For Immediate Release 30 January 2009
IN HOUSE GROUP PLC
("In House" or the "Company")
INTERIM REPORT
CHAIRMAN'S STATEMENT
Introduction
We present the Group's interim results for the six month period ended 31
October 2008.
Results
The Group had Revenues of £37,000 (2007 - £934,000) for the period under
review. The operating loss on ordinary activities for the period amounted to £
140,000 (2007- £182,000).
The loss per share for the period was 0.068p (2007 - 0.04p).
Current Trading
The period under review continued to be one of consolidation for the Group, one
property owning company (Berrymount Developments Limited) was acquired at the
end of the previous period and one (Avanti Properties Limited) was acquired
just after the period end (in November 2008).
On 27 May 2008 the Company's Share Capital was reorganised with 645,589,628
0.249p Deferred Shares being created and 839,248,182 0.001p Ordinary Shares
being authorised of which 645,589,628 were in issue at that time.
Clearly the current economic climate has brought uncertainty to the property
sector. Three particular implications result from the current conditions.
First, it is a very difficult market in which to sell properties; this means
the Group has been unable to sell its existing stock. Second, it has been
difficult to complete any further acquisitions of property portfolios due to
the uncertain economic climate. Third, interest rates have been declining,
which, as the Group's interest charges are linked to base rate, has been
helping its margins.
The Group is, therefore, currently concentrating on managing its existing stock
of residential properties. A good proportion of the properties are let to
asylum seekers or benefits claimants with the rents paid directly by either
local authorities or other agencies which therefore provide a high quality of
income to the Group. This revised strategy is reflected in the results for the
period, Revenue, being the gains made on trading residential units and income
from property management, is significantly reduced as there were no property
sales in the current period while Operating Income, being mainly the rental
income, is significantly up on previous periods (2008: £335,000, 2007: £87,000)
due to the property acquisitions that commenced in the autumn of 2007.
Prospects
The Group had expected to make further property acquisitions and is still
looking for appropriate opportunities but the current economic uncertainty is
impacting on the ability to complete such deals. The Group retains its existing
funding facility with Dunfermline Building Society and expects to be able to
acquire further properties using this facility only once the current economic
uncertainty has eased.
There are currently around 25 properties that require some refurbishment before
they can be relet which the Directors estimate would cost some £140,000 in
total. The Group does not currently have the funds to do this; but is seeking
ways to do so as the Directors believe that these properties can readily be
rented and will provide a good payback on the investment required.
As announced on 27 January 2009, the Group is arranging short term funding to
meet its immediate cash needs and is currently in discussions with a number of
parties in relation to long term funding to address the refurbishment
requirements, restart property acquisitions and, once these have been arranged,
finance the acquisition of the property management companies.
David Meddings
Chairman
30 January 2009
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended
31 October 31 October 30 April 2008
2008 2007
£'000 £'000 £'000
Revenue 37 934 963
Cost of sales (10) (923) (1.074)
______ ______ ______
Gross profit (loss) 27 11 (111)
Administrative expenses (271) (260) (713)
Operating income 335 87 282
Operating expenses (231) (20) (171)
______ ______ ______
Operating loss (140) (182) (713)
Investment Income 1 3 8
Other gains and losses (115) 0 254
Finance costs (437) (64) (336)
______ ______ ______
Loss on ordinary activities before (691) (243) (787)
taxation
Taxation 0 0 1
______ ______ ______
Loss for the Period attributable to (691) (243) (786)
the equity holders of the parent
company
===== ===== =====
Loss per share: basic (pence) (0.068) (0.044) (0.134)
===== ===== =====
1. Loss per share
The calculation of basic loss per share is based upon the loss for the period
and the weighted average number of 1,022,109,220 (30 April 2008 - 587,724,160,
31 October 2007 547,344,711) shares in issue during the period. Given the loss
for the period, no fully diluted earnings per share is disclosed.
Unaudited Unaudited Audited
31 October 31 October 30 April
2008 2007 2008
£'000 £'000 £'000
NON-CURRENT ASSETS
Intangible assets 9 15 12
Plant and equipment 2 3 3
______ ______ ______
11 18 15
CURRENT ASSETS
Trading Properties 11,958 3,843 12,606
Trade and other receivables 227 108 730
Cash and cash equivalents 44 28 162
______ ______ ______
12,229 3,979 13,498
CURRENT LIABILITIES
Borrowings (102) (143) (141)
Trade and other payables (583) (303) (440)
______ ______ ______
(685) (446) (581)
______ ______ ______
NET CURRENT ASSETS/(LIABILITIES) 11,544 3,533 12,917
NON-CURRENT LIABILITIES
Borrowings (12,458) (3,625) (12,805)
Deferred tax liabilities 0 0 (648)
______ ______ ______
NET LIABILITIES (903) (74) (521)
====== ====== ======
EQUITY
Share capital 1,625 1,551 1,614
Share premium account 1,777 1,446 1,479
Retained earnings (4,305) (3,071) (3,614)
______ ______ ______
TOTAL EQUITY ATTRIBUTABLE TO THE (903) (74) (521)
EQUITY HOLDERS OF THE PARENT
COMPANY
====== ====== ======
Unaudited Unaudited Audited
6 months 6 months Year ended
ended ended
31 October 31 October 30 April
2008 2007 2008
£'000 £'000 £'000
NET CASH (OUTFLOW)/INFLOW FROM (139) (3,195) (9,550)
OPERATING ACTIVITIES
INVESTING ACTIVITIES
Interest received 1 3 8
Acquisition of Subsidiary 0 0 (1,420)
Purchase of plant and equipment (1) (1) (4)
Disposal of plant & equipment 0 0 3
______ ______ ______
NET CASH GENERATED 0 2 (1,413)
FROM INVESTING ACTIVITIES
FINANCING ACTIVITIES
Interest paid (437) (64) (336)
Proceeds on issue of share capital (net 309 431 487
of costs)
Net new (repayments of) borrowings 385 3,394 11,514
______ ______ ______
NET CASH INFLOW/(OUTFLOW) 257 3,761 11,665
FINANCING ACTIVITIES
NET INCREASEIN CASHAND CASH EQUIVALENTS (118) 568 702
====== ====== ======
CASH AND CASH EQUIVALENTS AT THE 162 (540) (540)
BEGINNING OF THE PERIOD
====== ====== ======
CASH AND CASH EQUIVALENTS AT THE END OF 44 28 162
THE PERIOD
====== ====== ======
Cashflows from Operating Activities
Operating loss (140) (182) (713)
Depreciation of plant and equipment 2 2 3
Amortisation of intangibles 3 3 6
Gain on Disposal of plant & equipment 0 0 (1)
Movement in trading properties (648) (2,814) (8,102)
Movement in receivables 502 (79) (687)
Movement in payables 142 (125) (36)
______ ______ ______
Cash (absorbed)/generated by operations (139) (3,195) (9,530)
Income taxes paid 0 0 (20)
______ ______ ______
NET CASH (OUTFLOW)/INFLOW FROM (139) (3195) (9,550)
OPERATING ACTIVITIES
====== ====== ======
For the Period to 31 October 2008 Share Share Retained Total
Capital Premium Earnings Equity
£'000 Account £'000 £'000
£'000
Opening 1,614 1,479 (3,614) (521)
New Share Capital Subscribed 11 298 0 309
Loss for the period attributable to 0 0 (691) (691)
the
Equity holders of the parent company
______ ______ ______ ______
Closing 1,625 1,777 (4,305) (903)
====== ====== ====== ======
For the Year to 30 April 2008 Share Share Retained Total
Capital Premium Earnings Equity
£'000 Account £'000 £'000
£'000
Opening 959 1,607 (2,828) (262)
New Share Capital Subscribed 655 46 0 701
Share Issue Expenses 0 (174) 0 (174)
Loss for the period attributable to 0 0 (786) (960)
the
Equity holders of the parent company
______ ______ ______ ______
Closing 1,614 1,479 (3,614) (521)
====== ====== ====== ======
1. Basis of preparation
The accounting policies used are consistent with those that will be adopted in
the annual financial statements for the year ending 30 April 2009, subject to
any changes to IFRS that may be implemented in the mean time.
The preparation of the interim financial statements required management to make
estimates and assumptions that affect the reported amounts of revenues,
expenses, assets, liabilities and disclosure of contingent liabilities at the
date of the interim financial statements. If in the future such estimates and
assumptions, which are based upon the management's best judgement at the date
of the interim financial statements, deviate from the actual circumstances, the
original estimates and assumptions will be modified as appropriate in the
period in which the circumstances change.
2. Status of Accounts
The interim financial information is unaudited. The financial information does
not constitute statutory accounts as defined by Section 240 of the Companies
Act 1985.
3. Period of accounts
The financial statements include the results of the Group for the period from 1
May 2008 to 31 October 2008. The comparatives cover the periods from 1 May 2007
to 30 April 2008, and from 1 May 2007 to 31 October 2007 respectively.
4. Going Concern
In determining the appropriate basis of preparation of the Financial
Statements, the Directors are required to consider whether the Group can
continue in operational existence for the foreseeable future.
The Board has prepared projected cash flow information for the period ending 12
months from the date of approval of these Financial Statements ("the
Projections") based on the Group continuing to let out its existing property
portfolio to meet its finance and operating costs.
These Projections assume that the current negotiations with regard to
additional short term and long term funding will be successful and that the
company will be able to recommence acquisitions of properties shortly using the
existing lending and bridging facilities.
Having reviewed these Projections and having made reasonable enquiries in
making the underlying assumptions, together with assessing the position of
current lenders, the Directors have reasonable expectation that the Group will
be able to meet its liabilities moving forward as they fall due. It is on this
basis that the Directors consider it appropriate to prepare the Group's
Financial Statements on the going concern basis. However, for the reasons
described above, the Directors recognise that there are material uncertainties
that may cast significant doubt on the Group's ability to continue as a going
concern, and therefore, that it may be unable to realise its assets and
discharge its liabilities in the normal course of business.
There is a risk that the above material uncertainties as to the Group's ability
to continue as a going concern may not be resolved satisfactorily. The
Financial Statements do not include the adjustments that would result if the
Group were unable to continue as a going concern, which would include writing
down the carrying value of assets to their recoverable amount and providing any
further liabilities that might arise, as it is not practicable to determine or
quantify them.
5. Trading Properties
Under the requirements of IFRS 3 the properties acquired in Berrymount in March
2008 were brought in to the accounts for 30 April 2008 at fair value on
acquisition. The directors being aware of the changes in the property market
since that time have had these properties revalued and have determined that the
current value is approximately the cost of those properties to the Group and
therefore the uplift on these properties to fair value at acquisition has been
reversed along with the associated deferred tax provision. The impact of this
has been to reduce trading properties by £763,000, remove the deferred tax
provision of £648,000 and a charge to the Profit and Loss Account in the period
of £115,000 (disclosed as Other gains and losses).
6. Post Balance Sheet Events
On 5 November the group made a further acquisition relating to a portfolio of
North West residential properties via the acquisition of Avanti Properties
Limited. Funding was arranged with Dunfermline Building Society using the
existing facilities in place.
The following share issues have also been made:
On 4 November 2008 the company issued 3,125,000 ordinary shares of 0.001p at a
price of 0.08p per share in settlement of a £2,500 introductory commission to
Mufid & Co re an agreement with Primegold Properties Limited to manage its 12
residential properties in Lancashire.
On 6 November 2008 the company has issued 285,714,286 ordinary shares of 0.001p
at a price of 0.007p to UEB Consulting Limited on conversion of £20,000 of the
loans for working capital purposes.
On 17 November 2008 the company issued 50,000,000 Ordinary Shares at a price of
0.05p in settlement of a £25,000 payment for a three month exclusivity period
to acquire Breatheasy Finance Limited.
On 19 November 2008 the company has issued 285,714,286 ordinary shares of
0.001p at a price of 0.007p to UEB Consulting Limited on conversion of £20,000
of the loans for working capital purposes.
On 19 November 2008 the company has issued has issued 20,000,000 ordinary
shares of 0.001p at a price of 0.02p per share to UEB Consulting Limited in
settlement of a £4,000 fee for repair work on property owned by the Group.
On 16 December 2008 the company has issued 142,857,143 ordinary shares of
0.001p at a price of 0.0035p to UEB Consulting Limited on conversion of £5,000
of the loans for working capital purposes.
On 16 December 2008 the company has issued 342,857,143 ordinary shares of
0.001p at a price of 0.0035p Cairns Investment Holdings Limited on conversion
of a £12,000 loan provided for working capital purposes.
On 7 January 2009 the company has issued 142,857,143 ordinary shares of 0.001p
at a price of 0.0035p to UEB Consulting Limited on conversion of £5,000 of the
loans for working capital purposes.
7. Copies of the report
Copies of this interim statement will be made available to the public on the
Group's Website (www.ihgroup.co.uk) and will be available at Number One,
Birchwood One Business Park, Dewhurst Road, Warrington WA3 7GB.
Contact: Marcus Cassidy, In House Group Plc on 0845 061 9999
mcassidy@ihgroup.co.uk
Roland Cornish, Beaumont Cornish Limited,
0207 628 3396