27th Oct 2015 16:15
LONDON (Alliance News) - Telford Homes PLC said Tuesday that it has conditionally raised GBP50 million through a discounted share placing intended for investments to help the housebuilder reach a targeted pretax profit of GBP45 million from 2019 onwards, increasing to GBP60 million thereafter.
Telford posted pretax profit of GBP25.1 million in its financial year ended March 2015, up from GBP19.2 million the year before.
The company placed of 13.9 million shares at 360 pence each. Shares in the property development company were down 8.4% at 375.67 pence late Tuesday afternoon.
The placing was conducted by Shore Capital and Peel Hunt.
Telford Homes cited its acquisition of the regeneration business of United House Developments last month, which brought with it developments it believes have the potential to add around GBP500 million in revenue to its existing pipeline.
It funded this acquisition through its existing cash resources, and said the deal has left it with a development pipeline that "in total represents more than eight times" revenue it reported for the year to end-March 2015.
Telford said it now believes it has a "substantial platform" from which to undertake further investment, and said it has a number of opportunities to acquire new developments that will required additional funds beyond those it used for the United House Developments acquisition.
Telford cited the booming London housing market, saying that demand remains high, and it continues to be "very confident in investing further in the development pipeline."
It expects the placing to cause an initial dilution to earnings per share, but said it will enhance net asset value per share, and as a result, it plans to increase its dividend payments above one third of earnings in the short term to offset this initial dilution.
Telford said that it expects its pretax profit for the half year to end-September to be more than double the GBP9.4 million it posted in the previous year, and said that it remains well on track to meet its profit expectations for the year to end-March 2016.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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