subcontractor
verification platform. With the
changes to our procurement
process through the QMS,
approximately 90% of our
subcontractors will be
members of Construction
Line.
•
Implement the agreement with
Construction Line to roll-out
the subcontractor verification
process and extend this to
members of our supply chain
over the year ahead
•
Roll-out a modern slavery
awareness package to staff.
This includes training, visual
awareness (digital and on
site), induction package
and Construction Skills
Certification Scheme (CSCS)
card check, and ongoing
monitoring.
•
Finalise and implement a
formal process to confirm
labour agencies we work with
have formal processes in place
to combat modern slavery and
labour exploitation
.
Inland Homes plc
Stock code: INL
64
↑
Dagenham Dock,
Dagenham
Section 172 reporting
HOW THE BOARD COMPLIED WITH ITS SECTION 172 DUTY
The Board recognises that the long-term success of the business is dependent on maintaining
relationships with our key stakeholders and having consideration for the external impact of the
Company’s activities. The table below identifies our key stakeholders, how we engage and how
their views have shaped our decision-making. Further details about our standards of business
conduct, including our values, can be found on page 59.
Customers
Why they are important
We know that customers’ needs are changing.
It is vital that we engage with our customers to
ensure we grow our business in a way that meets
their needs now and into the future.
We know that high levels of customer
satisfaction will enhance the reputation of our
business and the Inland brand, increasing the
likelihood of third-party endorsements and
repeat customers.
Stakeholder priorities
•
High-quality, affordably
priced homes delivered
on time
•
Excellent customer service
and after care
•
Placemaking, design and
community infrastructure
How we engage
Through advertising campaigns,
and via our dedicated and
professional Sales and
Customer Service teams. We
also hold ‘meet the builder’
sessions and homebuyer
demonstrations.
Our on-site community
engagement events are also
important to our customers.
What we have done
•
Invested in our customer
relations teams
•
Offered a key worker
discount
•
Supported homebuyers in
the home buying search by
offering virtual tours
Communities and the
environment
Why they are important
Working alongside communities helps us better
understand the likely consequences of our
decisions in the long term, ensuring we build
communities which will thrive.
We know we have a part to play in reducing
the negative impact of climate change, whilst
providing sustainable, affordably priced homes
and communities where people are proud to live.
We place a great deal of importance on public
and stakeholder engagement and the critical
need to allow local communities the ability to
view and comment on development proposals.
We believe the importance of considering
feedback, addressing issues and providing
clarification prior to an application being
submitted greatly improves the quality of a
planning application and process.
Stakeholder priorities
•
Opportunities to engage and
influence
•
Investment in parks and
public open spaces, with
increased biodiversity
•
Investment in infrastructure,
schools and health facilities
•
Leaving a lasting legacy
How we engage
We engage with local
communities via a number
of methods, including social
media, local media campaigns,
community engagement events,
freephone and direct link to
project teams.
We work with schools, colleges
and universities to raise
aspirations, increase awareness
of construction and develop the
talent of the next generation.
What we have done
•
Contributed £1.4m
via Section 106, legal
agreements and Community
Infrastructure Levy
payments
•
Achieved an average 41/50
Considerate Constructors
Scheme score
www.inlandhomesplc.com
Annual Report and Accounts 2021
65
STRATEGIC REPORT
Investors and lenders
Why they are important
We have a clear responsibility to engage with
shareholders as the owners of our business, as
well as appealing to new shareholders.
We understand the importance of maintaining
long-term relationships with investors and key
banks to ensure the flow of short, medium and
long-term funding.
Stakeholder priorities
•
Long-term, sustainable
income and capital growth
•
Robust governance
•
Debt reduction
•
Risk management
How we engage
Shareholder engagement is the
responsibility of the Chairman
and Executive Directors.
They maintain and develop
relationships with institutional
investors, prospective investors
and analysts through a
programme of face-to-face
meetings, roadshows and direct
calls.
The Annual General Meeting
provides an important
opportunity for our
shareholders to participate in
the governance of the Company
and for the Board to engage and
communicate with private and
institutional investors through
the Q&A session held after the
formal meeting.
What we have done
•
The views of analysts and
major investors are fed back
to the Board on a regular
basis, especially following
roadshows, and this feeds
into discussions on future
strategy
•
In advance of establishing
new incentive plans
for Executives, the
Remuneration Committee
Chairman writes to, and
consults with, major
shareholders on proposals
regarding Executive
remuneration
Employees
Why they are important
Our employees are our greatest asset and it is
their experience and expertise that gives us a
competitive edge. We are committed to creating
a culture where all our employees can give their
best. It ensures we retain and develop their
exceptional talent.
With the world changing quickly as a result of the
pandemic, our employees have told us they want
to feel informed and connected, share successes
and have access to information wherever they
are working. Supporting their well-being is more
important than ever.
Stakeholder priorities
•
Understanding the direction
and strategy of the business
•
Having the right
opportunities to grow
and develop
•
Interesting and challenging
work
•
Feeling valued and
recognised
How we engage
We encourage open and
constructive discussions
throughout the business. We
engage with our employees in
many ways, including through
an employee engagement
survey, intranet, team meetings,
messages from the CEO,
newsletters and regular
business updates from the
Executive team.
What we have done
•
Introduced a hybrid office/
home working policy
•
Developing a People
Strategy
•
Formed a cross-
departmental ESG
working party with a remit
that includes workforce
engagement and diversity
and inclusion
Section 172 reporting CONTINUED
Inland Homes plc
Stock code: INL
66
Government and regulators
Why they are important
We understand the importance of fostering
relationships with Government and regulators
to ensure policies are developed in the best
interest of our customers, our business and the
sector in which we operate.
Stakeholder priorities
•
Communication
•
Clear sustainability and
environmental policies
•
Increasing the number of
homes and fast housing
delivery
How we engage
We have ongoing engagement
with planning authorities on
a number of projects. This
involves regular contact with
local government, highways
agencies and education
departments. Our onsite teams
also work closely with other
regulators, such as HMRC and
HSE.
What we have done
•
Contributed at a policy level
to proposed reforms to the
planning system
•
Developed our ESG
framework
•
Active members of trade
associations including the
House Builders Federation
and Land Promoters and
Developers Federation
•
Participated in industry
forums and events
Suppliers and subcontractors
Why they are important
We know that we are ‘stronger together’ and
because of this, we invest in our integrated
supply chain.
Our collaborative approach ensures all parties
have a shared long-term objective to working
together, reducing risk, maintaining high
standards of business conduct and delivering to
time and cost.
We recognise the importance of two-way
communication and through sharing our
expertise, we know that we improve working
practices, business conduct and our health and
safety procedures.
Stakeholder priorities
•
Visibility of future projects
and workload
•
Sharing risk and rewards
•
Operational efficiency
•
Timely payment
•
Projects delivered safely
and on time
•
Financial target
How we engage
Our engagement with suppliers
and subcontractors is
continuous. We have a formal
programme of engagement,
but we believe effective
communication comes from
informal dialogue that takes
place on a day-to-day basis
between our teams.
This keeps our subcontractors
and supply chain up to date
in respect of any changes
to our working practices as
appropriate.
What we have done
•
Introduced project
framework plans to ensure
visibility of project pipeline
•
Standardised build type and
fit-out
•
Supported open dialogue
at tender stage around
workload and resource to
ensure continuity of work
and success of projects
•
Held regular meetings
to discuss supplier
performance and areas
for improvement and
introduced Key Performance
Indicators to assist
•
Managed cost inflation
by fostering robust,
volume-based long-term
agreements with supply
chain partners
www.inlandhomesplc.com
Annual Report and Accounts 2021
67
STRATEGIC REPORT
Section 172 reporting CONTINUED
Inland Homes plc
Stock code: INL
68
Key strategic decisions during the year and consideration of the impact on stakeholders
During the year, the Board was closely involved in all key decisions of the Company, providing rigorous evaluation, risk management
and challenge to maintain strong governance.
In accordance with Section 172 of the Companies Act 2006, the Board considers the likely consequences of our strategy and long-
term decisions, taking into account the interests of our key stakeholders. This can be demonstrated in our business model on pages
30–31, through our approach to sustainability on pages 55–64 and throughout our strategic priorities on pages 20–23.
The table below provides a summary of some of the key strategic decisions taken by the Board in order to support the ongoing
success of the Group, whilst considering the interests of our stakeholders.
KEY BOARD DECISIONS AND CONSIDERATIONS
Board Governance
arrangements
▼
Governance and Risk Committee
The Board keeps under continuous review the structure of its Board and Committees to ensure they remain
fit-for-purpose and appropriate for the Group’s strategic growth aspirations. The Board recognises that
effective risk management and internal controls are critical elements in ensuring the ongoing success
of the Group and the decision was taken to establish a separate committee with delegated authority for
oversight of governance and risk arrangements. Further information on risk management can be found on
pages 46–54. Further details about the Governance and Risk Committee can be found on page 76.
ESG framework
Maximising the value of land goes beyond shareholder returns. It is about delivering long-lasting social,
environmental and economic value through our activity for our employees, suppliers and subcontractors,
and the communities in which we operate. We have started on this journey this year, putting in place
an Environmental, Social and Governance (ESG) framework. The framework sets out the scope of our
ambition, with high-level commitments and timelines for success in each of the three areas. More detail
can be found on pages 55–64.
Delivering on
key strategic
objectives
▼
Focus on a reduction in the Group’s net debt position
The reduction of net debt has been a priority and the Group has achieved a 20.3% reduction. This year-on-
year reduction has been driven by the sale of residential plots, private home sales predominantly from our
large, flatted developments and the first sales of the existing residential properties at Wilton Park, formerly
occupied by Ministry of Defence service personnel.
Submission of major brownfield planning applications
Whilst the general economic outlook remains uncertain, there is a fundamental shortage of high-quality,
affordably priced housing across the UK, and particularly in the South and South East of England. Further
details on our land portfolio can be found on pages 6–7.
Growth of our asset management division
Our asset management activity enables the Group to earn substantial fees generally with a significantly
reduced capital investment and working capital requirement. Growing this area of business is a focus for
the Group. Further details can be found on pages 40–41.
Focus on growing partnership housing activity
This year we have seen a substantial increase in the Group’s partnership housing contract income, driven
by the demand from affordable housing providers and Build to Rent operators. The opportunities we pursue
support the Government’s efforts to increase affordable housing and create wider economic activity. We
recognise that we have a part to play in building sustainable communities and our planning submissions
reflect this and include new schools, enhanced public realm and community facilities.
Working arrangements and supporting staff through the challenges of COVID-19
The Board took the decision to move to hybrid working as the default working arrangements for most roles
usually based at Head Office. Our Hybrid and Home Working Policy was rolled out over the summer of
2021, with additional guidance provided to managers to support the move away from managing an office-
based team. Our pulse survey demonstrated that the majority of staff were supportive of the new working
arrangements, but we recognise that working away from an office environment could impact on well-
being for some. Tips and guidance were shared with all staff on how best to maintain a work-life balance
under the new arrangements, with a reminder of the support on offer through the Employee Assistance
Programme, via our Mental Health First Aiders and more generally within the sector.
This Strategic Report was approved by the Board on 31 January 2022 and signed on its behalf by:
Stephen Wicks
Chief Executive Officer
Governance
Board of Directors
70
Corporate governance statement
72
Governance and risk committee
report
76
Audit committee report
77
Remuneration committee report
78
Directors’ report
83
www.inlandhomesplc.com
69
Inland Homes plc
Stock code: INL
70
Board of Directors
A
R
N
I
Key strengths and experience
•
Capital markets and financial expertise
•
More than 30 years' experience in investment banking and
providing corporate and broking advice
Simon is a chartered accountant with extensive experience in
investment banking and providing corporate finance and broking
advice to growing companies. He has worked for a number of
the world’s largest banks and has wide-ranging experience of
both the international debt and equity markets. He was Head
of Corporate Finance and Head of mid and small caps teams at
Credit Lyonnais Securities (now Credit Agricole), as well as head
of Corporate Broking at Fairfax IS plc and Sanlam Securities.
Other current appointments
Simon established Incremental Capital LLP in 2004 to provide
corporate finance advice to mid and small cap companies. In
addition, Simon is a partner at Glenmill Partners, which provides
impartial advice to entrepreneurs and growing companies. Simon
is Chairman of Drumz plc, the AIM-listed technology investment
company and is a Non-executive Director of Kwalee Ltd, the
developer and publisher of games for digital distribution.
Key strengths and experience
•
Extensive in-depth knowledge and understanding of the
housebuilding and residential sectors
•
Considerable knowledge of running large commercial,
property and land businesses
Stephen 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. He
was the founding shareholder and Chief Executive of Country
and Metropolitan plc, which floated on the main market of the
London Stock Exchange in 1999, with a market capitalisation of
£6.9m, until its disposal in 2005 to Gladedale Holdings plc for
approximately £72m.
Other current appointments
None.
Stephen Wicks
Chief Executive
Officer
Appointment to
the Board
2005
Simon Bennett
Non-executive
Chairman
Appointment to
the Board
2007
Key strengths and experience
•
Strong financial background with extensive property
experience
•
Considerable knowledge of running large commercial,
property and land businesses
Nish is a chartered accountant and has more than 25 years’
experience in the property sector. He has broad professional
knowledge and understanding of both listed and unlisted
companies. He was Finance Director and Company Secretary of
Country and Metropolitan plc, which floated on the main market
of the London Stock Exchange in 1999, until its disposal in 2005
to Gladedale Holdings plc.
Other current appointments
Non-executive Director at Drumz plc and Troy Homes Ltd.
Key strengths and experience
•
Extensive knowledge of the housing sector
•
Strategic leader with a track record of managing and
supervising multidisciplinary executive teams
Gary brings considerable experience to the Board, having
worked in the housing sector for over 30 years. He joined the
Group in February 2016 and was appointed to the Board in May
2018. Previously, he was Director of Operations at Wilmott Dixon
Housing and Production Director at George Wimpey (now part of
Taylor Wimpey plc).
Other current appointments
None.
Nish Malde
Group Finance
Director
Appointment to
the Board
2005
Gary Skinner
Group Managing
Director
Appointment to
the Board
2018
www.inlandhomesplc.com
Annual Report and Accounts 2021
71
GOVERNANCE
Committee membership A Audit Committee R Remuneration Committee N Nomination Committee I Independent
Key strengths and experience
•
Experienced CEO and Non-executive Director with a proven
track record of delivering exceptional shareholder return
•
Significant commercial experience gained in the retail sector
Carol is a former plc CEO with more than 35 years' experience
in the fashion industry. She has extensive knowledge of design,
manufacturing and supply to a wide-range of well known
retailers. During her career, Carol has led a MBO on heritage
menswear brand Wolsey, subsequently selling it to Matalan plc,
delivering exceptional shareholder value.
More recently, Carol was a Non-executive Director of Mattioli
Woods plc and during her seven years on the Board, she advised
on multiple acquisitions, as well as rapid growth strategies. She
continues to work with the Senior Executive team as a mentor.
Other current appointments
Chairman of Wotter Group Ltd, an app that helps businesses
understand the engagement and well-being of their employees
to reduce poor morale and Executive burn-out.
Key strengths and experience
•
Solid knowledge of the sector and an experienced Non-
executive Director
•
Extensive experience of leading and working in large
organisations
Brian brings a wealth of sector expertise, having held senior
management and Non-executive positions within the housing,
social care and commercial sectors. He was Chief Executive at
CityWest Homes, Moat Homes Ltd and at Metropolitan Housing
Trust. In addition, Brian was previously a Non-executive Director
at North Essex Partnership NHS Foundation Trust.
Other current appointments
Chief Executive Officer of the Maritime and Coastguards Agency
since October 2018.
Carol Duncumb
Non-executive
Director
Appointment to
the Board
2021
Brian Johnson
Non-executive
Director
Appointment to
the Board
2018
Kat has held several roles within the public and private sector
and before joining Inland Homes worked for 12 years as Group
Company Secretary to a large housing association based in
London. A Chartered Secretary, Kat is responsible for advising
the Board on governance matters.
0–10 years 10+ years
2
4
Independent Non-independent
3
3
Investment management
Leadership and values
Strategy
Construction
Property
2
3
5
6
6
BOARD BALANCE
Kat Worth
Group Company
Secretary
A
R
N
I
A
R
N
I
Inland Homes plc
Stock code: INL
72
Corporate governance statement
Simon Bennett
Non-executive
Chairman
The Board’s primary objective has been to
navigate the business through this time of
uncertainty, ensuring that we emerge in a
strong position, having continued to drive
forward with our strategy.”
An introduction from our Chairman
The Board’s primary objective has been to navigate the
business through this time of uncertainty, ensuring
that we emerge in a strong position, having continued
to drive forward with our strategy. I am therefore
pleased to report that it has been a year of tangible
progress in the delivery of Inland Homes’ strategic
objectives.
The Board recognises the value and importance of
good corporate governance and continues to adopt
the QCA Corporate Governance Code (the Code) as its
chosen governance code. In this section of the Report
and Accounts, we set out our governance framework
and describe the work we have done to ensure high
standards of corporate governance throughout
Inland Homes plc and its subsidiaries.
Culture
The Board is responsible for setting the Company’s
culture and for defining and demonstrating the
Company’s values and behaviours from the top. We
know that culture is established by leadership and
by example, but this also needs to be underpinned by
clear policies and codes of conduct which ensure that
our obligations to shareholders and other stakeholders
are clearly understood and met.
The Board is led in these respects by the Chairman,
who ensures the Board operates correctly, setting its
own culture and, by extension, that of the Company in
its operations and its dealings.
A balanced Board
We saw a number of changes to our Board during
the year, with Terry Roydon stepping down as Non-
executive Chairman in March 2021. We welcomed
Carol Duncumb to the Board as a Non-executive
Director during the year. Carol brings with her a
wealth of experience as a former CEO and a seasoned
Non-executive Director. We look forward to working
with Carol in the years ahead.
We recognise the importance of having a Board with
the necessary mix of skills, experience and personal
qualities to deliver the strategy of the Company for the
benefit of the shareholders and the wider stakeholder
community. Appointments to the Board are therefore
based on merit and judged against objective criteria.
Our Board members have high-ethical values and
demonstrate strong leadership qualities. We have a
strong mix of knowledge and experience relevant to
our business, including finance sector, public markets,
investor relations and property. Further details about
our Directors can be found on pages 70-71.
The Board has continued to comprise of six directors:
a Non-executive Chairman, two further Non-executive
Directors and three Executive Directors.
In line with the Code, the Board considers that all
Non-executive Directors remain independent. The
independence of our Non-executive Directors is
reviewed to confirm they remain independent from
executive management and free from any business or
other relationship which could materially interfere with
the exercise of their judgment.
How the Board operates
The Board is collectively responsible for the Group’s
strategy and its overall management. Through
entrepreneurial leadership and a flexible business
model, the Board is able to promote long-term growth
and value for shareholders. The Strategic Report on
pages 13-68 summarises how the Board achieves this.
The Executive Directors are responsible for business
operations and for ensuring that the necessary
resources are in place to carry out the Group’s
strategic aims. The Non-executive Directors provide
an independent view of the Group’s business,
constructively challenging management and helping
to develop and inform strategy. The Board as a whole
is responsible for reviewing key strategic issues
and decisions. Performance is monitored through
evaluation of financial information and monitoring the
return on strategic investments.
As Chairman, and with the support of the Group
Company Secretary, I have responsibility for ensuring
that Directors receive accurate, timely and clear
information. Directors are aware of their right to
have any concerns recorded in the Board meeting
minutes. The Group Company Secretary ensures that
all Directors are kept abreast of changes in relevant
legislation and regulations, with the assistance of the
Group’s advisers where appropriate.
ROLES AND RESPONSIBILITIES
There is a clear division of responsibility between the individual roles and responsibilities.
Chairman
I am ultimately responsible for leadership of the
Board and ensuring its effectiveness in all aspects
of its role. Setting the Board’s agenda, ensuring
the flow of timely information and facilitating
effective contribution for all Directors is a key
aspect of the role.
Chief Executive Officer
Stephen is one of the founders of the business and
is responsible for the leadership of the Group. He
manages overall performance of the business and
takes responsibility for executing the strategy. He
develops the roadmap for where we want to be and
ensures stakeholders and staff members are on
the same journey.
Group Finance Director
As one of the founders of the business, Nish
works alongside Stephen and Gary to drive
the business forward. Nish is responsible for
establishing a financial strategy that aligns with
the Group’s strategic priorities and ensures the
Board is kept informed of the financial health of
the business. He provides overall leadership and
direction to the finance department, ensuring
sound financial management and a robust system
of financial controls. Nish is also instrumental
in engaging with key stakeholders, including
shareholders, banks and future investors.
Group Managing Director
Gary takes overall responsibility for the operations
of the Group, overseeing the delivery of our
in-house build capability for both private and
partnership schemes. His clear leadership
sets the standard for the homes we deliver
and the values we live, to employees, suppliers
and subcontractors. His role is instrumental in
delivering cost efficiencies within the business.
Senior Independent Director
Brian’s role is to provide support to the Chairman
and act as a trusted intermediary for other
Directors. He is also available to act as an
intermediary for other Non-executive Directors
when necessary and to lead the Non-executive
Directors in the oversight of the Chairman.
Group Company Secretary
Kat’s role is to support the Board in meeting its
responsibilities and individual Director’s duties.
Kat keeps under review legislative and governance
developments that may impact on the Group and
ensures the Board is appropriately briefed on
them. She supports the Chairman in ensuring
there is an effective corporate governance
framework in place to support the business.
Non-executive Directors
As Non-executive Directors, Carol, Simon and Brian provide an independent view of the Company. They
work with the Executive Directors to develop strategy and provide informed, impartial advice through broad
experience and specialist knowledge.
www.inlandhomesplc.com
Annual Report and Accounts 2021
73
GOVERNANCE
Matters reserved for the Board
Whilst the Board delegates some activity to its
subcommittees, final approval sits with the Board on
certain matters. These include:
•
Strategy and business plans
•
Major acquisitions and disposals
•
Changes in share capital and dividends
•
Board membership and Committees and
delegation of authority
•
Remuneration and employment benefits (for the
Executive Directors)
•
Corporate statutory reporting
•
Appointment of auditors
•
Major capital and revenue commitments
•
Corporate governance, policy approval, internal
control and risk management
Details of the key decisions taken by the Board can be
found in the S172 Statement on page 68.
The Board has ultimate responsibility for the Group’s
system of internal control, but responsibility for
monitoring and ensuring the ongoing effectiveness of
this framework is delegated to the Governance and
Risk Committee. Further details can be found on page
76. The principal risks faced by the business are set
out on pages 46–54.
Inland Homes plc
Stock code: INL
74
Corporate governance statement CONTINUED
Subcommittees
The Board has delegated specific responsibilities to
the Audit, Governance and Risk, Remuneration and
Nominations Committee.
Each committee has written terms of reference setting
out its duties, authority and reporting responsibilities.
These terms of reference are kept under review
to ensure they remain appropriate and reflect any
changes in legislation, regulation or best practice.
Details of the Governance and Risk, Audit and
Remuneration Committees can be found on pages
76–82.
The Nominations Committee meets as required and
is chaired by Brian Johnson. Its other members are
Simon Bennett and Carol Duncumb. The Committee is
responsible for identifying and nominating candidates
for Board vacancies, as and when they arise, for
approval by the Board. Before any appointment is
made by the Board, the Committee evaluates the
balance of skills, knowledge, experience and diversity
on the Board and, in the light of this evaluation,
prepares a description of the role and capabilities
required for a particular appointment and the time
commitment expected.
The Nominations Committee undertook a detailed
recruitment process with support from advisors
Tyzac Partners during the early part of the financial
year, which resulted in Carol joining the Board in
March 2021.
Board meetings
The Board scheduled six formal meetings during
the year. A number of other shorter Board meetings
were held between formal meetings in order to
discuss specific issues. Attendance of these shorter
meetings has not been included in the table below.
In particular, the focus of these meetings was the
developing COVID-19 situation. The Board met in order
to assess and respond to the uncertainty, challenges
and opportunities which the pandemic created for
the business. Whilst Board and Committee meetings
provide time for debate and decision making, informal
communication channels also operate to ensure open
dialogue and information sharing with the Non-
executive Directors and the Executive team between
meetings.
Although not formally members of the Board
committees, Nish Malde, Stephen Wicks and Gary
Skinner are invited to attend as and when required.
Attendance has been included in the table below.
All Non-executive Directors are invited to attend
Committee meetings for those Committees they do
not sit on. Attendance has not been included in the
table below.
Name of Director
Independent
No. of
Board
meetings
attended
No. of
Remuneration
Committee
meetings
attended
No. of
Audit
Committee
meetings
attended
No. of
Governance
and Risk
Committee
meetings
attended
No. of
Nominations
Committee
meetings
attended
Terry Roydon
(resigned 08 March 2021)
Yes
4/4
n/a
3/3
n/a
1/1
Simon Bennett
Yes
10/10
1/1
4/4
1/1
1/1
Brian Johnson
Yes
10/10
1/1
4/4
1/1
1/1
Carol Duncumb
(joined 08 March 2021)
Yes
5/6
1/1
2/2
0/1
n/a
Stephen Wicks
No
8/10
n/a
3/4
n/a
n/a
Nish Malde
No
10/10
n/a
4/4
1/1
n/a
Gary Skinner
No
10/10
n/a
n/a
1/1
n/a
Directors are expected to attend all meetings of the
Board and committees and the Board is satisfied
that all Directors are able to allocate sufficient time
to the Company to discharge their responsibilities
effectively. In the event that Directors are unable to
attend a meeting, their comments on the business
of the meeting will be discussed in advance with the
Chairman so that their contribution can be included in
the wider Board discussion.
Board induction
The importance of induction and training is recognised
by the Board and the Company has established
procedures whereby all newly appointed Directors,
including Independent Non-executive Directors,
receive a formal induction. Our approach is tailored to
existing knowledge and experience as a Director and
may include training and continuing familiarisation
with the Company’s business, strategy, operations
systems, the principles underlying their duties as a
Director, and wider issues relating to the sector we
operate in. For newly appointed Independent Non-
executive Directors, this induction also includes visits
to our key sites and meeting with key members of the
senior management teams and external advisers.
By way of example, Carol’s induction process focused
on the Company’s strategy, operational structure and
key challenges. It included:
•
a comprehensive document pack of Company and
Board information, including analyst and broker
reports;
•
1-2-1 meetings with the Executive Director and
other Non-executives on the Board;
•
a meeting with the Group Company Secretary;
•
meetings with key members of the management
team, particularly in relation to Carol’s role as
Chair of the Remuneration Committee;
•
meetings with the Company’s key advisers; and
•
visits to a selection of development sites.
www.inlandhomesplc.com
Annual Report and Accounts 2021
75
GOVERNANCE
Board effectiveness
The Board recognises that evaluation provides a valuable feedback mechanism to maximise strengths and highlight areas for
development. This year we saw Simon Bennett take over as Chairman and Carol Duncumb join us a Non-executive Director. The
Board was in agreement that a review of effectiveness would be more beneficial once Simon and Carol had settled into their
respective roles. We will therefore look to evaluate the Board in the next financial year.
The Corporate Governance Statement is available on the Group’s website at www.inlandhomesplc.com
Principle
Application
01
Establish a strategy and business model
which promote long-term value for
shareholders
It has been a year of tangible progress in the delivery of Inland Homes’
strategic objectives. Our key strategic priorities have been to reduce
net debt whilst making further progress in maximising the value of the
Group’s valuable land bank, growing the asset management division and
sustaining the demand for high-quality, affordably priced homes. Further
details on our strategy and business model can be found on pages 20–23
and 30–31.
02
Seek to understand and meet shareholder
needs and expectations
We have a clear responsibility to engage with shareholders as the owners
of our business. We know that this engagement helps us gain a better
understanding of the impact of our decisions on shareholder interests, as
well as gain an insight into their needs and expectations. Pages 65–68 set
out how we do this.
03
Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
The Board recognises that the long-term success of the business is
dependent on maintaining relationships with our key stakeholders.
Balancing the needs and expectations of our stakeholders has never been
more important and we are committed to working together to navigate
the challenges ahead. Pages 65–68 provide further details on how we are
doing this.
04
Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
Successful risk management is a fundamental part of our business as
we pursue our strategic objectives. Details about our risk framework,
including the newly formed Governance and Risk Committee and our
approach to Environmental, Social and Governance (ESG) risk, can be
found on page 76.
05
Maintain the Board as a well-functioning,
balanced team, led by the Chair
The Board recognises that a well-functioning, balanced Board ensures
the Company reaches its full potential. Our current Directors' details,
including their skills and experience, are set out on pages 70–71.
06
Ensure that, between them, the Directors
have the necessary up-to-date experience,
skills and capabilities
Our Board appointments are made on merit and against objective criteria,
including personal characteristics. We know that diversity within our
membership strengthens the Board and this is something we are mindful
of as we review the skills and experience needed to drive forward our
strategy. More details about our Directors and their skills and experience
can be found on pages 70–71.
07
Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
We know that Board effectiveness goes to the heart of success and the
Board is committed to undertaking an evaluation of its performance and
that of individual Board Directors.
08
Promote a corporate culture that is based
on ethical values and behaviours
Our principles are embodied across the Group and inform every aspect
of our business operations and decision-making. The ESG report (pages
55–64) demonstrates our culture and values in action.
09
Maintain governance structures and
processes that are fit-for-purpose and
support good decision-making by the Board
Under the leadership of the Chairman, the Board has collective
responsibility for the governance structure of the Group to ensure the
Company’s strategy is delivered effectively. It is important to us that the
framework we have in place is appropriate for our business model and
this is something we keep under continuous review.
10
Communicate how the Company is governed
and is performing, by maintaining a
dialogue with shareholders and other
relevant stakeholders
Engagement with our key stakeholders is vital to the success of our
business. Details of how we do this can be found on pages 65–68.
Inland Homes plc
Stock code: INL
76
Governance and risk committee report
The Committee was established during
the financial year to further strengthen
the governance arrangements in place to
support the Group’s internal controls and
risk management systems.”
Key responsibilities
•
To ensure the effectiveness and efficiency of the
Group’s internal controls framework
•
To review the Group’s risk management framework
and ensure it operates effectively
•
Debate and agree changes to the principal risk
register
•
To ensure that the Group has an appropriate
Environmental, Social and Governance (ESG)
strategy in place
•
To ensure that short and long-term objectives
of the ESG strategy are developed and that key
metrics are identified and reported on
I am pleased to present the Governance and Risk
Committee Report for the year ended 30 September
2021. It provides shareholders with an overview of the
responsibilities of this Committee.
The Committee was established during the
financial year to further strengthen the governance
arrangements in place to support the Group’s
internal controls and risk management systems. The
Board has also delegated oversight of the Group’s
Environmental, Social and Governance (ESG) strategy
to this Committee in the short term but recognises
that a separate committee may need to be established
as this area of work develops.
Membership
The Committee consists of the following independent
Non-executive Directors: myself (as Chairman),
Simon Bennett and Carol Duncumb. Members of the
management team may attend Committee meetings
by invitation if required. We ensure Committee
members have the skills and knowledge relevant to
the remit of the Committee, as well as the personal
attributes to enable us to work with management and
to challenge matters if needed.
Risk management and internal controls
The Committee has delegated responsibility for
monitoring the risk profile of the business and for
oversight of the Group’s risk management framework.
Details of the risk framework are set out in the risk
section of the Strategic Report on pages 46–54. The
Group’s principal risks were reviewed and updated
by the Committee at its November 2021 meeting and
were recommended to the Board for subsequent
approval.
The Committee is also responsible for monitoring the
Group’s internal controls and processes, including its
financial, operational and compliance controls, and
reports to the Board on these matters. The Group
does not currently have an internal audit function
but the Committee keeps under review whether such
a function ought to be established. At present, the
Committee believes that management is able to derive
assurance as to the adequacy and effectiveness of
internal controls and risk management procedures
without one.
Environmental, Social and Governance
Currently, the committee is tasked with oversight of
the Group’s ESG strategy. The focus for the Committee
this year has been to ensure that the appropriate ESG
framework is agreed and established. The framework
sets out the scope of our ambition, with high-level
commitments and timelines for success in each of
the three areas. The framework has supported the
business in putting in place the structures and support
systems which will enable it to roll out its full ESG
strategy in the year ahead. The Committee has a key
strategic role in overseeing this strategy. Further
details can be found on pages 55–64.
Brian Johnson
Chair of the Governance and Risk Committee
Brian Johnson
Chair of the
Governance and
Risk Committee
www.inlandhomesplc.com
Annual Report and Accounts 2021
77
GOVERNANCE
Audit committee report
The Audit Committee is responsible
for ensuring the financial
performance of the Group is properly
measured and reported on.”
Key responsibilities
•
Reviewing the 2021 Report and Accounts
•
Considering the external audit report and
management representation letter
•
Reviewing the Going Concern Basis of Preparation
•
Consideration of key audit matters and how they
are addressed
•
Reviewing the 2021 and 2022 audit plan
•
Reviewing the suitability of the external auditor
•
Reviewing the interim results
•
Reviewing significant estimates and judgements
I am pleased to present the Audit Committee Report
for the year ended 30 September 2021. It provides
shareholders with an overview of the activities carried
out by the Committee during the period. The Audit
Committee is responsible for ensuring the financial
performance of the Group is properly measured
and reported on. Its role includes monitoring the
integrity of the financial statements (including annual
and interim accounts and results announcements),
reviewing any changes to accounting policies,
reviewing and monitoring the extent of the non-audit
services undertaken by external auditors, advising on
the appointment of external auditors and meeting with
external auditors without the Executive Directors and
management present.
Membership
The Committee consists of the following independent
Non-executive Directors: myself (as Chairman),
Brian Johnson and Carol Duncumb, from her
appointment to the Board in March 2021. Members of
the management may attend Committee meetings by
invitation if required. We ensure Committee members
have the skills and knowledge relevant to the remit
of the Committee, as well as the personal attributes
to enable us to work with management and external
auditors and to challenge matters if needed.
Role of the external auditor
The Audit Committee monitors the relationship with
the external auditor, BDO LLP, to ensure we maintain
auditor independence and objectivity. As part of its
review, the Committee monitors the provision of non-
audit services by the external auditor.
Audit process
The auditor prepares an audit plan for the review of
the full period financial statements. The audit plan
sets out the scope of the audit, areas to be targeted
and audit timetable. This plan is reviewed and agreed
in advance by the Audit Committee. Following the
audit, the auditor presented its findings to the Audit
Committee for discussion. No major areas of concern
were highlighted by the auditor during the period;
however, areas of significant risk and other matters of
audit relevance are regularly communicated.
Simon Bennett
Chair of the Audit Committee
Simon Bennett
Non-executive
Chairman
Inland Homes plc
Stock code: INL
78
Remuneration committee report
I am keen to ensure the Policy continues to
be fully aligned with business strategy and
the rest of the workforce, with decisions
made by the Committee linked to business
performance within the context of the
wider external environment.”
Key responsibilities
•
The Remuneration Committee determines
and agrees with the Board the policy for the
remuneration of the Executive Directors
•
The Remuneration Committee also reviews the
design and determined targets for performance-
related pay schemes and share incentive plans for
approval by the Board and shareholders
•
The Executive Directors of Inland Homes are
Stephen Wicks, Chief Executive, Nish Malde,
Group Finance Director and Gary Skinner, Group
Managing Director
Statement from the Chair of the Remuneration
Committee
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the year ended
30 September 2021. The Committee has considered
the principles set out in the QCA Code and evolving
best practice in preparing this report, which details
remuneration paid to the Executives during the
financial year and the remuneration policy (the Policy)
for the forthcoming financial year and beyond.
Remuneration Policy
As the new Chair of the Remuneration Committee,
I am keen to ensure the Policy continues to be fully
aligned with business strategy and the rest of the
workforce, with decisions made by the Committee
linked to business performance within the context of
the wider external environment.
The Committee delayed undertaking a review of the
Policy during the year due to the ongoing uncertainty
resulting from COVID-19. However, it is intended to
carry out this review, including finalising a new long-
term incentive plan, in 2022 given the initial impact of
the pandemic has now been assessed and strategic
measures implemented in response. The Committee
remains focused on ensuring a pay structure that
allows for appropriate reward and recognition of the
Executives, balanced against stakeholder interests and
uncertain external influences.
Workforce
The Policy will continue to be considered in the
context of remuneration policies and practices for
the wider workforce. In line with this, pay and reward
arrangements for our staff are also overseen by the
Committee. It is intended that during the early part
of 2022, the Group will focus on wider employee
pay structures and it intends to review current
arrangements to ensure these are appropriate and in
line with best practice.
2020/21 awards
Despite the ongoing market uncertainty, we started
this financial year with cautious optimism and have
continued to make good progress on our strategic
objectives. Reduction of net debt remains a priority
and subject to the timing of the grant of planning
permission(s), land sales and receipt of management
fees, we presently expect to report a further significant
reduction in net debt in the coming financial year.
Nevertheless, as in the previous financial year, the
Executive Directors have waived entitlement to a
bonus payment for the year ended 30 September 2021.
This is in part to support the priority to reduce net
debt but also in recognition of the measures taken to
mitigate the impact of the ongoing pandemic, which
included receiving Government support and voluntary
reductions in pay. The Board hopes to be in a position
to resume bonus payments in 2022.
Committee remit
The Terms of Reference for the Committee are based
on the QCA template and were reviewed and updated
at the December 2021 Committee meeting. In addition
to determining the Policy for executive remuneration, it
was agreed that the Committee will have responsibility
for setting the framework for the remuneration of the
Group’s Operating Board.
Closing remarks
The Committee believes that the decisions taken with
respect to awards for the financial year ended 30
September 2021 support our strategic objectives and
are appropriate given the challenges presented by
both the COVID-19 pandemic and the changing market
conditions.
As we look forward, the Committee remains focused
on ensuring appropriate reward and recognition of
the Executive Directors, whilst aligning with the wider
workforce and shareholder expectations. We recognise
that flexibility of reward and recognition is key in
uncertain times and this will be at the forefront of our
thinking as we review our Policy and look to implement
a new LTIP in 2022. The Committee is committed to
an open and transparent dialogue with shareholders
on the issue of Executive remuneration and we look
forward to seeking views in the new year.
On behalf of the Committee and the Board, I would like
to thank all shareholders for your continued support
during this challenging year.
Carol Duncumb
Remuneration Committee Chair
31 January 2022
Carol Duncumb
Remuneration
Committee
Chair
www.inlandhomesplc.com
Annual Report and Accounts 2021
79
GOVERNANCE
Membership of the Committee currently consists of
Carol Duncumb as Chair of the Committee, Simon
Bennett, the Company’s Non-executive Chairman
and Brian Johnson, Senior Non-executive Director.
The Executive Directors, Group Company Secretary
and Head of HR are invited to attend. The Committee
meets formally three times a year and on such other
occasions as may be required.
Current 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 Group 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,
a 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 considers
the aggregate remuneration to be received by the
individual Executive.
In 2013, in line with best corporate governance and
market practice at that time, the Remuneration
Committee introduced a new deferred bonus plan
and a long-term incentive plan for the Company’s
Executive Directors. These were 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 Incentive
Plan (2013 LTIP). It operated for a period of six years
and was approved by shareholders in general meeting
in December 2013.
As referenced above, this scheme has now run its
course and the Remuneration Committee has been
working with the Group’s remuneration consultants to
formulate a new long-term incentive plan to replace
the 2013 LTIP.
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. It provided an opportunity for the Executive
Directors to earn up to 100% of basic annual salary
as an annual bonus. The plan provides for 50% of
an Executive Director’s bonus entitlement to be
mandatorily deferred into ordinary shares in the
Company. Bonuses are 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:
i.
profit before taxation as compared with brokers’
market forecasts following the announcement of
the preliminary results of the previous accounting
period; and
ii.
net debt levels.
Once the quantum of the Executive Directors’ bonuses
has been calculated, these will be settled up to
50% in cash and up 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 Director leaves
the Company as a ‘bad leaver’, but is not subject to any
further performance conditions.
Inland Homes plc
Stock code: INL
80
Remuneration committee report CONTINUED
Long-term incentive plans
The Company currently operates an unapproved share
option scheme, which is open to all employees of
Inland Homes.
Awards under the unapproved share option scheme
are made on a periodic basis to the Company’s
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 2013 LTIP is now in abeyance having come to the
natural end of its life. The following is a summary
of the principal features and terms of the 2013 LTIP,
which has now run its course:
1. Creation of growth shares
The plan operated by reference to rights attached to
a special class of share in an intermediate holding
company (Inland Homes 2013 Limited) interposed
between the Company and the Group’s trading
subsidiaries. The special class of shares were called
‘growth shares’. The growth shares were qualifying
shares for the purposes of the Employee Shareholder
Status scheme, the aim of which was to provide tax
benefits to employees and Directors who achieved
growth for their employing companies.
The awards in relation to the growth shares were
subject to performance targets (Performance
Targets) and when such Performance Targets were
achieved, a relevant proportion of the growth shares
were awarded.
2. Vesting and exchange of growth shares
Subject to the Performance Targets being met, the
awards in relation to the growth shares would vest in
accordance with the Articles of Association of Inland
Homes 2013 Limited if and when each Performance
Target was met. After vesting, the growth shares could
be realised by being exchanged for a fixed number of
the Company’s ordinary shares.
The growth shares did not carry any entitlement
to dividends, capital or voting unless and until they
vested and were exchanged for ordinary shares in the
Company.
3. Participants
Originally, when the 2013 LTIP was established, the
Executive Directors participating in the 2013 LTIP and
their allocations of growth shares were as follows:
Stephen Wicks 47%, Nish Malde 38% and Paul
Brett 15% (collectively the Participants). Originally,
11,350,504 ordinary shares were available to be earned
under the 2013 LTIP, equivalent at the time to 5.68% of
the issued share capital.
The aggregate number of ordinary shares of the
Company, issuable under the 2013 LTIP, in exchange
for growth shares, was therefore then reduced by
1,702,576 ordinary shares to 9,647,928 ordinary shares
(from 11,350,504 ordinary shares). On 19 July 2018,
the Company issued 2,814,924 new ordinary shares
of 10p each to Stephen Wicks in exchange for 248
of his vested growth shares under the 2013 LTIP.
The total number of ordinary shares issuable under
the 2013 LTIP was therefore reduced to 6,833,004
ordinary shares.
Of this total, as at 30 September 2021, in aggregate
a further 2,285,076 ordinary shares (equivalent to
0.99% of the total issued ordinary share capital) were
available to be issued to the Participants, under the
terms of the 2013 LTIP, as the Performance Targets
had been met. The remaining 4,547,928 ordinary
shares (equivalent to 1.98% of the total issued ordinary
share capital at the period end) have now lapsed as the
Performance Targets have not been met.
Due to an anomaly in the way in which the 2013 LTIP
was drafted, fractional entitlements of a growth
share cannot be exchanged for ordinary shares. As
a result, of the 2,285,076 ordinary shares earned by
the Participants but not yet issued, 14,975 ordinary
shares would otherwise lapse. The Remuneration
Committee has agreed to issue any earned but
unallocated ordinary shares created by this anomaly to
the existing Participants, when the 2013 LTIP is closed
in accordance with its terms.
Any awards to the Executive Directors under the 2013
LTIP are subject to good and bad leaver provisions in
accordance with the rules of the scheme.
Gary Skinner, who joined the Group Board in May 2018,
was not entitled to any awards under the 2013 LTIP
but will be able to participate in any future long-term
incentive plan approved by shareholders at a general
meeting.
4. Performance targets
Vesting only occurred as and when specific
Performance Targets (which were linked to the share
price of Inland Homes over six consecutive annual
performance periods) were met or exceeded for 15
working days in the relevant performance period. Each
annual performance period ended 20 working days
after the announcement of the preliminary results for
each year, usually therefore in October of each year.
However, the Group’s accounting period was changed
from 30 June to 30 September 2019. For the purposes
of the 2013 LTIP only, the final period for Performance
Targets to be met was therefore deemed to be the year
ended 30 June 2019.
The target share prices for the 2013 LTIP were
based on compounded growth being achieved and,
accordingly, if the Performance Target was missed in
one period, the Participants’ awards could still vest,
if the required compound percentage of growth was
achieved in subsequent periods. For instance, if in the
first period the Performance Target for that period
was not met, then the related number of growth
shares which could have vested may still vest in the
following period or future periods, provided that the
Performance Target for those periods was achieved.
The first Performance Target was set at a price of
60.5p per ordinary share (the First Target Performance
Price), being a 30% premium to the share price of
46.5p per ordinary share (the Initial Base Price), being
the mid-price at the close of business on 20 December
2013, the date the 2013 LTIP was adopted.
www.inlandhomesplc.com
Annual Report and Accounts 2021
81
GOVERNANCE
Subsequent performance targets were based on
compound growth in share value of 15% over the
following year and 10% for each of the subsequent
years.
5. Dilution
Originally, in order for all the 9,647,928 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, would have had
to have more than doubled before the end of the final
performance period, when compared with the Initial
Base Price of 46.5p per ordinary share. This increase
would have been equivalent to an approximate 14%
annual compound rise in the ordinary share price over
the life of the 2013 LTIP.
As at 30 September 2021, a total of 2,285,076 ordinary
shares (equivalent to 0.99% of the total issued ordinary
share capital) have been earned but not been issued
yet to the remaining Participants.
6. Change of control
The 2013 LTIP allowed realisation from three years
after the award, provided the Performance Targets
had been met. As is customary, the 2013 LTIP provided
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 would vest, provided
that the offer price was greater than the share price
required to achieve the Performance Target for the
relevant performance period in which the takeover
occurs.
2022 Long-term Incentive Plan (2022 LTIP)
As set out in more detail above, the 2013 LTIP scheme
has now run its course and the Remuneration
Committee has been working with the Group’s
remuneration consultants to formulate the terms
of a new long-term incentive plan, in accordance
with current best practice. This process has been
considerably delayed by the COVID-19 global
pandemic and the uncertainty this has caused for the
housebuilding industry and the wider UK economy.
As a result, whilst the future remains uncertain, the
Remuneration Committee intends to introduce the
2022 LTIP for shareholder approval in due course.
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.
Service contracts and notice periods
Each of the Executive Directors are employed on
rolling contracts subject to one year’s notice from
either Inland Homes or the Executive Director in
relation to Stephen Wicks and Nish Malde, and three
months’ notice in relation to Gary Skinner. These
contracts contain confidentiality provisions and
restrictive covenants for the Company’s protection.
The Executive Directors’ service contracts do not
provide specifically for any termination payments,
although the Company might make payments in lieu of
notice. For this purpose, such payments would consist
of basic salary and other benefits for the relevant
period and, depending on the circumstances, any
awards due to Stephen Wicks or Nish Malde under the
2013 LTIP.
Non-executive Directors
Inland Homes currently has three Non-executive
Directors: Simon Bennett, the Chairman and Chair
of the Audit Committee, Carol Duncumb, Chair of the
Remuneration Committee and Brian Johnson, Senior
Independent Director and Chair of the Governance and
Risk Committee and the Nominations Committee.
The Non-executive Directors have letters of
appointment, which initially are for a three-year period
and thereafter may be terminated on three months’
notice from either Inland Homes or the individual. The
appointment letters contain confidentiality provisions
for the Company’s benefit.
The Non-executive Directors’ letters of appointment do
not provide specifically for any termination payments,
although the Company might make payments in lieu
of notice.
Non-executive 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 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.
Inland Homes plc
Stock code: INL
82
Remuneration committee report CONTINUED
Directors’ remuneration table
The remuneration of each of the Directors for the year ended 30 September 2021 is set out in detail below.
2021
Year ended
30 September
2020
Salary/
fees
£000
Bonus
£000
Benefits
£000
Pension
£000
Total
remuneration
£000
Social
security
costs
£000
Total
remuneration
and social
security
£000
Total
remuneration
and social
security
£000³
Executive Directors
S D Wicks1
384
452
26
–
455
62
517
372
N Malde1
384
452
25
–
454
62
516
372
G Skinner
280
352
12
14
341
44
385
323
Non-executive Directors
T Roydon (until March
2021)
42
–
–
–
42
6
48
52
S Bennett
55
–
–
–
55
6
61
52
B Johnson
42
–
–
–
42
5
47
40
C Duncumb (from
March 2021)
28
–
–
–
28
2
30
–
1
S Wicks and N Malde have taken their pension entitlement as part of their salaries. During the period no LTIPs vested
2
The payment of bonuses awarded for the fifteen-month period ended 30 September 2019 was deferred due to COVID-19. These bonuses were paid during the
year ended 30 September 2021
3
Salary shown reflects temporary salary reductions taken during the year
Directors’ interests in shares and the unapproved share option scheme and the 2013 LTIP
Directors’ interests in the Company’s ordinary shares are disclosed on page 83 in the Directors’ Report. The share options held by the
Directors in the unapproved share option scheme are set out below:
Stephen
Wicks
Nish
Malde¹
Gary
Skinner
Total options outstanding at 30 September 2021
–
–
750,000
Representing:
Options exercisable 17 July 2021 to 16 July 2028 at 67.00p
–
–
250,000
Options exercisable 18 March 2022 to 17 March 2029 at 61.30p
–
–
500,000
–
–
750,000
1
Nish Malde exercised options over ordinary shares of 10 pence each under the unprovided share option scheme, resulting in a total gain of £483,750
2013 LTIP
The 2013 LTIP has now run its course. The initial price for determination of awards under the 2013 LTIP was 46.5p per ordinary share.
The awards vested to date to current Directors of the Group in respect of which further ordinary shares are to be issued as at
30 September 2020 and 30 September 2021 were as follows:
Ordinary
shares
of 10p each
S D Wicks
5,076
N Malde
2,280,000
As at 30 September 2021, 2,285,076 ordinary shares (equivalent to 1.10% of the total issued ordinary share capital) have been earned
but not yet issued to the remaining Participants.
Approval
This report was approved by the Board on 31 January 2022 and signed on its behalf by:
Carol Duncumb
Chair of the Remuneration Committee
www.inlandhomesplc.com
Annual Report and Accounts 2021
83
GOVERNANCE
Directors’ report
Kat Worth
Group
Company
Secretary
The Directors present their Annual Report
on the affairs of the Group, together with the
Financial Statements and Auditor’s Report,
for the year ended 30 September 2021.”
The Directors present their Annual Report on the
affairs of the Group, together with the Financial
Statements and Auditor’s Report, for the year ended
30 September 2021. The Corporate Governance
Statement also forms part of this Directors’ Report.
Directors
The Directors of the Company during the financial
year were:
Terry Roydon (resigned 08 March 2021)
Simon Bennett
Brian Johnson
Carol Duncumb (joined 08 March 2021)
Stephen Wicks
Nish Malde
Gary Skinner
Results and dividend
Results for the year ended 30 September 2021 are set
out in the Group Statement of Comprehensive Income
on page 95. The Directors are not recommending a
dividend for the year ended 30 September 2021.
Share capital and substantial shareholders
The Company’s issued share capital as at 30
September 2021 was 230,091,045 ordinary shares
of 10p each. 1,627,500 ordinary shares are held by
the Company’s Employee Benefit Trust. Details of
movements in the Company’s issued share capital can
be found in Note 39 of the Financial Statements.
The Company had been notified of the following
substantial shareholders comprising 3% or more of
the issued ordinary share capital of the Company:
Major shareholders
Shareholding
Mr Dixon
9,000,000
Downing LLP
6,571,322
This table excludes Director’s shareholdings, which
are detailed below.
There have been no significant changes to substantial
shareholders since the year end.
Directors’ and officers’ liability insurance and
independent advice
The Company maintains an appropriate level of
Directors’ and Officers’ liability insurance in respect
of legal actions against the Directors. The Board has
established a procedure by which any Director, for
the purpose of furthering his or her duties, may take
independent professional advice at the Company’s
expense. No Director had reason to use this facility
during the reporting period.
Post balance sheet events
Details of post balance sheet events are given in Note
43 of the Financial Statements on page 152.
Directors and Directors’ interests
As at 30 September 2021
As at 30 September 2020
Number of
ordinary
shares
Number of
growth
shares
Number of
share options
Number of
ordinary
shares
Number of
growth shares
Number of
share options
S D Wicks
17,763,571
–
–
17,763,571
–
–
N Malde
11,496,792
–
-
10,996,792
380
1,500,000
G Skinner
82,105
–
750,000
82,105
–
750,000
S Bennett
125,000
–
–
125,000
–
–
C Duncumb
–
–
–
–
–
–
B Johnson
–
–
–
–
–
–
More information about the Directors can be found on pages 70–71.
Inland Homes plc
Stock code: INL
84
Directors’ report CONTINUED
Purchase of own shares
The Company did not purchase any of its own shares in
this reporting period.
Political donations
The Company did not make any political donations or
incur any political expenditure during the reporting
period to 30 September 2021, or in the prior period.
Auditor
As far as the Directors are aware, there is no relevant
audit information (that is, information needed by the
Group’s auditor in connection with preparing their
report) of which the Group’s auditor is unaware.
Each Director has taken all reasonable steps that he
or she ought to have taken as a Director in order to
make himself or herself aware of any relevant audit
information and to establish that the Group’s auditor is
aware of that information.
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 21 March 2022 at
11 am. The Notice of Meeting will be published on our
website at: www.inlandhomesplc.com/investors/agm/
Statement of Directors’ responsibilities
The Directors are responsible for preparing the
strategic report, 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 period.
Under that law, the Directors have elected to prepare
the Group’s consolidated financial statements in
accordance with international accounting standards
in conformity with the requirements of the Companies
Act 2006 and the Company financial statements in
accordance with FRS 101: The Financial Reporting
Standard applicable in the UK and Republic of Ireland.
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 of
the Group and Company and of the profit or loss of the
Group for that period. The Directors are also required
to prepare financial statements in accordance with the
rules of the London Stock Exchange for companies
trading securities on the Alternative Investment
Market. In preparing these financial statements, the
Directors are required to:
•
select suitable accounting policies and then apply
them consistently;
•
make judgements and accounting estimates that
are reasonable and prudent;
•
state whether they have been prepared in
accordance with international standards
in conformity with the requirements of the
Companies Act 2006, subject to any material
departures disclosed and explained in the financial
statements; and
•
prepare the financial statements on a going
concern basis unless it is inappropriate to
presume that the Group will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group and Company’s transactions and
disclose with reasonable accuracy at any time the
financial position of the Group and Company and
enable them to ensure that the financial statements
comply with the requirements of the Companies Act
2006. They are also responsible for safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
Financial risk management objectives and
policies
These are detailed in Note 7 of the Financial
Statements.
Website publication
The Directors are responsible for ensuring the report
and accounts are made available on a website.
Financial statements are published on the Group’s
website in accordance with legislation in the United
Kingdom governing the preparation and dissemination
of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and
integrity of the Group’s website is the responsibility
of the Directors. The Directors’ responsibility also
extends to the ongoing integrity of the financial
statements contained therein.
Stakeholder involvement policies
Directors believe that the involvement of employees,
customers and suppliers is an important part of the
business culture and contributes to the successes
achieved to date. Read more about our engagement
with stakeholders on pages 65-68.
Corporate Governance Code
Details of our compliance with the QCA Governance
Code can be found on pages 72-75.
Streamlined Energy and Carbon Report
All measured emissions from activities which the
Group has financial control over are reported on
page 58.
Approval
This report was approved by the Board on 31 January
2022 and signed on its behalf by:
Kat Worth
Group Company Secretary
www.inlandhomesplc.com
Annual Report and Accounts 2021
85
FINANCIALS
Financial
Statements
Independent Auditor’s report
86
Group statement of
comprehensive income
95
Group statements of financial
position
96
Company statements of financial
position
97
Statements of changes in equity
98
Group statement of cash flows
99
Notes to the financial statements
100
Five-year summary
153
List of definitions
154
Advisers and Company information 155
85
Independent Auditor’s report to the
members of Inland Homes plc
Opinion on the financial statements
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30
September 2021 and of the Group’s profit for the year then ended;
•
the Group financial statements have been properly prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006;
•
the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted
Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of Inland Homes Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year
ended 30 September 2021 which comprise the Group statement of comprehensive income, the Group statement of financial position,
the Company statement of financial position, the Group and Company statements of changes in equity, the Group statement of cash
flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law
and international accounting standards in conformity with the requirements of the Companies Act 2006. The financial reporting
framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United
Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
We considered the ability of the Group and the Parent Company to continue as a going concern to be a key audit matter based on our
assessment of the significance of the risk and the effect on our audit strategy. Refer to Note 2 (Basis of preparation).
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern
basis of accounting and in response to the key audit matter included:
•
We assessed the appropriateness of the Group’s cash flow forecasts in the context of the Group’s 30 September 2021 financial
position, the expected land and house sales and other contractual revenue.
•
We considered the potential effects that the continuing Covid-19 pandemic could have on trade. In assessing the potential effects,
we considered the previous lockdowns and its impacts on trade.
•
We evaluated the key assumptions in these forecasts and considered whether these appear reasonable, for example by
comparing sales revenue to contractually secured future revenue and expected sales prices to forward sales and historic sales
data in the area and expected completion of sites as per project appraisals.
•
The Group has a number of facilities that fall due for repayment in the period to 31 March 2023 as disclosed in Note 2. We
obtained supporting documentation in the form of bank statements and facility agreements to verify the facilities that have been
repaid or refinanced post period end. For the remaining facilities that fall due in the period to 31 March 2023 we obtained the
Directors’ views on their ability to obtain alternatives sources of finance to replace existing facilities, the Directors’ views on and
evidence of the continued support of their lenders and the ability to obtain finance on unencumbered assets.
•
We checked that the information used in the covenant compliance calculations were consistent with the forecasts to 31 March
2023 including the sufficiency of headroom in the downside scenarios.
•
We considered the Group’s overheads and the level of discretionary spend in the Group and the Directors’ ability to flex this in
base case scenarios.
•
For scenarios in which the Directors may be forced to utilise capital markets to raise additional finance, we discussed the
timeframe required to achieve this and agreed the ability to issue shares without pre-emption to the Group’s 2020 Annual General
Meeting minutes.
•
We reviewed the disclosures provided relating to the going concern basis of preparation and considered whether these were
consistent with the Directors’ going concern assessment.
Inland Homes plc
Stock code: INL
86
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern
for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of
this report.
Overview
Coverage
100% (2020: 100%) of Group profit before tax
100% (2020: 100%) of Group revenue
100% (2020: 100%) of Group total assets
Key audit matters
2021
2020
Valuation of investment properties and carrying value of trading properties
Y
Y
Revenue and profit recognition
Y
Y
Recoverability of receivables from Joint Ventures and the Associate and other
significant receivables
Y
Y
Going concern
Y
Y
Prior period adjustments
Y
N
Materiality
Group financial statements as a whole
£4m (2020: £3.9m) based on 1% (2020: 1%) of total assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal
control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a
risk of material misstatement.
For the purposes of the Group audit, the Parent Company, nine subsidiaries and one joint venture were considered significant
components and were subject to full scope audit procedures performed by the Group engagement team. The remaining non-
significant components were also subject to full scope audit procedures performed by the Group engagement team. All components
are based in the UK. Our audit work on these components was executed at the level of materiality applicable to the relevant
component, which in each instance was lower than Group materiality.
www.inlandhomesplc.com
Annual Report and Accounts 2021
87
FINANCIALS
Independent Auditor’s report to the
members of Inland Homes plc CONTINUED
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to
the matter described in the Conclusions related to going concern section, we have determined the matters described below to be the
key audit matters to be communicated in our report.
Key audit matter
How the scope of our audit addressed the key audit matter
Valuation of investment
properties and carrying
value of trading properties
(Note 4, 19, 28 and 30)
The Group owns a portfolio of
properties which are held as
either investment properties or
trading properties.
Determination of the fair value
of investment properties and
the carrying amount of trading
properties is considered a
significant audit risk due to the
subjective nature of certain
assumptions and the potential
for management bias inherent
in each valuation. Valuations
are either carried out by the
Directors or external valuers.
Each valuation requires
consideration of the individual
nature of the property, its
location, its cash flows
and comparable market
transactions. The majority of the
Group’s property interests are
in the course of development.
The valuation of these
properties requires estimation
of the expected sales value the
completed developments will
achieve with deductions for
future build costs to completion,
which requires significant
judgements.
The valuation of the Group’s
income generating investment
properties requires significant
judgements to be made in
relation to the appropriate
market capitalisation yields and
estimated rental values.
As a result of the significant
assumptions and judgements
required, this was considered to
be a key audit matter.
Trading properties
Our audit work included, but was not restricted to, the following:
•
We agreed a sample of data used by the Directors or external valuers, back to source
documentation, including title deed and tenancy agreements.
•
We assessed the competency, independence and objectivity of the external valuers, which
included making enquiries regarding interests and relationships that may have created a
threat to the valuer’s objectivity.
•
We assessed the movement in the valuation of the property portfolio against our own
expectations, based on externally available metrics and wider economic and commercial
factors, and challenged the Directors, as appropriate, for those valuations which fell outside
of our range of expectations through discussion and inspection of corroborating information
to determine the appropriate valuation.
•
We obtained all copies of any planning permission documents received in the year to support
the uplift in land values.
•
We obtained project appraisals prepared by the Directors for each development and:
−
Reviewed and assessed costs to complete and compared these to actual costs for
completed developments of a similar nature;
−
Considered the historic accuracy of cost and sales forecasts;
−
Reviewed the level of costs to complete that were fixed by way of procurement;
−
For a sample of properties that have been exchanged, reserved or sold post year end we
obtained supporting documentation and compared the prices achieved to those in the
development appraisals. Where no activity has occurred, we performed a comparison of
prices achieved on similar properties sold or comparable market transactions; and
−
We visited a sample of the Group’s development sites and considered the stage of the
development compared to the costs to complete in the project appraisal.
Investment properties
Our audit work included, but was not restricted to, the following:
•
We obtained the valuation schedules prepared by the Directors and;
−
Evaluated the competence and capability of the Directors;
−
Confirmed that the basis of the valuation was in accordance with requirements of
accounting standards; and
−
Discussed the basis of the valuation, the assumptions used and the valuation movements
in the year with the Directors;
•
We considered whether movements in the valuations are consistent with our own expectations
based upon market comparable transactions and changes in industry benchmarks and
challenged those valuations which fell outside of our expectations. We did this by holding
discussions with the Directors and obtaining an explanation for the reasons why these
valuations were outside of our expectations. We obtained supporting evidence to corroborate
explanations received from the Directors.
•
We compared the significant valuation inputs, such as current rent, lease terms and yields,
used by the Directors against our own expectations, underlying supporting evidence and, where
relevant, market data.
•
For a sample of investment properties we corroborated the rental income to supporting leases.
Key observations
We did not identify any indicators to suggest that the valuation of the Group’s investment
properties and the carrying value of the Group’s trading properties are inappropriate.
Inland Homes plc
Stock code: INL
88
Key audit matter
How the scope of our audit addressed the key audit matter
Revenue and profit
recognition (Note 4, 9)
The group has numerous
sources of revenue out of which
we consider the sale of land and
buildings, contract income and
management fee income to pose
specific risks.
Proceeds from the sale of land
and buildings should only be
recognised once the risks and
rewards of ownership have
passed to the buyer which
is considered to be legal
completion. There is a risk that
revenue and profits on house
sales could be recognised before
completion.
The accounting for the revenue
from construction contract
income is inherently complex
and involves significant
judgement particularly with
regard to assessing the
stage of completion of the
project. Revenue from long
term contracts is recognised
based on the input method by
considering the costs incurred
to date, relative to the total
estimated forecast revenue.
Profit is recognised once the
Directors are able to make an
estimate of the outcome with
reasonable certainty.
The Group is involved in the
provision of certain development
and planning application
management fee services to
third parties. The accounting for
revenue from such contracts
is inherently complex and
involves significant judgement
in terms of the identification of
performance obligations under
applicable accounting standards
and where appropriate the
stage of performance against
those obligations and the
measurement and recognition
of any deferred consideration
where relevant.
Our audit work included, but was not restricted to, the following:
Sale of land and buildings
•
We agreed a sample of sales to the sales contract, the legal letter of completion and the
proceeds to bank. To address cut off, we tested a sample of sales that occurred in September
2021 and checked that completion took place pre year end per the date of the legal letter of
completion. For revenue recognised post year end we obtained the legal letter of completion
for the associated sale and checked that it was recognised in the correct period.
•
We reviewed the realised margin on the land and building sales in the year compared to
the expected margin obtained from the development appraisal. Refer to the Valuation of
investment properties and carrying value of trading properties key audit matter above for
work completed on the development appraisals.
•
For land sales we obtained the sale and purchase agreements and considered the substance
of the transactions and whether the risks and rewards of ownership had been transferred and
whether the transaction met the criteria for revenue recognition under applicable accounting
standards.
We obtained managements forecast margin calculation and compared to our own independently
set expectations in terms of gross development value and costs to complete.
Construction contract income
For each development contract we obtained copies of the construction contract and performed
the following:
•
We agreed the total value of the development to the signed contract.
•
We discussed with management to understand and challenge other areas of judgment
taken including anticipated completion date and impact of any delays, whether there are any
disputes with third parties on the contract and the reason for any movements in forecasts
from tender to 30 September 2021. We obtained corroborating evidence for the explanations
provided.
•
We obtained management’s calculation of the costs to date compared to the expected
costs to complete; We compared the costs to complete to forecast and corroborated the
percentage of costs that had been procured at the year-end and enquired of management as
to cost overruns since the year-end and compared to the latest appraisals. We challenged
management where there are substantial costs yet to procure and agreed a sample of
un-procured subcontractor costs to relevant support.
•
We compared the stage of completion against the proportion of profit recognised to date.
•
We reviewed incremental costs incurred of obtaining contracts and agreed the treatment to
the relevant accounting standard and the accounting policies.
Management fee income
For each contract we obtained copies of the management fee contract and performed the
following:
•
We obtained a copy of management’s paper regarding the revenue recognition policy for the
contract. We challenged the judgements made in relation to the performance obligations
identified with management and considered these in light of our review of the contract and
requirements of applicable accounting standards.
•
We obtained management’s assessment of the Group’s performance against the performance
obligations identified in each contract. For performance obligations that were met in the
period we agreed to external sources or direct confirmation with the associated customer.
•
We obtained management’s paper considering any constraint of revenue in accordance with
applicable accounting standards. We challenged management regarding the assumptions
made of the future recoverability of revenue recognised as per the underlying project
appraisal. Refer to the Valuation of investment properties and carrying value of trading properties
key audit matter above for work completed on the development appraisals.
Key observations
We did not identify any indicators to suggest that the revenue and profit recognition from the sale
of land and buildings, from construction contract income or from management fee income has
been recognised inappropriately.
www.inlandhomesplc.com
Annual Report and Accounts 2021
89
FINANCIALS
Independent Auditor’s report to the
members of Inland Homes plc CONTINUED
Key audit matter
How the scope of our audit addressed the key audit matter
Recoverability of
receivables from Joint
Ventures (Note 4, 25) and
the Associate (Note 4,
26) and other significant
receivables (Note 4, 29)
The Group has made a number
of loans to Joint Venture and
Associate entities where
the recoverability of these
receivables is underpinned by
the net realisable value of the
underlying development held
within the Special Purpose
Vehicle (“SPV”).
There are also a number of
other significant receivables
due from management fee
contracts. The recoverability of
these receivables is dependent
on either the value of the land
or the profitability of completed
developments over which the
Group holds security. The
valuation and profitability of
the developments is subject
to significant judgments and
assumptions.
Because of the significance
of these receivables and the
judgements involved in assessing
recoverability we considered this
to be a key audit matter.
Our audit procedures over the value of land and profitability of completed developments are those
set out in the valuation of investment properties and carrying value of trading properties key audit
matter outlined earlier in this report.
We then compared those values to the respective receivable balances.
Key Observation
We did not identify any indicators to suggest that the receivables from Joint Ventures and the
Associate, and other significant receivables are not recoverable at the amount recorded in the
financial statements.
Prior period adjustments
(Note 41)
During the year the Directors
identified a liability for deferred
consideration on one of the
development sites that had not
been appropriately accounted
for in previous periods.
During the audit process a
classification adjustment was
identified between investment in
subsidiaries and trade and other
receivables related to the parent
company statement of financial
position. Additionally, a second
adjustment was identified
related to inappropriate netting
off of intercompany balances.
Prior period adjustments were
recognised for all of these
matters.
There is a risk that these
adjustments were incorrectly or
incompletely identified and not
presented in accordance with
the requirements of accounting
standards.
Our audit work included, but was not restricted to, the following:
•
We obtained an understanding of the deferred consideration and agreed the amount and
terms to the underlying agreement.
•
We performed audit procedures through a sample selection of development sites to verify
there were no other instances of deferred consideration or other key terms that are not
accounted for.
•
We obtained an understanding of the nature of the balances in the parent company balance
sheet and verified whether they related to an investment in subsidiary or intercompany
balances.
•
We agreed the counterparties in the intercompany schedule to underlying agreements as
appropriate.
•
We agreed the treatment of these adjustments to the relevant accounting standard and the
accounting policies.
•
We considered the appropriateness of the disclosures made in the financial statements for
these adjustments.
•
We consulted with BDO internal technical experts to assess and challenge the conclusions
reached by the audit team based on the evidence provided by management of the accounting
treatment and classification of the adjustments.
Key Observation
Based on the procedures performed, we consider that prior period adjustments have been
appropriately recognised in the annual report and financial statements.
Inland Homes plc
Stock code: INL
90
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We
consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of
reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality
level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will
not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance
materiality as follows:
Group financial statements
Parent company financial statements
2021
2020
2021
2020
Materiality
£4,000,000
£3,900,000
£610,000
£740,000
Basis for determining
materiality
1% of Group total assets
90% of Group specific materiality
Rationale for the
benchmark applied
We determined that Group total assets would
be the most appropriate basis for setting overall
financial statement materiality, as we consider
this to be one of the principal considerations for
members in assessing the financial performance
of the Group.
Capped at 90% of Group specific materiality
given the assessment of the components
aggregation risk.
Performance
materiality
£2,200,000
£2,145,000
£335,500
£555,000
Basis for determining
performance
materiality
55% of materiality
In determining performance materiality we have
considered the following factors:
• Our risk assessment, including our assessment
of the Group’s overall control environment; and
• Our past experience of the audit, including
expected total value of known or likely
misstatements.
Capped at 90% of Group
specific performance
materiality given the
assessment of the
components aggregation
risk.
75% of materiality
In determining
performance materiality
we have considered the
following factors:
• Our risk assessment,
including our
assessment of the
Parent Company’s
overall control
environment; and
• Our past experience
of the audit, including
expected total value
of known or likely
misstatements
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Annual Report and Accounts 2021
91
FINANCIALS
Specific materiality
We also determined that for other classes of transactions, balances or disclosures that impact adjusted earnings (being profit before
tax adjusted for investment property valuations), a misstatement of less than materiality for the financial statements as a whole,
specific materiality, could influence the economic decisions of the users of the financial statements. As a result, we applied a specific
materiality of £685,000 (2020: £825,000) to these areas which represents 5% of the three year average adjusted earnings (2020: 5% of
the three year average adjusted earnings). The three year average was taken to better reflect a consistent basis in a business where
there are inconsistent operational cycles and trading activity.
We further applied a performance materiality level of 55% (2020: 55%) of specific materiality to ensure that the risk of errors
exceeding specific materiality was appropriately mitigated.
Component materiality
We set materiality for each component of the Group based on a % of assets, adjusted profit before tax or revenue (capped at 90%
of group specific materiality) dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from £1 to £610,000. In the audit of each component, we further applied performance materiality
levels of 75% of the component materiality (capped at 90% of group specific performance materiality) to our testing to ensure that the
risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £80,000 (2020: £75,000)
for all items audited to financial statement materiality, and £13,700 (2020: £20,000) for all items audited to specific materiality. The
reporting threshold applied for the Parent Company was set at £13,700 (2020: £37,000). We also agreed to report differences below
these thresholds that, in our view, warranted reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information included in the Report and
Accounts other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance
conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine
whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the
Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
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 financial statements; and
•
the Strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the strategic report or
the Directors’ report.
Matters on which we
are required to report
by exception
We have nothing to report in respect of the following matters in relation to which 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.
Inland Homes plc
Stock code: INL
92
Independent Auditor’s report to the
members of Inland Homes plc CONTINUED
Responsibilities of Directors
As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it operates
and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including fraud. We considered
the significant laws and regulations to be the Companies Act 2006, the AIM Listing Rules, DTR rules, and the applicable accounting
framework.
Our procedures included:
•
Agreement of the financial statement disclosures to underlying supporting documentation to assess compliance with those laws
and regulations having an impact on the financial statements;
•
Enquiries of management and the Audit Committee as to their identification of any non-compliance with laws or regulations, or
any actual or potential claims;
•
Review of minutes of Board meetings throughout the period;
•
Obtaining an understanding of the control environment in monitoring compliance with laws and regulations and performing our
own checks of compliance with relevant requirements.
We also assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud might occur
by considering the key risks impacting the financial statements. We identified specific fraud risks with respect to the valuation of
investment property and carrying value of trading properties and revenue and profit recognition which have been included as key
audit matters and our audit response is set out in that section of our audit report.
In relation to the risk of management override of internal controls which was also identified as a fraud risk, we reviewed journal
entries processed during and subsequent to the year end and evaluated whether there was evidence of bias that represented a risk
of material misstatement due to fraud. We selected a sample of journal entries which met our risk criteria and agreed the entry to
supporting documentation and agreed the entry was appropriate.
We communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained
alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud
may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations
in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and
transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
www.inlandhomesplc.com
Annual Report and Accounts 2021
93
FINANCIALS
Use of our report
This report is made solely to the Parent 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 Parent 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 Parent Company and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Christopher Young (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
31 January 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Inland Homes plc
Stock code: INL
94
Independent Auditor’s report to the
members of Inland Homes plc CONTINUED
Continuing operations
Note
Year ended
30 September
2021
£m
Year ended
30 September
2020
as restated
£m
Fifteen-month
period ended
30 September
2019
£m
Revenue
9, 10
181.7
124.0
147.9
Cost of sales
10
(148.0)
(99.2)
(115.4)
Expected credit loss
29
(1.7)
(2.8)
–
Gross profit
32.0
22.0
32.5
Administrative expenses
10, 11
(7.5)
(12.6)
(15.7)
Gain on sale of joint venture interest
25
–
–
12.6
Share of (loss) / profit of joint ventures
25
(1.9)
2.0
2.0
Share of (loss) / profit of associate
26
(0.1)
(0.2)
0.2
Revaluation of assets held for sale
30
(1.2)
2.0
–
Loss on sale of controlling interest in subsidiary
25
–
(2.0)
–
Loss on sale of property, plant and equipment
20
(0.1)
–
–
Loss on sale of assets held for sale
30
(0.8)
–
–
Revaluation of investment property
19
0.6
0.6
1.1
Operating profit
21.0
11.8
32.7
Finance cost - interest expense
14
(9.3)
(9.5)
(9.4)
Finance income - interest receivable and similar income
15
1.5
1.1
1.7
Profit before tax
13.2
3.4
25.0
Current tax charge
16
(4.3)
(0.9)
(1.1)
Deferred tax credit / (charge)
16
0.7
(0.5)
0.7
Total profit for the year / period
9.6
2.0
24.6
Revaluation of quoted investments
23
–
(0.6)
(0.4)
Total profit and comprehensive income for the year / period
9.6
1.4
24.2
Earnings per share for profit attributable to the equity holders of the
Company during the year/period
– basic
17
4.21p
0.65p
11.79p
– diluted
17
4.13p
0.64p
11.49p
The accompanying Notes form an integral part of these Financial Statements.
www.inlandhomesplc.com
Annual Report and Accounts 2021
95
FINANCIALS
Group statement of comprehensive income
for the year ended 30 September 2021
Group statements of financial position
at 30 September 2021
Company number: 5482990
Note
As at
30 September
2021
£m
As at
30 September
2020
as restated
£m
As at
30 September
2019
as restated
£m
ASSETS
Non-current assets
Investment properties
19
36.0
43.5
49.3
Property, plant and equipment
20
4.8
5.6
6.3
Right-of-use assets
21
0.9
1.2
–
Intangible assets
22
0.1
0.2
0.3
Investments in quoted companies
23
0.5
0.5
1.1
Investment in joint ventures
25
4.2
8.8
8.0
Amounts due from joint ventures
25
32.7
–
1.0
Investment in associate
26
1.0
1.1
1.3
Other receivables
29
36.3
22.3
21.8
Total non-current assets
116.5
83.2
89.1
Current assets
Inventories
28
163.9
178.8
197.6
Trade and other receivables
29
116.9
60.9
45.4
Assets held for sale
30
1.4
12.5
4.7
Amounts due from associate
26
3.1
3.1
3.3
Amounts due from joint ventures
25
3.9
42.2
34.8
Cash and cash equivalents
31
12.1
15.7
10.9
Total current assets
301.3
313.2
296.7
TOTAL ASSETS
417.8
396.4
385.8
LIABILITIES
Current liabilities
Bank loans and overdrafts
32
(30.7)
(41.5)
(48.0)
Other loans
32
(22.3)
(25.3)
–
Trade and other payables
33
(84.5)
(32.8)
(47.7)
Deferred income
37
(5.5)
(10.0)
–
Amounts due to joint ventures
25
–
(6.2)
–
Lease liabilities
34
(0.3)
(0.3)
–
Corporation tax
(4.3)
(3.1)
(2.2)
Other financial liabilities
36
(12.4)
(2.0)
(4.1)
Total current liabilities
(160.0)
(121.2)
(102.0)
Non-current liabilities
Bank loans
32
(37.6)
(43.9)
(82.1)
Other loans
32
–
(13.1)
(7.2)
Deferred income
37
–
(2.1)
–
Lease liabilities
34
(0.6)
(0.9)
–
Other financial liabilities
36
(3.6)
(10.3)
(5.2)
Zero Dividend Preference shares
32
(32.0)
(30.2)
(25.9)
Deferred tax
27
(1.0)
(1.7)
(1.2)
Total non-current liabilities
(74.8)
(102.2)
(121.6)
TOTAL LIABILITIES
(234.8)
(223.4)
(223.6)
Net current assets
141.3
192.0
194.7
Net assets
183.0
173.0
162.2
EQUITY
Share capital
39
23.0
22.8
20.7
Share premium account
39
43.9
43.7
36.4
Employee benefit trust
39
(1.1)
(1.1)
(1.1)
Special reserve
39
1.1
1.1
1.1
Retained earnings
39
116.1
106.5
105.1
TOTAL EQUITY
183.0
173.0
162.2
The Financial Statements were approved and authorised for issue by the Board of Directors on 31 January 2022.
Stephen Wicks
Nish Malde
Director
Director
The accompanying Notes form an integral part of these Financial Statements.
Inland Homes plc
Stock code: INL
96
Company statements of financial position
at 30 September 2021
Company number: 5482990
Note
As at
30 September
2021
£m
As at
30 September
2020
as restated
£m
As at
30 September
2019
as restated
£m
ASSETS
Current assets
Trade and other receivables
29
119.1
103.5
79.7
Cash and cash equivalents
31
7.3
8.2
7.1
Total current assets
126.4
111.7
86.8
TOTAL ASSETS
126.4
111.7
86.8
LIABILITIES
Non-current liabilities
Trade and other payables
33
(32.1)
(30.3)
(26.2)
Total current liabilities
(32.1)
(30.3)
(26.2)
Current liabilities
Other loans
32
(7.0)
(7.0)
–
Trade and other payables
33
(0.5)
(0.8)
(0.6)
Total current liabilities
(7.5)
(7.8)
(0.6)
TOTAL LIABILITIES
(39.6)
(38.1)
(26.8)
Net current assets
118.9
103.9
86.2
Net assets
86.8
73.6
60.0
EQUITY
Share capital
39
23.0
22.8
20.7
Share premium account
39
43.9
43.7
36.4
Employee benefit trust
39
(1.1)
(1.1)
(1.1)
Special reserve
39
1.1
1.1
1.1
Retained earnings
39
19.9
7.1
2.9
TOTAL EQUITY
86.8
73.6
60.0
Retained earnings for the Company includes a profit after tax for the year of £12.8m (2020: profit after tax of £4.2m).
The Financial Statements were approved and authorised for issue by the Board of Directors on 31 January 2022.
Stephen Wicks
Nish Malde
Director
Director
The accompanying Notes form an integral part of these Financial Statements.
www.inlandhomesplc.com
Annual Report and Accounts 2021
97
FINANCIALS
Statements of changes in equity
for the year ended 30 September 2021
Group
Share
capital
£m
Share
premium
£m
Employee
Benefit
Trust
£m
Special
reserve
£m
Retained
earnings
£m
Total
£m
As at 30 September 2019
20.7
36.4
(1.1)
1.1
105.1
162.2
Total profit for the period
–
–
–
–
2.3
2.3
Other comprehensive income
–
–
–
–
(0.6)
(0.6)
Transactions with owners:
Issue of ordinary shares
2.1
7.3
–
–
–
9.4
As at 30 September 2020 - as previously stated
22.8
43.7
(1.1)
1.1
106.8
173.3
Effect of prior period adjustment
–
–
–
–
(0.3)
(0.3)
As at 30 September 2020 – as restated
22.8
43.7
(1.1)
1.1
106.5
173.0
Total profit for the period
–
–
–
–
9.6
9.6
Other comprehensive income
–
–
–
–
–
–
Transactions with owners:
Exercise of share options
0.2
0.2
–
–
–
0.4
As at 30 September 2021
23.0
43.9
(1.1)
1.1
116.1
183.0
Company
As at 30 September 2019
20.7
36.4
(1.1)
1.1
2.9
60.0
Total profit for the period
–
–
–
–
4.2
4.2
Transactions with owners:
Issue of ordinary shares
2.1
7.3
–
–
–
9.4
As at 30 September 2020
22.8
43.7
(1.1)
1.1
7.1
73.6
Total profit for the period
–
–
–
–
12.8
12.8
Transactions with owners:
Exercise of share options
0.2
0.2
–
–
–
0.4
As at 30 September 2021
23.0
43.9
(1.1)
1.1
19.9
86.8
The accompanying Notes form an integral part of these Financial Statements.
Inland Homes plc
Stock code: INL
98
Group statement of cash flows
for the year ended 30 September 2021
Year ended
30 September
2021
£m
Year ended
30 September
2020 as
restated
£m
Fifteen-month
period ended
30 September
2019 as
restated
£m
Cashflow from operating activities
Profit for the year/period before tax
13.2
3.4
25.0
Adjustments for:
- depreciation – property, plant and equipment
0.8
1.0
0.7
- depreciation – right-of-use assets
0.3
0.3
–
- amortisation
0.1
0.1
–
- share-based payments
–
–
0.3
- revaluation of investment property
(0.6)
(0.6)
(1.1)
- revaluation of assets held for sale
1.2
(2.0)
–
- interest expense
9.3
9.2
9.4
- interest receivable and similar income
(1.5)
(1.1)
(1.7)
- gain on sale of joint venture interest
–
–
(12.6)
- loss on sale of controlling interest in subsidiary undertaking
–
2.0
–
- IFRS 15 opening adjustment
–
–
0.2
- loss on sale of property, plant and equipment
0.1
–
–
- loss on sale of assets held for sale
0.8
–
–
- share on loss/(profit) of joint ventures
1.9
(2.0)
(2.0)
- share of loss/(profit) of associate
0.1
0.2
(0.2)
Corporation tax payments
(3.1)
–
(5.6)
Changes in working capital:
- decrease/(increase) in inventories
30.8
(45.4)
(56.0)
- increase in trade and other receivables
(50.8)
(11.8)
(3.7)
- increase in trade and other payables
50.6
22.1
7.9
- (decrease)/increase in deferred income
(6.6)
12.1
–
- increase/(decrease) in other financial liabilities
0.7
(3.8)
5.6
- increase/(decrease) in trading balance due to/from joint ventures
–
(0.1)
4.1
Net cash inflow/(outflow) from operating activities
47.3
(16.4)
(29.7)
Cashflow from investing activities
Interest received
–
0.2
1.0
Purchase of property, plant and equipment
(0.1)
(0.3)
(5.4)
Purchase of intangible assets
–
–
(0.3)
Purchase of investment property
(5.3)
(1.7)
(1.5)
Additions of assets held for sale
(0.8)
–
–
Proceeds from sale of subsidiary
1.0
–
–
Proceeds from sale of investment property
–
1.4
–
Proceeds from sale of assets held for sale
6.4
–
–
Purchase of controlling interest in joint venture
(0.4)
–
–
Loans provided under management fee contracts
(17.7)
(3.4)
(4.2)
Loans provided to joint ventures
(4.1)
(13.6)
(19.9)
Amounts repaid by joint ventures
9.7
9.2
–
Distribution of profit from joint venture
0.4
2.4
1.0
Amounts repaid by associate
–
–
2.6
Net cash outflow from investing activities
(10.9)
(5.8)
(26.7)
Cashflow from financing activities
Interest paid
(5.7)
(5.8)
(7.0)
Repayment of borrowings
(53.5)
(33.4)
(20.0)
Repayment of lease liabilities
(0.3)
(0.3)
–
New loans
20.4
44.7
52.6
Repayment of loan from joint ventures
(1.3)
–
–
Proceeds from loan from joint ventures
–
3.1
–
Proceeds from other financing arrangements
–
6.6
–
Proceeds from issue of shares
–
9.4
–
Issue of Zero Dividend Preference shares
–
2.7
6.2
Equity dividends paid to ordinary shareholders
–
–
(5.0)
Exercise of share options
0.4
–
0.1
Net cash (outflow)/inflow from financing activities
(40.0)
27.0
26.9
Net increase/(decrease) in cash and cash equivalents
(3.6)
4.8
(29.5)
Net cash and cash equivalents at beginning of year
15.7
10.9
40.4
Net cash and cash equivalents at end of year
12.1
15.7
10.9
The accompanying Notes form an integral part of these Financial Statements.
www.inlandhomesplc.com
Annual Report and Accounts 2021
99
FINANCIALS
Notes to the financial statements
for the year/period ended 30 September 2021
1. Nature of operations and general information:
Inland Homes PLC (“Inland Homes”, “The Group“ or “Company“) registered number 05482990, the ultimate Parent Company, is a public
limited company incorporated and domiciled in England and Wales. The Company’s shares are quoted on AIM, a market operated by the
London Stock Exchange. The Group’s registered office is located at Burnham Yard, London End, Beaconsfield, HP9 2JH.
The principal activities of Inland Homes are to acquire brownfield, mixed-use or residential land and to then seek achievement of
planning consent for development. The Group also develops a number of plots for private sale and constructs partnership housing for
registered providers. These activities are grouped into the following business segments:
• Land sales: The Group sells its own land assets, which have the benefit of planning permission, to third parties.
• Asset management fees: The Group engages as an asset manager to third-party landowners to provide land management and
planning services.
• Contract income: The Group constructs private or affordable housing projects for a third-party landowner.
• House building: The Group constructs private or affordable housing units for sale to individuals or private investors.
• Rental income: The Group holds property assets for rental income purposes as cost mitigation in the short and medium term of
site development.
• Investment properties: The Group holds property assets for rental income purposes for the long term.
• Central support: The Group’s central support functions supporting all other segments.
At 30 September 2021, the Group, directly or indirectly, held interests in equity via holdings of ordinary shares of the following:
Company name
Principal activity
Holding and
voting rights
Subsidiary undertakings
Appletree Farm Cressing Limited
Real estate development
100%
Aston Clinton Developments Limited
Real estate development
100%
Basildon Developments Limited
Real estate development
100%
Basildon United Football, Sports & Leisure Limited
Real estate development
100%
Brooklands Helix Developments Limited
Real estate development
100%
Bucks Developments Limited
Real estate development
100%
Bucknalls Developments Limited
Real estate development
100%
Bulwark Properties Limited
Real estate development
100%
Chapel Riverside Developments Limited
Real estate development
100%
Dormant Company 04528421 Limited
Dormant company
100%
Dormant Company 06758784 Limited
Dormant company
100%
Dormant Company 06764423 Limited
Dormant company
100%
Dormant Company 08631901 Limited
Dormant company
100%
Dormant Company 08813334 Limited
Dormant company
100%
Dormant Company 08944533 Limited
Dormant company
100%
Dormant Company 09437864 Limited
Dormant company
100%
Dormant Company 09775087 Limited
Dormant company
100%
Dormant Company 10651624 Limited
Dormant company
100%
Dormant Company 11694060 Limited
Dormant company
100%
Dormant Company 12369803 Limited
Dormant company
100%
Dormant Company 12727169 Limited
Dormant company
100%
Dormant Company 12812913 Limited
Dormant company
100%
High Wycombe Developments No. 2 Limited
Real estate development
100%
Hitchin Properties Limited
Real estate development
100%
Hugg Homes Limited
Letting or operating of real estate
100%
Inland (STB) Limited
Provision of finance
100%
Inland Commercial Limited
Real estate development
100%
Inland Corporate Limited
Holding company
100%
Inland Developments Limited
Real estate development
100%
Inland Finance Limited
Real estate development
100%
Inland Homes (Essex) Limited
Real estate development
100%
Inland Homes 2013 Limited
Holding company
100%
Inland Homes Developments Limited
Real estate development
100%
Inland Lifestyle Limited
Real estate development
100%
Inland Limited
Real estate development
100%
Inland Partnerships Limited
Real estate development
100%
Inland Property Finance Limited
Provision of finance
100%
Inland Property Limited
Real estate development
100%
Inland Strategic Land Limited
Real estate development
100%
Inland ZDP PLC
Provision of finance
100%
Poole Investments Limited
Real estate development
100%
Rosewood Housing Limited
Real estate development
100%
Inland Homes plc
Stock code: INL
100
Company name
Principal activity
Holding and
voting rights
Wilton Park Developments Limited
Real estate development
100%
Interests in joint ventures
Centre Square Commercial Limited
Letting or operating of real estate
50%
Centre Square Lifestyle Limited
Letting or operating of real estate
50%
Cheshunt Lakeside Developments Limited
Real estate development
50%
Delamare Estate (Cheshunt) Limited
Real estate development
50%
Europa Park LLP
Real estate development
50%
Gardiners Park LLP
Real estate development
50%
High Wycombe Developments Limited
Real estate development
50%
Interests in associate
Troy Homes Limited
Real estate development
25%
Inland Homes 2013 Limited is the only direct subsidiary of the
Company and all others are indirect holdings.
All of the above entities are incorporated and domiciled in
England and Wales, and are registered at the same registered
office of the Company, with the exception of:
• Europa Park LLP and Gardiners Park LLP which are
registered at Springfield Lodge, Colchester Road,
Chelmsford, Essex, CM2 5PW
• Troy Homes Limited which is registered at 5 Technology Park,
Colindeep Lane, Colindale, London, NW9 6BX
The joint ventures and associate listed above are accounted for
using the equity method.
There are no restrictions on the ability of the Company or its
subsidiaries to transfer cash or other assets to or from other
entities in the Group.
Incorporation of subsidiaries
During the year ended 30 September 2021, the Group
incorporated the following subsidiaries:
• Inland Lifestyle Limited on 9 February 2021
• Zenith Living (Barking) Limited on 15 February 2021
Acquisition of subsidiaries
During the year ended 30 September 2021, the Group acquired
the following subsidiaries:
• Appletree Farm Cressing Limited on 9 October 2020
• Hitchin Properties Limited on 31 August 2021
• Aston Clinton Developments Limited on 31 August 2021
The Group acquired 50% of the share capital of Bucknalls
Developments Limited on 30 September 2021, 50% of Dormant
Company 09437864 Limited on 10 February 2021 and 50% of
the share capital of West Drayton Developments Limited on
17 March 2021, previously joint ventures.
Disposals of subsidiaries
During the year ended 30 September 2021, the Group disposed of:
• Inland Commercial Property Limited on 9 January 2021.
A loss of £4,000 arose on disposal.
• Zenith Living (Barking) Limited on 25 February 2021.
No profit or loss arose on this disposal.
Liquidation of subsidiaries
During the year ended 30 September 2021, the Group liquidated
the following subsidiaries:
• West Drayton Developments Limited on 22 June 2021
• Merrielands Crescent Dagenham LLP on 13 July 2021
• Inland Helix Limited on 16 July 2021
Investments in joint ventures
The Group holds the following interests in joint ventures:
• Centre Square Commercial Limited: In August 2020, High
Wycombe Developments Limited incorporated this subsidiary
to hold commercial property at a site in High Wycombe,
Buckinghamshire for net rental income purposes and
long-term capital gain. The results are consolidated by High
Wycombe Developments Limited and are, therefore, included
in these disclosures in Note 25.
• Centre Square Lifestyle Limited: In November 2019, High
Wycombe Developments Limited incorporated this subsidiary
to hold residential investment property at a site in High
Wycombe, Buckinghamshire for net rental income purposes
and long-term capital gain. The results are consolidated by
High Wycombe Developments Limited and are, therefore,
included in these disclosures in Note 25.
• Cheshunt Lakeside Developments Limited and Delamare
Estate (Cheshunt) Limited: In April 2018, the Group entered
into a joint venture whose purpose was to obtain planning
permission and develop land at Cheshunt, Hertfordshire.
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 and promote return by way of
a performance payment.
1. Nature of operations and general information CONTINUED
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FINANCIALS
• Europa Park LLP: In November 2016, the Group entered into
a joint venture which acquired a site in Ipswich, Suffolk.
The development completed in the six-month period ended
31 March 2021 and the entity exists to support the defects
period of the completed development.
• Gardiners Park LLP: In November 2016, the Group entered
a joint venture with Constable Homes Limited to develop a
site in Basildon, Essex. The development completed in the
six-month period ended 31 March 2021 and the entity exists
to support the defects period of the completed development.
• High Wycombe Developments Limited: In December 2019,
the Group entered into a joint venture to develop a site of
private units in High Wycombe, Buckinghamshire.
The development was completed in the year.
Investment in associate
The Group holds an interest in Troy Homes Limited. In October
2015, the Group acquired 25% of Troy Homes Limited, a
premium housebuilder, and is entitled to 25% of the net returns.
2. 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
accounting standards in conformity with the requirements of
the Companies Act 2006 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 Parent Company Financial Statements have been prepared
in accordance with FRS 101, Financial Reporting Standards
Reduced Disclosure Framework.
The balance sheet heading relating to the Company’s
investments in subsidiaries has been amended to “Fixed assets”
from “Non-current assets” to be consistent with the Company’s
presentation of its balance sheet in accordance with the balance
sheet formats of the Companies Act 2006. Assets are classified
in accordance with the definitions of fixed and current assets in
the Companies Act instead of the presentation requirements of
IAS 1 Presentation of Financial Statements.
The Consolidated Financial Statements present the results
of the Group as if it formed a single entity. Intercompany
transactions and balances between Group companies are
eliminated in full.
The Consolidated Financial Statements are presented in GBP,
which is also the Group and Parent Company’s functional
currency.
Disclosure exemptions adopted
In preparing the Financial Statements of the Parent Company,
advantage has been taken of all disclosure exemptions conferred
by FRS 101. The Parent Company Financial Statements do not
include:
• a statement of cash flows;
• the effect of future accounting standards not yet adopted; and
• disclosure of related party transactions with other wholly
owned members of the Group headed by Inland Homes plc.
In addition, and in accordance with FRS 101, further disclosure
exemptions have been adopted because equivalent disclosures
are included in the Consolidated Financial Statements of Inland
Homes Plc. The Parent Company Financial Statements do not
include certain disclosures in respect of:
• Financial Instruments (other than certain disclosures
required as a result of recording financial instruments at fair
value); and
• Fair value measurement (other than certain disclosures
required as a result of recording financial instruments at fair
value).
The Company has taken advantage of the exemption allowed
under section 408 of the Companies Act 2006 and does not
present its own profit and loss account in these Financial
Statements.
Going concern
The Directors are required to assess the Group’s ability to
continue as a going concern for a period of at least the next
twelve months.
The Group’s going concern assessment considers its principal
risks which are set out in the "Principal risks and uncertainties"
section on Pages 46 to 54.
The Board has reviewed the performance of the Group for the
current reporting period and prepared forecasts for a period
covering fifteen months from the date of approval of this Annual
report.
In preparing forecasts the Directors have considered the
prevailing market conditions and current and known future
disruptions brought about by COVID-19, alongside the other
risks and uncertainties, including credit risk and liquidity risk,
the present inflationary economic climate, the current and
future forecast demand for land with planning consent and the
current and expected future housing market conditions in the
South and South East of England where the Group operates.
The Base Case forecast includes all known and anticipated
cash inflows and confirms that the Group has sufficient working
capital for the foreseeable future. The Group currently has
forward residential home sales of £31.0m, which includes a
large block sale to a third party scheduled to complete during
the third quarter of the financial year ending 30 September
2022. Additionally, the Group has a forward partnership housing
contract income order book of £186.8m. The Group, excluding
joint ventures, currently has annualised residential and
commercial rental income of c£1.5m.
The Directors have also assumed the continuation of stringent
cash management procedures and debt reprofiling strategy,
which have been in place since March 2020 and which saw
reduction in net debt in the year ended 30 September 2021. The
Directors have also assumed a continuation of this strategy in
the period under review and expect net debt to reduce in the
current year ending 30 September 2022.
These procedures have seen net debt decreased from £148.2m
at 30 September 2020 to £118.1m at 30 September 2021.
Inland Homes plc
Stock code: INL
102
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
The Group has done a considerable amount of work in
successfully extending the time profile of its debt facilities. The
undrawn debt facilities at 30 September 2021 were £33.9m. The
main strategic objective of the Group in the current financial
year remains the reduction of both net debt and net gearing.
This includes two loan facilities with the same lender amounting
to £10.3m, of which £7.0m was repaid in November 2021 and
£2.0m was repaid in December 2021. The remaining £1.3m
has been extended to 31 December 2023. Three loan facilities
amounting to £37.9m have been refinanced to 30 June 2023.
The balance of remaining borrowing facilities falling due for
repayment within one year represents amounts secured on
residential unit sales which will be repaid in full as those
residential sales complete. At the date of this report, the
Group has borrowing facilities totalling £27.0m falling due for
repayment within twelve months.
A revolving credit facility of £65.0m expires in March 2023 of
which £29.8m is drawn down at the date of this report. The
Directors intend to commence a dialogue with the lender during
the current financial year to 30 September 2022 to further
extend the existing facility. This existing lender has supported
the Group since March 2019 and has supported numerous
successful house building development sites since that date.
A second revolving credit facility of £14.9m has been extended
to May 2022 with an agreement in principle from the lender to
extend this further to May 2027, with an option for the Group to
break at the end of three years. As demonstrated by the positive
reprofiling changes made to the Group’s debt, explained above,
the Directors hold positive relationships with funders and have
held constructive discussions with all existing and several other
potential lenders.
At the date of this report there is no binding commitment
to extend or refinance these RCF facilities beyond the dates
referred to above but in view of the recent track record, the
strength of the relationships, the availability of security for
lenders and the number of options available, the Directors
expect to be able to do so.
The Directors have performed detailed sensitivity analyses to
test the Group's future liquidity and forecast banking covenant
compliance based on several scenarios.
The Group has forecast planned land sales in the next twelve
months as part of its normal course of business and as part of
the Group’s going concern review, the Directors have considered
the impact of a delay of three months on each of these sales in
isolation. They have also considered, again in isolation, a price
reduction of 10% on all residential unit sales that are not in
the hands of solicitors. Finally, the Group considered a delay in
residential unit sales by three months. None of these individual
scenarios leads to an issue with either the Group's liquidity or its
debt covenants.
The Directors have also considered the following severe, but
plausible downside scenario:
• Only residential unit sales that have exchanged or are
currently with solicitors to exchange will complete as forecast
and all residential units that are available for sale are delayed
by three months; and
• All planned land sales and where applicable management
fees, where contracts have not been exchanged at the date of
this report are delayed by six months.
Under this severe, but plausible scenario the Group may have
to consider using capital markets to raise additional debt or
equity to generate additional liquidity for the Group to meet
its obligations as they contractually fall due. The Group has
in place an approved mandate to use capital markets without
pre-emption to issue up to approximately 46 million shares
and successfully raised £9.9m, before expenses, in May 2020.
Additionally, under this severe, but plausible scenario, the
postponement or deferral of completions would delay revenue
and profit recognition under IFRS 15 ‘Revenue from Contracts
with Customers’ but means that the Group would still remain
completely covenant compliant with all of its lenders. Based on
those assumptions, the Group would remain able to meet its
debts as they fell due.
The Strategy outlined above details our approach but, the
Board is mindful that no one can forecast exactly how changing
macroeconomic circumstances post pandemic will play out
and how this may affect the Group, industry and the wider
economy for the foreseeable future. In particular, future
changes to government policy relating to the housing market
could have implications for the Group as it would for many
other businesses. Such a situation would require the Board
to re-examine the Group's financial position at the time and if
necessary, report any significant adverse changes.
At the time of approving the Annual Report and after making
appropriate enquiries, the Directors consider that the Group
has adequate resources to continue in operational existence
for the foreseeable future. The Directors therefore consider it
appropriate to prepare the financial statements on the going
concern basis.
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3. Changes in accounting policies
The principal accounting policies are described in Note 4 and
are consistent with those applied in the Group’s Financial
Statements for the year ended 30 September 2021 and the year
ended 30 September 2020, as amended to reflect the adoption of
new standards, amendments and interpretations which became
effective in the year as shown in Note 5.
4. Significant accounting policies
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 September 2021. Where the
Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of
the following elements are present: power over the subsidiary;
exposure, or rights to, the variable returns from its involvement
with the subsidiary; and the ability to affect those returns
through its power over the subsidiary. The Group obtains and
exercises control through voting rights. Further information can
be found in Notes 1 and 24.
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.
Business combinations
At the time of acquisition, the Group considers whether each
acquisition represents the acquisition of a business or the
acquisition of an asset. The Group accounts for an acquisition
as a business combination where an integrated set of activities
is acquired in addition to the property. Where such acquisitions
are not judged to be the acquisition of a business, they are not
treated as business combinations. Rather, the cost to acquire
the corporate entity is allocated between the identifiable assets
and liabilities of the entity based upon their relative fair values
at the acquisition date. Accordingly, no goodwill or additional
deferred tax arises.
Segmental reporting
The Group has a number of operating segments. In identifying
these operating segments, management generally follows the
Group’s service lines representing its main activities. Each of
these operating segments are managed separately.
In addition, corporate assets which are not directly attributable
to the business activities of any operating segment are allocated
to the central support segment. This primarily relates to the
Group’s headquarters.
Revenue
The Group has adopted IFRS 15 ‘Revenue from Contracts with
Customers’. This establishes a principles-based approach for
revenue recognition and is based on the concept of recognising
revenue for obligations only when they are satisfied and the
control of goods or services is transferred.
The standard is applicable to sales of land and sales of
reversionary freehold, sales of residential units, property
construction services and management fees from management
of sites owned by third parties, but excludes rental income which
is accounted for within the scope of IFRS 16 ‘Leases’.
To determine whether to recognise revenue, the Group follows a
five-step process:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance
obligations
5. Recognising revenue when/as performance obligations are
satisfied
The Group often enters into transactions with multiple
performance obligations. In these cases, the total transaction
price for a contract is allocated amongst the various
performance obligations based on their relative stand-alone
selling prices. The transaction price for a contract excludes any
amounts collected on behalf of third parties.
Revenue is recognised either at a point in time or over time,
when (or as) the Group satisfies performance obligations by
transferring the promised goods or services to its customers.
The Group recognises contract liabilities for consideration
received in respect of unsatisfied performance obligations and
reports these amounts as other payables in the Statement of
Financial Position (Note 33). Similarly, if the Group satisfies a
performance obligation before it receives the consideration,
the Group recognises either a contract asset or receivable in
the Statement of Financial Position, depending on whether
something other than the passage of time is required before the
consideration is due.
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.
Sales of land and sales of reversionary freeholds
Revenue from the sale of land and reversionary freeholds is
recognised at a point in time on legal completion. In some
instances, payment terms are deferred – such balances are
discounted if deferred terms are more than one year.
Sales of residential units
Revenue from the sale of residential units is recognised at a
point in time on legal completion.
Inland Homes plc
Stock code: INL
104
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
4. Significant accounting policies CONTINUED
Contract income
Contract income relates to where the Group is providing
construction services to third parties, resulting in a completed
developed property, on land that is not controlled by the Group
during the development phase.
Revenue is recognised over time, with reference to the stage
of completion of the contract. The stage of completion is
determined using an input method that reflects the development
cost incurred as a proportion of the total expected development
cost, as it is considered proportionate to the satisfaction of the
underlying performance obligation. These contracts are typically
for a fixed cash consideration received on a monthly cycle over
the course of the construction services contract.
Costs to obtain contracts
The Group recognises as an asset incremental cost incurred
to obtain future build contracts where the costs would not
have been incurred otherwise. A contract asset is amortised
on a systematic basis proportionate to the amount of revenue
recognised in an accounting period.
Management planning and land management services
For each planning and land management services contract
there are a number of milestones, which vary from contract
to contract, but in all cases include a planning and a disposal
obligation. The Directors must exercise judgement over whether
each milestone constitutes a distinct performance obligation.
In doing so, they consider whether each milestone has a single
commercial objective, whether any of the milestones are
interdependent on any other milestone, and whether the service
or goods being provided represents a single performance
obligation. In determining the number of performance
obligations, the Directors also consider the level of integration
between the milestones.
Once the number of performance obligations has been
determined, the Directors will exercise further judgement to
allocate the consideration to each obligation, which is based on
the stand-alone selling price of each performance obligation
agreed by the customer. Once the Group considers that the
outcome of the contract can be reliably estimated, then revenue
and profit is recognised based on the proportion of the contract
that is completed. There is also judgement in considering
whether the obligations have been satisfied, and whether the
revenue is recognised at a point in time or over time. This
is assessed on a performance obligation by performance
obligation basis. In general, the Directors have assessed that
any management of construction obligations, if relevant, are
satisfied over time, given that Inland Homes’ work enhances
an asset controlled by the customer. The planning and disposal
obligations have been assessed to be recognised at a point in
time. Refer to Note 9.
Overages
Any variable consideration on overages is estimated at the
point of sale taking into consideration the time to recover
overage amounts, as well as other factors which may give rise
to variability. It is only recognised to the extent that it is highly
probable that there will not be a significant reversal in the future
and is reassessed throughout the duration of the sales contracts.
Golden brick income
Sales of land where title transfers prior to construction
beginning (or at golden brick) are considered to be a distinct
performance obligation.
Revenue from land sales is recognised at a point in time, being
the completion of contracts usually achieved at golden brick.
The separate construction element of the contract is recognised
over time in accordance with the Group’s policy above for
construction contracts.
Shared ownership sales
Shared ownership is where initially a long lease on a property
is granted through a sale to the occupier, in return for an initial
payment (the First Tranche).
First Tranche sales are included within revenue and the related
proportion of the cost of the asset recognised as cost of sales.
Shared ownership properties are split proportionately between
Inventories and Investment Properties based on the current
element relating to First Tranche sales. The split is made
at the point of completion of the sale to the third party. The
assumptions on which the First Tranche proportion has been
based include, but are not limited to, matters such as the
affordability of the shared ownership properties, local demand
for shared ownership properties, and general experience of First
Tranche shared ownership sales within the wider social housing
sector. As at 30 September 2021, the average First Tranche sales
percentage assumed for vacant shared ownership properties is
30%. If there is a change in percentage used, this will affect the
proportion of inventory and investment property recognised with
a higher assumed First Tranche sales percentage resulting in a
higher inventory value and a lower investment property value.
Shared Owners have the right to acquire further tranches and
any surplus or deficit on such subsequent sales are recognised
in the Group Income Statement as a part disposal of investment
properties.
Administrative expenses
Operating expenses are recognised in the Group Statement of
Comprehensive Income upon utilisation of the service as it is
received.
Employee benefits
Defined contribution retirement benefit scheme
The Group operates a defined contribution retirement benefit
scheme pension and costs charged against operating profits
are the contributions payable to the scheme in respect of the
accounting period.
Equity-settled share-based payment
All share-based payment arrangements are recognised in
the Group and Company 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. The Black-Scholes model
is used to value the share options because it relies on fixed
inputs and the options do not have non-standard features. The
Monte Carlo simulation is more suitable to value LTIPs as they
depend on the share price changing over time and, therefore,
have more complex vesting conditions than the share options.
All equity-settled share-based payments are ultimately
recognised as an expense in the Group Income Statement with a
corresponding credit to retained earnings.
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Annual Report and Accounts 2021
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FINANCIALS
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 or LTIPs
expected to vest.
Estimates are subsequently revised if there is any indication that
the number of share options or 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
or LTIPs ultimately exercised are different to that estimated
on vesting.
Upon exercise of the share options or LTIPs, the proceeds
received net of attributed transaction costs are credited to share
capital and, where appropriate, share premium.
Government grants – furlough
Grants for revenue expenditure are netted against the cost
incurred by the Group. Where retention of a government grant is
dependent on the Group satisfying certain criteria, it is initially
recognised as deferred income. When the criteria for retention
have been satisfied, the deferred income balance is released to
the Consolidated Statement of Comprehensive Income.
Taxation
Tax expense recognised in the Group Statement of Comprehensive
Income comprises the sum of current tax and deferred tax not
recognised in other comprehensive income or directly in equity.
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.
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 investment property under
construction 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. Investment
properties are valued by the Directors based on up-to-date
market information.
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 is 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
management changes its intentions and there is evidence of the
change in use, such as the cessation of future rental income, or
the commencement of development with a view to sell. When a
partial disposal or transfer is made, the proportion relating to
the disposal or transfer is derecognised.
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.
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 applicable are:
Fixtures and fittings
– 20% to 25%
Office equipment
– 25%
Motor vehicles
– 25%
Modular housing
– Over useful economic life estimated at
40 years
Material residual value estimates are reviewed as required, but
at least annually.
Leased assets
The Group has applied IFRS 16 regarding the recognition of
leased assets.
The Group as a lessee
For any new contracts entered into on or after 1 October 2019,
the Group considers whether a contract is, or contains, a lease. A
lease is defined as ‘a contract, or part of a contract, that conveys
the right to use an asset (the underlying asset) for a period of time
in exchange for consideration’. To apply this definition, the Group
assesses whether the contract meets three key evaluations,
which are whether:
• The contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by
being identified at the time the asset is made available to the
Group
Inland Homes plc
Stock code: INL
106
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
4. Significant accounting policies CONTINUED
• The Group has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout
the period of use, considering its rights within the defined
scope of the contract
• The Group has the right to direct the use of the identified asset
throughout the period of use. The Group assesses whether it
has the right to direct ‘how and for what purpose’ the asset is
used throughout the period of use.
At lease commencement date, the Group recognises a right-of-
use asset and a lease liability on the balance sheet date. The
right-of-use asset is measured at cost, which is made up of the
initial measurement of the lease liability, any initial direct costs
incurred by the Group, an estimate of any costs to dismantle and
remove the asset at the end of the lease, and any lease payments
made in advance of the lease commencement date (net of any
incentives received).
The Group depreciates the right-of-use assets on a straight-line
basis from the lease commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the
lease term. The Group also assesses the right-of-use asset for
impairment when such indicators exist.
At the commencement date, the Group measures the lease
liability at the present value of the lease payments unpaid at
that date, discounted using the interest rate implicit in the
lease, if that rate is readily available, or the Group’s incremental
borrowing rate.
Lease payments included in the measurement of the lease
liability are made up of fixed payments (including in substance
fixed), variable payments based on an index or rate, amounts
expected to be payable under a residual value guaranteed
and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced
for payments made and increased for interest. It is remeasured
to reflect any reassessment or modification, or if there are
changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding
adjustment is reflected in the right-of-use asset, or profit and
loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and
leases of low-value assets using the practical expedients.
Instead of recognising a right-of-use asset and lease liability, the
payments in relation to these are recognised as an expense in
the Statement of Comprehensive Income on a straight-line basis
over the lease term. Right-of-use assets have been recognised
as a non-current asset and lease liabilities have been included
as a liability.
The Group as a lessor
In accordance with IFRS 16, as a lessor, the Group classifies its
leases as either operating or finance leases.
A lease is classified as a finance lease if it transfers substantially
all the risks and rewards incidental to ownership of the underlying
asset, and is classified as an operating lease if it does not.
The Group earns rental income from operating leases of its
investment properties. Rental income is recognised on a
straight-line basis over the lease term.
Intangible assets
Intangible assets, comprising costs incurred in the development
phase of new business models and associated set-up costs,
are stated at cost less provisions for both amortisation and
impairments. Development phase costs relating to new business
models either separately acquired, or acquired as part of a
business combination, are amortised over their estimated useful
lives, generally not exceeding 20 years, using the straight-line
basis, from the time they are available for use. The estimated
useful lives for determining the amortisation charge considers
the expected business model life. Asset lives are reviewed, and
where appropriate adjusted, annually.
Research costs are recognised in the Income Statement as
incurred.
The rates generally applicable are:
Enterprise Resource Planning system – 10%
Development costs
– 25%
Website costs
– 25%
Other computer software
– 25%
Investment in subsidiaries (Company only)
Subsidiaries are entities in which the Company has control.
Investments in subsidiaries are held in the Company’s
Statement of Financial Position at cost less impairment.
Joint ventures and associate
Joint ventures are entities in which the Group has shared control
with another entity, established by contractual agreement.
Where the Group has significant influence but not control or
joint control over the financial and operating policy decisions
of another entity, it is classified as an associate. Joint ventures
and associates are initially recorded in the Group Statement of
Financial Position at cost and are accounted for using the equity
method. All subsequent changes to the share of interest in the
equity of joint ventures and associates are recognised in the
Group’s carrying amount of the investment. Changes resulting
from the profit or loss generated are recognised in the Group’s
carrying amount of the investment and in ‘share of profit of joint
ventures’ for joint ventures and ‘share of profit of associate’ for
associates in the Group Income Statement and, therefore, affect
the 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 and associates are eliminated to the extent of the
Group’s investment in joint ventures and associates. 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 and associates are
consistent with those of the Group.
The Company’s investments in joint ventures are held at cost
less any impairment.
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
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FINANCIALS
based upon the future expected selling price, less estimated
costs of completion and estimated costs to sell.
Land options
The Group holds a number of land options that were bought for
the potential to exercise the option and either develop the land
or sell with planning permission. The land options are initially
capitalised at cost and considered for any impairment indication
annually. The impairment review includes consideration of
the resale value of the option, likelihood of achieving planning
consent and current recoverable value as determined by the
Directors.
Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for which
the asset was acquired. The Group’s accounting policy for each
category is as follows:
Fair value through profit or loss
This category comprises amounts due from joint ventures
(refer to Note 25) where the terms of the loan are inconsistent
with a basic lending agreement and are, therefore, not solely
payments of principal and interest. This balance is carried in
the Statement of Financial Position at fair value with changes
in fair value recognised in the Consolidated Statement of
Comprehensive Income in the finance income or expense line.
Other than amounts due from joint ventures, the Group does not
have any assets held for trading nor does it voluntarily classify
any financial assets as being at fair value through profit or loss.
Amortised cost
These assets arise principally from the provision of goods
and services to customers (e.g. trade receivables), but also
incorporate other types of financial assets where the objective
is to hold these assets in order to collect contractual cash
flows and the contractual cash flows are solely payments of
principal and interest. They are initially recognised at fair value
plus transaction costs that are directly attributable to their
acquisition or issue, and are subsequently carried at amortised
cost using the effective interest rate method, less provision for
impairment.
Impairment provisions for current and non-current trade
receivables are recognised based on the simplified approach
within IFRS 9 using a provision matrix in the determination
of the lifetime expected credit losses. During this process,
the probability of the non-payment of the trade receivables is
assessed. This probability is then multiplied by the amount of
the expected loss arising from default to determine the lifetime
expected credit loss for the trade receivables. On confirmation
that the trade receivable will not be collectable, the gross
carrying value of the asset is written off against the associated
provision.
Impairment provisions for all other receivables are recognised
based on a forward looking expected credit loss model. The
methodology used to determine the amount of the provision
is based on whether there has been a significant increase in
credit risk since initial recognition of the financial asset. For
those where the credit risk has not increased significantly since
initial recognition of the financial asset, 12-month expected
credit losses are recognised. For those for which credit risk
has increased significantly, lifetime expected credit losses are
recognised. For those that are determined to be credit impaired,
lifetime expected credit losses along with interest income on a
net basis are recognised.
The Group’s financial assets measured at amortised cost
comprise trade and other receivables, cash and cash equivalents
and amounts due from joint ventures (other than those held
at fair value through profit and loss) and associates in the
Consolidated Statement of Financial Position.
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.
Fair value through other comprehensive income
The Group has investments which are not accounted for as
subsidiaries, associates or joint ventures. For those investments,
the Group has made an irrevocable election to classify the
investments at fair value through other comprehensive income
rather than through profit or loss as the Group considers this
measurement to be the most representative of the business
model for these assets. They are carried at fair value with
changes in fair value recognised in other comprehensive income
and accumulated in the fair value through other comprehensive
income reserve. Upon disposal, any balance within fair value
through other comprehensive income reserve is reclassified
directly to retained earnings and is not reclassified to profit
or loss.
Dividends are recognised in profit or loss, unless the dividend
clearly represents a recovery of part of the cost of the investment,
in which case the full or partial amount of the dividend is recorded
against the associated investments carrying amount.
Assets held for sale
Non-current assets are classified as held for sale when:
• they are available for immediate sale;
• management is committed to a plan to sell;
• it is unlikely that significant changes to the plan will be made
or that the plan will be withdrawn;
• an active programme to locate a buyer has been initiated;
• the asset or disposal group is being marketed at a reasonable
price in relation to its fair value; and
• a sale is expected to complete within 12 months from the
date of classification.
Non-current assets classified as held for sale are measured at
the lower of:
• their carrying amount immediately prior to being classified
as held for sale in accordance with the Group’s accounting
policy; and
• fair value less costs of disposal.
Investment property is held at fair value.
Following their classification as held for sale, non-current
assets are not depreciated.
The results of assets disposed during the year are included in
the Consolidated Statement of Comprehensive Income in the
appropriate segment, up to the date of disposal.
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.
Inland Homes plc
Stock code: INL
108
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
4. Significant accounting policies CONTINUED
All financial liabilities are initially recognised at fair value net
of any transaction costs. Subsequently, they 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,
cancelled or expires.
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, which the Group
interprets to be over 12 months. The majority of the Group’s
sites involve the development of large volumes of properties in
a repetitive manner. The Group, therefore, expenses borrowing
costs relating to such developments in the period to which they
relate through the 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.
Currently, the Group capitalises borrowing costs only in relation
to the site at Wilton Park. Additionally, the Group’s joint venture,
Cheshunt Lakeside Developments Limited, also capitalises
borrowing costs. These are the only sites where borrowing costs
are directly attributable to the production of qualifying asset and
where construction occurs over a significant period of time.
Deferred income
Deferred income is recognised where the Group receives cash
from customers in advance of achieving the performance
obligation under IFRS 15 ‘Revenue’. Deferred income arises in
the contract income and housebuilding segments.
Guarantees
All guarantees are deemed to be insurance contracts. A financial
guarantee is recognised where a contract requires the issuer
to make specified payments to reimburse the holder for a loss
it incurs because a specified debtor fails to make payment
when due.
Share capital and other equity reserves
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Share premium represents amounts subscribed for share
capital in excess of nominal value less directly attributable issue
costs.
Employee benefit trust represents the purchase of the
Company’s own shares which are deducted from total equity
until they are issued to employees under the Deferred Bonus
Plan.
Special Reserve represents 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.
Treasury Reserve represents the purchase of the Company’s own
shares which are deducted from total equity until they are issued
to employees under the share option plan.
Retained earnings represents cumulative net gains and losses
recognised in the Group Income Statement together with other
items such as dividends and share-based payments.
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 and 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 Group
Statement of Financial Position when those assets vest
unconditionally in identified beneficiaries.
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.
5. Adoption of new accounting standards
In the year ended 30 September 2021, the Group has adopted
amendments and interpretations endorsed by the EU that were
effective for the first time. These had no material impact on the
Financial Statements.
New standards adopted during the year
The following standards, amendments and interpretations
endorsed by the EU were effective for the first time for the Group’s
year ended 30 September 2021 and had no material impact on the
Financial Statements.
• IFRS 3 ‘Definition of a Business’ (Amendments to IFRS 3);
• IFRS 16 ‘Leases’ COVID-19 Related Rent Concessions
(Amendments to IFRS 16);
• Amendments to References to the Conceptual Framework in
IFRS Standards; and
• IAS 1 and IAS 8 ‘Definition of Material’ (Amendments to IAS 1
and IAS 8).
Standards in issue but not yet effective
The following new standards, amendments and interpretations to
existing standards were in issue at the date of approval of these
Financial Statements but are not yet effective for the current
accounting year and have not been adopted early. Based on the
Group’s current circumstances, the Directors do not anticipate
that their adoption in future periods will have a material impact on
the Financial Statements of the Group, however, the impact of the
standards in issue but not yet effective is currently being assessed
by the Group.
• IFRS 9, IAS 38 and IFRS 7 ‘Interest Rate Benchmark Reform’
(Amendments to IFRS 9, IAS 38 and IFRS 7);
• Classification of Liabilities as Current or Non-current
(Amendments to IAS 1);
• Amendments to IFRS 3 ‘Business Combinations’;
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Annual Report and Accounts 2021
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FINANCIALS
• Amendments to IAS 16 ‘Property, Plant and Equipment’;
• Amendments to IAS 37 ‘Provisions, Contingent Liabilities and
Contingent Assets’;
• Reference to the Conceptual Framework (Amendments to
IFRS 3);
• Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8);
• Annual Improvements (2018–2020 Cycle) IFRS 1, IFRS 9, IAS
41 and Illustrative Examples accompanying IFRS 16; and
• IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate
Benchmark Return Reform – Phase 2 (Amendments to IFRS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16).
6. Significant judgements, key assumptions and
estimates
The preparation of financial statements in accordance with IFRS
requires the use of certain critical accounting estimates and
judgements. It also requires management to exercise judgement
in the process of applying the Group’s accounting policies. The
Group’s significant accounting policies are stated in Note 4.
Not all of these accounting policies require management to
make difficult, subjective or complex judgements or estimates.
Estimates and judgements are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. Although these estimates are based
on management’s best knowledge of the amount, event or
actions, actual results may differ from those estimates. The
following is intended to provide an understanding of the policies
that management consider critical because of the level of
complexity, judgement or estimation involved in their application
and their impact on the Financial Statements.
Significant judgements
Revenue recognition (Note 9)
The Directors are required to exercise judgement in respect of
revenue recognition for asset management fees (see below) and
contract income, where estimates are involved in determining
the proportion of costs. There is no judgement required for land
sales, housebuilding, rental income nor investment properties
revenue.
Overages
Estimates are involved when determining how much revenue
to recognise in relation to variable consideration where Inland
Homes is entitled to an overage in relation to future sales at a
site sold by Inland Homes to a customer. When determining how
much of the variable revenue to recognise at the point of sale,
the Directors estimate the amount that they would expect to
receive based on market evidence for current house prices. They
then consider the risk of a significant reversal of this revenue in
future periods and constrain it accordingly.
Land and house building sales margins
There are significant estimates involved in determining the
appropriate profit margin to recognise on land and residential
sales. Assumptions are required to be made as to future costs
to complete and future sales prices to be achieved on the
remaining units. The Directors use detailed project appraisals
for each development to determine the appropriate profit margin
to recognise; which forecasts the costs to complete on such
developments and the anticipated sales prices; and which have
been determined based on the type, specification and location of
the property. The financial outturn in both the current year and
prior period relating to land and housebuilding sales margins is
disclosed in Note 10.
Management fee income
The Group recognises revenue in respect of management services
equal to the amounts entitled. The management fee formula in
the contract reflects progress at any given time of the satisfaction
of the contract’s underlying performance obligations, which
involves judgement.
There were a number of material management service contracts
that were either ongoing or commenced in the period. For each
management service contract there are a number of milestones
and obligations. The Directors had to make significant judgements
for each contract based on:
• whether each milestone constituted a distinct performance
obligation;
• whether the obligations have been satisfied;
• whether the revenue is recognised at a point in time or
over time;
• whether the achievement of a successful planning outcome is
highly probable in the context of the scheme; and
• whether it is highly probable the third-party asset with
planning produces a suitable economic return for the Group
to recover its management fee in full.
The Directors have a number of judgements to consider in
recognising revenue from management service contracts which
are if revenue:
• should be recognised over time or at a point in time. The
Directors recognise management fee income when the
customer benefits only once the obligation is met;
• meets all of the criteria to be recognised under IFRS 15; and
• is highly probable that a significant reversal will not occur.
In making that decision, the Directors have to consider
whether there is sufficient certainty that they will get planning
permission and whether that permission will be for a scheme
that generates sufficient value to ensure the Group recovers
management services fees due.
The Directors were required to exercise judgement in respect of
revenue recognition for the following contracts as set out below.
For all of the following management contracts a key judgement
is an assessment of the collectability of management fees on
achieved planning and the eventual sale price of the site, which
is based on the assessment of value of the land once planning is
achieved.
Inland Homes plc
Stock code: INL
110
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
6. Significant judgements, key assumptions and
estimates CONTINUED
The significant judgements made were in relation to the
following contracts:
Hillingdon Gardens:
For the contract at Hillingdon Gardens, it was determined
that there were a number of distinct performance obligations
of which no further performance obligations were satisfied
in the year to 30 September 2020 and of which three were
satisfied in the year to 30 September 2021. The contract
was entered into in the period to 30 September 2019 where
five performance obligations were satisfied in the 15-month
period. It was concluded that these were distinct on the basis
the customer benefited from each of the milestones and that
these milestones were considered separable in the context of
the contract. Planning obligations are considered to be one
milestone achieved when the grant of planning is awarded. The
performance obligations recognised were considered satisfied
in the period as control of the relating service was transferred
to the customer before the year end. For the remaining
performance obligations still to be satisfied, it was determined
by the Directors that they will be recognised in future periods at
a point in time, given they all meet the criteria to be recognised
at a point in time.
Walthamstow:
For the contract at Walthamstow, it was determined that there
were a number of distinct performance obligations of which
three were satisfied in the year to 30 September 2020 and of
which four were satisfied in the year to 30 September 2021.
The contract was entered into in January 2020. It was concluded
that these were distinct on the basis that the customer benefits
from each of the milestones as they are actioned. Planning
obligations are considered to be one milestone achieved when
the grant of planning is awarded. The performance obligations
recognised were considered satisfied in the period as control of
the related service was transferred to the customer before the
year end. The contract is now complete.
Hounslow:
For the contract at Hounslow, it was determined that there were
a number of distinct performance obligations of which one was
satisfied in the year to 30 September 2020 and one in the year
to 30 September 2021. The contract was entered into in August
2020. It was concluded that these were distinct on the basis
that the customer benefits from each of the milestones as they
are achieved. Planning obligations are considered to be one
milestone achieved when the grant of planning is awarded. The
performance obligations recognised were considered satisfied
in the period as control of the related service was transferred to
the customer before the year end.
For the remaining performance obligations still to be satisfied, it
was determined by the Directors that they will be recognised in
future periods at a point in time, given they all meet the criteria
to be recognised at a point in time.
Discounting and deferred consideration
The Group has a number of deferred consideration receipts and
payments which are generated from its activities in the land
market. Where a receipt or payment is due within one year it is
not discounted. Where a receipt or payment is due after more
than one year it is discounted. The discount rate chosen is with
reference to the underlying rate of return related to the deferred
consideration.
Likelihood of achieving planning – inventories (Note 28)
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 Directors believe that, based on the
Group’s experience, planning consent will be given. If planning
consent was not achieved then a provision may be required
against inventories. The cost value is based on actual costs
incurred at the date of signing the Financial Statements taking
account of an estimation of costs to complete. The judgement
of costs to complete is based on the Directors’ experience and if
actual plus projected costs are higher than net realisable value
then a provision would be required against inventories. Inventories
of £21.9m (2020: £3.3m) are held at net realisable value. A
provision of £2.6m (2020: £2.1m) was recognised during the year.
Assets held for sale (Note 30)
At 30 September 2021, the Directors’ intention is to sell some
residential properties over the year ending 30 September 2022.
These assets have been classified as held for sale at their fair
value. The Directors have made a judgement that the properties
will sell within the next twelve months.
Timing and recoverability of repayment – amounts due
from joint ventures and associate (Notes 25 and 26)
Certain amounts due from the joint ventures are contractually
repayable on demand and the amounts due from the associate
are repayable over the term of the underlying development. At
each balance sheet date the Directors review the forecasts of the
underlying developments and make a judgement as to the likely
timing of the recoverability of each loan and whether they will
be recovered within the normal operating cycle of the business.
Amounts are then disclosed as either due in less than one
year or greater than one year accordingly. The recoverability of
receivables are dependent on the future profitability of land and
development sales. The judgements involved are the same as
outlined above for inventories.
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FINANCIALS
Other financial liabilities (Note 36)
During the prior year, the Group transferred legal title of land to
a third party with a contract that contains a put and call option
and did not recognise any revenue. At 30 September 2021, the
Group had a put and call option over the land with a third party
that can be triggered in certain circumstances where planning is
achieved or after a certain elapsed time period by either party.
There is significant judgement involved as to whether or not this
transaction should be accounted for as revenue or as a financing
arrangement on the initial transfer of legal title of the land and in
determining whether the put and call option could be exercised,
on what grounds and at what time. The Directors consider that
it is highly probable either they or the third party will trigger the
option in greater than one year and, therefore, under IFRS 15,
have accounted for the options as an other financial liability and
this relates to a financing agreement and not a land sale.
Key sources of estimation uncertainty
Cost of and net realisable value of inventories (Note 28)
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. The
uncertainty relates to both land and work in progress. Cost which
requires estimation includes the cost of acquisition of sites,
the cost of infrastructure and construction works, allocation of
site wide costs 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. The
critical judgement in respect of receipt of planning consent (see
above) further increases the level of estimation uncertainty in
this area.
Fair value of investment properties (Note 19)
The fair value of materially completed investment property is
determined by independent valuation experts using the highest
and best 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. See Note 19 for information about valuation
methodology and assumptions made.
Deferred consideration on transfer of beneficial interest
in Cheshunt Lakeside Developments Limited (Notes 25
and 36)
The Group discounts deferred consideration payable or receivable
using the discounted cash flow method; the Group considers the
expected timing of payments and receipts and uses the third-party
cost of debt capital as the most appropriate discount rate and
these are considered to be significant estimates.
The Group sold its beneficial interest of 50% of Cheshunt
Lakeside Developments Limited on deferred terms during the
fifteen-month period ended 30 September 2019 and estimated
a discount to present value calculated from the date of disposal.
At 30 September 2021, this is shown as an other receivable of
£22.0m (2020: £20.7m) disclosed in Note 29. Further details
of Cheshunt Lakeside Developments Limited are provided in
Note 25.
The impact of a change in the discount rates by one percent up
on the receipt would be a reduction in the receivable of £0.8m
and the impact of a change in the discount rates by one percent
down on the receipt would be an increase in the receivable of
£1.6m.
Management do not envisage a timing opportunity where the
receipt of the receivable could be brought forward. The impact
of a delay in receipt of 12 months, at the current discount rate,
would be a reduction in the receivable of £0.7m.
Inland Homes plc
Stock code: INL
112
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
7. Financial instruments
Financial risk management
The Group’s activities expose it to a variety of financial risks: credit risk; liquidity risk; interest rate risk and price 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, as set out on pages 46 to 54.
(a) Credit risk
The Group’s significant concentrations of credit risk are its loans to joint ventures and the associate and deferred receipts on disposal of
investment in subsidiaries and joint ventures and management fees, which are adequately covered by the underlying values of the assets
within the joint ventures and associate or legal charges over the land within the vehicle disposed of or from where management fees are
due. Further information can be found in Notes 24, 25, 26 and 29. 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:
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Classes of financial assets - carrying amounts
Investments in quoted companies
0.5
0.5
1.1
Cash and cash equivalents
12.1
15.7
10.9
Amounts due from joint ventures in less than one year
3.9
42.2
34.8
Amounts due from joint ventures in more than one year
32.7
–
1.0
Amounts due from associate in less than one year
3.1
3.1
3.3
Receivables due in more than one year
36.3
22.3
21.8
Trade and other receivables
116.3
63.8
44.4
204.9
147.6
117.3
The Group’s policy is to only deal with creditworthy counterparties. A creditworthy counterparty is defined by the Group as a
counterparty that carries a minimal risk that the counterparty in a transaction cannot honour its obligation to the Group.
Counterparties are assessed on contract inception through externally available information where legal charges are not available
over the underlying asset and are reviewed periodically to determine if there are any changes in creditworthiness or other
circumstances that may bring the financial viability of the counterparty into some doubt.
All new contracting and management service contracts entered into are with reputable parties and are subject to acceptance
procedures, which include detailed creditworthiness checks. This procedure ensures that collectability is probable (i.e. more likely
than not), prior to commencement of the contract. In this regard, no instances have been identified in the past where the collectability
of the sales consideration has been considered improbable at the time of contract commencement.
In any instance where part of the consideration is deferred, the Group endeavours to seek and secure a legal charge over underlying
property assets held until such time that all elements of the deferred consideration have been fully received, at which point that legal
charge is released.
The Group has assessed loans and advances due from joint ventures and associate and have concluded there is a minimal risk of
default. Default is defined and assessed as a risk of missed payment of interest and/or principal or a failure to honour the financial
terms in place between the Group and the joint ventures and associate in question.
The assessment of credit risk for amounts due from joint ventures are based on a consideration of known future cash flows which
have been sensitised, based on the most likely, the worst case and mid-case scenarios. These cash flows are reviewed against what
is due and expected to be paid and analysis made of whether this is sufficient to repay monies based on the financial terms in place
between the Group and the joint ventures in question.
The assessment of credit risk for amount due from the associate are based on net valuations. The valuation of properties has been
sensitised based on the most likely, the worst case and a mid-case scenario downturn in valuations. These valuations are reviewed
against what is due and expected to be paid and analysis made of whether this is sufficient to repay monies based on the financial
terms in place between the Group and associate in question.
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FINANCIALS
Loans to joint ventures are secured via charge over either the underlying asset, the future dividends of, or the future profits generated
by, the relevant entity based on the agreement between the joint venture or associate in question. The Group does not rely on this
collateral in taking its position of reviewing and/or recognising an expected credit loss.
At the balance sheet date there are no financial assets that are credit impaired.
Management has determined there has not been a significant increase in credit risk on loans to subsidiaries from the Parent
Company and loans to joint ventures and associate for the Group during the year ended 30 September 2021 or the year ended
30 September 2020.
Due to the short-term nature of trade and other receivables, the Group does not anticipate any material default and the Directors do
not consider the macro economic environment conditions (inflation, exchange rates and property prices) to substantially change in
the short term.
The vast majority of trade and other receivable balances relate to property transactions and are short term in nature. As a housing
developer, the risk of not receiving settlement on sales or services are low and as such, no trade and other receivables are deemed
credit impaired.
The Group’s management considers that all the above financial assets for each of the reporting dates under review are of good credit
quality. Further information on the concentration of credit risk can be found in Note 29.
Other forms of credit risk are for liquid funds and other short-term financial assets but these are considered negligible, since the
counterparties are reputable banks with high-quality credit ratings.
Credit ratings of the financial institutions holding the Group’s cash deposits as at 30 September 2021 are shown below:
Financial institution
Long-term
credit rating
– Fitch
Long-term
credit rating
– Moody’s
Cash at bank
£m
HSBC
A+
A3
12.1
Barclays
A+
A1
–
Aldermore
n/a
n/a
–
Metro
B+
n/a
–
Aldermore Bank is privately owned so no credit rating is provided.
Credit ratings of the financial institutions holding the Group’s cash deposits as at 30 September 2020 are shown below:
Financial institution
Long-term
credit rating
– Fitch
Long-term
credit rating
– Moody’s
Cash at bank
£m
HSBC
AA–
A1
11.0
Lloyds
A+
A1
4.7
Barclays
A+
A1
–
Aldermore
n/a
n/a
–
Metro
B+
n/a
–
(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.
See Note 32 for the maturity analysis of borrowings and details of the undrawn committed borrowing facilities at the year end.
Inland Homes plc
Stock code: INL
114
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
7. Financial instruments CONTINUED
(c) Interest rate risk
Interest rate risk is the risk that future cash flows of a financial instrument will fluctuate due to changes in interest rate.
The Group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to risk. Most
of the Group’s borrowings are at variable rates as outlined in the table in Note 32. The Group does not use hedging arrangements to
limit the interest rate risk.
Market rate sensitivity analysis
The analysis below shows the sensitivity of the Group Income Statement and net assets to a 0.5% change in interest rate on the
Group’s financial instruments that are affected by market risk. These financial instruments consist solely of borrowings.
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
0.5% increase in interest rates
Interest on borrowings
(0.7)
(0.8)
(0.6)
Interest on cash deposits
0.1
0.1
0.1
Total impact on pre-tax profit and equity – loss
(0.6)
(0.7)
(0.5)
0.5% decrease in interest rates
Interest on borrowings
0.7
0.8
0.6
Interest on cash deposits
(0.1)
(0.1)
(0.1)
Total impact on pre-tax profit and equity – gain
0.6
0.7
0.5
The interest rate risk profile of financial assets and liabilities of the Group at 30 September 2021 was as follows:
Floating rate
financial
assets
£m
Fixed rate
financial
assets
£m
Financial
assets on
which no
interest is
earned
£m
Total
£m
Total financial assets
12.1
39.7
153.1
204.9
Floating rate
financial
liabilities
£m
Fixed rate
financial
liabilities
£m
Financial
liabilities
on which no
interest is
incurred
£m
Total
£m
Total financial liabilities
70.0
61.1
92.9
224.0
The interest rate risk profile of financial assets and liabilities of the Group at 30 September 2020 as restated was as follows:
Floating rate
financial
assets
£m
Fixed rate
financial
assets
£m
Financial
assets on
which no
interest is
earned
£m
Total
£m
Total financial assets
15.7
45.3
86.6
147.6
Floating rate
financial
liabilities
£m
Fixed rate
financial
liabilities
£m
Financial
liabilities
on which no
interest is
incurred
£m
Total
£m
Total financial liabilities
85.0
70.2
51.3
206.5
The interest rate risk profile of financial assets and liabilities of the Group at 30 September 2019 as restated was as follows:
Floating rate
financial
assets
£m
Fixed rate
financial
assets
£m
Financial
assets on
which no
interest is
earned
£m
Total
£m
Total financial assets
10.9
39.1
67.3
117.3
www.inlandhomesplc.com
Annual Report and Accounts 2021
115
FINANCIALS
Floating rate
financial
liabilities
£m
Fixed rate
financial
liabilities
£m
Financial
liabilities
on which no
interest is
incurred
£m
Total
£m
Total financial liabilities
116.1
47.1
56.5
219.7
(d) Price risk
The Group’s price risk arises from the market value of land and house prices. These are affected by credit availability, employment
levels, interest rates, consumer confidence and the supply of land. Whilst it is not possible for the Group to fully mitigate such risks
on a macroeconomic basis, the Group does focus its operations in areas that have a favourable supply/demand ratio and ensures that
planning permissions gained are for units of the type and price point which are less easily affected by any downturns in the housing
market. The Group enters into construction contracts with housing associations which involve the bulk, forward selling of residential
units and has less risk than private house building.
Financial assets and liabilities
The carrying amounts presented in the Statement of Financial Position relate to the following categories:
As at
30 September
2021
£m
As at
30 September
2020
as restated
£m
As at
30 September
2019
as restated
£m
Amortised cost
Other assets – non-current
69.0
22.3
22.8
Other assets – current
123.3
109.1
78.5
Cash and cash equivalents
12.1
15.7
10.9
Fair value through other comprehensive income
Other assets – non-current
0.5
0.5
1.1
Fair value through profit and loss
Other assets – current
–
–
4.0
204.9
147.6
117.3
Financial liabilities
Financial liabilities measured at amortised cost:
– Borrowings
90.6
123.8
137.3
– Zero Dividend Preference shares
32.0
30.2
25.9
– Other liabilities – current
97.2
41.3
51.3
– Other liabilities – non-current
4.2
11.2
5.2
224.0
206.5
219.7
Other assets – non-current includes investments, amounts due from associate in Note 26 and joint ventures shown in Note 25 and
amounts shown as trade and other receivables in Note 29 due in more than one year.
Other assets – current includes amounts due from joint ventures and associate shown in Notes 25 and 26 and all amounts shown as
trade and other receivables due in less than one year in Note 29, except prepayments of £0.6m (30 September 2020: £0.3m). Amounts
due from Bucknalls Developments Limited is split between amortised cost and fair value through profit and loss.
Other liabilities – current includes purchase consideration of £4.8m (30 September 2020: £0.3m) shown in Note 36 and all amounts
shown as trade and other payables in Note 33, except sales and social security taxes of £0.5m (30 September 2020: £0.5m). All
amounts are non-interest bearing and are due within one year.
Other liabilities – non-current contains another financial arrangement of £7.6m (30 September 2020: £6.8m) at an implied rate of
interest tied to the triggering of the put and call options in place. Refer to page 112 for further details.
Borrowings consist of loans which attract interest at varying rates and there is a variety of fixed and variable rates (see table in Note
32). The ZDP shares are carried at their accrued value of 176.86p per share (30 September 2020: 167.83p). Their closing price on
the main market of the London Stock Exchange on 30 September 2021 was 168.50p (30 September 2020: 156.00p). The ZDP shares
attract an interest rate of between 4.96% and 5.49%. The interest rates disclosed for the ZDP preference shares were the rates
disclosed before the changes in August 2018.
Inland Homes plc
Stock code: INL
116
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
8. Capital management policies and procedures
The Group’s objectives when managing capital are:
• to safeguard its ability to continue as a going concern;
• to ensure sufficient liquid resources are available to meet the funding requirement of its projects and to fund new projects where
identified; and
• to provide returns for shareholders and benefits for other stakeholders.
This is achieved through ensuring sufficient bank and other facilities are in place; further details are given in Notes 31 and 32 to the
Group Accounts. The Group monitors capital on the basis of the carrying amount of the equity less cash and cash equivalents as
presented on the face of the Group Statement of Financial Position.
The movement in the capital to overall financing ratio is shown below. The target capital to overall financing ratio has been set by
the Board at 40% and an outturn metric scoring higher than this amount is considered to be a good performance against the target.
Further commentary on the level of borrowing, overall financing strategy and expected future direction is contained in the Group
Finance Director’s review.
As at
30 September
2021
£m
As at
30 September
2020
as restated
£m
As at
30 September
2019
as restated
£m
Equity
183.0
173.0
162.2
Less: cash and cash equivalents
(12.1)
(15.7)
(10.9)
170.9
157.3
151.3
Equity
183.0
173.0
162.2
Bank loans
68.3
85.4
130.1
Other loans
22.3
38.4
7.2
Zero Dividend Preference Shares
32.0
30.2
25.9
Loans from joint ventures
–
3.1
–
Other financial liabilities
7.6
12.3
5.2
Borrowings
130.2
169.4
168.4
Overall financing (Equity plus Borrowings)
313.2
342.4
330.6
Capital to overall financing
54.6%
45.9%
45.8%
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 asset cover which is calculated as adjusted gross assets: financial indebtedness. This covenant
is monitored on a bi-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.inlandhomesplc.com.
www.inlandhomesplc.com
Annual Report and Accounts 2021
117
FINANCIALS
9. Revenue from contracts with customers
The Group has disaggregated revenue into various categories in the following tables which is intended to:
• Depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic date; and
• Enable users to understand the relationship with revenue segment information provided in Note 10.
Year ended 30 September 2021
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Total
£m
Point in time
21.9
27.8
–
69.9
119.6
Over time
–
–
60.3
–
60.3
Total
21.9
27.8
60.3
69.9
179.9
Year ended 30 September 2020
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Total
£m
Point in time
21.7
21.4
–
23.8
66.9
Over time
–
3.0
51.8
–
54.8
Total
21.7
24.4
51.8
23.8
121.7
Fifteen-month period ended 30 September 2019
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Total
£m
Point in time
29.2
16.7
–
34.5
80.4
Over time
–
1.9
62.6
–
64.5
Total
29.2
18.6
62.6
34.5
144.9
All revenue is earned in the United Kingdom.
Included within ‘Land sales’ are land sales to housing associations which include construction works to ‘Golden Brick’. Subsequent
construction works to completion are included within ‘Contract income’.
Included within ‘Housebuilding’ are the sales of reversionary freehold reversions and customers’ extras that arise as a by-product of
house building activity.
Rental income and investment properties income is not disclosed in the table above as these revenue sources do not fall under the
IFRS 15 accounting standard.
During the year, transactions with two customers each accounted for more than 10% of revenue from contracts with customers. One
customer was in the ‘Land sales’ segment (revenue of £20.2m) and one customer was in the ‘Contract income’ segment (revenue of
£27.6m). During the prior year, transactions with three customers each accounted for more than 10% of revenue from contracts with
customers. One customer was in the ‘Land sales’ segment (revenue of £20.2m) and two customers were in the ‘Contract income’
segment (revenue of £23.9m and £23.7m).
Contract assets and contract liabilities are included within the Group Statement of Financial Position. The timing of work performed
and revenue recognised, billing profiles and cash collection results in trade receivables (amounts billed to date and unpaid), contract
assets (unbilled amounts where revenue has been recognised) and contract liabilities (amounts relating to contracts where work is
yet to be performed and the performance obligation achieved) being recognised on the Group Statement of Financial Position.
The reconciliation of the opening to closing contract balances is shown below:
Contract
assets
(benefits
arising under
construction
contracts)
£m
Contract
assets (costs
to obtain
contracts)
£m
Contract
liabilities
£m
At 30 September 2020
2.1
–
(12.1)
Transfer to revenue
(2.1)
–
10.0
Invoiced in advance of performance
3.8
17.3
(9.8)
Amortisation
–
(0.3)
–
At 30 September 2021
3.8
17.0
(11.9)
Contract assets are recognised in prepayments and accrued income falling due in less than one year, and other receivables falling
due in greater than one year (Note 29). Contract liabilities are recognised in accruals (Note 33).
Inland Homes plc
Stock code: INL
118
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
10. Segmental 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, contract income, rental
income, hotel income, investments, investment properties, management fees and other income. These segments are based on the
information reported to the Chief Operating Decision Makers (which in the Group’s case is the Operating Board comprising the three
Executive Directors and four senior managers) and represent the activities which generate significant revenues, profits and use of
resources within the Group. These operating segments are monitored and strategic decisions are made on the basis of segment
operating results. Note 1 provides further information relating to each segment.
During the year ended 30 September 2021, the Chief Decision Makers in the Group have opted to allocate administrative expenses
to the sectors, rather than present under central support. The administrative expenses for the year ended 30 September 2021 have,
therefore, been presented in this way. This represents a change from previous periods. The administrative expenses in the segmental
analyses for the year ended 30 September 2020 and the fifteen-month period ended 30 September 2019 have not been updated with
the new measurements.
Segmental analysis by activity
Year ended
30 September 2021
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Rental
income
£m
Investment
properties
£m
Central
support
£m
Total
£m
Revenue from contracts with customers 21.9
27.8
60.3
69.9
–
–
–
179.9
Other revenue
1.3
0.5
–
1.8
Cost of sales
(14.5)
(5.8)
(60.8)
(66.0)
(0.8)
(0.1)
–
(148.0)
Expected credit loss
(1.7)
–
–
–
–
–
–
(1.7)
Gross profit/(loss)
5.7
22.0
(0.5)
3.9
0.5
0.4
–
32.0
Administrative expenses
(1.0)
(0.6)
(1.4)
(1.8)
(0.1)
(0.1)
(2.5)
(7.5)
Share of loss of joint venture
–
–
–
(1.9)
–
–
–
(1.9)
Share of loss of associate
–
–
–
(0.1)
–
–
–
(0.1)
Revaluation of assets held for sale
–
–
–
–
–
(1.2)
–
(1.2)
Loss on sale of property, plant and
equipment
–
–
–
–
–
(0.1)
–
(0.1)
Loss on sale of assets held for sale
–
–
–
–
–
(0.8)
–
(0.8)
Revaluation of investments properties
–
–
–
–
–
0.6
–
0.6
Operating profit/(loss)
4.7
21.4
(1.9)
0.1
0.4
(1.2)
(2.5)
21.0
Finance cost
(4.7)
–
–
(2.2)
–
(0.7)
(1.7)
(9.3)
Finance income
1.1
0.2
–
–
–
–
0.2
1.5
Profit/(loss) before tax
1.1
21.6
(1.9)
(2.1)
0.4
(1.9)
(4.0)
13.2
Net tax charge
–
–
–
–
–
–
(3.6)
(3.6)
Total profit/(loss)
1.1
21.6
(1.9)
(2.1)
0.4
(1.9)
(7.6)
9.6
Other comprehensive income
–
–
–
–
–
–
–
–
Total profit and comprehensive
income/(loss)
1.1
21.6
(1.9)
(2.1)
0.4
(1.9)
(7.6)
9.6
www.inlandhomesplc.com
Annual Report and Accounts 2021
119
FINANCIALS
10. Segmental information CONTINUED
Year ended
30 September 2020 as restated
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Rental
income
£m
Investment
properties
£m
Central
support
£m
Total
£m
Revenue from contracts with customers 21.7
24.4
51.8
23.8
–
–
–
121.7
Other revenue
–
–
–
–
1.4
0.9
–
2.3
Cost of sales
(19.7)
(3.0)
(52.9)
(22.7)
(0.4)
(0.5)
–
(99.2)
Expected credit loss
(2.8)
–
–
–
–
–
–
(2.8)
Gross profit/(loss)
(0.8)
21.4
(1.1)
1.1
1.0
0.4
–
22.0
Administrative expenses
–
–
–
–
–
–
(12.6)
(12.6)
Share of profit of joint ventures
–
–
–
2.0
–
–
–
2.0
Share of loss of associate
–
–
–
(0.2)
–
–
–
(0.2)
Revaluation of assets held for sale
–
–
–
–
–
2.0
–
2.0
Loss on sale of controlling interest
in subsidiary
–
–
–
(2.0)
–
–
–
(2.0)
Revaluation of investment property
–
–
–
–
–
0.6
–
0.6
Operating profit/(loss)
(0.8)
21.4
(1.1)
0.9
1.0
3.0
(12.6)
11.8
Finance cost
(4.8)
(0.3)
(0.1)
(2.0)
–
(0.5)
(1.8)
(9.5)
Finance income
0.8
0.1
–
0.2
–
–
–
1.1
Profit/(loss) before tax
(4.8)
21.2
(1.2)
(0.9)
1.0
2.5
(14.4)
3.4
Net tax charge
0.1
(0.8)
–
(0.6)
(0.1)
(0.1)
0.1
(1.4)
Total profit/(loss)
(4.7)
20.4
(1.2)
(1.5)
0.9
2.4
(14.3)
2.0
Other comprehensive income
–
–
–
–
–
–
(0.6)
(0.6)
Total profit and comprehensive
income/(loss)
(4.7)
20.4
(1.2)
(1.5)
0.9
2.4
(14.9)
1.4
Fifteen-month period to
30 September 2019
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Rental
income
£m
Investment
properties
£m
Central
support
£m
Total
£m
Revenue from contracts with customers 29.2
18.6
62.6
34.5
–
–
–
144.9
Other revenue
–
–
–
–
1.5
1.5
–
3.0
Cost of sales
(24.3)
(2.5)
(57.1)
(30.6)
(0.9)
–
–
(115.4)
Gross profit
4.9
16.1
5.5
3.9
0.6
1.5
–
32.5
Administrative expenses
–
–
–
–
–
–
(15.7)
(15.7)
Gain on sale of joint venture interest
–
–
12.6
–
–
–
12.6
Share of profit of joint ventures
–
–
–
2.0
–
–
–
2.0
Share of profit of associate
–
–
–
0.2
–
–
–
0.2
Revaluation of investment property
–
–
–
–
–
1.1
–
1.1
Operating profit/(loss)
4.9
16.1
5.5
18.7
0.6
2.6
(15.7)
32.7
Net finance (cost)/income
(1.5)
0.7
–
(4.8)
–
(1.8)
(0.3)
(7.7)
Profit/(loss) before tax
3.4
16.8
5.5
13.9
0.6
0.8
(16.0)
25.0
Tax (charge)/credit
(0.1)
(0.3)
(0.1)
(0.2)
–
–
0.3
(0.4)
Total profit/(loss)
3.3
16.5
5.4
13.7
0.6
0.8
(15.7)
24.6
Other comprehensive income
–
–
–
–
–
–
(0.4)
(0.4)
Total profit and comprehensive
income/(loss)
3.3
16.5
5.4
13.7
0.6
0.8
(16.1)
24.2
Inland Homes plc
Stock code: INL
120
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
10. Segmental information CONTINUED
Year ended 30 September 2021
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Rental
income
£m
Investment
properties
£m
Central
support
£m
Total
£m
ASSETS
Non-current assets
Investment properties
–
–
–
–
–
36.0
–
36.0
Property, plant and equipment
–
–
–
–
4.3
–
0.5
4.8
Right-of-use asset
–
–
–
–
–
–
0.9
0.9
Intangible assets
–
–
–
–
0.1
–
–
0.1
Investments in quoted companies
–
–
–
–
–
–
0.5
0.5
Investment in joint ventures
–
–
–
4.2
–
–
–
4.2
Amounts due from joint ventures
–
–
–
32.7
–
–
–
32.7
Investment in associate
–
–
–
1.0
–
–
–
1.0
Other receivables
–
–
14.3
22.0
–
–
–
36.3
Total non-current assets
–
–
14.3
59.9
4.4
36.0
1.9
116.5
Current assets
Inventories
88.6
3.9
0.7
70.6
0.1
–
–
163.9
Trade and other receivables
15.6
73.2
26.7
–
–
–
1.4
116.9
Assets held for sale
–
–
–
–
–
1.4
–
1.4
Amounts due from associate
–
–
–
3.1
–
–
–
3.1
Amounts due from joint ventures
–
–
–
3.9
–
–
–
3.9
Cash and cash equivalents
–
–
–
–
–
–
12.1
12.1
Total current assets
104.2
77.1
27.4
77.6
0.1
1.4
13.5
301.3
Total assets
104.2
77.1
41.7
137.5
4.5
37.4
15.4
417.8
LIABILITIES
Current liabilities
Bank loans
(30.4)
–
–
–
(0.3)
–
–
(30.7)
Other loans
(21.9)
–
–
(0.4)
–
–
–
(22.3)
Trade and other payables
(10.4)
(1.8)
(55.9)
(15.1)
(0.1)
–
(1.2)
(84.5)
Deferred income
(3.4)
–
–
(2.1)
–
–
–
(5.5)
Lease liabilities
–
–
–
–
–
–
(0.3)
(0.3)
Corporation tax
–
–
–
–
–
–
(4.3)
(4.3)
Other financial liabilities
(12.4)
–
–
–
–
–
–
(12.4)
Total current liabilities
(78.5)
(1.8)
(55.9)
(17.6)
(0.4)
–
(5.8)
(160.0)
Non-current liabilities
Bank loans
–
–
–
(34.1)
(0.1)
(3.4)
–
(37.6)
Lease liabilities
–
–
–
–
–
–
(0.6)
(0.6)
Other financial liabilities
(3.6)
–
–
–
–
–
–
(3.6)
Zero Dividend Preference shares
–
–
–
(32.0)
–
–
–
(32.0)
Deferred tax
–
–
–
–
–
–
(1.0)
(1.0)
Total non-current liabilities
(3.6)
–
–
(66.1)
(0.1)
(3.4)
(1.6)
(74.8)
Total liabilities
(82.1)
(1.8)
(55.9)
(83.7)
(0.5)
(3.4)
(7.4)
(234.8)
Net assets
22.1
75.3
(14.2)
53.8
4.0
34.0
8.0
183.0
www.inlandhomesplc.com
Annual Report and Accounts 2021
121
FINANCIALS
10. Segmental information CONTINUED
30 September 2020 as restated
Land
sales
£m
Asset
management
fees
£m
Contract
income
£m
House
building
£m
Rental
income
£m
Investment
properties
£m
Central
support
£m
Total
£m
ASSETS
Non-current assets
Investment properties
–
–
–
–
–
43.5
–
43.5
Property, plant and equipment
–
–
–
–
4.7
–
0.9
5.6
Right-of-use asset
–
–
–
–
–
–
1.2
1.2
Intangible assets
–
–
–
–
0.2
–
–
0.2
Investments in quoted companies
–
–
–
–
–
–
0.5
0.5
Investment in joint ventures
–
–
–
8.8
–
–
–
8.8
Investment in associate
–
–
–
1.1
–
–
–
1.1
Other receivables
–
–
1.6
20.7
–
–
–
22.3
Total non-current assets
–
–
1.6
30.6
4.9
43.5
2.6
83.2
Current assets
Inventories
77.3
4.0
–
97.5
–
–
–
178.8
Trade and other receivables
15.8
36.8
8.0
–
–
–
0.3
60.9
Assets held for sale
–
–
–
–
–
12.5
–
12.5
Amounts due from associate
–
–
–
3.1
–
–
–
3.1
Amounts due from joint ventures
–
–
–
42.2
–
–
–
42.2
Cash and cash equivalents
–
–
–
–
–
–
15.7
15.7
Total current assets
93.1
40.8
8.0
142.8
–
12.5
16.0
313.2
Total assets
93.1
40.8
9.6
173.4
4.9
56.0
18.6
396.4
LIABILITIES
Current liabilities
Bank loans
(14.2)
–
–
–
(0.3)
(27.0)
–
(41.5)
Other loans
(25.3)
–
–
–
–
–
–
(25.3)
Trade and other payables
(15.8)
–
(11.4)
(4.2)
(0.1)
(1.3)
–
(32.8)
Deferred income
–
–
(10.0)
–
–
–
–
(10.0)
Amounts owed to joint ventures
–
–
–
(6.2)
–
–
–
(6.2)
Lease liabilities
–
–
–
–
–
–
(0.3)
(0.3)
Other financial liabilities
(2.0)
–
–
–
–
–
–
(2.0)
Corporation tax
–
–
–
–
–
–
(3.1)
(3.1)
Total current liabilities
(57.3)
–
(21.4)
(10.4)
(0.4)
(28.3)
(3.4)
(121.2)
Non-current liabilities
Bank loans
–
–
–
(42.4)
(0.3)
(1.2)
–
(43.9)
Other loans
–
–
–
(13.1)
–
–
–
(13.1)
Deferred income
–
–
–
(2.1)
–
–
–
(2.1)
Lease liabilities
–
–
–
–
–
–
(0.9)
(0.9)
Other financial liabilities
(10.3)
–
–
–
–
–
–
(10.3)
Zero Dividend Preference shares
–
–
–
(30.2)
–
–
–
(30.2)
Deferred tax
–
–
–
–
–
(2.4)
0.7
(1.7)
Total non-current liabilities
(10.3)
–
–
(87.8)
(0.3)
(3.6)
(0.2)
(102.2)
Total liabilities
(67.6)
–
(21.4)
(98.2)
(0.7)
(31.9)
(3.6)
(223.4)
Net assets
25.5
40.8
(11.8)
75.2
4.2
24.1
15.0
173.0
Inland Homes plc
Stock code: INL
122
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
10. Segmental information CONTINUED
Fifteen-month period ended
30 September 2019 as restated
Land
sales
£m
Asset
management
Fees
£m
Contract
income
£m
House
building
£m
Rental
income
£m
Investment
properties
£m
Central
support
£m
Total
£m
ASSETS
Non-current assets
Investment properties
–
–
–
–
–
49.3
–
49.3
Property, plant and equipment
–
–
–
–
5.2
–
1.1
6.3
Intangible assets
–
–
–
–
0.3
–
–
0.3
Investments
–
–
–
–
–
–
1.1
1.1
Investment in joint ventures
–
–
–
8.0
–
–
–
8.0
Amounts due from joint ventures
–
–
–
1.0
–
–
–
1.0
Investment in associate
–
–
–
1.3
–
–
–
1.3
Other receivables
1.7
–
0.2
19.9
–
–
–
21.8
Total non-current assets
1.7
–
0.2
30.2
5.5
49.3
2.2
89.1
Current assets
Inventories
82.4
–
–
115.2
–
–
–
197.6
Trade and other receivables
11.8
15.7
14.9
1.0
–
–
2.0
45.4
Assets held for sale
–
–
–
–
–
4.7
–
4.7
Amounts due from associate
–
–
–
3.3
–
–
–
3.3
Amounts due from joint ventures
–
–
–
34.8
–
–
–
34.8
Cash and cash equivalents
–
–
–
–
–
–
10.9
10.9
Total current assets
94.2
15.7
14.9
154.3
–
4.7
12.9
296.7
Total assets
95.9
15.7
15.1
184.5
5.5
54.0
15.1
385.8
LIABILITIES
Current liabilities
Bank loans and overdrafts
(48.0)
–
–
–
–
–
–
(48.0)
Trade and other payables
(16.8)
–
(14.3)
(13.1)
–
(1.2)
(2.3)
(47.7)
Corporation tax
–
–
–
–
–
–
(2.2)
(2.2)
Other financial liabilities
(4.1)
–
–
–
–
–
–
(4.1)
Total current liabilities
(68.9)
–
(14.3)
(13.1)
–
(1.20)
(4.5)
(102.0)
Non-current liabilities
Bank loans
(1.1)
–
–
(53.0)
–
(28.0)
–
(82.1)
Other loans
–
–
–
(7.2)
–
–
–
(7.2)
Other financial liabilities
(5.2)
–
–
–
–
–
–
(5.2)
Zero Dividend Preference shares
–
–
–
(25.9)
–
–
–
(25.9)
Deferred tax
–
–
–
–
–
(1.2)
–
(1.2)
Total non-current liabilities
(6.3)
–
–
(86.1)
–
(29.2)
–
(121.6)
Total liabilities
(75.2)
–
(14.3)
(99.2)
–
(30.4)
(4.5)
(223.6)
Net assets
20.7
15.7
0.8
85.3
5.5
23.6
10.6
162.2
www.inlandhomesplc.com
Annual Report and Accounts 2021
123
FINANCIALS
11. Expenses by nature
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Depreciation – property, plant and equipment
0.8
1.0
0.7
Depreciation – right-of-use asset
0.3
0.3
–
Amortisation
0.1
0.1
–
Operating lease rentals
– properties
–
–
0.4
Fees paid to BDO LLP in respect of
– audit of the Company and consolidated accounts
– current year/period
0.3
0.2
0.3
– prior year/period
–
–
0.1
Advertising expenses
0.1
0.2
0.6
12. Employee costs
The Directors of the Company who served during the year are considered to be key management personnel in both the current and
prior years.
The Remuneration Report on pages 78–82 is produced for information purposes, in order to give shareholders and other users of
financial statements greater transparency about the way in which the Directors are remunerated.
Total employee costs (including Directors) during the year were as follows:
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Wages and salaries
10.7
12.3
15.0
Social security costs
1.2
1.6
1.7
Pension costs – defined contribution plans
0.5
0.5
0.4
Share-based payments
–
–
0.3
12.4
14.4
17.4
Amount capitalised to inventories
(6.3)
(5.7)
(8.1)
Total employee costs
6.1
8.7
9.3
During the year, the Group received reimbursement of payroll costs of £nil (2020: £0.6m) in respect of the UK Government’s
Coronavirus Job Retention Scheme. In the year ended 30 September 2020, this is shown as a credit to gross wages and salary costs
of £12.9m, to give wages and salaries costs of £12.3m.
The average number of employees during the year was as follows:
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Key management personnel
3
3
3
Administration
140
156
135
143
159
138
There were no employee or employee benefit expenses in the Company in the current year or prior years.
Inland Homes plc
Stock code: INL
124
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
13. Share-based payments
Group – equity-settled option scheme
Share options are awarded to all eligible members of staff on a discretionary basis and there are no service or performance
conditions attached to them, other than that the members of staff awarded the options are still employed by the Company at the
time of the options being exercised. Good leavers can exercise options for a period of up to six months from the date of leaving. This
unapproved share option scheme is separate to the long-term incentive plan (LTIP) for the Executive Directors, further details of
which can be found in the Remuneration Committee report on pages 78–82.
A summary of the outstanding options under this equity-settled option scheme is as follows:
Year of grant
Exercise
Price
p
Date from
which
exercisable
Expiry
date
Outstanding
at
1 October
2020
Issued
Exercised
Lapsed
Outstanding
at
30 September
2021
Exercisable
at 30
September
2021
Exercisable at
30 September
2020
For the year ended 30 September 2021
2010
18.25
22/11/2013
22/11/2020
1,500,000
– (1,500,000)
–
–
–
1,500,000
2012
17.5
25/06/2015
24/06/2022
160,000
–
(100,000)
–
60,000
60,000
160,000
2013
32.5
18/06/2016
17/06/2023
380,000
–
(150,000)
–
230,000
230,000
380,000
2015
70.25
22/06/2018
21/06/2025
240,000
–
–
(25,000)
215,000
215,000
240,000
2018
67
17/07/2021
16/07/2028
1,385,000
–
– (140,000)
1,245,000 1,245,000
–
2019
61.3
18/03/2022
17/03/2029
500,000
–
–
–
500,000
–
–
4,165,000
– (1,750,000) (165,000)
2,250,000 1,750,000
2,280,000
The weighted average exercise price of share options exercised and lapsed was 19.43p (2020: 75.50p) and 67.49p (2020: 68.35p)
respectively. The exercise price of options outstanding at 30 September 2021 ranged between 32.50p and 70.25p (2020: 17.50p and
70.25p) and their weighted average contractual life was 7.0 years (2020: 6.7 years).
The weighted average share price (at the date of exercise) of options exercised during the year was 52.09p (2020: 75.50p).
The weighted average fair value of each option granted during the year was nil p (2020: nil p).
There were no grants in 2021 nor 2020.
The fair value of the options granted is calculated using the Black-Scholes option pricing model. The following information is relevant
in the determination of the fair value:
Grant date
30 September
2021
30 September
2020
30 September 2019
Grant 2
Grant 1
Share price at date of grant
–
–
61.0p
67.0p
Volatility
–
–
21%
32%
Option life
–
–
4 years
4 years
Dividend yield
–
–
3.30%
4.00%
Risk-free investment rate
–
–
0.40%
0.90%
Fair value of option at grant date
–
–
3.0p
5.0p
Exercisable price at date of grant
–
–
61.0p
67.0p
On 4 November 2020, Nish Malde, an Executive Director of the Company, exercised options over ordinary shares of 10p each under
the unapproved share option scheme. Nish Malde exercised a total of 1,500,000 options and sold 1,000,000 ordinary shares to cover
the exercise price and the tax liability arising from the exercise of these options. Following the above transactions, Nish Malde holds
an interest in 11,496,792 ordinary shares representing approximately 5.0% of the Company’s issued share capital.
www.inlandhomesplc.com
Annual Report and Accounts 2021
125
FINANCIALS
13. Share-based payments CONTINUED
Volatility was calculated with reference to historical share price information using the closing prices on each business day over the
period since the shares have been listed.
The share-based payment charged to the Group Statement of Comprehensive Income for the year ended 30 September 2021 is £nil
(year ended 30 September 2020: £nil) with a corresponding deferred tax asset at that date of £nil (year ended 30 September 2020:
£nil). £nil of this charge (year ended 30 September 2020: £nil) relates to the Directors.
No Growth Shares were issued in the current year or prior period. At 30 September 2021, there were 2,285,076 (30 September 2020:
2,285,076) ordinary shares exchangeable for the Growth Shares outstanding, issued in December 2013, that do not have an exercise
price but are subject to vesting conditions. Further details can be found in the Remuneration Committee Report on pages 78–82.
The Executive Directors receive 50% of bonuses in shares which are purchased by the Employee Benefit Trust and the remaining 50%
in cash. The shares will be vested to the Directors three years after the award date. The amount of the bonus awarded each year is
explained in the Remuneration Committee Report on pages 78–82.
14. Finance costs
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Interest expense:
– bank loan borrowings
3.8
4.1
3.9
– other loan borrowings
2.8
2.1
3.6
– amortisation of loan arrangement and other fees
1.2
2.6
1.7
– Zero Dividend Preference shares
1.5
1.5
1.5
Gross finance costs
9.3
10.3
10.7
Finance costs capitalised
–
(0.8)
(1.3)
Finance costs
9.3
9.5
9.4
Finance costs of £nil (2020: £0.8m) have been capitalised on inventories in the period in accordance with IAS 23 ‘Borrowing Costs’
(see Note 28), using the Group’s cost of borrowing for that loan specific to the development in question.
In the year ended 30 September 2021, the average capitalisation interest rate for interest expense in the cost of inventories was 0%
(2020: 5.25%).
15. Finance income
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Interest from loans to joint ventures and associate
0.2
0.2
0.7
Other interest receivable
0.3
0.1
0.3
Notional interest income
1.0
0.8
0.7
Finance income
1.5
1.1
1.7
16. Tax charge
An analysis of the tax charge in the year is as follows:
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Current tax expense
Current tax on profits for the year
4.4
1.0
2.1
Adjustment for under provision in prior periods
(0.1)
(0.1)
(1.0)
Total tax expense
4.3
0.9
1.1
Deferred tax charge/(credit)
Origination and reversal of temporary differences
(1.0)
0.4
(0.7)
Effect of tax rate change
0.3
0.1
–
Total deferred tax
(0.7)
0.5
(0.7)
Total tax expense
3.6
1.4
0.4
Inland Homes plc
Stock code: INL
126
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
16. Tax charge CONTINUED
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 Group companies as follows:
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Profit before tax
13.2
3.7
25.0
Expected tax charge based on the standard rate of corporation tax in the UK (19%)
2.5
0.7
4.8
Expenses not deductible for tax purposes
0.5
0.7
0.1
ZDP interest not deductible for tax purposes
0.3
0.3
0.3
Capital (losses)/gains
0.1
0.2
(0.2)
Adjustments to tax charge in respect of previous periods
(0.1)
(0.1)
(0.5)
Income not deductible for tax purposes
–
–
(2.4)
Prior year capital losses now recognised
–
–
(1.6)
Other items
0.3
(0.4)
(0.1)
Total tax expense
3.6
1.4
0.4
The tax credit relating to revaluation of quoted investments within other comprehensive income in the year ended 30 September 2021
is £nil (2020: £0.1m).
The Group’s share of tax expense in its joint ventures and associate is £nil (2020: £0.1m).
17. Earnings per share
Number of shares
Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the Parent
Company, i.e. no adjustments to profit were necessary in 2021 nor 2020.
The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the weighted average
number of ordinary shares used in the calculation of basic earnings per share is as follows:
Earnings per share
Weighted average
Year ended
30 September
2021
’000
Year ended
30 September
2020
’000
Fifteen-month
period ended
30 September
2019
’000
For use in basic measures
228,130
214,361
205,285
Dilutive effect of:
– share options
115
1,323
1,500
– deferred bonus shares
1,694
1,694
1,823
– growth shares
2,285
2,285
2,397
For use in diluted measures
232,224
219,663
211,005
The Group’s Employee Benefit Trust (EBT) purchased 650,000 shares on 29 October 2014, 377,500 shares on 20 December 2015 and
a further 600,000 shares on 16 December 2016 in Inland Homes plc under the terms of the Long-Term Incentive Plan. These total
1,627,500 shares and have been deducted from the weighted average number of ordinary shares in issue and also from the shares in
issue at the year-end.
In several transactions in October and November 2017, the Group purchased 1,000,000 of its own shares to be held in treasury. On
18 January 2018, 175,000 shares were transferred from the treasury reserve to satisfy employee share options exercised within the
terms of the Company’s share option scheme.
During the fifteen-month period ended 30 September 2019, the Group purchased 200,000 shares. On 24 October 2018, 849,241 shares
were transferred from the treasury reserve to satisfy employee share options exercised within the terms of the Company’s share
option scheme. In several transactions during August and September 2019, the Group sold 175,779 shares. At 30 September 2019, no
shares were held in treasury.
Amounts included for the growth shares are those where the performance conditions have been satisfied. On 19 July 2018, Stephen
Wicks transferred 248 vested LTIP shares to the Company in exchange for the issue of 2,814,924 shares in the Company as referred to
in the Remuneration Committee Report on pages 78–82.
www.inlandhomesplc.com
Annual Report and Accounts 2021
127
FINANCIALS
Basic and diluted EPS
Year ended
30 September
2021
Year ended
30 September
2020
Fifteen-month
period ended
30 September
2019
Profit attributable to equity shareholders (£m)
9.6
1.4
24.2
Earnings per share
4.21p
0.65p
11.79p
Diluted earnings per share
4.13p
0.64p
11.49p
18. Dividends
Dividends are not paid to the shares owned by the Employee Benefit Trust.
On 30 March 2020, in response to the global COVID-19 pandemic, the Board cancelled the second interim dividend of 2.25p per share
that was due to be paid on 12 June 2020. There were no dividends declared in relation to the year ended 30 September 2021 nor
30 September 2020.
During the year, dividends of £14.8m were received by the Company from its subsidiaries (2020: £7.5m).
19. Investment properties
Commercial
properties
£m
Residential
properties
£m
Development
land
£m
Assets under
construction
£m
Total
£m
Fair value
At 1 October 2019
2.6
37.0
8.5
1.2
49.3
Additions
–
1.6
–
0.1
1.7
Disposals
(1.4)
–
–
–
(1.4)
Fair value adjustment
(0.3)
0.9
–
–
0.6
Transfer between classes
–
1.3
–
(1.3)
–
Transfer (to)/from inventories
–
(0.9)
–
–
(0.9)
Transfer to assets held for sale
(0.9)
(4.9)
–
–
(5.8)
At 30 September 2020
–
35.0
8.5
–
43.5
Additions
–
5.3
–
–
5.3
Fair value adjustment
–
0.8
(0.2)
–
0.6
Transfer (to)/from inventories
–
(7.6)
(8.3)
–
(15.9)
Transfer (to)/from assets held for sale
–
2.5
–
–
2.5
At 30 September 2021
–
36.0
–
–
36.0
Valuation techniques
Residential properties
The Group’s residential investment properties were valued by the Directors on the basis of ‘open market value’. In arriving at
their view of open market value the Directors had regard to the following: the accommodation offered, the square footage and the
condition of each property. They then considered the above in light of the local market and prices achieved in recent transactions in
consultation with a local property agent.
Development land
The Group’s development land is carried at fair value which has been established by the Directors 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 assessed at each balance sheet date based on the values achieved by the Group on earlier phases of the same
development for similar property types, adjusted for the changes in current market conditions and progress of the current phase
of the development. 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. The Directors are of the opinion that developing the site reflects the highest and best use of
this asset.
Inland Homes plc
Stock code: INL
128
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
19. Investment properties CONTINUED
Commercial properties
The Group’s commercial properties were valued by the Directors on the basis of ‘open market value’. In arriving at their view of open
market value the Directors had regard to the following: the accommodation offered, the square footage and the condition of each
property. They then considered the above in light of the local market and yields achieved in recent transactions following consultation
with a local property agent.
These techniques use significant unobservable inputs such that the fair value measurement of investment properties has been
classified as Level 3 in the fair value hierarchy as set out by IFRS 13 ‘Fair Value Measurement’. There were no transfers between
Levels 1 and 2 or between 2 and 3 in the fair value hierarchy during the year ended 30 September 2021 (2020: None).
There has been no change in valuation techniques of Level 3 fair value measurements in the year. The fair value is based on the
above items’ highest and best use, which does not differ from their actual use.
The key inputs to the strategic property valuations valued for EPRA purposes include house prices, rental values and development
costs.
The impact of sensitising these inputs on the Financial Statements are as follows:
Sensitivity analysis
Increase/(decrease)
Variable
Variation
2021
£m
2020
£m
2019
£m
Commercial properties
Rental values
+5%
–
–
0.1
–5%
–
–
(0.1)
Residential properties
House prices
+5%
1.8
1.8
1.9
–5%
(1.8)
(1.8)
(1.9)
Development land
House prices
+5%
–
2.2
1.6
–5%
–
(2.2)
(1.3)
Development costs
+5%
–
(1.1)
(1.1)
–5%
–
1.1
0.9
Where investment properties are valued on a yield basis the impact of sensitising of the yield would be immaterial.
Income and expense
During the year ended 30 September 2021, £0.5m (2020: £0.9m) rental and ancillary income from investment properties was
recognised in the Group Statement of Comprehensive Income. Direct operating expenses, including repairs and maintenance,
arising from investment property that generated rental income amounted to £0.1m (2020: £0.5m). The Group did not incur any direct
operating expenses arising from investment properties that did not generate rental income (year ended 30 September 2020: £nil).
Restrictions and obligations
At 30 September 2021, there were no restrictions on the realisability of investment property or the remittance of income and proceeds
of disposal (2020: None). There are no obligations (2020: None) to construct or develop the Group’s residential or development land
investment property. At 30 September 2021, contracted obligations to purchase investment properties amounted to £nil (2020: £nil).
At 30 September 2021, the historical cost of the Group’s investment properties was £8.5m (2020: £11.9m). Certain of the investment
properties have been pledged as security against the Group’s borrowings. For details see Note 32.
The modular housing, which forms part of property, plant and equipment (see Note 20), has been pledged as security against a
borrowing of the Group. For details see Note 32.
www.inlandhomesplc.com
Annual Report and Accounts 2021
129
FINANCIALS
20. Property, plant and equipment
Group
Modular
housing
£m
Motor
vehicles
£m
Office
equipment
£m
Fixtures
and fittings
£m
Total
£m
Cost
At 1 October 2019
5.5
0.3
1.3
0.9
8.0
Additions
–
–
0.3
–
0.3
Disposals
–
(0.2)
(0.5)
(0.4)
(1.1)
At 30 September 2020
5.5
0.1
1.1
0.5
7.2
Additions
–
–
0.1
–
0.1
Disposals
–
–
(0.3)
–
(0.3)
At 30 September 2021
5.5
0.1
0.9
0.5
7.0
Depreciation
At 1 October 2019
0.3
0.3
0.6
0.5
1.7
Charge for the year
0.5
–
0.3
0.2
1.0
Disposals
–
(0.2)
(0.5)
(0.4)
(1.1)
At 30 September 2020
0.8
0.1
0.4
0.3
1.6
Depreciation charge
0.5
–
0.2
0.1
0.8
Disposals
–
–
(0.1)
(0.1)
(0.2)
At 30 September 2021
1.3
0.1
0.5
0.3
2.2
Net book value
At 30 September 2019
5.2
–
0.7
0.4
6.3
At 30 September 2020
4.7
–
0.7
0.2
5.6
At 30 September 2021
4.2
–
0.4
0.2
4.8
21. Right-of-use assets
On adoption of IFRS 16 on 1 October 2019, the Group has recognised a right-of use asset. This has been presented in the Statement
of Financial Position as follows:
Group
Leasehold
property
£m
Cost
At 1 October 2020
1.6
Additions
–
Disposals
–
At 30 September 2021
1.6
Depreciation
At 1 October 2020
0.4
Charge for the year
0.3
Disposals
–
At 30 September 2021
0.7
Net book value
At 30 September 2021
0.9
At 30 September 2020
1.2
The right-of-use assets relates to the Group’s occupation of Burnham Yard, Beaconsfield as a Head Office facility, and a car. Right-
of-use assets are depreciated on a straight-line basis over the remaining term of the lease or over the remaining economic life of the
asset, if this is judged to be shorter. See Note 34 for further details.
Inland Homes plc
Stock code: INL
130
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
22. Intangible assets
Group
Development
costs
£m
Cost
At 1 October 2020 and 30 September 2021
0.3
Amortisation
At 1 October 2020
0.1
Charge for the year
0.1
At 30 September 2021
0.2
Net book value
At 30 September 2021
0.1
At 30 September 2020
0.2
Intangible assets relate to development costs of the Hugg Homes brand capitalised under IAS 38 ‘Intangible assets’.
23. Investments in quoted companies
Group
Quoted
investments
£m
Cost and carrying value
At 1 October 2020
0.5
Revaluation
–
At 30 September 2021
0.5
Investments of quoted securities is measured at fair value through other comprehensive income. The fair value is based on published
market prices.
24. Investments in subsidiaries
At 30 September 2021, the Group, directly or indirectly, held interests in equity in various subsidiary undertakings. Details of these
have been included in Note 1.
25. Investments in joint ventures
At 30 September 2021, the Group held interests in equity in various joint ventures. A summary of the investments in joint ventures is
as follows:
Bucknalls
Developments
£m
Cheshunt
Lakeside
Developments
£m
Europa
Park
£m
High Wycombe
Developments
£m
Gardiners
Park
£m
Total
£m
Cost
At 1 October 2019
0.7
7.3
–
–
–
8.0
Share of profit after tax
1.6
(1.0)
1.0
–
0.4
2.0
Receipts from joint ventures
–
–
(0.8)
–
(0.4)
(1.2)
Movement during the period
1.6
(1.0)
0.2
–
–
0.8
At 30 September 2020
2.3
6.3
0.2
–
–
8.8
Share of profit after tax
–
(1.9)
–
–
–
(1.9)
Receipts from joint ventures
–
(0.2)
(0.2)
–
–
(0.4)
Purchase of joint venture
(2.3)
–
–
–
–
(2.3)
Movement during the period
(2.3)
(2.1)
(0.2)
–
–
(4.6)
At 30 September 2021
–
4.2
–
–
–
4.2
www.inlandhomesplc.com
Annual Report and Accounts 2021
131
FINANCIALS
25. Investments in joint ventures CONTINUED
Amounts due from/(to) joint ventures
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Amounts owed by joint ventures, due within one year
Cheshunt Lakeside Developments Limited held at carrying value
32.7
–
–
Bucknalls Developments Limited
held at carrying value
–
–
(2.0)
held at fair value through profit and loss
–
–
4.0
32.7
–
2.0
Cheshunt Lakeside Developments Limited held at carrying value
–
28.6
32.8
High Wycombe Developments Limited
held at carrying value
3.9
13.6
–
36.6
42.2
34.8
Amounts owed by joint ventures, due in
greater than one year
Gardiners Park LLP
held at carrying value
–
–
1.0
–
–
1.0
Amounts owed by joint ventures
36.6
42.2
35.8
Amounts owed to joint ventures, due
within one year
Bucknalls Developments Limited
held at carrying value
–
(6.2)
–
Amounts owed to joint ventures
–
(6.2)
–
Amounts due from/(to) joint ventures
36.6
36.0
35.8
The Directors considered and concluded that the classification of the amounts due from Bucknalls Developments Limited at 30
September 2019 was £4m classified as amounts due from joint ventures as assets held at fair value through profit and loss due to the
Perpetual Annuity Bond interest. All other amounts above are held at carrying value. During the year ended 30 September 2020, the
Perpetual Annuity Bond was repaid in full.
The measurement uses significant unobservable inputs to measure fair value and is based on Directors’ valuation given there is
no readily available market information. These amounts have been classified as Level 3 in the fair value hierarchy as set out by
IFRS 13 ‘Fair Value Measurement’. There have been no transfers between levels in the fair value hierarchy during the year ended
30 September 2021 or the year ended 30 September 2020.
Apart from interest, which is charged on amounts due from Bucknalls Developments Limited held at fair value through profit and
loss, all other amounts are interest free and repayable on demand.
The Group applies a forward looking expected credit loss model to measure any credit loss provision for amounts due from joint
ventures. Both the expected credit loss provision and the incurred loss provision in the current period and prior year are immaterial.
Summarised financial information has been included for material joint ventures and follows.
Inland Homes plc
Stock code: INL
132
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
25. Investments in joint ventures CONTINUED
Bucknalls Developments Limited
In December 2015, the Group entered into a joint venture with two private individuals to purchase land, obtain planning permission
and develop the homes in Garston, Hertfordshire. During the year ended 30 June 2017, outline planning consent was obtained for 100
residential units. Under the terms of the joint venture, the Group was obliged to fund 50% of the costs of the site and was entitled to
receive 50% of the returns.
On 30 September 2021, the Group acquired the 50% interest from the two private individuals and, from this date, Bucknalls
Developments Limited was accounted for as a subsidiary.
Summarised statement of total comprehensive income
Year ended
30 September
2021
Year ended
30 September
2021
Year ended
30 September
2020
Fifteen-month
period ended
30 September
2019
Accounted for as
a subsidiary
£m
Accounted for as
a joint venture
under IAS 28
£m
Accounted for as
a joint venture
under IAS 28
£m
Accounted for as
a joint venture
under IAS 28
£m
Revenue
–
0.7
17.3
16.6
Cost of sales and operating expenses
0.1
(0.3)
(14.1)
(13.3)
Interest received/(payable)
–
–
0.6
(0.9)
Tax payable
(0.1)
–
(0.7)
(0.4)
Total comprehensive income/(expense)
–
0.4
3.1
2.0
Summarised statement of financial position
As at
30 September
2020
£m
Current assets
Other current assets
6.3
Total current assets
6.3
Current liabilities
Financial liabilities (excluding trade payables and provisions)
0.4
Other current liabilities
1.4
Total current liabilities
1.8
Net assets
4.5
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Annual Report and Accounts 2021
133
FINANCIALS
25. Investments in joint ventures CONTINUED
Cheshunt Lakeside Developments Limited
In June 2016, the Group entered into a joint venture whose purpose was to acquire a site in Cheshunt, obtain planning permission and
ultimately sell the land.
Summarised statement of total comprehensive income
Year ended
30 September
2021
Year ended
30 September
2020
Period from
6 June 2019 to
30 September
2019
Period from
1 July 2018 to
5 June
2019
Accounted as a joint
venture under IAS 28
£m
Accounted as a joint
venture under IAS 28
£m
Accounted as a joint
venture under IAS 28
£m
Accounted for as a
subsidiary
£m
Revenue
0.7
15.9
0.5
1.9
Cost of sales and operating expenses
(0.3)
(16.5)
(0.4)
(1.2)
Interest payable
(4.5)
(1.9)
–
–
Tax receivable
–
0.5
–
–
Total comprehensive (expense)/income
(4.1)
(2.0)
0.1
0.7
Summarised statement of financial position
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Current assets
Property, plant and equipment
0.2
0.3
–
Total non-current assets
0.2
0.3
–
Current assets
Cash and cash equivalents
–
–
–
Other current assets
69.6
66.9
74.6
Total current assets
69.6
66.9
74.6
Total assets
69.8
67.2
74.6
Current liabilities
Financial liabilities (excluding trade payables and provisions)
(76.1)
(68.0)
(69.5)
Other current liabilities
(0.3)
(0.3)
(0.9)
Total current liabilities
(76.4)
(68.3)
(70.4)
Non-current liabilities
Financial liabilities (excluding trade payables and provisions)
–
–
(3.1)
Total non-current liabilities
–
–
(3.1)
Total liabilities
(76.4)
(68.3)
(73.5)
Net (liabilities)/assets
(6.6)
(1.1)
1.1
Inland Homes plc
Stock code: INL
134
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
25. Investments in joint ventures CONTINUED
Europa Park LLP
In December 2017, the Group entered into a joint venture which acquired a site in Ipswich, Suffolk from the Group which has planning
permission for 94 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. During the year ended 30 September 2021, the construction
completed and the LLP has sold all the residential units constructed.
Summarised statement of total comprehensive income
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Revenue
0.8
9.2
10.1
Cost of sales and operating expenses
(0.6)
(7.0)
(8.0)
Interest payable
–
(0.1)
(0.2)
Total comprehensive income/(expense)
0.2
2.1
1.9
Summarised statement of financial position
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Current assets
Cash and cash equivalents
–
0.4
–
Other current assets
0.1
0.6
3.2
Total current assets
0.1
1.0
3.2
Current liabilities
Financial liabilities (excluding trade payables and provisions)
–
–
–
Other current liabilities
–
(0.5)
(0.7)
Total current liabilities
–
(0.5)
(0.7)
Non-current liabilities
Financial liabilities (excluding trade payables and provisions)
–
–
(2.5)
Other non-current liabilities
–
–
–
Total current liabilities
–
–
(2.5)
Total liabilities
–
(0.5)
(3.2)
Net assets
0.1
0.5
–
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Annual Report and Accounts 2021
135
FINANCIALS
25. Investments in joint ventures CONTINUED
Gardiners Park LLP
In November 2016, the Group entered a joint venture with Constable Homes to develop a site in Basildon, Essex with 30 private and
13 Housing Association units. 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. During the year ended 30 September 2021, construction completed and the
LLP has sold all of the residential units constructed.
Summarised statement of total comprehensive income
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Revenue
–
9.8
2.0
Cost of sales and operating expenses
–
(8.7)
(1.8)
Interest payable
–
(0.1)
(0.1)
Total comprehensive income
–
1.0
0.1
Summarised statement of financial position
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Current assets
Cash and cash equivalents
0.1
0.2
0.5
Other current assets
0.1
–
5.2
Total current assets
0.2
0.2
5.7
Current liabilities
Financial liabilities (excluding trade payables and provisions)
(0.1)
–
–
Other current liabilities
–
(0.1)
(0.9)
Total current liabilities
(0.1)
(0.1)
(0.9)
Non-current liabilities
Financial liabilities (excluding trade payables and provisions)
–
–
(2.8)
Other non-current liabilities
–
–
–
Total current liabilities
–
–
(2.8)
Total liabilities
(0.1)
(0.1)
(3.7)
Net assets
0.1
0.1
2.0
Inland Homes plc
Stock code: INL
136
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
25. Investments in joint ventures CONTINUED
High Wycombe Developments Limited
In December 2019, the Group disposed of a 50% controlling interest in High Wycombe Developments Limited for consideration of
£5,000.
Summarised statement of total comprehensive income
Year ended
30 September 2021
Period from
27 December
2019 to
30 September 2020
Period from
1 October 2019 to
26 December 2019
Accounted as a joint
venture under IAS 28
£m
Accounted as a joint
venture under IAS 28
£m
Accounted as
a subsidiary
£m
Revenue
18.4
29.4
6.9
Cost of sales and operating expenses
(17.4)
(28.5)
(6.2)
Interest payable
(1.1)
(1.1)
(0.3)
Income tax payable
–
(0.1)
–
Total comprehensive (expense)/income
(0.1)
(0.3)
0.4
Summarised statement of financial position
As at
30 September
2021
£m
As at
30 September
2020
£m
Non-current assets
Property, plant and equipment
4.3
4.3
Total non-current assets
4.3
4.3
Current assets
Cash and cash equivalents
–
0.1
Other current assets
3.6
20.8
Total current assets
3.6
20.9
Total assets
7.9
25.2
Current liabilities
Financial liabilities (excluding trade payables and provisions)
(5.5)
(24.4)
Other current liabilities
(0.6)
(2.1)
Total current liabilities
(6.1)
(26.5)
Non-current liabilities
Financial liabilities (excluding trade payables and provisions)
(3.1)
–
Other non-current liabilities
–
–
Total non-current liabilities
(3.1)
–
Total liabilities
(9.2)
(26.5)
Net liabilities
(1.3)
(1.3)
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Annual Report and Accounts 2021
137
FINANCIALS
26. Investment in associate
In October 2015, the Group acquired 25% of Troy Homes Limited (Troy Homes), a premium housebuilder, and is entitled to 25% of the
net returns.
At 30 September 2021, the Company continued to hold equity in its associate. A summary of the investment in the associate is
as follows:
Total
£m
Cost
At 1 October 2020
1.1
Share of loss after tax
(0.1)
At 30 September 2021
1.0
Amounts due from associate
As at
30 September
2021
£m
As at
30 September
2020
£m
Current
Loans
3.1
3.1
Total amounts due from associate
3.1
3.1
The above loans are repayable on demand. Interest was charged on the loan amounts at 7% per annum for the period from 1 October
2019 to 31 March 2021 and at 8% thereafter.
Summarised financial information has been included for the associate, as follows.
Troy Homes Limited
For the year ended 30 September 2021, Troy Homes made a loss before tax of £1.0m (2020: loss of £0.4m).
Inland Homes plc
Stock code: INL
138
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
26. Investment in associate CONTINUED
Summarised statement of total comprehensive income
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
Revenue
14.5
16.0
29.0
Cost of sales and operating expenses
(14.3)
(15.0)
(26.2)
Interest (payable)/receivable
(1.6)
(1.5)
(2.1)
Income tax receivable/(payable)
0.1
0.1
(0.2)
Total comprehensive (expense)/income
(1.3)
(0.4)
0.5
Summarised statement of financial position
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Non-current assets
Investments
–
0.1
–
Total non-current assets
–
0.1
–
Current assets
Cash and cash equivalents
0.7
0.7
3.0
Other current assets
34.2
34.0
32.3
Total current assets
34.9
34.7
35.3
Total assets
34.9
34.8
35.3
Current liabilities
Financial liabilities (excluding trade payables and provisions)
(21.3)
(21.3)
(18.1)
Other current liabilities
(1.0)
(0.9)
(3.8)
Total current liabilities
(22.3)
(22.2)
(21.9)
Non-current liabilities
Financial liabilities (excluding trade payables and provisions)
(9.0)
(9.0)
(9.4)
Other non-current liabilities
–
–
–
Total non-current liabilities
(9.0)
(9.0)
(9.4)
Total liabilities
(31.3)
(31.2)
(31.3)
Net assets
3.6
3.6
4.0
www.inlandhomesplc.com
Annual Report and Accounts 2021
139
FINANCIALS
27. Deferred tax
Group
Revaluation
gain
£m
Capital losses
recognised on
revaluation
gain
£m
Share-based
payments
£m
Total
£m
At 1 October 2019
6.3
(4.3)
(0.8)
1.2
Charged/(credited) to income statement
0.4
0.2
(0.1)
0.5
At 30 September 2020
6.7
(4.1)
(0.9)
1.7
(Credited)/charged to income statement
(1.5)
0.9
(0.1)
(0.7)
At 30 September 2021
5.2
(3.2)
(1.0)
1.0
Company
At 1 October 2020
–
–
(0.7)
(0.7)
(Charged)/credited to income statement
–
–
(0.3)
(0.3)
At 30 September 2021
–
–
(1.0)
(1.0)
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.
No deferred tax asset is recognised in respect of realised or unrealised capital losses if there is uncertainty over future recoverability.
In the Spring Budget 2021, the Government announced that from 1 April 2023, the corporate tax rate will increase to 25%. This new
law was substantively enacted in March 2021 and so this new rate has been applied to deferred tax balances (2020: 19%).
28. Inventories
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
At 1 October
178.8
192.4
136.2
Additions
66.0
116.9
159.8
Disposal on sale of controlling interest in subsidiary undertaking
–
(36.2)
–
Capitalisation of finance costs
–
0.8
1.3
Capitalisation of employee costs
6.3
5.7
8.1
Charged to income statement
(100.5)
(99.6)
(111.9)
Transferred from/(to) investment property
15.9
0.9
4.3
Impairment
(2.6)
(2.1)
(0.2)
At 30 September
163.9
178.8
197.6
Analysis of inventories
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2020
£m
Work in progress
75.2
101.5
115.2
Land
88.7
72.1
82.4
163.9
173.6
197.6
Certain of the inventories are secured against the Group’s borrowings. For details see Note 32.
Inland Homes plc
Stock code: INL
140
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
29. Trade and other receivables
Group
Company
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
As at
30 September
2021
£m
As at
30 September
2020
as restated
£m
As at
30 September
2019
as restated
£m
Trade receivables from contract revenue with
customers
62.1
18.9
14.7
–
–
–
Contract assets (costs to obtain contracts) due in
less than one year
5.0
–
–
–
–
–
Prepayments and accrued income
22.0
30.8
18.9
–
–
–
Other receivables
27.8
11.2
11.8
0.4
0.1
1.6
Deferred tax
–
–
–
1.0
0.7
0.8
Amounts owed by Group undertakings
–
–
–
85.6
72.4
51.1
Trade and other receivables due in less than
one year
116.9
60.9
45.4
87.0
73.2
53.5
Contract assets (costs to obtain contracts) due in
more than one year
12.0
–
–
–
–
–
Other receivables due in more than one year
24.3
22.3
21.8
–
–
–
141.2
83.2
67.2
87.0
73.2
53.5
Materially, all of the trade receivables are receivables from contract revenue and management fees with customers.
The carrying value of trade and other receivables classified at amortised cost is considered a reasonable approximation of fair value.
Within prepayments and accrued income falling due in less than one year is £11.3m (30 September 2020: £2.1m) relating to income
accrued on a construction contract.
Included within other receivables due in greater than one year is £22.0m (30 September 2020: £20.7m) in relation to the sale of the
Group’s beneficial interest of 50% in Cheshunt Lakeside Developments Limited. See Note 25 for further details.
Included in prepayments and accrued income due in less than one year is £nil (30 September 2020: £10.6m) treated as short term as
it represents the normal operating cycle of business but is not expected to be retained until greater than one year.
Deferred tax of £1.0m (30 September 2020: £0.7m) in the Company is expected to be realised after one year.
The Group does not hold any collateral as security.
As is outlined in Note 4, the Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9 for
trade receivables. The Group applies the general approach to providing for expected credit losses prescribed by IFRS 9 for other
receivables. The expected credit loss provision in the current year was £1.7m in the Group (30 September 2020: £2.8m) and £nil in the
Company (30 September 2020: £nil).
In the Company, amounts owed by Group undertakings of £85.6m (30 September 2020: £72.4m), although classified as due within one
year due to their legal agreements with the debtor, could be recovered after more than one year should the debtors' circumstance not
permit repayment on demand.
Other receivables
Group
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Due in less than one year
Sale of subsidiary
–
–
2.9
Sale of interest in joint venture
–
–
2.1
Loan facility
25.3
7.9
4.2
Other
2.5
3.3
2.6
27.8
11.2
11.8
Due in more than one year
Sale of interest in joint venture
22.0
20.7
19.9
Other
2.3
1.6
1.9
24.3
22.3
21.8
Within other receivables due in more than one year is £2.3m (30 September 2020: £1.6m) relating to retentions receivable from
construction contracting clients.
www.inlandhomesplc.com
Annual Report and Accounts 2021
141
FINANCIALS
29. Trade and other receivables CONTINUED
Loan facility includes amounts as follows:
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Repayment status
Interest status
Hillingdon Properties Limited
7.3
4.1
4.1
Repayable on demand
Non–interest bearing
Hounslow Property Developments Limited
7.0
–
–
Repayable on demand
Interest rate of 4%
Inland (Southern) Limited
10.5
2.8
0.1
Repayable on demand
Interest rate of 4%
Gallions Developments Limited
0.5
0.7
–
Repayable on demand
Non–interest bearing
Brook Street Properties Limited
–
0.3
–
Repayable on demand
Interest rate of 4%
25.3
7.9
4.2
30. Assets held for sale
The assets held for sale relate to surplus existing investment properties at Wilton Park which will not be developed. The assets were
transferred based on a Directors’ valuation as shown in the table below. Management expect disposal of these assets to occur within
12 months of the balance sheet date and post balance sheet disposals are disclosed in Note 43.
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
Fifteen-month
period ended
30 September
2019
£m
At 1 October
12.5
4.7
–
Transfer (to)/from investment properties
(2.5)
5.8
4.7
Additions
0.8
–
–
Assets sold
(8.2)
–
–
Fair value adjustment
(1.2)
2.0
–
1.4
12.5
4.7
31. Cash and cash equivalents
Group
Company
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
As at
30 September
2021
£m
As at
30 September
2020
£m
Cash at bank
12.1
15.7
10.9
7.3
8.2
Included in cash at bank is a restricted amount of £nil (2020: £4.7m) held in a bank account over which the Homes and Communities
Agency had a charge as part of their security for a development loan advanced to the Group. On 29 April 2021, the loan facility was
repaid and the charge was released.
Inland Homes plc
Stock code: INL
142
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
32. Borrowings
< 1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
> 5 years
£m
Total
£m
At 30 September 2021
Secured bank loans
30.7
34.2
–
–
–
3.4
68.3
Secured other loans
22.3
–
–
–
–
–
22.3
Borrowings
53.0
34.2
–
–
–
3.4
90.6
Zero Dividend Preference shares
–
32.0
–
–
–
32.0
Loans from joint ventures
–
–
–
–
–
–
–
Other financing arrangements
7.6
–
–
–
–
–
7.6
Gross debt
60.6
34.2
32.0
–
–
3.4
130.2
Cash and cash equivalents
(12.1)
–
–
–
–
–
(12.1)
Net debt
48.5
34.2
32.0
–
–
3.4
118.1
At 30 September 2020
Secured bank loans
41.5
0.8
42.4
–
–
0.7
85.4
Secured other loans
25.3
–
–
13.1
–
–
38.4
Borrowings
66.8
0.8
42.4
13.1
–
0.7
123.8
Zero Dividend Preference shares
–
–
–
30.2
–
–
30.2
Loans from joint ventures
3.1
–
–
–
–
–
3.1
Other financing arrangements
–
6.8
–
–
–
–
6.8
Gross debt
69.9
7.6
42.4
43.3
–
0.7
163.9
Cash and cash equivalents
(15.7)
–
–
–
–
–
(15.7)
Net debt
54.2
7.6
42.4
43.3
–
0.7
148.2
At 30 September 2019
Secured bank loans
26.8
51.3
1.2
29.6
–
–
108.9
Secured other loans
21.2
–
–
–
7.2
–
28.4
Borrowings
48.0
51.3
1.2
29.6
7.2
–
137.3
Zero Dividend Preference shares
–
–
–
–
25.9
–
25.9
Gross debt
48.0
51.3
1.2
29.6
33.1
–
163.2
Cash and cash equivalents
(10.9)
–
–
–
–
–
(10.9)
Net debt
37.1
51.3
1.2
29.6
33.1
–
152.3
Undrawn committed bank facilities
Secured bank loans
–
30.6
–
–
–
–
30.6
Secured other loans
3.3
–
–
–
–
–
3.3
At 30 September 2021
3.3
30.6
–
–
–
–
33.9
At 30 September 2020
20.0
–
22.6
3.2
–
–
45.8
At 30 September 2019
–
0.4
0.1
14.8
5.3
–
20.6
At 30 September 2021, the bank loans were secured over £29.2m (30 September 2020: £34.9m) of investment property and assets
held for sale, £81.3m (30 September 2020: £105.5m) of inventories and £3.6m (30 September 2020: £nil) of property, plant and
equipment. The other loans were secured over £nil (30 September 2020: £8.5m) of investment property, £nil (30 September 2020:
£4.7m) of property, plant and equipment and £28.8m (30 September 2020: £35.9m) of inventories. The Zero Dividend Preference
shares were secured against loans to joint ventures and associates of £35.8m (30 September 2020: £32.9m) and £7.3m of unrestricted
cash (30 September 2020: £7.7m).
www.inlandhomesplc.com
Annual Report and Accounts 2021
143
FINANCIALS
32. Borrowings CONTINUED
Zero Dividend Preference shares
The Zero Dividend Preference shares carry no entitlement to any dividends or other distributions or to participate in the revenue or
any other profits of the Company. The Zero Dividend Preference shareholders have no right to receive notice of, or to attend or vote
at, any general meeting of the Company except in those circumstances set out in the Inland Zero Dividend Preference plc’s Articles
of Association, which would be likely to affect their rights or general interests. At 30 September 2021, there were 18,101,857 Zero
Dividend Preference shares in issue (30 September 2020: 18,101,857). An explanation of the fair value of the Zero Dividend Preference
shares is included in Note 7. In August 2018, the Zero Dividend Preference shareholders agreed to rollover and extend the facility and
will now be repaid on or before 10 April 2024. This was accounted for as a substantial modification due to the significant extension to
the term of the debt, the change to the covenants and the substantial change in interest rate. This resulted in no gain or loss being
recognised in the Income Statement.
IFRS 7 ‘Financial liabilities: Disclosure’ requires disclosure of the maturity of the Group’s remaining contractual financial liabilities.
The table below shows the contractual undiscounted cash outflows arising from the Group’s gross debt which is split between fixed
rate and variable rate borrowings.
< 1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
> 5 years
£m
Total
£m
At 30 September 2021
Variable rate borrowings
38.0
–
32.0
–
–
–
70.0
Fixed rate borrowings
22.6
34.2
–
–
–
3.4
60.2
Gross debt
60.6
34.2
32.0
–
–
3.4
130.2
Interest on gross debt
4.6
2.3
1.0
0.1
0.1
0.2
8.3
Gross loan commitments
65.2
36.5
33.0
0.1
0.1
3.6
138.5
At 30 September 2020
Variable rate borrowings
41.2
7.3
–
43.3
–
–
91.8
Fixed rate borrowings
28.7
0.3
42.4
–
–
0.7
72.1
Gross debt
69.9
7.6
42.4
43.3
–
0.7
163.9
Interest on gross debt
3.3
2.6
1.5
1.4
0.6
0.1
9.5
Gross loan commitments
73.2
10.2
43.9
44.7
0.6
0.8
173.4
At 30 September 2019
Variable rate borrowings
26.8
51.3
1.2
29.6
7.2
–
116.1
Fixed rate borrowings
47.1
–
–
–
–
–
47.1
Gross debt
73.9
51.3
1.2
29.6
7.2
–
163.2
Interest on gross debt
5.9
3.6
1.4
0.8
0.2
–
11.9
Gross loan commitments
79.8
54.9
2.6
30.4
7.4
–
175.1
33. Trade and other payables
Group
Company
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
as restated
£m
Trade payables
46.3
17.0
19.5
0.2
0.2
0.1
Other payables
4.3
3.9
14.8
–
–
0.1
Sales and social security taxes
0.5
0.5
0.5
–
–
–
Provisions
0.2
0.2
0.2
–
–
–
Amounts owed to Group undertakings
–
–
–
–
–
–
Accruals
33.2
11.2
12.7
0.3
0.6
0.4
Trade and other payables due in less than on year
84.5
32.8
47.7
0.5
0.8
0.6
Amounts owed to Group undertakings
–
–
–
32.1
30.3
26.2
84.5
32.8
47.7
32.6
31.1
26.8
The carrying value of trade and other payables is considered to be a reasonable approximation of fair value.
Included within trade payables is £37.0m (30 September 2020: £9.1m) relating to amounts payable in relation to construction
contracts in the contract income segment and £5.2m (30 September 2020: £4.3m) in relation to construction contracts in the
housebuilding segment.
Inland Homes plc
Stock code: INL
144
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
34. Lease liabilities
IFRS 16 ‘Leases’ was adopted on 1 October 2019 without restatement of comparative figures. On adoption, lease liabilities
were measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease, which in the Group’s case was the Group’s incremental borrowing rate on
commencement of the lease.
The Group has a lease for the Head Office facility at Burnham Yard, and a car. These have been presented on the Statement of
Financial Position as right-of-use assets and lease liabilities.
The lease imposes a restriction that the right-of-use asset can only be used by the Group and is non-cancellable for six years from
the commencement of the lease. Further, the Group is prohibited from selling or pledging the underlying leased asset as security and
the Group must keep the property in a good state of repair and return the property in its original condition at the end of the lease. The
lease is secured by the related underlying asset.
The Group has elected not to recognise a lease liability for short-term leases (leases with an expected term of 12 months or less) or
for leases of low value assets. Payments made under such leases are expensed on a straight-line basis.
Year ended
30 September
2021
£m
Year ended
30 September
2020
£m
At 1 October
1.2
–
On adoption of IFRS 16 'Leases'
–
1.4
Additions
–
–
Interest
–
0.1
Lease payments
(0.3)
(0.3)
At 30 September
0.9
1.2
Leases are presented in the Group Statement of Financial Position as follows:
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Current
0.3
0.3
–
Non-current
0.6
0.9
–
0.9
1.2
–
Future minimum lease payments at 30 September 2021 were as follows:
<1 year
£m
1 to 2 years
£m
2 to 3 years
£m
3 to 4 years
£m
4 to 5 years
£m
>5 years
£m
Total
£m
Lease liabilities secured against right-of-use asset
0.3
0.3
0.3
–
–
–
0.9
0.3
0.3
0.3
–
–
–
0.9
The expense relating to payments not included in the measurement of the lease liability is immaterial.
35. Commitments and leases
Operating lease commitments where the Group is the lessor
The Group leases houses, commercial properties, modular homes and land under non-cancellable operating lease agreements to
third parties. The leases have varying terms, escalation clauses and renewal rights.
The future aggregate minimum lease receipts under non-cancellable operating leases are as follows:
As at
30 September
2021
£m
As at
30 September
2020
£m
Due in less than one year
0.6
1.1
Due later than one year and not later than five years
0.5
0.6
Due later than five years
–
0.4
1.1
2.1
There were no other significant leasing arrangements where the Group is lessor at either 30 September 2021 or 30 September 2020.
www.inlandhomesplc.com
Annual Report and Accounts 2021
145
FINANCIALS
36. Other financial liabilities
Other financial liabilities, falling due within one year, of £4.8m (30 September 2020: £0.3m) and falling due greater than one year of
£3.6m (30 September 2020: £nil) relate to purchase consideration on inventories falling due within one year. Other financial liabilities
falling due within one year of £7.6m (30 September 2020: £nil) and falling due greater than one year of £nil (30 September 2020:
£6.8m) relate to the recognition of another financial liability.
37. Deferred income
As at
30 September
2021
£m
As at
30 September
2020
£m
Deferred income, due in less than one year
5.5
10.0
Deferred income, due in greater than one year
–
2.1
The deferred income due within one year arises due to the differences between customer certification of contract income recognised
under the input method of IFRS 15 and amounts billed to customers.
38. Contingencies
Subsidiary guarantees of bank loans and other loans
The Company has guaranteed the obligations of certain subsidiaries with regards to bank loans and other loans as follows:
As at
30 September
2021
£m
As at
30 September
2020
£m
As at
30 September
2019
£m
Chapel Riverside Developments Limited
–
8.6
7.2
High Wycombe Developments Limited
–
–
2.2
Hugg Homes Limited
0.3
0.7
–
Inland Commercial Property Limited
–
0.5
1.3
Inland Homes Developments Limited
34.4
42.8
30.3
Inland Limited
3.3
4.0
4.0
Inland Property Finance Limited
11.6
14.3
17.2
Inland (STB) Limited
17.2
17.2
8.8
Rosewood Housing Limited
0.7
0.7
–
67.5
88.8
71.0
All of the above subsidiaries are going concerns. High Wycombe Developments Limited was no longer a subsidiary as of
30 September 2021 and 2020.
Subsidiary guarantees of payment of subcontractors
The Group has guaranteed the obligations of certain subsidiaries with regards to the payments of subcontractors. No guarantees
were considered significant at either 30 September 2021 nor 30 September 2020.
Subsidiary guarantees of build performance obligations
Inland Homes plc has guaranteed the build performance obligations of Inland Partnerships Limited on its contracts with certain
housing associations and buy to rent operators. The Directors do not consider that these guarantees would be called up.
Associate guarantee to Troy Homes Limited
Inland Homes plc has guaranteed the obligations of Poole Investments Limited on its commitments to its associate company, Troy
Homes Limited. Further information regarding the associate can be found in Note 26.
No provisions have been made in these Financial Statements in respect of any of these contingent liabilities.
Inland Homes plc
Stock code: INL
146
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
38. Contingencies CONTINUED
Joint ventures and associate
Unless otherwise noted, the Group has no commitments to its joint ventures or associate.
For Cheshunt Lakeside Developments Limited, the Group is committed to contributing all costs not funded by external borrowings
together with its joint venture partner.
For Europa Park LLP, the Group is committed to contributing 50% of all costs not funded by external borrowings and no further costs
are expected.
For Gardiners Park LLP, the Group is committed to contributing 50% of all costs not funded by external borrowings and no further
costs are expected.
For High Wycombe Developments Limited, the Group is committed to contributing all assets not funded by external borrowings
together with its joint venture partner.
39. Share capital and reserves
Group and Company
The Group and Company has two classes of share capital and five types of reserves organised as follows:
Ordinary shares
Except for the shares held in the Employee Benefit Trust and the Treasury reserve, 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. Ordinary shares issued after the
balance sheet date but prior to the date of this report are disclosed in Note 43.
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 shares (if any)
shall be entitled to receive an amount equal to the nominal value of such deferred shares pro rata to their respective holdings.
The movement in the number of shares in issue is shown in the table below.
Authorised, issued and fully paid
10p ordinary shares
10p deferred shares
Number
£m
Number
£m
At 30 September 2019
207,366,045
20.7
9,980
–
Issued on exercise of LTIP
225,000
–
–
–
Issued on placing and subscriptions for new ordinary shares
20,750,000
2.1
–
–
At 30 September 2020
228,341,045
22.8
9,980
–
Issued on exercise of share options
1,750,000
0.2
–
–
Issued on placing and subscriptions for new ordinary shares
–
–
–
–
At 30 September 2021
230,091,045
23.0
9,980
–
10p ordinary
shares
Number
Total voting shares1
At 30 September 2019
205,738,545
At 30 September 2020
226,713,545
At 30 September 2021
228,463,545
1 Ordinary shares in issue less shares held in the Employee Benefit Trust and the Treasury reserve
www.inlandhomesplc.com
Annual Report and Accounts 2021
147
FINANCIALS
39. Share capital and reserves CONTINUED
Reserves
The following describes the nature and purpose of each reserve within shareholders’ equity:
Reserve
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value less directly attributable issue costs.
Employee benefit trust
This represents the purchase of the Company's own shares and are deducted from total equity until they are
issued to employees under the Deferred Bonus Plan. At 30 September 2021, this reserve holds 1,627,500
shares (2020: 1,627,500 shares).
Special reserve
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,
which is a distributable reserve. A copy of this resolution is available from Companies House.
Retained earnings
Cumulative net gains and losses recognised in the Group statement of comprehensive income together with
other items such as dividends and share–based payments.
10p ordinary shares
Number
£m
Employee Benefit Trust
At 30 September 2020
1,627,500
(1.1)
At 30 September 2021
1,627,500
(1.1)
40. Cash flow information
Net debt reconciliation
Cash flows
Non-cash
As at
30 September
2020
£m
Cash flows
£m
Proceeds
£m
Repayments
£m
Amounts
derecognised
on acquisition
of controlling
interest in
subsidiary
undertaking
£m
Movement
in accrued
liability
£m
As at
30 September
2021
£m
Secured bank loans
85.4
–
13.5
(30.4)
–
(0.2)
68.3
Other secured loans
38.4
–
6.9
(23.1)
–
0.1
22.3
Borrowings
123.8
–
20.4
(53.5)
–
(0.1)
90.6
Zero Dividend Preference shares
30.2
–
–
–
–
1.8
32.0
Other financing arrangements
6.8
–
–
–
–
0.8
7.6
Loans from joint ventures
3.1
–
–
–
(3.1)
–
–
Gross debt
163.9
–
20.4
(53.5)
(3.1)
2.5
130.2
Cash and cash equivalents
(15.7)
3.6
–
–
–
–
(12.1)
Net debt
148.2
3.6
20.4
(53.5)
(3.1)
2.5
118.1
Net assets
173.0
–
–
–
–
–
183.0
Net gearing
85.7%
–
–
–
–
–
64.5%
Inland Homes plc
Stock code: INL
148
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
40. Cash flow information CONTINUED
Cash flows
Non-cash movements
As at
1 October
2019
£m
Cash flows
£m
Proceeds
£m
Repayments
£m
Amounts
derecognised
on disposal
of controlling
interest in
subsidiary
undertaking
£m
Movement
in accrued
liability
£m
As at
30 September
2020
£m
Secured bank loans
108.9
–
31.6
(30.4)
(23.6)
(1.1)
85.4
Other secured loans
28.4
–
13.1
(3.0)
–
(0.1)
38.4
Borrowings
137.3
–
44.7
(33.4)
(23.6)
(1.2)
123.8
Zero Preference Dividend shares
25.9
–
2.7
–
–
1.6
30.2
Other financing arrangements
–
–
3.1
–
–
–
3.1
Loans from joint ventures
–
–
6.6
–
–
0.2
6.8
Gross debt
163.2
–
57.1
(33.4)
(23.6)
0.6
163.9
Cash and cash equivalents
(10.9)
(4.8)
–
–
–
–
(15.7)
Net debt
152.3
(4.8)
57.1
(33.4)
(23.6)
0.6
148.2
Net assets
162.2
–
–
–
–
–
173.0
Net gearing
93.9%
–
–
–
–
–
85.7%
Non-cash movements
As at
1 July
2018
£m
Cash flows
£m
Amortisation
of loan
arrangement
fees
£m
Non-cash
receivable
settlement
£m
Movement
in accrued
liability
£m
As at
30 September
2019
£m
Secured bank loans
67.4
38.5
1.7
1.3
–
108.9
Other secured loans
34.3
(5.9)
–
–
–
28.4
Borrowings
101.7
32.6
1.7
1.3
–
137.3
Zero Dividend Preference shares
18.4
6.2
–
–
1.3
25.9
Gross debt
120.1
38.8
1.7
1.3
1.3
163.2
Cash and cash equivalents
(40.4)
29.5
–
–
–
(10.9)
Net debt
79.7
68.3
1.7
1.3
1.3
152.3
Net assets
142.4
–
–
–
–
162.2
Net gearing
56.0%
–
–
–
–
93.9%
www.inlandhomesplc.com
Annual Report and Accounts 2021
149
FINANCIALS
41. Prior year adjustments
During the year, the Directors identified instances where prior year judgments relating to the Group and Company’s accounting
policies required amendment. For this reason, prior year figures have been restated and the details are summarised below:
1) Deferred contingent consideration payments (Group)
The Group has a prior year adjustment in respect of deferred contingent consideration payments for the site at Wilton Park,
Beaconsfield not being recognised in prior periods.
Site assembly occurred in 2010 when the Group entered into two land option contracts which committed to deferred contingent
consideration payments on grant of a planning permission for the site over a period from the date of the planning consent. The two
land option contracts also contained standard overage clauses which are triggered in certain future circumstances based on the
actual delivery of housing for the site.
The Group did not recognise in 2019 the deferred contingent consideration payments on the grant of a planning permission. The
liability of £6.0m was triggered in September 2019 of which, £4.8m remains unpaid at 30 September 2021.
There is no impact on profit after tax for the fifteen-month period ended 30 September 2019 as the grant of the planning application
for Wilton Park was achieved on 20 September 2019. Had the deferred contingent consideration payments been recognised as at 30
September 2019, the liability of £6.0m would have been discounted to present value, resulting in the recognition of a non-current
other financial liability of £5.2m.
There is an impact of £0.3m on profit after tax for the year ended 30 September 2020 as a result of the unwinding of the discount.
Management have reviewed in the period all relevant legacy contracts and their review was based on historic archive and knowledge
of the Group’s activities over a ten-year period. Management have identified no other instances where the Group has entered into land
contracts where there was a deferred contingent consideration payment that has triggered and remains unrecorded at the year end.
The impact on the financial statements for the fifteen-month period ended 2019 and the year ended 30 September 2020 are shown
below:
As at
30 September
2020
£m
As at
30 September
2019
£m
Closing net assets as originally stated
173.3
162.2
Net asset restatement in respect of adjustment
(0.3)
–
Restated closing net assets
173.0
162.2
Inland Homes plc
Stock code: INL
150
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
41. Prior year adjustment CONTINUED
As at
30 September
2019
as reported
Adjustment
As at
30 September
2019
as restated
Effect of
trading year
Impact
of 2019
adjustment on
2020 trading
As at
30 September
2020
as restated
ASSETS
£m
£m
£m
£m
£m
£m
Non-current assets
Investment properties
49.3
–
49.3
(5.8)
–
43.5
Property, plant and equipment
6.3
–
6.3
(0.7)
–
5.6
Right-of-use assets
–
–
–
1.2
–
1.2
Intangible assets
0.3
–
0.3
(0.1)
–
0.2
Investments in quoted companies
1.1
–
1.1
(0.6)
–
0.5
Investment in subsidiaries
–
–
–
–
–
–
Investment in joint ventures
8.0
–
8.0
0.8
–
8.8
Amount due from joint ventures
1.0
–
1.0
(1.0)
–
–
Investment in associate
1.3
–
1.3
(0.2)
–
1.1
Other receivables
21.8
–
21.8
0.5
–
22.3
Deferred tax
–
–
–
–
–
–
Total non-current assets
89.1
–
89.1
(5.9)
–
83.2
Current assets
Inventories
192.4
5.2
197.6
(24.0)
5.2
178.8
Trade and other receivables
45.4
–
45.4
15.5
–
60.9
Assets held for sale
4.7
–
4.7
7.8
–
12.5
Amounts due from associate
3.3
–
3.3
(0.2)
–
3.1
Amounts due from joint ventures
34.8
–
34.8
7.4
–
42.2
Cash and cash equivalents
10.9
–
10.9
4.8
–
15.7
Total current assets
291.5
5.2
296.7
11.3
5.2
313.2
TOTAL ASSETS
380.6
5.2
385.8
5.4
5.2
396.4
LIABILITIES
Current liabilities
–
Bank loans and overdrafts
(48.0)
–
(48.0)
6.5
–
(41.5)
Other loans
–
–
–
(25.3)
–
(25.3)
Trade and other payables
(47.7)
–
(47.7)
14.9
–
(32.8)
Deferred income
–
–
–
(10.0)
–
(10.0)
Amounts due to joint ventures
–
–
–
(6.2)
–
(6.2)
Lease liabilities
–
–
–
(0.3)
–
(0.3)
Corporation tax
(2.2)
–
(2.2)
(0.9)
–
(3.1)
Other financial liabilities
(4.1)
–
(4.1)
4.1
(2.0)
(2.0)
Total current liabilities
(102.0)
–
(102.0)
(17.2)
(2.0)
(121.2)
Non-current liabilities
Bank loans
(82.1)
–
(82.1)
38.2
–
(43.9)
Other loans
(7.2)
–
(7.2)
(5.9)
–
(13.1)
Deferred income
–
–
–
(2.1)
–
(2.1)
Lease liabilities
–
–
–
(0.9)
–
(0.9)
Other financial liabilities
–
(5.2)
(5.2)
(1.6)
(3.5)
(10.3)
Zero Dividend Preference shares
(25.9)
–
(25.9)
(4.3)
–
(30.2)
Deferred tax
(1.2)
–
(1.2)
(0.5)
–
(1.7)
Total non-current liabilities
(116.4)
(5.2)
(121.6)
22.9
(3.5)
(102.2)
TOTAL LIABILITIES
(218.4)
(5.2)
(223.6)
5.7
(5.5)
(223.4)
Net current assets
189.5
5.2
194.7
(5.9)
3.2
192.0
Net assets
162.2
–
162.2
11.1
(0.3)
173.0
www.inlandhomesplc.com
Annual Report and Accounts 2021
151
FINANCIALS
41. Prior year adjustment CONTINUED
2) Presentation of an intragroup balances (Company)
In the prior year a balance of £12.5m was shown as ‘Investment in subsidiaries.’ Upon review, the Directors have concluded this was
incorrect as the Company had transferred its investments in subsidiaries to another subsidiary in exchange for an intercompany
receivable of the same amount.
The prior year comparatives have been restated to decrease fixed assets in the Company Statement of Financial Position by £12.5m
and increase current trade and other receivables in the Company Statement of Financial Position by £12.5m.
The adjustment has no overall effect on the total net assets of the Company at either 30 September 2021, 30 September 2020 or 30
September 2019 or on the Company profit for either the year ended 30 September 2021, the year ended 30 September 2020 or the
fifteen-month period ended 30 September 2019.
3) Intercompany balances (Company)
In the prior year a balance of £59.9m was shown as an intercompany debtor and £nil as an intercompany creditor. Upon review, the
Directors have concluded this was incorrect as the Company is counterparty to a loan agreement with Inland ZDP plc where the
gross proceeds of the ZDP shares are lent to the Company for use in investment opportunities. The Company subsequently lent the
gross proceeds to Inland Homes 2013, as the intermediate holding company.
The prior year comparatives have been restated to increase the amounts owed by group undertakings and amounts owed to group
undertakings by £30.3m. The adjustment has no overall effect on the total net assets of the Company at either 30 September 2021,
30 September 2020 or 30 September 2019 or on the Company profit for either the year ended 30 September 2021, the year ended 30
September 2020 or the fifteen-month period ended 30 September 2019.
42. Related party transactions
Nish Malde is a Non-executive Director of Troy Homes Limited, an associate of the Group. Please see Note 26 for balances
outstanding from the associate and contractual terms of the debtors at 30 September 2021 and as at 30 September 2020.
The Group has interests in several joint ventures, all of which are considered to be material. Further information, including
the Group’s share of the net assets and net results of these joint ventures, as well as outstanding loan amounts, interest and
distributions received can be found in Note 25.
On 4 November 2020, Nish Malde, an Executive Director of the Company, exercised options over ordinary shares of 10p each (ordinary
shares) under the unapproved share option scheme. Nish Malde exercised a total of 1,500,000 options and sold 1,000,000 ordinary
shares to cover the exercise price and the tax liability arising from the exercise of these options. Following these transactions, Nish
Malde holds an interest in 11,496,792 ordinary shares representing approximately 5.0% of the Company’s issued share capital.
For details of compensation paid to the Directors and key management please see the Remuneration Committee Report on
pages 78–82 and Note 12. For Directors’ shareholdings in the Company, please see the Directors’ Report on pages 83–84.
43. Post balance sheet events
On 13 October 2021, the Group received a resolution to grant planning permission, subject to the signing of a Section 106 agreement,
for a residentially led, mixed-use scheme of 380 homes plus 930sqm of flexible commercial space at Dagenham Dock, Dagenham.
On 8 November 2021, the Group exchanged contracts to sell the final phase of its Carters Quay development in Poole to
Bournemouth, Christchurch and Poole ("BCP") Council, receiving an advanced payment of £8.25m, which will provide a further
reduction in the Group's borrowings.
On 2 December 2021, Cheshunt Lakeside Developments Limited refinanced existing facilities and procured a new facility with Homes
England which will reduce the joint venture's funding cost significantly.
On 17 January 2022, the Group confirmed it had been successful in securing a planning application for the Master Brewer site in
Hillingdon, which is an asset management contract supporting a third party investor.
On 21 January 2022, the Group refinanced three loan facilities amounting to £37.9m to 30 June 2023.
Inland Homes plc
Stock code: INL
152
Notes to the financial statements CONTINUED
for the year/period ended 30 September 2021
Five-year summary (unaudited)
Year ended 30 September
20213
£m
20203
£m
20192
£m
20181
£m
20171
£m
Revenue
181.7
124.0
147.9
147.4
90.7
Profit before tax
13.2
3.7
25.0
19.3
19.6
Inventories
163.9
173.6
197.6
136.2
139.9
Cash
12.1
15.7
10.9
40.4
26.5
Gross debt
130.2
163.9
163.2
120.1
94.5
Net debt
118.1
148.2
152.3
79.7
68.0
Net gearing (%)
IFRS
64.5
85.7
93.9
56.0
52.1
EPRA
47.9
63.0
65.1
38.6
35.0
Net assets
IFRS
183.0
173.0
162.2
142.4
130.6
EPRA
246.5
235.4
233.9
206.7
194.4
Earnings per share (p)
Basic
4.21
0.65
11.79
7.64
7.82
Diluted
4.13
0.64
11.49
7.30
7.46
Dividend per share (p)
Basic
–
–
3.10
1.85
1.40
Diluted
–
–
2.40
2.20
1.70
Net asset value per share (p)
IFRS
80.10
76.31
78.84
70.46
64.64
EPRA Net Asset Value – diluted
106.00
101.46
110.55
98.03
91.88
EPRA Net Asset Value – undiluted
107.88
103.84
113.69
102.28
96.22
Net reinstatement value per share (p)
EPRA Net Reinstatement Value – diluted
106.00
101.46
N/A4
N/A4
N/A4
EPRA Net Reinstatement Value – undiluted
107.88
103.84
N/A4
N/A4
N/A4
Net tangible assets per share (p)
EPRA Net Tangible Assets – diluted
105.96
101.37
N/A4
N/A4
N/A4
EPRA Net Tangible Assets – undiluted
107.84
103.75
N/A4
N/A4
N/A4
Net disposal value per share (p)
EPRA Net Disposal Value – diluted
105.27
100.34
N/A4
N/A4
N/A4
EPRA Net Disposal Value – undiluted
107.14
102.69
N/A4
N/A4
N/A4
Number
Number
Number
Number
Number
Private housing units sold
383
226
201
275
188
Land plots sold
6015
107
532
837
780
Land bank plots
10,055
11,045
7,796
6,870
6,776
Plots with planning permission and resolution
to grant planning consent
3,689
2,470
2,956
1,708
2,105
Plots without planning permission
6,366
8,575
4,840
5,162
4,671
1 Twelve-month reporting period ended 30 June
2 Fifteen-month reporting period ended 30 September
3 Twelve-month reporting period ended 30 September
4 These new features of the EPRA Net Asset Valuation metrics can into effect for reporting periods commencing on or after 1 January 2020
5 This includes plots within the asset management division owned by third parties
www.inlandhomesplc.com
Annual Report and Accounts 2021
153
FINANCIALS
List of definitions
Accident Frequency Rate (AFR)
The Accident Frequency Rate is a way of measuring the
accidents we have based on a category of accident which is
reportable to the Health and Safety Executive under RIDDOR.
Affordable housing
Social rented and intermediate housing provided to specified
eligible households whose needs are not met by the market, at
a cost low enough for them to afford, determined with regard to
local incomes and local house prices.
Brownfield site
Land which has been previously used or built upon.
Community Infrastructure Levy (CIL)
The CIL is a levy payable by developers to local authorities in
England and Wales to help deliver infrastructure to support the
development of the area.
Diluted figures
Reported results adjusted to include the effects of potential
dilutive shares issuable under the Group’s share option plans,
LTIPs and deferred bonus schemes.
Earnings/earnings per share (EPS)
Earnings represent the profit or loss for the year attributable
to equity shareholders and are divided by the weighted average
number of ordinary shares in issue during the financial year to
arrive at earnings per share.
European Public Real Estate Association (EPRA)
A not-for-profit association with a membership of Europe’s
leading property companies, investors and consultants which
strives to establish best practices in accounting, reporting and
corporate governance and to provide high-quality information
to investors. EPRA published its latest Best Practices
Recommendations in November 2016. In October 2019, the
European Public Real Estate Association (‘EPRA’) published
new Best Practice Recommendations (‘BPR’) for financial
disclosures by listed real estate companies. The BPR introduced
two new measures of net asset value:
EPRA net tangible assets (NTA) and net disposal value (NDV).
Golden brick
The ‘golden brick’ is the first brick laid above the foundation
level. At this point, the housebuilder can zero rate the sale of
land that will form the site of a building provided a building is
clearly under construction.
Headroom
This is the amount left to draw under the Group’s loan facilities
(i.e. the total loan facilities less amounts already drawn).
Help to Buy
Help to Buy is a Government scheme which provides equity
loans to buyers of newly constructed homes worth up to
£600,000 in England. Buyers have to contribute at least 5% of
the property price as a deposit and obtain a mortgage of up to
75% (55% in London) and the Government provides a loan for up
to 20% (40% in London) of the price. Eligibility was restricted to
first-time buyers from 1 April 2021.
Key Performance Indicators (KPIs)
Activities and behaviours, aligned to both business objectives
and individual goals, against which the performance of the
Group is annually assessed. Performance measured against
them is referenced in the Annual Report.
Net asset value (NAV) per share
Equity shareholders’ funds divided by the number of ordinary
shares in issue at the balance sheet date.
Net debt
Borrowings plus accrued ZDP liability less cash and cash
equivalents.
Net gearing/EPRA net gearing
Loans and accrued ZDP liability less cash as a proportion of
IFRS and EPRA net asset value respectively.
Planning permission
Usually granted by the local planning authority, this permission
allows a plot of land to be built on, change its use or, for an
existing building, be redeveloped or altered. Permission is
either ‘outline’ when detailed plans are still to be approved, or
‘detailed’ when detailed plans have been approved.
Profit before tax
Profit before tax after excluding any revaluation gains or losses.
Reporting of Injuries, Diseases and Dangerous
Occurrences Regulations (RIDDOR)
RIDDOR refers to the Reporting of Injuries, Diseases and
Dangerous Occurrences Regulations 2013. The regulations
require an employer to report any absence by an employee of
seven days or more caused by an accident at work to the Health
and Safety Executive.
Section 106 planning agreements (S106)
These are legally-binding agreements or planning obligations
entered into between a landowner and a local planning authority,
under Section 106 of the Town and Country Planning Act
1990. These agreements are a way of delivering or addressing
matters that are necessary to make a development acceptable
in planning terms. They are increasingly used to support the
provision of services and infrastructure, such as highways,
recreational facilities, education, health and affordable housing.
Social housing
Housing that is let at low rents and on a secure basis to people
with housing need. It is generally provided by councils and
organisations such as housing associations.
Inland Homes plc
Stock code: INL
154
Company registration number
5482990
Company Secretary
Kathryn Worth (ACG)
Nominated adviser and broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Solicitor
Dorsey & Whitney (Europe) LLP
199 Bishopsgate
London
EC2M 3UT
Auditor
BDO LLP
Chartered Accountants
Statutory Auditor
55 Baker Street
London
W1U 7EU
Banker
HSBC UK Bank plc
London Commercial Banking Centre
Level 6
71 Queen Victoria Street
London
EC4V 4AY
Financial PR Consultants
Instinctif Partners
65 Gresham Street
London
EC2V 7NQ
Registrar
Link Asset Services
10th Floor
Central Square
29 Wellington Street
Leeds
LS1 4DL
Inland Homes plc
Registered office and website
Burnham Yard
London End
Beaconsfield
Bucks
HP2 2JH
Tel: 01494 762450
Fax: 01494 765897
Email: info@inlandplc.com
Investor website:
www.inlandhomesplc.com
House sales website:
www.inlandhomes.co.uk
Advisers and Company information
www.inlandhomesplc.com
Annual Report and Accounts 2021
155
FINANCIALS
Inland Homes plc
Burnham Yard
London End
Beaconsfield
Buckinghamshire
HP9 2JH
01494 762450
info inlandplc.com
House sales website:
www.inlandhomes.co.uk
Investor website:
www.inlandhomesplc.com