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Inland Homes boss steps down as developer posts pre-tax loss of more than £37m
The chief executive of Inland Homes has announced he will step down from the top job as the house builder posted a pre-tax loss of more than £37m in its latest trading update.
The brownfield developer announced that Stephen Wicks will retire from the board at the end of this month as it posted its plans for a strategic review to the stock market earlier today.
Mr Wicks will stay on at the house builder in an advisory capacity for a 12-month period, it was confirmed.
Simon Bennett, chair of Inland Homes, thanked the developer’s founder for his commitment to the business and praised Mr Wicks for leading it through the global financial crisis and coronavirus pandemic.
Nish Malde, chief finance officer at Inland Homes, will act as interim chief executive alongside his current duties while a search is underway to replace Mr Wicks.
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In its trading update, the house builder blamed delays in the completion of land sales and unsatisfactory margins in its partnership housing contracts. It also blamed credit losses for its expected operating loss of £29.3m for the year ending 30 September 2022 and a loss before taxation of £37.1m.
Inland Homes is still waiting to complete over £75m in planned land sales, which may not conclude until the next financial year.
A review of its construction projects also found that an additional £4m is needed to get these developments to completion in the first six months of this financial year.
Senior management changes to the construction division have been made and further provisions of £15.4m will be made in the second half of the year due to build cost inflation.
These inflationary pressures and supply chain issues have forced Inland Homes to put an additional £4.7m aside for expected future credit losses, according to the update.
However, the builder’s net debt has fallen from £148.2m at 30 September 2020 to less than £100m this year.
The result of these anticipated losses for the financial year means the developer “is a going concern, but it does mean that the group would breach the interest cover covenant with one of its lenders where the group’s borrowings are approximately £19.3m”.
This borrowing by one of the group’s subsidiaries is guaranteed by Inland Homes and the developer said it has had “positive discussions with the lender concerned to procure a waiver from this potential covenant breach”.
As part of its plans for a strategic review, the builder cited a “drastic shortage of quality consented sites in the South and South East, exacerbated by a highly complex and unpredictable planning system which places considerable demands on developers”.
As a result, the house builder has appointed financial advisors Lazard to assist with a strategic review of the business.
The update stated: “In light of the present circumstances, the board has determined that it would be inappropriate to continue the share buy-back programme that has been formally announced. The board is therefore suspending the share buy-back programme until the strategic review has concluded.”
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