REG - Inland Homes PLC - Trading Update

Inland HomesAnnouncement

26/10/2020 07:00

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RNS Number : 1305D  Inland Homes PLC  26 October 2020

26 October 2020

 

Inland Homes plc

("Inland Homes" or "Group")

Inland Homes provides trading update for the year ended 30 September 2020

Inland Homes ("Inland Homes" or "the Group"), the leading brownfield
developer, housebuilder and partnership housing company with a focus on the
South and South East of England, today issues a trading update for the year
ended 30 September 2020 ahead of its Preliminary Results which will be
announced in January 2021.

Period under review and comparator period

The period in relation to which this trading update relates is the year to 30
September 2020; comparative information is for the audited fifteen-month
period to 30 September 2019.

Highlights

We expect revenue for the year to be no less than £135.0m (fifteen-month
period to 30 September 2019: £147.9m). Our revenue run-rate is at a higher
level than the comparative period, principally because of the increased number
of partnership housing developments under construction, which continue to
generate significant monthly revenue, achieved completions on land sales and
plots delivered to plan.

Reducing net debt was the strategic priority for the Group this year, even
before the impact of the global COVID-19 pandemic.

As the impact of COVID-19 became apparent, we swiftly implemented several
measures to reduce the Group's cost base, preserve its assets and conserve
cash. This included a successful placing of new ordinary shares in May 2020 to
raise gross proceeds of £9.9m.

During the year, we achieved a reduction of Net Debt to £138.3m (30 September
2019: £152.3m) comprising gross debt of £149.3m (30 September 2019:
£163.2m) and cash and cash equivalents of £11.0m (30 September 2019:
£10.9m). We have triggered the £20m accordion part of the revolving credit
facility ("RCF") with HSBC which increases the facility available for
day-to-day use by the Group to £65m.

COVID-19

The Group was trading in line with market expectations to mid-March 2020, but
its results have inevitably been impacted by the global COVID-19 pandemic.

Throughout the pandemic, in line with the Group's commitment to health and
safety, our priority has been to safeguard the health and wellbeing of our
staff and maintain positive relationships with our customers, subcontractors
and suppliers. Measures were rapidly taken to ensure full compliance with the
Government's 'COVID-19 Secure' guidance and the Group is a signatory to the
Home Builders Federation's 'Charter for Safe Working Practice'.

All but three sites remained operational through lockdown with stringent new
procedures regarding hygiene, social distancing, travel and self-isolation in
place to ensure the safety of those on site. Office-based staff have been
supported in the transition to working from home and continue to do-so in line
with Government guidance.

Sales and marketing suites reopened in May 2020 and we were able to open the
three sites that had been temporarily closed in August 2020.

Trading performance

During the period have seen sustained demand from investors, housing
associations and other developers for our high-quality land assets and our
planning expertise, as evidenced by new management agreements in our asset
management division.

We secured the sale of 94 plots at our flagship site Wilton Park, Beaconsfield
and 195 plots at Cheshunt Lakeside, Hertfordshire, on more favourable terms
than the original deals which had been negotiated and had subsequently aborted
prior to the COVID-19 lockdown. The sale at Cheshunt Lakeside, via the Group's
joint venture, Cheshunt Lakeside Developments Limited, to a local housing
association, also secured a £34.5m build contract for partnership housing to
construct the homes, generating further revenue and profitability for the
future.

Additionally, the Group secured the sale of 208 apartments to two Build to
Rent ("BTR") funds within its Centre Square joint venture and wholly owned
Buckingham House development in High Wycombe with a total value of £52.8m.

During the year we completed the sale of 226 private homes (fifteen-month
period to 30 September 2019: 202) including via joint ventures but excluding
bulk sales to BTR operators. These were across 11 active sites with an average
selling price of £287,000 (fifteen-month period to 30 September 2019:
£250,000) which makes these homes attractive for both the first-time buyer
market and those with long-term rental investment intentions.

The average selling price increase is due to a change of sales mix between
houses and apartments sold as well as price differences in geographic
locations.   Our net reservation rate per active sales outlet was 0.69 for
the year (fifteen-month period to 30 September 2019: 0.73). However, this
increased to 1.12 homes per active sales outlet during the fourth quarter (the
period from 1 July to 30 September 2020) following the re-opening of our sales
centres and increased demand in the marketplace occasioned by the temporary
relaxation in Stamp Duty Land Tax.

Asset management activity

A growing part of the Group's business involves procuring sites for and
providing planning and management services to external investors. This
activity enables the Group to earn substantial fees with a significantly
reduced investment and working capital requirement. The transactions are
generally structured so that they are non-recourse to the Group.

Our asset management division has grown significantly this year to six live
projects in Greater London which have the potential to deliver more than 3,500
homes. Notably the 4.4-acre former Homebase site in Walthamstow, East London
and the latest agreement announced in August 2020 for the development of the
36.7-acre site at Cavalry Barracks in Hounslow, West London, which is the
fifth transaction that the Group has done with the Ministry of Defence. We
expect to make a planning application for a residentially led mixed-use scheme
of over 1,000 homes shortly for this site.

The planning application for 514 homes at the Master Brewer site in Hillingdon
was called in by the Greater London Authority and approved by the Mayor of
London on 3 September 2020.  The planning application is now awaiting either
the release of the planning consent by the Secretary of State for Housing or
for it to be called in by him for further consideration.

Land portfolio

The Group sold 449 plots during the year and has grown its land bank to a
record 11,045 plots (30 September 2019: 7,796), 2,470 of which have planning
consent (30 September 2019: 2,956). The land bank includes 2,795 plots on
strategic sites the majority of which are held by way of discount to market
value options.

At 30 September 2020, the Group has submitted planning applications on 1,819
of its land bank plots and has 3,961 plots at a pre-application planning
stage. We have also signed a development agreement with Homes England to
develop a 54-acre site in Basildon, Essex which is expected to have a gross
development value in the order of £200m.

Private and partnership housing build performance

At 30 September 2020 there are 415 private homes and 1,302 partnership homes
under construction across 13 sites (30 September 2019: 892 private homes, 921
partnership homes).

Our total forward order books sit at £50.8m for private homes and commercial
units (30 September 2019: £39.3m) and £105.8m for partnership housing
contract income (30 September 2019: £123.7m). The partnership housing order
book includes £40.3m of future contract income secured during the last two
months of the financial year.

We continue to focus our efforts on growing the partnership housing activity
as it achieves land sales for the Group and also secures a forward income
stream from the subsequent construction activities thus balancing the business
against any potential decline in the private sale market in the year ahead.

Outlook

Whilst the general economic outlook remains uncertain, there is a fundamental
shortage of high-quality, affordable housing across the UK and particularly in
the South and South East of England which creates a sustained demand for our
land assets, homes and expertise.

We remain focused on maximising and realising the value in our land bank in
the year ahead, via land sales, private or partnership housebuilding activity,
using our flexible business model to adapt to changing market conditions.

Stephen Wicks, Chief Executive, commented:

"The past six months have been one of dedicated focus to achieve the Group's
stated strategic aims, namely a refocus for the Group on a clear strategy of
land-focused activities geared to positive cash generation and net debt
reduction. This has been achieved despite the inevitable disruption and
significant impact on our results caused by the global COVID-19 pandemic."

"We start the new financial year with cautious optimism and a record land
bank: buoyed by sustained demand from customers, investors, developers and
housing associations for our quality land assets, homes and expertise and
equipped with a stronger balance sheet."

"We remain focused on maximising and realising the value in our land bank in
the year ahead, whether that be via land sales, private or partnership
housebuilding activity. Our flexible business model supports us in making
these decisions quickly. It is this entrepreneurial agility that gives us the
flexibility to adapt to movements in a rapidly changing marketplace."

"I should also like to thank all members of our staff and supply chain for
their immense efforts over these unprecedented times and for their continued
support."

 

Enquiries

 Inland Homes plc                  Tel: +44 (0) 1494 762450
 Stephen Wicks, Chief Executive
 Nishith Malde, Finance Director

 Gary Skinner, Managing Director

 Panmure Gordon (UK) Limited       Tel: +44 (0) 20 7886 2500
 Dominic Morley
 Erik Anderson

 Instinctif Partners               Tel: +44 (0) 20 7457 2020
 Mark Garraway
 Rosie Driscoll

 

Notes to Editors:

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.

The Company is committed to extensive public and community consultation 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.
The Company is always looking for brownfield sites without planning permission
for future development.

For further information, please visit the Inland Homes website at
www.inlandhomes.co.uk .

Hugg Homes -  www.hugghomes.co.uk

Rosewood Housing -  www.rosewoodhousing.co.uk

 

 

 

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