TIDMTEF
RNS Number : 2721M
Telford Homes PLC
12 October 2016
For Immediate Release 12 October 2016
Telford Homes Plc
('Telford Homes' or the 'Group')
Trading Update
Telford Homes Plc (AIM:TEF), the residential property developer
focused on non-prime London, is pleased to provide the following
update on trading ahead of its interim results for the six months
ended 30 September 2016 ('H1 2017' or the 'period'), which will be
released on Wednesday, 30 November 2016.
Highlights
-- Long term imbalance between the supply of homes and the
demand for somewhere to live in non-prime areas of London underpins
future prospects for Telford Homes
-- Strong forward sold position now exceeding GBP650 million of
revenue to be recognised from the year to 31 March 2017 onwards
-- Increasing sales activity in respect of residual availability over the last six weeks
-- Next significant sales launch will be City North, N4 in
November 2016 where a GBP110 million loan facility was recently
signed with LaSalle Residential Finance Fund
-- Second PRS sale to M&G Real Estate announced in May 2016
and a third transaction has also recently progressed to detailed
discussions with a prospective purchaser
-- Increasing number of land opportunities being appraised with
some sites now the subject of more detailed negotiations
-- The Board remains confident in the longer term housing market
in non-prime London and has not adjusted the Group's growth targets
since the outcome of the EU vote
-- H1 2017 profits in line with expectations and lower than last
year due only to the timing of development completions with a
substantially higher proportion of profits expected in H2 2017
-- Interim dividend to increase in accordance with anticipated full year profit growth
-- Secured 95 per cent of the open market homes anticipated to
complete in the year to 31 March 2017 and 87 per cent of the gross
profit expected in the year
-- Expectations for the full year to 31 March 2017 and further
into the future remain unchanged and on track to deliver
significant growth over the next three years
Current trading
Telford Homes continues to hold a positive view of both the
current and future housing market in non-prime areas of London due
to the significant imbalance between the supply of homes and demand
for somewhere to live. This imbalance underpins the future
prospects for the business and as a result the Board has not
revised the Group's growth targets following the outcome of the EU
vote. There is a housing crisis in London with many more homes
needed and the Group expects to play an increasing role in
delivering those homes.
The Group started the current financial year with a substantial
forward sold position that has subsequently been enhanced to exceed
GBP650 million of revenue to be recognised from the year to 31
March 2017 onwards. As a result the existing development pipeline
has been significantly de-risked putting the Group in a strong
position.
In terms of the current market environment the Group is pleased
to report that it has experienced increased sales activity in
respect of residual availability across a number of developments.
Since the start of September greater interest levels and more
visitors to the central sales centre have resulted in an increased
number of reservations. Particularly pleasing is that this has
included the sale of three of the remaining penthouses at Horizons,
E14 where the average price is over GBP1 million and is therefore
well in excess of our usual price point. The average anticipated
price of open market homes in the Group's future pipeline is
GBP517,000.
The Group's next significant launch will be City North in
Finsbury Park, a joint development with The Business Design Centre
in Islington, which is planned for November 2016. This development
is now underway and the Group recently announced the successful
signing of a GBP110 million loan facility with LaSalle Residential
Investment Fund, which will fund this exciting scheme of 355 homes,
140,000 square feet of commercial and leisure space and a new
entrance to the underground station. As with previous developments,
the Group expects that the product and location will be attractive
to a range of buyers both at the launch and thereafter.
PRS (Private Rented Sector) or 'build to rent' remains a
significant focus for the Group following the sale of The
Pavilions, N1 to a subsidiary of L&Q and Carmen Street, E14 to
M&G Real Estate. Following these two development sales Telford
Homes has recently progressed to detailed discussions on a third
transaction with a prospective purchaser. There has been a
noticeable increase in institutional interest in PRS investments
which complements the Group's desire to extend its involvement in
the sector and to benefit from stronger returns on equity and lower
gearing as a result.
Telford Homes has a strong and accelerated development pipeline
as a result of the purchase of the regeneration business of United
House in September 2015. The Group has resources to add to that
pipeline due to the GBP50 million equity placing in 2015 and has
been able to take a selective approach to prospective acquisitions.
An increasing number of opportunities are being appraised with some
sites now the subject of more detailed negotiations.
Interim results and outlook
The Group's reported profits in any given period are driven by
the number of open market completions achieved and there were far
fewer of these in H1 2017 than H1 2016. This is purely down to
development timings which are all on track and in accordance with
the original programmes but do not always fall equally across the
year. Completions of individual properties are proceeding exactly
as planned with no unexpected delays.
As a result of the weighting of completions across the year
pre-tax profit for H1 2017 will be lower than last year but
entirely in line with expectations. The interim dividend is
proposed to increase in line with the anticipated full year profit
growth and will not be affected by weighting between the two half
year periods. To date Telford Homes has secured 95 per cent of the
open market homes anticipated to complete in the year to 31 March
2017 and 87 per cent of the gross profit expected in the year. The
Board's expectations for the full year to 31 March 2017 and further
into the future remain unchanged and the Group is on track to
deliver significant growth in both output and profits over the next
three years.
Jon Di-Stefano, Chief Executive of Telford Homes, commented:
"We have seen a robust market place in recent weeks, with
encouraging sales activity and increasing interest from
institutional investors. We are very pleased with the progress of
our move into delivering schemes for the 'build to rent' sector and
I am delighted that we are progressing discussions on a third
transaction to add to the sales already achieved to L&Q and
M&G Real Estate."
"The Group has made strong progress in the last six months and
remains positive about the long term prospects for the housing
market in non-prime areas of London. The imbalance between the
supply of homes and the need for somewhere to live is not
diminishing and this underpins our plans to continue to grow
Telford Homes over the next few years."
- Ends -
For further information:
Please visit our new and improved corporate website via
www.telfordhomes.london and you can also follow us on twitter
@telfordhomes.
Telford Homes Plc
Jon Di-Stefano, Chief Executive Tel: +44 (0) 1992
Katie Rogers, Finance Director 809 800
www.telfordhomes.london
Shore Capital - Nomad and Joint
Broker
Dru Danford / Patrick Castle Tel: +44 (0) 20
7408 4090
Peel Hunt LLP - Joint Broker
Charles Batten / Capel Irwin Tel: +44 (0) 20
7418 8900
Media enquiries:
Buchanan
Henry Harrison-Topham / Victoria Tel: +44 (0) 20
Hayns / Stephanie Watson 7466 5000
telfordhomes@buchanan.uk.com www.buchanan.uk.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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