You have increased the dividend significantly. How did you determine the level?
The Board wanted to ensure that the dividend was progressive, in line with its intention announced at the time of our 2012 results. The amount was neither driven by dividend cover or yield, but determined in consideration of the Group's cash requirements for the foreseeable future. The yield based on the current share price is approximately 1.3% and although this is above the average yield from all AIM companies, the Board believes that the majority of investors are seeking growth and not a dividend yield.
Has securing finance become any easier in recent times?
Procuring development finance for housebuilding has become relatively easier for Inland Homes than a few years ago. However, obtaining funding for land with or without planning consent is extremely difficult. Although one or two entrants have emerged for land finance, the Group endeavours to structure its land acquisitions by the use of vendor financing or from its own cash resource.
Given the increase in the Group's housebuilding activity, should we expect net debt to continue to rise? What kind of level would you be comfortable with?
Debt levels have increased in line with the expansion of our housebuilding activity as expected by the Board. The Group expects borrowings to reduce by the half year due to a significant number of legal completions of residential units and some land sales. The Group's borrowings are controlled by a gearing covenant imposed by the Zero Dividend Preference shareholders. The Board would be comfortable with an average gearing of 30%, although there may be times when a planned increase will take place where a reduction could be forecast within a short period of time.
What are your expectations for NAV and profit growth for the current financial year?
We expect profits to continue to increase with both stated and underlying net asset value continuing to grow at a very respectable rate. The consensus forecast in the market, for profit before tax for the year ending 30 June 2015, is £12m.
It's very difficult to ascertain a 'true' NAV value for Inland, given assets are held on the balance sheet at the lower of cost and net realisable value. Could you not revalue your portfolio annually or provide some guidance to investors?
Accounting Standards preclude the Group from revaluing its stock and work in progress in the accounts. As an indication to investors of the potential unrealised value within the land owned by the Group, the average cost per plot of £38,000 should be compared to the open market value of consented plots. As a general rule of thumb, the value of a consented plot equates to 30% of the value of the home. Based on the average UK house price of £274,000 this could result in a consented plot value of approximately £82,000.