Inland trades at a market Cap of circa £126m. With a share price of about 68p.
Results for the year gave net asset value of £142m and an EPRA NAV of 102p per share. NAV is very realistic with very little Fixed Assets involved.
The final dividend was raised by 29% to 1.55p
Most of Inland’s operations experienced decent levels of growth.
A number of the newer initiatives helped drive results in some of the older sides of the business. In particular Housing Association home contracts created land sales.
The Bad
The average sales price being obtained by the open market homes fell to £290,000 from £306,000.
Private housing finished the year with a slightly lower order book than it started.
As with other builders there is always a risk that there may be a significant decrease in land values should the housing bubble burst. Given demand exceeds supply this looks unlikely but as relative to salaries house prices are historically high it is a risk.
Whilst the newer initiatives grow they require more management time and have separate requirements from the old business. They potentially have lower returns and to the extent synergies occur they potentially make the older core parts of Inland reliant on the new less profitable side driving down overall returns.
With all the new initiatives it is hard to really say what Is Inland’s core business or direction for the future. Each additional initiative perhaps makes sense in itself but when all are viewed its harder imho to see the wood for the trees
The Ugly.
Inland’s most prestigious development and potentially its most lucrative is blocked in planning with the relevant planning authority requiring a much higher % of affordable housing than Inland envisaged. At the moment the development is not proceeding and Inland claims it would not be economic for it to do so. This potentially could have a significant impact on NAV, EPRA or otherwise and returns for the next few years. Moreover given getting planning is Inland’s historical core skill failure at Wilton Park would not give possible partners increased confidence.
Inland has been a core holding for me as a Value play. But as it never delivers I do wonder more and more whether it is a value trap. I may reduce my holding from current levels and will be keeping an eye out for indicators as to what is happening at Wilton Park.