07:00 Mon 21 Mar 2016
Inland Homes PLC - Half Yearly Report
21 March 2016
Inland Homes Plc
(the 'Company' or the 'Group')
Interim results for the six months ended 31 December 2015
Record results reflect growing momentum of strategy against a favourable market backdrop
Highlights
Strong financial results delivered across all operating metrics
· EPRA net asset value of 84.4 pence per share
· 274.4% increase in profit before tax (including £14.0 million revaluation surplus) to £21.5 million (2014*: £5.7 million)
· Group revenue increased by 4.9% to £55.1 million (2014*: £52.6 million), reflecting a higher average selling price per unit of £325,000 (2014*: £242,000)
· Current annualised rental income has reached an all-time high at £2.3 million per annum
· Committed £20 million revolving credit facility, with an 'accordion facility' of £10 million, secured with Barclays Bank plc to finance the majority of the Group's housebuilding activities
· 33% rise in interim dividend to 0.4 pence (2014: 0.3 pence) per share, reflecting strength of earnings performance and the Board's confidence in the outlook
Growing land bank providing opportunities for strong returns through planning, development and sales
· Disposal of 244 plots across three sites during the period, for a total consideration of £21.5 million
· Gross margin from the sale of private homes increased to 24.1% (2014*: 22.0%)
· Net increase in the Group's land bank with the addition of 833 plots, bringing the total number of plots in the portfolio to 5,672, of which 1,146 have planning consent
· Significant value-add activity with projects progressing through the planning system
· Appointment of high profile Managing Director with responsibility for Group construction activity and project delivery
· Joint venture with the land owners of an 8.4 acre site, with the capacity for c. 100 plots in Garston,
· Agreement signed with
· Progress across the Group's development projects continues apace with 208 units under construction and work on a further 111 units to commence shortly
Housing market remains strong in the areas that the Company operates
· Demand for new homes and for land with planning consent remains high in our areas of operation
· Increasing land values implies a shortage of supply and continuing demand from housebuilders for good, sustainable, suburban locations outside central
· Government initiatives, including
"This has been another record period for
"Our strategy of regenerating brownfield sites that are well-located in areas of growth in the south east is delivering clear results and, with our key development projects progressing as planned, we are looking forward to the rest of the year ahead with confidence."
Enquiries:
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Tel: +44 (0) 1494 762450 |
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Tel: +44 (0) 20 7710 7600 |
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FTI Consulting: |
Tel: +44 (0)20 3727 1000 |
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Notes to Editors:
Incorporated in the
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 of
For further information, please visit the
Chairman's statement
I am pleased to report another set of record results for
Financial results
Revenue for the Group increased by 4.9% to £55.1 million (2014*: £52.6 million), including £30.3 million from the sale of 93 private residential homes (2014: £48.1 million from 199 homes), reflecting a higher average selling price per unit of £325,000 (2014*: £242,000) as a result of a change in mix between houses and apartments. The gross margin from the sale of private homes increased to 24.1% (2014*: 22.0%) and £21.5 million (2014*: nil) was generated through the sale of 244 (2014*: nil) building plots.
Operating profit (including £14.0 million revaluation surplus on investment property) increased by 151.4% to £25.0 million (2014*: £9.9 million) and profit before tax increased by 274.4% to a record of £21.5 million (2014*: £5.7 million). The overall operating margin for the Group was 45.3% (2014*: 18.9%).
Earnings per share increased by 314.9% over the previous period to 10.04 pence (2014*: 2.42 pence). Against this backdrop of a strong earnings performance, the Board has decided to increase the interim dividend by 33.3% to 0.4 pence (2014: 0.3 pence) per share. The dividend will be paid on 31 May 2016 to shareholders on the register at the close of business on 6 May 2016. The ex-dividend date is 5 May 2016.
Net assets attributable to shareholders of the Company at 31 December 2015 were £107.1 million (2014*: £64.7 million) equating to 53.1 pence (2014*: 32.0 pence) per share. As signalled in our 2015 Annual Report and Accounts, the Board has decided to adopt the performance measures of the European Public Real Estate Association ('EPRA'), in common with most
The EPRA net asset value of 84.4 pence per share of the Group has been determined as follows:
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Pence per |
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£000 |
ordinary share |
Net asset value (NAV) |
107,066 |
53.06p |
Unrealised value within projects |
63,200 |
31.32p |
EPRA net asset value |
170,266 |
84.38p |
Deferred tax at 19% on unrealised value within projects |
(12,008) |
(5.95)p |
Adjusted net asset value |
158,258 |
78.43p |
The gross rental income from commercial and residential assets at the end of the first half was £892,000 (2014*: £331,000), with the increase predominantly driven by the rental of the houses at Wilton Park, Beaconsfield. Annualised rental income is now at its highest ever level of £2.3 million and it is intended that this will go some way to underpinning the operating costs as the business expands in the future. In this regard, we are pleased to announce that since the period end we have pre-let a 4,500 sq ft neighbourhood convenience store at RAF Stanbridge in
We have increased our investment in staff to further support our housebuilding activity in particular, resulting in a 25.4% increase in overheads to £3.6 million (2014*: £2.8 million) for the 6 months ended 31 December 2015. While we expect some further rises in overheads over the short to medium term, this is part of a deliberate strategy aimed at significantly increasing the level of construction expertise within the Group in response to the well-publicised growth in construction costs which is affecting the industry as a whole. To this end, we have recently appointed
As at 31 December 2015, the Group had cash balances of £16.6 million (2014*: £9.8 million), with net debt increasing to £54.6 million (2014*: £43.3 million). Net debt represents 50.9% of net asset value and 32.0% of EPRA net asset value. This increase in net debt, which we highlighted in our previous results announcement, is due to the continuing increase in inventories, our participation in joint ventures and, in particular, our ongoing investment in land and works on the Group's major redevelopment project at Wilton Park in Beaconsfield,
Operational activity
Acquisitions and disposals
During the period the Group sold 244 plots across three sites for a total consideration of £21.5 million. The disposals included 55 plots in Henley,
Despite these sales, the Group's land bank has seen a net increase following the addition of a further 833 plots, including the securing of options and agreements over 300 acres of land in areas where the local authorities have a shortfall in their housing supply.
The current land bank is as follows:
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Plots without planning consent |
Plots with planning consent |
Total plots |
Owned under development |
- |
208 |
208 |
Owned or contracted |
1,238 |
775 |
2,013 |
Managed or held within joint ventures |
1,580 |
- |
1,580 |
Land controlled |
200 |
163 |
363 |
Strategic land controlled |
1,397 |
- |
1,397 |
Terms agreed |
111 |
- |
111 |
Total |
4,526 |
1,146 |
5,672 |
Planning applications:
In the first half of this financial year Inland successfully secured planning consents or resolutions to grant planning consent on 583 plots and 7,114 sq ft of commercial space. The Group currently has planning applications submitted and are awaiting decisions on a further 999 plots, with pre-application discussions underway with 19 different local authorities covering a further 1,930 plots.
Joint Ventures:
In December, the Group entered into a joint venture with the land owners of an 8.4 acre site in Garston,
The Group anticipates that the formation of strategic joint ventures with private and public sector land owners, such as those referred to above, will become an increasing part of its activity in the medium and longer term, as it will allow the Group to capitalise on its expertise without the requirement to provide all of the funding.
Development projects:
Significant progress has been made at Wilton Park in Beaconsfield, where the recent public consultation, which was attended by over 600 people, was well received. The Group expects to submit a planning application for 304 new homes and 21,000 sq ft of commercial space in April this year. I am also pleased to report that the construction of the new access road into the site from the Pyebush roundabout is well advanced. As previously indicated, until planning consent is granted, the Group's focus continues to be in the generation of rental and other income from the property. The Group has seen a further revaluation surplus of £14.0 million on the 76 existing houses at Wilton Park resulting in a carrying value for these properties of £40.0 million.
Construction is underway on 208 units across seven projects in the South East of
Investment in
As announced on 19 November 2015, the Group has committed to invest £1 million for a 25% equity stake in a newly formed premium housebuilding company, Troy Homes Limited ('Troy') and a further £2 million via interest bearing loan notes. Troy has acquired its first site for 18 units in Hitchin,
Financing:
The Group has recently secured a committed £20 million revolving credit facility ('the Facility') with Barclays Bank plc to finance the majority of the Group's housebuilding activities. The Facility lasts until 31 October 2019 and includes an 'accordion facility' of £10 million which gives the Group the flexibility to increase the committed sum.
Market overview
The demand for new homes outside of central
The demand for land with planning consent continues to be strong in our areas of operation and the Group has noticed an increase in land values, which implies a shortage of supply and continuing demand from housebuilders for good, sustainable, suburban locations outside of central
Outlook
Despite the volatility in the financial markets since the start of this year, the demand for housing in the areas in which the Group operates remains strong and this, in turn, continues to drive the demand for consented land. Our land bank is growing, with a number of planning applications to be determined in the near future. We are investing in our in-house construction expertise to further improve the management of our housebuilding activities. I have every confidence that, against this market background, our strategy will continue to deliver further value for our shareholders over the coming year.
Chairman
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
Group income statement
for the six months ended 31 December 2015
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Six months ended |
*Six months ended |
Year ended |
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31 December |
31 December |
30 June |
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2015 |
2014 |
2015 |
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(unaudited) |
(unaudited) |
(audited) |
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Note |
£000 |
£000 |
£000 |
Revenue |
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55,148 |
52,568 |
114,219 |
Cost of sales |
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(40,556) |
(39,245) |
(79,841) |
Gross profit |
6 |
14,592 |
13,323 |
34,378 |
Administrative expenses |
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(3,559) |
(2,837) |
(6,021) |
Loss on investments |
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- |
(541) |
(541) |
Revaluation of investment properties |
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13,969 |
- |
14,519 |
Operating profit |
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25,002 |
9,945 |
42,335 |
Finance cost - interest expense |
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(2,332) |
(3,140) |
(4,836) |
Finance cost - cost associated with the arrangement of new facilities and other finance related costs |
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(565) |
(990) |
(2,322) |
Finance cost - notional interest on deferred consideration |
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(744) |
(178) |
(1,215) |
Finance income - interest receivable and similar income |
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96 |
94 |
201 |
Profit before tax and share of profits from joint ventures |
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21,457 |
5,731 |
34,163 |
Share of profit/(loss) from joint ventures |
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- |
- |
(135) |
Profit before tax |
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21,457 |
5,731 |
34,028 |
Income tax |
7 |
(1,486) |
(1,626) |
(5,078) |
Total profit and comprehensive income for the period |
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19,971 |
4,105 |
28,950 |
Attributable to: |
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- Shareholders of the Company |
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20,289 |
4,910 |
29,680 |
- Non-controlling interests |
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(318) |
(805) |
(730) |
Earnings per share |
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- basic earnings per share in pence |
8 |
10.04p |
2.42p |
14.67p |
- diluted earnings per share in pence |
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9.40p |
2.28p |
13.76p |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
Group statement of financial position
at 31 December 2015
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As at 31 December |
*As at 31 December |
As at 30 June |
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2015 |
2014 |
2015 |
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(unaudited) |
(unaudited) |
(audited) |
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Note |
£000 |
£000 |
£000 |
ASSETS |
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Non-current assets |
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Investment property |
9 |
48,093 |
14,732 |
34,000 |
Property, plant and equipment |
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429 |
333 |
332 |
Investments in joint ventures |
10 |
1,722 |
1,376 |
1,488 |
Loans to joint ventures due in more than one year |
12 |
5,580 |
2,947 |
3,246 |
Investments in associate |
10 |
250 |
- |
- |
Loans to associate due in more than one year |
12 |
500 |
- |
- |
Receivables due in more than one year |
12 |
55 |
55 |
55 |
Deferred tax |
11 |
42 |
1,409 |
548 |
Total non-current assets |
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56,671 |
20,852 |
39,669 |
Current assets |
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Inventories |
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129,711 |
131,729 |
121,031 |
Trade and other receivables |
12 |
7,364 |
7,984 |
7,998 |
Listed investments carried at fair value through profit and loss |
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1 |
1 |
1 |
Cash and cash equivalents |
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16,617 |
9,778 |
21,377 |
Total current assets |
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153,693 |
149,492 |
150,407 |
Total assets |
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210,364 |
170,344 |
190,076 |
EQUITY |
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Capital and reserves attributable to the Company's equity holders |
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Share capital |
13 |
20,281 |
20,281 |
20,281 |
Share premium account |
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34,033 |
34,033 |
34,033 |
Employee Benefit Trust |
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(713) |
(382) |
(382) |
Special reserve |
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6,059 |
6,059 |
6,059 |
Retained earnings |
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47,406 |
4,709 |
28,806 |
Total equity attributable to shareholders of the Company |
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107,066 |
64,700 |
88,797 |
Non-controlling interests |
14 |
(46) |
197 |
272 |
Total equity |
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107,020 |
64,897 |
89,069 |
LIABILITIES |
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Current liabilities |
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|
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Bank loans and overdrafts |
|
25,900 |
9,132 |
25,192 |
Other loans |
|
31,104 |
31,945 |
18,724 |
Trade and other payables |
15 |
9,394 |
14,231 |
14,862 |
Corporation tax |
15 |
5,607 |
3,738 |
6,347 |
Other financial liabilities |
16 |
4,157 |
18,909 |
10,881 |
Total current liabilities |
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76,162 |
77,955 |
76,006 |
Non-current liabilities |
|
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|
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Zero dividend preference shares |
16 |
14,163 |
11,958 |
12,372 |
Other financial liabilities |
16 |
13,019 |
15,534 |
12,629 |
Total non-current liabilities |
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27,182 |
27,492 |
25,001 |
Total equity and liabilities |
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210,364 |
170,344 |
190,076 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
Group statement of changes in equity
for the six months ended 31 December 2015
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|
|
Employee |
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|
|
Non- |
|
|
Share |
Share |
benefit |
Special |
Retained |
|
controlling |
Total |
|
capital |
premium |
trust reserve |
reserve |
earnings |
Total |
interests |
Equity |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
*At 30 June 2014 (audited) |
20,280 |
34,033 |
- |
6,059 |
(281) |
60,091 |
1,002 |
61,093 |
Share based payment |
- |
- |
- |
- |
80 |
80 |
- |
80 |
Purchase of own shares into EBT |
- |
- |
(382) |
- |
- |
(382) |
- |
(382) |
Reinstatement of deferred shares |
1 |
- |
- |
- |
- |
1 |
- |
1 |
Transactions with owners |
1 |
- |
(382) |
- |
80 |
(301) |
- |
(301) |
Total comprehensive income |
- |
- |
- |
- |
4,910 |
4,910 |
(805) |
4,105 |
Total changes in equity |
1 |
- |
(382) |
- |
4,990 |
4,609 |
(805) |
3,804 |
*At 31 December 2014 (unaudited) |
20,281 |
34,033 |
(382) |
6,059 |
4,709 |
64,700 |
197 |
64,897 |
Share-based payment |
- |
- |
- |
- |
544 |
544 |
- |
544 |
Dividend payment |
- |
- |
- |
- |
(1,217) |
(1,217) |
- |
(1,217) |
Transactions with owners |
- |
- |
- |
- |
(673) |
(673) |
- |
(673) |
Total comprehensive income |
- |
- |
- |
- |
24,770 |
24,770 |
75 |
24,845 |
Total changes in equity |
- |
- |
- |
- |
24,097 |
24,097 |
75 |
24,172 |
At 30 June 2015 (audited) |
20,281 |
34,033 |
(382) |
6,059 |
28,806 |
88,797 |
272 |
89,069 |
Share based payment |
- |
- |
- |
- |
331 |
331 |
- |
331 |
Dividend payment |
- |
- |
- |
- |
(2,020) |
(2,020) |
- |
(2,020) |
Purchase of own shares into EBT |
- |
- |
(331) |
- |
- |
(331) |
- |
(331) |
Transactions with owners |
- |
- |
(331) |
- |
(1,689) |
(2,020) |
- |
(2,020) |
Total comprehensive income |
- |
- |
- |
- |
20,289 |
20,289 |
(318) |
19,971 |
Total changes in equity |
- |
- |
(331) |
- |
18,600 |
18,269 |
(318) |
17,951 |
At 31 December 2015 (unaudited) |
20,281 |
34,033 |
(713) |
6,059 |
47,406 |
107,066 |
(46) |
107,020 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
Group statement of cash flows
for the six months ended 31 December 2015
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|
Six months ended |
*Six months ended |
Year ended |
|
|
31 December |
31 December |
30 June |
|
|
2015 |
2014 |
2015 |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
Note |
£000 |
£000 |
£000 |
Cash flows from operating activities |
|
|
|
|
Profit for the period before tax |
|
21,457 |
5,730 |
34,028 |
Adjustments for: |
|
|
|
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- depreciation |
|
87 |
52 |
120 |
- share-based compensation |
|
331 |
80 |
625 |
- fair value adjustment for value of the Drayton Garden Village Ltd option |
|
- |
541 |
541 |
- revaluation of investment properties |
|
(13,969) |
- |
(14,519) |
- interest expense |
|
3,641 |
4,308 |
8,373 |
- interest and similar income |
|
(96) |
(94) |
(201) |
- share of loss of joint ventures |
|
- |
- |
135 |
- corporation tax payments |
|
(1,719) |
(629) |
(678) |
Changes in working capital: |
|
|
|
|
- (increase)/decrease in inventories |
|
(8,680) |
1,800 |
13,819 |
- decrease in trade and other receivables |
|
731 |
2,462 |
2,434 |
- decrease in trade and other payables |
|
(11,450) |
(3,824) |
(7,870) |
Net cash (outflow)/inflow from operating activities |
|
(9,667) |
10,426 |
36,807 |
Cash flow from investing activities |
|
|
|
|
Interest received |
|
- |
79 |
199 |
Purchases of property, plant and equipment |
|
(184) |
(232) |
(299) |
Purchases of investment property |
9 |
(124) |
- |
(11,481) |
Acquisition of subsidiaries |
|
- |
- |
(250) |
Loans provided to associate |
12 |
(500) |
- |
- |
Investment in associate |
10 |
(250) |
- |
- |
Loans provided to joint ventures |
12 |
(2,334) |
(2,947) |
(3,246) |
Investment in joint ventures |
10 |
(234) |
(1,376) |
(1,622) |
Net cash outflow from investing activities |
|
(3,626) |
(4,476) |
(16,699) |
Cash flow from financing activities |
|
|
|
|
Interest paid |
|
(3,614) |
(3,560) |
(7,172) |
Repayment of borrowings |
|
(24,861) |
(18,486) |
(36,568) |
New loans |
|
37,948 |
15,192 |
35,544 |
Equity dividends paid to ordinary shareholders |
|
(609) |
- |
(1,217) |
Purchase of own shares by Employee Benefit Trust |
|
(331) |
(382) |
(382) |
Net cash inflow/(outflow) from financing activities |
|
8,533 |
(7,236) |
(9,795) |
Net (decrease)/increase in cash and cash equivalents |
|
(4,760) |
(1,286) |
10,313 |
Net cash and cash equivalents at beginning of period |
|
21,377 |
11,064 |
11,064 |
Net cash and cash equivalents at the end of period |
|
16,617 |
9,778 |
21,377 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
Notes to the half-yearly financial report
for the six months ended 31 December 2015
1. Nature of operations and general information
The principal activity of the Company and its subsidiaries (together called the Group) is to acquire residential and mixed use sites and seek planning consent for development. The Group also develops a number of plots for private sale.
The financial information set out in this half-yearly financial report does not constitute statutory accounts as defined in Sections 434(3) and 435(3) of the Companies Act 2006. The Group's statutory financial statements for the year ended 30 June 2015 have been filed with the Registrar of Companies and are available at www.inlandhomes.co.uk. The auditor's report on those financial statements was unqualified and did not contain any statement under Section 498(2) or Section 498(3) of the Companies Act 2006.
2. Basis of preparation
This consolidated half-yearly financial report has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting.
The consolidated half-yearly financial report should be read in conjunction with the annual financial statements for the year ended 30 June 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the
From 1 July 2014 the Group has adopted IFRS 10 'Consolidated Financial Statements' and this has resulted in the consolidation of Drayton Garden Village Ltd (DGVL). During the year ended 30 June 2015 the Group changed its policy for investment properties from a deemed cost basis to a fair value basis. These changes have impacted this half-yearly report and the results for the half-year ended 31 December 2014 have been restated. Further information on the financial impact of these changes in accounting policies can be found in note 19.
3. Accounting policies
The accounting policies applied are consistent with those of the annual financial statements for the year ended 30 June 2015.
4. Going concern
The Board has reviewed the performance for the current period and forecasts for the future period together with the available financial resources. It has also considered the risks and uncertainties, including credit risk and liquidity. The Directors have considered the present economic climate, the state of the housing market and the current demand for land with planning consent. The Group has continued to see demand for consented land in the areas in which it operates. The Group has significant forward sales of residential units and is in discussions for the sale of some of the land within its projects and expects to make sufficient disposals in the foreseeable future to ensure it has adequate working capital for its requirements. The Directors are satisfied that the Group will generate sufficient cash to meet its liabilities as and when they fall due for a period of 12 months from signing this half-yearly financial report. The Directors therefore consider it appropriate to prepare the financial statements on the going concern basis.
5. Critical accounting estimates and judgments
Estimates and judgements are continually evaluated and are based on historic experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
(a) Valuation of inventories
In applying the Group's accounting policy for the valuation of inventories the Directors are required to assess the expected selling price and costs to sell each of the plots or units that constitute the Group's land bank and work in progress. Cost includes the cost of acquisition of sites, the cost of infrastructure and construction works, and legal and professional fees incurred during development prior to sale. Estimation of the selling price is subject to significant inherent uncertainties, in particular the prediction of future trends in the market value of land.
Whilst the Directors exercise due care and attention to make reasonable estimates, taking into account all available information in estimating the future selling price, the estimates will, in all likelihood, differ from the actual selling prices achieved in future periods and these differences may, in certain circumstances, be very significant. The critical judgement in respect of receipt of planning consent (see below) further increases the level of estimation uncertainty in this area.
(b) Income taxes
The Group recognises tax/deferred tax assets and liabilities for anticipated tax based on estimates of when the tax/deferred tax will be paid or recovered. When the final outcome of these matters is different from the amounts initially recorded, such differences impact the period in which the determination is made. Critical accounting estimates relate to the profit forecasts used to determine the extent to which deferred tax assets are recognised from available losses and the period over which they are estimated.
Critical accounting estimates
(c) Fair value of derivatives and other financial instruments
The fair value of instruments that are not traded in an active market is determined by using valuation techniques. The Group uses its judgement to select a variety of methods and makes assumptions that are mainly based on market conditions existing.
(d) Fair value of investment properties
The fair value of completed investment property is determined by reference to independent valuation experts or sales agents using open market value, subject to current leases and restrictions, as this has been assessed currently as the best use of these assets. Investment properties awaiting construction are valued by the Directors using an appraisal system; critical accounting estimates relate to the forecasts prepared in order to assess the carrying value. This system has been used to establish the fair value of the investment property in
(e) Fair value of assets and liabilities acquired with business combinations
The fair value of assets and liabilities is determined by the Directors at the date of acquisition using residual valuation model for property assets, the recoverable amount for debtors and the discounted cash flow method for deferred consideration of inventories in accordance with IAS 39. Critical accounting estimates relate to the experience of the Directors in reaching their valuations and the cost of debt capital used as an appropriate discount rate.
(f) Discounting on deferred consideration of inventories
The Group discounts deferred consideration of inventories using the discounted cash flow method; the Group considers that the cost of debt capital is the most appropriate discount rate and this is a significant estimate.
Critical judgements in applying the entity's accounting policies
Inventories
The Group values inventories at the lower of cost and net realisable value. The net realisable value is based on the judgement of the probability that planning consent will be granted for each site. The Group believes that, based on the Directors' experience, planning consent will be given. If planning consent was not achieved then a provision may be required against inventories.
Zero Dividend Preference Shares
The Group has in issue Zero Dividend Preference (ZDP) shares which are accounted for as debt. In the event of a takeover, the ZDP shares are repayable, together with any accrued interest. The Directors consider that the potential early repayment meets the definition of a derivative instrument under IAS39. However, they consider that this instrument is closely related to the host contract and therefore have not accounted for the embedded derivative separately.
Consolidation of Drayton Garden Village Limited
In December 2008 the Group entered into an Option and Development Services Agreement (the Agreement) with DGVL.
The Board has reviewed the requirements of IFRS 10, to assess whether the Group controls DGVL and has concluded that, although it does not own any of its share capital it does control DGVL because of the nature of the contractual arrangements between the Group and DGVL. In particular:
• The Group has power over DGVL because it has the practical ability to direct the relevant activities that significantly affect DGVL's returns. Such relevant activities would include obtaining planning permission to develop the site and subsequently managing the property to realise its value. The Group also has an option to acquire the share capital of DGVL which provides it with a mechanism by which it can direct the relevant activities.
• The services that the Group provides to DGVL and the arrangement by which the Group receives its fees are such that it has rights to variable returns as a result of its involvement in delivering the various property services to DGVL. The Group is entitled to 90% of the profits from the project at Drayton Garden Village and thus provides it with a very significant part of the returns generated from its involvement with DGVL.
• The Group also has the ability to use its power to affect its returns by virtue of its involvement with DGVL.
In view of the above the Group believes that it had control over DGVL from the date it entered into the agreement with DGVL and has therefore consolidated the results and financial position of DGVL within the Group accounts. Accordingly, the comparatives at 31 December 2014 have been restated. See note 19 for further details.
Consolidation of
In December 2014, the Group entered into an Option with WPDL. The Option entitles the Group to acquire land from WPDL within 10 days of the date that the land is released from the vendor's charge, as payment of deferred consideration is made by WPDL to the vendor and this could be before any decisions about the relevant activities take place. The terms of the option allow the Group to purchase the land from WPDL at a price of cost plus 20% plus indexation. The Directors have considered the requirements of IFRS 10 'Consolidated Financial Statements' and have consolidated WPDL as part of these results from the date the Option was granted. The Directors are of the opinion that the Group controls WPDL, and therefore also its parent undertaking BDL, as it has an option to acquire the only significant asset of that group and because these entities were incorporated solely for the purpose of purchasing the land under Option. The Group does not own any of the share capital of either WPDL or BDL and has none of the voting rights.
Investment in joint ventures
The Group's joint venture investments in
The Group's owns 50% of the share capital of Bucknalls Developments Limited and is entitled to 50% of the net assets. The Group has significant influence but not control and therefore this investment is also classified as a joint venture and is accounted for using the equity method.
6. Income and segmental analysis
The Group generates income by way of land sales. It also generates income from housebuilding, rental property, contracting and other related services. These operating segments are monitored and strategic decisions are made on the basis of segment operating results. The segmental analysis of operations is as follows:
Segmental analysis by activity
|
|
|
|
|
|
|
Finance |
|
Profit |
|
|
Cost of |
Gross |
Admin |
|
Operating |
(cost)/ |
|
before |
|
Revenue |
sales |
profit |
costs |
Other |
profit |
income |
Other |
tax |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
*Six months ended 31 December |
|
|
|
|
|
|
|
|
|
2014 (unaudited) |
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
|
|
|
Land sales |
- |
- |
- |
- |
- |
- |
(1,429) |
- |
(1,429) |
Housebuilding |
48,148 |
(37,579) |
10,569 |
- |
- |
10,569 |
(1,889) |
- |
8,680 |
Contract income |
3,928 |
(1,279) |
2,649 |
- |
- |
2,649 |
- |
- |
2,649 |
Rental income |
331 |
(18) |
313 |
- |
- |
313 |
- |
- |
313 |
Other |
161 |
(369) |
(208) |
- |
- |
(208) |
- |
- |
(208) |
- Loss on investments |
- |
- |
- |
- |
(541) |
(541) |
- |
- |
(541) |
- Share of loss of joint venture |
- |
- |
- |
- |
- |
- |
(990) |
- |
(990) |
- Unallocated |
- |
- |
- |
(2,837) |
- |
(2,837) |
94 |
- |
(2,743) |
Total for six months |
52,568 |
(39,245) |
13,323 |
(2,837) |
(541) |
9,945 |
(4,214) |
- |
5,731 |
Six months ended 30 June 2015 |
|
|
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
|
|
|
Land sales |
39,560 |
(22,553) |
17,007 |
- |
- |
17,007 |
(3,387) |
- |
13,620 |
Housebuilding |
17,971 |
(14,738) |
3,233 |
- |
- |
3,233 |
(678) |
- |
2,555 |
Contract income |
3,664 |
(3,664) |
- |
- |
- |
- |
- |
- |
- |
Rental income |
456 |
(10) |
446 |
- |
- |
446 |
- |
- |
446 |
Other |
- |
369 |
369 |
- |
- |
369 |
- |
- |
369 |
- Gain on revaluation of investment properties |
- |
- |
- |
- |
14,519 |
14,519 |
- |
- |
14,519 |
- Share of loss of joint venture |
- |
- |
- |
- |
- |
- |
- |
(135) |
(135) |
- Unallocated |
- |
- |
- |
(3,184) |
- |
(3,184) |
107 |
- |
(3,077) |
Total for six months |
61,651 |
(40,596) |
21,055 |
(3,184) |
14,519 |
32,390 |
(3,958) |
(135) |
28,297 |
Total for year ended 30 June 2015 (audited) |
114,219 |
(79,841) |
34,378 |
(6,021) |
13,978 |
42,335 |
(8,172) |
(135) |
34,028 |
Six months ended 31 December |
|
|
|
|
|
|
|
|
|
2015 (unaudited) |
|
|
|
|
|
|
|
|
|
Segment |
|
|
|
|
|
|
|
|
|
Land sales |
21,611 |
(15,312) |
6,299 |
- |
- |
6,299 |
(2,774) |
- |
3,525 |
Housebuilding |
30,254 |
(22,966) |
7,288 |
- |
- |
7,288 |
(311) |
- |
6,977 |
Contract income |
2,220 |
(2,115) |
105 |
- |
- |
105 |
- |
- |
105 |
Rental income |
892 |
(163) |
729 |
- |
- |
729 |
(533) |
- |
196 |
Other |
171 |
- |
171 |
- |
- |
171 |
- |
- |
171 |
- Gain on revaluation of investment properties |
- |
- |
- |
- |
13,969 |
13,969 |
- |
- |
13,969 |
- Unallocated |
- |
- |
- |
(3,559) |
- |
(3,559) |
73 |
- |
(3,486) |
Total for six months |
55,148 |
(40,556) |
14,592 |
(3,559) |
13,969 |
25,002 |
(3,545) |
- |
21,457 |
|
|
As at 31 December |
*As at 31 December |
As at 30 June |
|
|
2015 |
2014 |
2015 |
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
£000 |
£000 |
£000 |
Segment assets |
|
|
|
|
Land: |
|
|
|
|
Non-current assets - deferred tax |
- |
1,113 |
142 |
|
Current assets - inventories |
107,218 |
104,508 |
90,530 |
|
Current assets - other |
1,447 |
3,738 |
2,252 |
|
|
108,665 |
109,359 |
92,924 |
|
Housebuilding: |
|
|
|
|
Non-current assets - deposit match debtor |
55 |
55 |
55 |
|
Current assets - inventories |
22,493 |
27,221 |
29,709 |
|
Current assets - other |
254 |
1,005 |
426 |
|
|
22,802 |
28,281 |
30,190 |
|
Contracting: |
|
|
|
|
Current assets -inventories |
- |
- |
792 |
|
Current assets - other |
276 |
274 |
26 |
|
|
276 |
274 |
818 |
|
Investment property: |
|
|
|
|
Non-current assets - investment property |
48,093 |
14,732 |
34,000 |
|
Current assets - other |
125 |
- |
158 |
|
|
48,218 |
14,732 |
34,158 |
|
|
|
|
|
|
Other: |
|
|
|
|
Non-current assets - investment in joint ventures |
1,722 |
1,376 |
1,488 |
|
Non-current assets - loans to joint ventures |
5,580 |
2,947 |
3,246 |
|
Non-current assets - investment in associate |
250 |
- |
- |
|
Non-current assets - loans to associate |
500 |
- |
- |
|
Non-current assets - other |
429 |
333 |
332 |
|
Non-current assets - deferred tax |
42 |
296 |
406 |
|
Current assets - other |
5,263 |
2,968 |
5,137 |
|
Cash |
16,617 |
9,778 |
21,377 |
|
|
30,403 |
17,698 |
31,986 |
|
Total segmental and entity assets |
210,364 |
170,344 |
190,076 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
|
|
|
As at 31 December |
*As at 31 December |
As at 30 June |
|
|
|
2015 |
2014 |
2015 |
|
|
|
(unaudited) |
(unaudited) |
(audited) |
|
|
|
£000 |
£000 |
£000 |
Segment liabilities |
|
|
|
||
Land: |
|
|
|
||
Current liabilities - trade creditors |
1,213 |
1,776 |
1,966 |
||
Current liabilities - other loans |
24,552 |
20,222 |
10,178 |
||
Current liabilities - other |
936 |
3,416 |
4,860 |
||
Current liabilities - purchase consideration |
4,157 |
18,909 |
10,881 |
||
Non-current liabilities - purchase consideration |
13,019 |
15,534 |
12,629 |
||
|
43,877 |
59,857 |
40,514 |
||
Housebuilding: |
|
|
|
||
Current liabilities - trade creditors |
1,033 |
2,232 |
2,322 |
||
Current liabilities - other loans |
6,552 |
11,723 |
8,546 |
||
Current liabilities - bank loans |
9,921 |
9,132 |
9,692 |
||
Current liabilities - other creditors |
1,494 |
2,165 |
2,392 |
||
|
19,000 |
25,252 |
22,952 |
||
Contracting: |
|
|
|
||
Current liabilities - trade creditors |
- |
530 |
25 |
||
Current liabilities - other creditors |
1,116 |
211 |
1,272 |
||
|
1,116 |
741 |
1,297 |
||
Rental investment: |
|
|
|
||
Current liabilities - other creditors |
28 |
- |
- |
||
Current liabilities - bank loans |
15,979 |
- |
15,500 |
||
|
16,007 |
- |
15,500 |
||
|
|
|
|
||
Other: |
|
|
|
||
Current liabilities - trade creditors |
246 |
113 |
70 |
||
Current liabilities - other creditors |
8,935 |
7,526 |
8,302 |
||
Non-current liabilities - zero dividend preference shares |
14,163 |
11,958 |
12,372 |
||
|
23,344 |
19,597 |
20,744 |
||
Total segmental and entity liabilities |
103,344 |
105,447 |
101,007 |
||
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
7. Income tax
|
Six months ended |
*Six months ended |
Year ended |
|
31 December |
31 December |
30 June |
|
2015 |
2014 |
2015 |
|
(unaudited) |
(unaudited) |
(audited) |
|
£000 |
£000 |
£000 |
Current tax charge |
980 |
1,559 |
4,150 |
Deferred tax charge |
506 |
67 |
928 |
|
1,486 |
1,626 |
5,078 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
8. Earnings and net asset value per share
Basic and diluted EPS
Basic and diluted earnings per share has been calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
|
Six months ended |
*Six months ended |
Year ended |
|
31 December |
31 December |
30 June |
|
2015 |
2014 |
2015 |
|
(unaudited) |
(unaudited) |
(audited) |
|
£000 |
£000 |
£000 |
Profit attributable to equity holders of the Company (£000) |
20,289 |
4,910 |
29,680 |
Net assets attributable to equity holders of the company (£000) |
107,066 |
64,700 |
88,797 |
Weighted average number of ordinary shares in issue (000s) |
202,136 |
202,578 |
202,368 |
Dilutive effect of options (000s) |
2,343 |
1,563 |
1,985 |
Dilutive effect of growth shares (000s) |
11,328 |
11,319 |
11,351 |
|
215,807 |
215,460 |
215,704 |
Basic earnings per share in pence |
10.04p |
2.42p |
14.67p |
Diluted earnings per share in pence |
9.40p |
2.28p |
13.76p |
Shares in issue (000s) |
201,779 |
202,156 |
202,156 |
Net asset value per share in pence |
53.06p |
32.01p |
43.92p |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
On 21 December 2015 the Group's Employee Benefit Trust purchased 377,500 shares in
9. Investment property
|
Residential properties |
Commercial Property |
Development land |
|
|
Level 3 |
Level 3 |
Level 3 |
Total |
|
£000 |
£000 |
£000 |
£000 |
Cost or fair value |
|
|
|
|
*At 31 December 2014 |
5,724 |
- |
9,008 |
14,732 |
Additions |
5,757 |
- |
- |
5,757 |
Transfer to inventories |
- |
- |
(1,008) |
(1,008) |
Fair value adjustment |
14,519 |
- |
- |
14,519 |
At 30 June 2015 |
26,000 |
- |
8,000 |
34,000 |
Additions |
31 |
93 |
- |
124 |
Fair value adjustment |
13,969 |
- |
- |
13,969 |
At 31 December 2015 |
40,000 |
93 |
8,000 |
48,093 |
At 30 June 2015 |
26,000 |
- |
8,000 |
34,000 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
During the period the Group undertook a review of the fair value of the residential investment properties at Wilton Park, Beaconsfield in
10. Investments
|
Joint |
|
|
|
ventures |
Associate |
Total |
|
£000 |
£000 |
£000 |
Cost or fair value at 31 December 2014 |
1,376 |
- |
1,376 |
Additions |
247 |
- |
247 |
Share off loss after tax |
(135) |
- |
(135) |
At 30 June 2015 |
1,488 |
- |
1,488 |
Additions |
234 |
250 |
484 |
At 31 December 2015 |
1,722 |
250 |
1,972 |
In November 2014 the Group acquired a 10% interest in
In December 2014 the Group entered into a joint venture with CPC Group Ltd (CPC) to purchase land, obtain planning permission and ultimately sell the land. The Group owns 20% of the share capital and is obliged to fund 20% of the costs of the sites acquired by the joint venture. A 'waterfall' calculation determines the amount of profit to be received by the Group using performance hurdles. At 31 December 2015 the Group had provided loans of £3.1m to the joint venture in addition to the capital investment of £0.1m. Further details can be found in note 12.
In December 2015 the Group entered into a joint venture with two individuals to purchase land, obtain planning permission and development approximately 100 homes in Garston,
In October 2015 the Group acquired 25% of Troy, a new premium housebuilder and is entitle to 25% of the net returns. At the 31 December the Group has made a capital investment of £250,000 and has provided loans of £0.5m. The Group has subscribed to a further £1.5m of loan notes which are payable when called by the board of Troy. Further details can be found in note 12.
11. Deferred tax
The net movement on the deferred tax account is as follows:
|
£000 |
*At 31 December 2014 |
1,409 |
Income statement charge |
(861) |
At 30 June 2015 |
548 |
Income statement charge |
(506) |
At 31 December 2015 |
42 |
The movement in deferred tax assets is as follows:
|
Capital losses |
|
|
|
|
Notional |
|
|
recognised on |
|
|
|
Share |
interest on |
|
|
revaluation |
Revaluation |
|
|
based |
deferred |
|
|
gain |
gain |
Other |
Losses |
compensation |
consideration |
Total |
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
*At 31 December 2014 |
477 |
(477) |
829 |
118 |
296 |
166 |
1,409 |
Charged to income statement |
2,320 |
(2,320) |
(977) |
(118) |
110 |
124 |
(861) |
At 30 June 2015 |
2,797 |
(2,797) |
(148) |
- |
406 |
290 |
548 |
Charged to income statement |
2,794 |
(2,794) |
(641) |
- |
66 |
69 |
(506) |
At 31 December 2015 |
5,591 |
(5,591) |
(789) |
- |
472 |
359 |
42 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future taxable profits is probable. The Group has capital losses amounting to £10,814,000 (2014 restated: £36,202,000) that have not been recognised as the Directors consider the realisation of the losses is not expected to crystallise in the foreseeable future.
12. Trade and other receivables
|
Six months ended |
*Six months ended |
Year ended |
|
31 December |
31 December |
30 June |
|
2015 |
2014 |
2015 |
|
(unaudited) |
(unaudited) |
(audited) |
|
£000 |
£000 |
£000 |
Trade receivables |
204 |
110 |
167 |
Prepayments and accrued income |
988 |
371 |
656 |
Other receivables falling due within one year |
6,172 |
7,503 |
7,175 |
Loans to joint ventures due in more than one year |
5,580 |
2,947 |
3,246 |
Loans to associate due in more than one year |
500 |
- |
- |
Other receivables falling due after more than one year |
55 |
55 |
55 |
|
13,499 |
10,986 |
11,299 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
The Group has provided loans of £2.2m to
At 31 December 2015 the Group had provided loans of £3.1m to its joint venture with CPC, as shown in note 10.
At 31 December 2015 the Group had provided loans of £0.3m to its joint venture in Garston,
The Group has provided loans of £0.5m to Troy, a company in which it holds a 25% equity interest, as shown in note 10.
All of the Group's trade and other receivables have been reviewed for indicators of impairment.
13. Share capital
|
Six months ended |
Six months ended |
Year ended |
|
31 December |
31 December |
30 June |
|
2015 |
2014 |
2015 |
|
(unaudited) |
(unaudited) |
(audited) |
|
Number |
Number |
Number |
Shares in issue |
|
|
|
Shares in issue at start of period |
202,156,216 |
202,799,432 |
202,799,432 |
Shares purchased by EBT |
(377,500) |
(643,216) |
(643,216) |
Shares in issue at end of period |
201,778,716 |
202,156,216 |
202,156,216 |
14. Non-controlling interests (minority interests)
|
WPDL |
DGVL |
Total |
|
£000 |
£000 |
£000 |
At 31 December 2014 |
239 |
(436) |
(197) |
Non-controlling interests in the net result of subsidiaries |
685 |
(760) |
(75) |
At 30 June 2015 |
924 |
(1,196) |
(272) |
Non-controlling interests in the net result of subsidiaries |
58 |
260 |
318 |
At 31 December 2015 |
982 |
(936) |
46 |
Within WPDL there is also a land creditor of £19m which is non-recourse to the Group. Post tax profits to date of £2.2m, which have been eliminated on consolidation, will be available for distribution to the shareholder of WPDL as a dividend at a future date in addition to the losses shown in the table above. Further details of the option agreement can be found in note 5.
15. Trade and other payables
|
Six months ended |
*Six months ended |
Year ended |
|
31 December |
31 December |
30 June |
|
2015 |
2014 |
2015 |
|
(unaudited) |
(unaudited) |
(audited) |
|
£000 |
£000 |
£000 |
Trade payables |
2,520 |
4,653 |
4,425 |
Other creditors |
3,396 |
4,728 |
3,675 |
Social security, other taxes and VAT |
- |
1,461 |
3,802 |
Corporation tax |
5,607 |
3,738 |
6,347 |
Accruals and deferred income |
3,478 |
3,389 |
2,960 |
|
15,001 |
17,969 |
21,209 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
The carrying value of trade and other payables is considered a reasonable approximation of fair value.
16. Other financial liabilities
|
Six months ended |
*Six months ended |
Year ended |
|
31 December |
31 December |
30 June |
|
2015 |
2014 |
2015 |
|
(unaudited) |
(unaudited) |
(audited) |
|
£000 |
£000 |
£000 |
Purchase consideration on inventories falling due within one year |
4,157 |
18,909 |
10,881 |
Purchase consideration on inventories falling due after more than one year |
13,019 |
15,534 |
12,629 |
Zero dividend preference shares falling due after more than one year |
14,163 |
11,958 |
12,372 |
|
31,339 |
46,401 |
35,882 |
* Restated as a result of the application of IFRS 10 and the change in accounting policy for investment properties as explained in note 19.
18. Contingencies
The Group has no contingent liabilities as at 31 December 2015 and 31 December 2014.
19. Change in accounting policies
During the year ended 30 June 2015 the Group changed its investment property accounting policy from a 'deemed cost' basis to a 'fair value' basis. The Directors are of the opinion that the revaluation model gives a more accurate reflection of the investment properties held by the Group. The Group also adopted IFRS 10 and this resulted in the consolidation of DGVL. Further information on the reasons for this change can be found in note 5. The impact of these changes in policy on each line item of the Group Income Statement and Group Statement of Financial Position on the six month period to 31 December 2014 is shown in the table below:
|
Prior to change in accounting policies |
Adjustments |
Restated |
|
|
|
DGVL |
Revaluation |
|
|
£000 |
£000 |
£000 |
£000 |
Group income statement |
|
|
|
|
Turnover |
54,509 |
(1,941) |
- |
52,568 |
Cost of sales |
(41,856) |
2,611 |
- |
(39,245) |
Gross profit |
12,653 |
670 |
- |
13,323 |
Administrative expenses |
(2,781) |
(56) |
- |
(2,837) |
Operating profit |
9,331 |
614 |
- |
9,945 |
Net interest |
(3,225) |
(989) |
- |
(4,214) |
Profit before tax |
6,106 |
(375) |
- |
5,731 |
|
Prior to change in accounting policies |
Adjustments |
Restated |
|
|
|
DGVL |
Revaluation |
|
|
£000 |
£000 |
£000 |
£000 |
Group statement of financial position |
|
|
|
|
Investment properties |
11,916 |
- |
2,816 |
14,732 |
Deferred tax |
2,158 |
829 |
(1,578) |
1,409 |
Total non-current assets |
18,785 |
829 |
1,238 |
20,852 |
Inventories |
113,879 |
17,850 |
- |
131,729 |
Trade and other receivables |
15,785 |
(7,801) |
- |
7,984 |
Cash and cash equivalents |
9,777 |
1 |
- |
9,778 |
Total current assets |
139,442 |
10,050 |
- |
149,492 |
Retained earnings |
7,666 |
(4,195) |
1,238 |
4,709 |
Total equity attributable to shareholders |
67,657 |
(4,195) |
1,238 |
64,700 |
Bank loans and overdrafts |
9,124 |
8 |
- |
9,132 |
Other loans |
17,499 |
14,446 |
- |
31,945 |
Trade and other payables |
13,793 |
438 |
- |
14,231 |
Corporation tax creditor |
3,753 |
(15) |
- |
3,738 |
Total current liabilities |
63,078 |
14,877 |
- |
77,955 |
20. Copies of our half-yearly financial report can be viewed and downloaded from our website at www.inlandhomes.co.uk. Copies are also available on request by writing to the Company Secretary at the Registered Office of
Independent review report to
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report of
This report is made solely to the company, in accordance with International Standard on Review Engagements (
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the
Our responsibility
Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the
Chartered Accountants
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18 March 2016
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