IN HOUSE GROUP PLC
APPLICATION ANNOUNCEMENT
APPLICATION
The Directors of In House Group plc ("IHG" or "the Company") are pleased to
announce that the Company has applied for an introduction to the PLUS market.
The intended start of dealing date is to be announced.
The Company is classified under Section 86 of the FTSE Global Classification
System, Real Estate.
IHG is a United Kingdom-based company. The Company is engaged in acquiring
property portfolios for break up and resale. The Company currently owns a
portfolio of residential properties.
The Company wishes to admit its entire share capital of 7,042,230 Ordinary
shares of 1p each.
The Company has 2,521,852 warrants outstanding with exercise prices ranging
from 7p to GBP 36.25. These can be summarised as follows:
NUMBER EXERCISE EXPIRY
PRICE DATE
2,250 1,000p 04/02/2014
5,517 3,625p 14/10/2015
43,771 600p 31/03/2010
34,000 250p 31/03/2010
115,957 37.6p 01/05/2010
489,048 10.5p 30/06/2012
1,457,143 7p 30/06/2012
374,166 40p 30/06/2014
CURRENT TRADING AND FINANCIAL POSITION
The past year has been a period of consolidation for the Company and its
subsidiaries (the "Group") and whilst the full force of the credit crunch has
seen our main lending bank The Dunfermline Building Society go into
administration, we have assurances from them that our facility is still
available as per the original agreement and we have not been notified of
anything to the contrary. During the financial year to 30 April 2009 the Board
worked on making further acquisitions and raising new finance. In July 2009
private placing arrangements were carried out which are detailed below.
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. 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 was reflected in the results for the
period ended 30 April 2009 which were announced to shareholders in October
2009.
A strategic increase in rents and reduction in related property management
costs during this period was a clear indication of positive current trading
activities.
For the 30 April 2009 the Board undertook a review of the property market to
assess the current value of the Group's stock. The data was obtained by local
visits to the area by some or all of the directors and liaising with local
agents supported by on line research.
It was concluded that a fair valuation based on the review undertaken was GBP
12,789,000.
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 but expects to replace this with new facilities as each tranche of the
facility falls due for repayment (first tranche is in August 2010).
There are currently around 25 properties that require some refurbishment before
they can be re-let. Since its year end in April 2009 the Group reached
agreement with a number of private investors to enable it to facilitate the
consolidation of creditors and allow it to refurbish some of the properties and
increase revenue. The Directors believe that these properties can readily be
rented and will provide a good payback on the investment required. The
refinancing included arrangements with its longstanding creditors for
settlement of the debts through the issue of the Company's Ordinary Shares and
cash settlement over time. The Company announced in July 2009 it had agreed
private placements of new Ordinary Shares of 0.001p totalling GBP443,000 that
were to be settled over the next 5 Months. Since then, the Company has received
some GBP153,350 and issued and allotted the shares accordingly in respect of
the amounts actually paid but not in respect of the unpaid amounts. This has
enabled certain liabilities to be met as well as a small proportion of the
planned refurbishment work to be undertaken but has not provided all the funds
which were required for the full refurbishment of the Group's properties and
accordingly, the expected significant benefit in the rental income from
lettings has yet to arise.
The Company is discussing the position with the parties concerned with a view
to receiving the majority of the remaining monies although various parties have
requested a revision to the terms and/or the length of time in which to pay up.
However, there is an amount of some GBP85,000 which the Directors are not
confident will be received and, although the directors are in talks with
potential alternative investors, the budget may need to be adjusted
accordingly. The Company may also review other options to raise this money. A
further announcement will be made to shareholders as and when the matter has
been determined.
Clearly the current economic climate is bringing uncertainty to the property
sector. Two particular implications would appear to result from the current
conditions. First, it is a very difficult market in which to sell properties;
this means the Group will be less likely to be able to sell its existing stock
but conversely will be able to acquire new stock at particularly keen prices.
Second, it is expected that the rental market will strengthen as a result and
thus the income the Group obtains from the housing stock that is held should
increase. Due to this the Group is still looking at acquiring further property
portfolios.
Since the year end the going concern position has been further improved in
comparison to the previous year. A large number of creditors are now being
dealt with and after cutting overheads and introducing new investment funds
into the group to increase revenue we feel that we are now able to move forward
in a more successful and productive way.
That said it should be pointed out that in the 30 April 2009 financial
statements the auditor's report, which was not qualified and was dated 30
October 2009, included an emphasis of matter paragraph as follows:-
"In forming our opinion on the financial statements, which is not qualified, we
have considered the adequacy of the disclosures made in note 1 to the financial
statements concerning the group's ability to continue as a going concern.
The group incurred a net loss of GBP1,995,000 during the year ended 30 April
2009 and, at that date, had net liabilities of GBP2,063,000. These conditions,
along with the other matters explained in note 1 to the financial statements,
indicate the existence of a material uncertainty which may cast significant
doubt about the group's ability to continue as a going concern. The financial
statements do not include the adjustments that would result if the group was
unable to continue as a going concern."
The matters referred to in note 1 of the financial statements were that the
board had prepared a projected cash flow for a 12 month period from the date of
approval of the financial statements. The cash flow included a number of key
assumptions which would have an impact on working capital. These assumptions
included, the level of funding facilities from the group's lenders, continuing
support from creditors, funds committed under the private placing referred to
above, bank base rates and income from refurbished properties.
We as a board continue to prepare cash flow forecasts to assess the group's
financial position and the directors recognise that there are still material
uncertainties that may cast a doubt on the group's ability to continue as a
going concern.
Management will continue to concentrate on investment, continued robust
financial control and the continued drive in streamlining of operations and
costs.
REASONS FOR THE INTRODUCTION TO PLUS
The company has chosen to move from AIM to PLUS as the Board believes that PLUS
Markets offers an appropriate capital market for companies of IHG's size and
will also offer a suitable trading platform for shareholders.
Furthermore the Directors believe that a move to PLUS Markets will result in
significant annual cost savings.
MANAGEMENT TEAM AND THE BOARD
ALAN BURDON-COOPER - NON-EXECUTIVE CHAIRMAN (65)
Alan is an experienced commercial lawyer who has retired from practicing as a
solicitor after 42 years in the law as a member and partner of Collyer Bristow
LLP. He has a wide knowledge of commercial issues affecting companies and
businesses and has substantial expertise in commercial property and in drafting
and negotiating commercial contracts.
Alan has been a director for a number of years and is currently Deputy Chairman
of GMS Estates Ltd; a property investment company. He is currently non
executive director of Atelis plc, an AIM listed company.
He has also been a former joint Chairman and director of The European
Sponsorship Association as well as former Chairman of Flarepilot plc, an AIM
listed company until its acquisition by another AIM listed company, and a
former Deputy Chairman of Rose Bruford College, a higher education
institution.
MARCUS CASSIDY - CEO (42)
Experienced property entrepreneur for over 17 years in property
management/development both here in UK and in Eastern Europe. Founder of In
House Group Ltd over 10 years ago. Marcus career spans an indepth knowledge of
sales, marketing, corporate finance, retail, and the leisure industry.
Presently director on a number of public listed companies and Chairman of 2
PLCs one listed on the Plus Market. Marcus is a keen musician, writer and
budding author as well as enjoying hobbies of motorbike scrambling and tennis.
JOANNE SARAH GORDON - FINANCE DIRECTOR (36)
ACMA qualified accountant, with 12 years or Financial Control and Finance
Director experience.. Joanne has worked in a number of business sectors
including hospitality, retail, manufacturing, business process outsourcing and
currently also holds the position of Financial Controller at Xchanging plc a
FTSE 250 listed company where she played a pivotal role in overall cost base
reduction with an ongoing project to offshore non key processes to the offshore
facility in Gurgeon, Delhi, India.
The Company recently agreed the resignation of Mr David Meddings for personal
reasons and of Mr John Ferree as Non executive directors to make way for Mr
Alan Burdon-Cooper, The Company would like to thank Mr Meddings and Mr Ferree
for their valued contribution during their time with In House Group PLC.
DIRECTOR INTERESTS
Director Number of Ordinary Shares Percentage holding
David Meddings 42,710 0.61%
Marcus Cassidy 140,897 2.00%
Joanne Gordon - 0.00%
83,897 of Marcus Cassidy's above shareholding is held by a company called
Quantum Property Services Limited, a company of which he is the beneficial
owner.
Marcus Cassidy hold warrants over 238,665 Ordinary shares. The exercise price
is 40p and the expiry date for the warrants is 30 June 2014.
SHAREHOLDERS WITH OVER 3% OF THE ISSUED SHARE CAPITAL
Shareholder Number of Ordinary Shares Percentage holding
JIM Nominees Limited 2,574,749 36.56%
Graf Commercial Services Limited 1,250,000 17.75%
Shekel Limited 626,957 8.90%
Barclayshare Nominees Limited 266,075 3.78%
Graf Commercial Services Limited is beneficially owned by Aryeh Ehrentreu.
Including the aforementioned shares and shares held personally, Mr Ehrentreu
beneficially owns 1,311,710 Ordinary shares representing 18.63% of the issued
share capital.
Shekel Limited is a company limited by guarantee and therefore has no
beneficial owner. The shareholding above includes 626,957 Ordinary shares held
by JIM Nominees Limited.
DIRECTORS' CURRENT AND PAST DIRECTORSHIPS
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|DIRECTOR |CURRENT |PAST DIRECTORSHIPS/PARTNERSHIPS |
| |DIRECTORSHIPS/PARTNERSHIPS | |
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|Alan | | |
|Burdon- |Atelis plc |The European Sponsorship |
|Cooper |Acer Ventures plc |Association |
| |Old Bond 43 (Holdings) Limited |The Institute of Sports |
| | |Sponsorship |
| | |GMS Hotels Limited |
| | |SMG Real Estates Limited |
| | |GMS Nominees Limited |
| | |Estaman Properties Limited |
| | |Flarepilot plc |
| | |Collyer Bristow Nominees Limited|
| | |Collyer Bristow Secretaries |
| | |Limited |
| | |Collyer Bristow LLP |
| | | |
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|Marcus |Avanti Properties Limited |Balti Palace UK Ltd |
|Cassidy |Alvaston Media plc |Cassidyconsult Ltd |
| |B & C Property Development Ltd |Health FX Ltd |
| |Berrymount Developments Limited|Homes FX Ltd. |
| |Compustar Limited |In-House Developments Limited |
| |Decaton Limited |Lancaster Farnworth Limited |
| |Identity for Business Limited |Palace Court (Stoke) Management |
| |In House Consulting Limited |Limited |
| |In House Estates Limited |Perception Developments Ltd |
| |In House Property Projects |Sareen Investments Ltd |
| |Limited |Vivid Realties Ltd |
| |In House Property Developments |Flarepilot PLC |
| |Limited |La Vita Bella Restaurants |
| |Keywave Limited |Limited |
| |Marvel Corporate Limited | |
| |Merseybank Ltd | |
| |Merseybank (SLP) Limited | |
| |Metroview Limited | |
| |Morgan Menzies Capital Limited | |
| |Prequs Investments Limited | |
| |Quantum Property Services Ltd | |
| |Quantum Property Too Ltd | |
| |The Brandsco plc | |
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|Joanne |Charwind Limited |None |
|Gordon |Seymour Capital Investments | |
| |Limited | |
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CORPORATE ADVISER & CONTACT DETAILS
Alfred Henry Corporate Finance Limited is acting as the Corporate Advisor for
the Company, and can be contacted at:
Finsgate
5-7 Cranwood Street
London
EC1V 9EE
Email: sjs@alfredhenry.com
Telephone: +44 (0)20 7251 3762
The Directors of In House Group plc accept responsibility for this
announcement.
21 January 2010
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