Inland Homes to appoint administrators

Housebuilder and brownfield developer Inland Homes is set to appoint administrators, as ongoing uncertainty related to regulatory failings means it cannot publish audited accounts for the past two financial years.

Inland filed a notice of intent to appoint administrators yesterday (27 September), with the directors selecting David Hudson and Phil Armstrong of FRP Advisory to oversee the process.

FRP has been working with the Buckinghamshire-based firm to investigate regulatory breaches that emerged earlier this year.

Inland’s chair and two non-executive directors resigned in March as the firm admitted it may have breached rules for listed companies, saying it had become aware of “certain related-party issues […] of which the board was not informed at the relevant times”.

Companies listed on AIM – a stock market for small and medium-sized businesses overseen by the London Stock Exchange – must immediately disclose the terms of a transaction with “related parties” such as shareholders, directors or their family members.

In April, trading in Inland’s shares was suspended after it missed the deadline for publishing its audited accounts for the year ending 30 September 2022.

Inland initially appointed FRP (overseen by auditor PwC) to investigate the related-party issues and ‘“any other relevant matters”. In July, Inland said that FRP had found “significant and repeated failures in board-level corporate governance” as well as “failings of internal control” in some areas of the business.

The company then asked FRP to carry out a further review to assess whether “control breaches or incomplete disclosures impacted other areas of corporate governance and financial reporting”.

This newer investigation concluded that “further work is still required into material judgements and estimates” before Inland can publish audited financial statements covering 1 October 2020 to 30 September 2022.

Inland announced yesterday that “the extent of further work and cost required to complete the preparation of the financial statements and the audit for FY22 cannot be certain at this stage, and the timeframe within which this might be feasible is not known”.

After reviewing its options, the firm concluded that administration would be “in the best interests of all stakeholders”.

AIM rules mean that trading in the company’s shares will cease on 4 October following the six-month suspension.

The firm announced on 11 September that it had also breached a loan covenant with HSBC from which it had drawn about £11m. It stated that “active discussions” were underway with HSBC about waivers for the breaches. Inland added that it was “likely to be in breach of covenants with other lenders” and it had begun discussions with these.

Inland’s announcement brings an end to an attempted rescue strategy that would have involved it acquiring the Wakefield-based NorthCountry Homes for £4m.

Jolyon Harrison, NorthCountry’s executive chairman and a former Gleeson chief executive, was appointed as Inland’s new chief executive in July and heads of terms were agreed for the acquisition. But the move was dependent on conditions including the restoration of trading in Inland’s shares, which has not been possible.

In January, Inland said it expected losses of around £91m in its next accounts – worse than its previously predicted £37m loss.

FRP declined to comment.

Article by Construction News

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