22nd Nov 2005 07:01
Telford Homes PLC22 November 2005 EMBARGOED FOR RELEASE AT 7.00AM ON 22 NOVEMBER 2005 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 Telford Homes, the London-based house builder specialising in the redevelopmentof sites within residential areas principally in North and East London, todayannounces its interim results for the six months ended 30th September 2005. Highlights • Turnover increased by 26% to £27.8 million (2004 - £22.0 million) • Contracts exchanged on 161 private homes at an average price of £236,000 and 246 affordable homes making a total of 407 in the period • Profit before tax increased by 35% to £3.3 million (2004 - £2.5 million) • Basic earnings per share 7.93 pence (2004 - 5.92 pence) • Interim dividend declared of 2.4 pence per share an increase of 33% (2004 - 1.8 pence per share) • 117 of the 162 private homes at Icona, Stratford sold by 30th September 2005, the remaining 45 sold since • Success of Olympic bid having significant effect on regeneration of East London • 1,031 properties in development pipeline with agreements reached to purchase a further 350 • Tough market conditions affected sales of higher priced properties in summer and early autumn but signs of improvement since September • Anticipate reporting record results for the year to 31st March 2006 Commenting on the results, Andrew Wiseman, Chief Executive of Telford Homes,said: "The six months ended 30th September 2005 has been another successful period inthe growth of the Company with results in line with our expectations. Marketconditions remained tough over the summer and into early autumn and thisaffected sales at some of our higher priced developments. Since September therehave been signs of improvement and although we have a number of sales to secureI remain confident that 2005/6 will be another record year for Telford Homes." For further information, please contact: Telford Homes Andrew Wiseman, Chief Executive 020 8498 6789 Jon Di-Stefano, Financial Director Shore Capital Graham Shore, Alex Borrelli 020 7408 4090 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 CHIEF EXECUTIVE'S STATEMENT Financial results In the six months ended 30th September 2005 turnover increased by 26% to £27.8million and profit before tax increased by 35% to £3.3 million. This representsanother successful period in the growth of the Company in East London, despitetougher market conditions during the summer and early autumn. Contracts were exchanged on 161 private homes and 246 affordable homes making atotal of 407 in the period. Included in this figure are 220 homes beingconstructed under joint ventures where we recognise half of the turnover andprofit from the development. The gross margin in the six months was 22.9%, against 22.8% for the full year toMarch 2005 and there has not been an increase in incentives required to sellprivate homes. Operating margin was 16.0%, up from 14.4% for the same periodlast year. Overall the results for the first six months of the year are in line with ourexpectations and the Board has declared an interim dividend of 2.4p, an increaseof 33%. Property sales and affordable housing The 161 private homes exchanged in the period achieved an average selling priceof £236,000, compared to an average of £245,000 in the year to March 2005. Thischange is due to a different mix of properties sold in the period and we havenot seen significant underlying price changes over the last six months, exceptin the immediate locality of the Olympic Park. There is no doubt that thesuccess of London's bid for the 2012 Olympic Games will have a significanteffect on the regeneration of East London and therefore on the local housingmarket. Included within these sales are 117 of the 162 private homes at Icona, our jointventure development with the Royal Bank of Scotland, in Warton Road, Stratford.The remaining 45 homes have been sold since the 30th September. While our siteis not part of the Olympic development, it is adjacent to the Olympic Park andWarton Road is expected to be a major access route. Infrastructure planning forthe Olympics is due to be completed over the next few weeks and as a temporarymeasure the site has been included within a Compulsory Purchase Order (CPO)issued by the London Development Agency (LDA) on 17th November 2005. We havebeen in regular contact with the LDA before and since the CPO was issued and wehave received assurances that they are keen for development at Icona to proceedand that they expect to withdraw the notice once infrastructure planning iscomplete. The assurances we have received mean that we are continuing withconstruction and have recognised profit in respect of the development workundertaken to 30th September 2005 in the interim results. The sale of 246 affordable homes represents 60% of the number of homes sold inthe period. This underlines the importance of maintaining strong relationshipswith affordable housing providers and we continue to appraise major regenerationopportunities in East London with our partners. Provision of affordable housingon individual sites can vary from none to 50% of the properties depending onsize and location of the development. Sales in the period include 118 homes atour major development in South Woodford where the private homes are expected tobe sold from April 2006. These properties have been sold to Circle Anglia, a newaffordable housing partner for Telford Homes. TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 CHIEF EXECUTIVE'S STATEMENT (continued) Planning and development pipeline Knowledge of the planning environment has helped us to secure a number ofplanning consents during the last six months. In addition I announced in Julythat we had acquired the site of the former halls of residence of Queen Mary andWestfield College in South Woodford, which has planning permission for thedevelopment of 323 private homes and 118 affordable homes. Our development pipeline, defined as properties that will produce profit infuture periods not including those built for joint venture partners, consists of981 properties with planning consent and just 50 properties subject to theplanning process. This is a total of 1,031 properties in the pipeline, comparedto 913 at 31st March 2005. In addition we have recently agreed to purchase anumber of sites subject to achieving detailed planning consent and, once theseare under contract, they should add approximately 350 properties to ourdevelopment pipeline. Development sites We are now designing or constructing 18 separate developments and during the sixmonths to September 2005 we completed and handed over a total of 110 properties.This number is expected to be approximately 300 for the year to March 2006 andwill represent a significant increase on previous years. The quality of ourproduct sets high standards, commended by customer inspections, and this hasbeen recognised by the NHBC with our development at Abbotts Wharf winning a 'Top100 Seal of Excellence award'. The creation of two operating divisions, Telford Homes Alto and Telford HomesMetro, is working extremely well and has enabled the Company to manage theincreased volume of work undertaken by the technical, commercial andconstruction teams. Organisation and people Telford Homes would not be the successful Company that it is today without theskills, experience and dedication of our employees and once more I extend mythanks to all of them for their contribution over the last six months. Following the restructuring of the Company earlier in the year and due to thecontinuing growth of the business we have recruited a number of new people. As aresult of this expansion we will be moving to a new head office in WalthamCross, Hertfordshire over the Christmas period. Health and Safety Health and Safety remains at the forefront of any activity undertaken by TelfordHomes and we are constantly updating our procedures and our staff training.Weekly reporting on Health and Safety remains a core part of our managementinformation systems and we employ external consultants to monitor and advise onour policies and procedures. Finance A number of new financing arrangements have been secured during the last sixmonths including the funding, by the Royal Bank of Scotland, of the £10 millionacquisition cost of South Woodford and the first £21 million of constructioncosts. Allied Irish Bank continue to provide significant support to the businessand their funding was renewed in September 2005. TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 CHIEF EXECUTIVE'S STATEMENT (continued) Gearing at 30th September 2005 was 150% compared to 132% at 31st March 2005 andwe have facilities in place that would increase the level of gearing in thefuture. We are entirely comfortable with gearing at this level and we constantlymonitor the certainty of future cash inflows against exposure to debt. Ourbusiness model of selling properties at an early stage of construction reducesthe risk of carrying debt as the sales revenue, secured by exchanging contracts,will be used to repay the loan. Internally we calculate 'uncovered gearing'which excludes debt matched by the value of contracts exchanged on a givendevelopment. This was 59% at 30th September 2005. Current trading and outlook Market conditions remained tough over the summer and into early autumn and thisaffected sales of higher priced properties typically sold to the end usermarket. However the opening of a sales office and show home at Estilo on WenlockRoad, N1, has resulted in sales since September, perhaps a sign of improvingconditions in line with market forecasts. Following the subsequent show homeopening at Equinox, Island Gardens, E14, we expect sales activity at both thesedevelopments to pick up in the second half of the year. Construction on eachsite continues beyond the summer of 2006. To date, due to contracts exchanged since 30th September 2005 and propertiessold, subject to contract, we have a total of 65 private homes and 19 affordablehomes to contribute to second half results. While we still have a number ofsales to secure I remain confident that 2005/6 will be another record year forTelford Homes. Andrew Wiseman22nd November 2005 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 PROFIT AND LOSS ACCOUNT Note 6 months ended 6 months ended 12 months ended 30th September 2005 30th September 2004 31st March restated (note 1) 2005 restated (note 1) £000 £000 £000 Turnover 27,815 22,025 58,245 Cost of sales (21,436) (17,366) (44,947) Gross profit 6,379 4,659 13,298 Administrative expenses (1,919) (1,494) (3,827) Operating profit 4,460 3,165 9,471 Interest receivable 94 46 79Interest payable and similar (1,251) (756) (1,780)charges Profit on ordinary activities 3,303 2,455 7,770before taxation Taxation on profit on ordinary 2 (991) (737) (2,303)activities Profit on ordinary activities 2,312 1,718 5,467after taxation Dividends paid and proposed 3 (1,077) (873) (1,394) Retained profit for the period 5 1,235 845 4,073 Earnings per share: Basic 4 7.93p 5.92p 18.96p Diluted 4 7.76p 5.76p 18.45p The Company has no other recognised gains and losses other than those includedin the profit and loss account. All activities are in respect of continuing operations. TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 BALANCE SHEET Note As at As at As at 30th September 2005 30th September 31st March 2004 2005 restated (note 1) restated (note 1) £000 £000 £000 Fixed assetsTangible assets 900 678 775 Current assets Stocks and work in progress 41,760 29,245 28,576Debtors 37,827 26,415 40,052Cash at bank and in hand 2,348 1,272 4,067 81,935 56,932 72,695 Creditors - amounts falling due (54,827) (34,290) (47,120)within one year Net current assets 27,108 22,642 25,575 Total assets less current 28,008 23,320 26,350liabilities Creditors - amounts falling due (82) (91) (58)after more than one year Provision for liabilities and (24) - (24)charges Net assets 27,902 23,229 26,268 Financed by: Capital and reserves Called up share capital 5 2,957 2,912 2,912Share premium 5 12,501 12,300 12,300Profit and loss account 5 12,444 8,017 11,056 Equity shareholders' funds 6 27,902 23,229 26,268 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 CASH FLOW STATEMENT Note 6 months ended 6 months ended 12 months ended 30th September 2005 30th September 2004 31st March 2005 £000 £000 £000 Cash flow from operating 7 (9,596) (2,994) (4,334)activities Returns on investments andservicing of financeInterest received 94 46 79Interest paid (1,246) (750) (1,768)Hire purchase interest (5) (6) (12) (1,157) (710) (1,701) Taxation (913) (982) (2,226) Capital expenditurePurchase of tangible fixed assets (191) (99) (367)Sale of tangible fixed assets 41 40 51Purchase of own shares - - (216)Sale of own shares 119 92 95 Equity dividends paid (1,077) (873) (1,394)Cash flow before financing (12,774) (5,526) (10,092) FinancingIssue of ordinary share capital 246 - -Expenses of share issue - (10) (10)Increase in bank loans 10,867 6,066 13,454Capital element of hire purchase (58) (106) (133)payments 11,055 5,950 13,311 (Decrease) increase in cash (1,719) 424 3,219 Reconciliation of net cash flow tomovement in net debt(Decrease) increase in cash (1,719) 424 3,219Increase in bank loans (10,867) (6,066) (13,454)Capital element of hire purchase 58 106 133paymentsIncrease in debt arising from cash (12,528) (5,536) (10,102)flowInception of hire purchase (89) (133) (109)agreementsMovement in net debt in the period (12,617) (5,669) (10,211) Net debt brought forward (29,199) (18,988) (18,988)Net debt carried forward 8 (41,816) (24,657) (29,199) TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 NOTES 1 Basis of preparation The figures for the six months ended 30th September 2005 and the six monthsended 30th September 2004 are unaudited and do not constitute statutory accountswithin the meaning of section 240 of the Companies Act 1985. The interim reporthas been prepared under the historical cost convention and on a basis consistentwith the accounting policies in the financial statements for the year ended 31stMarch 2005 except as noted below. The results for the year ended 31st March 2005and the balance sheet of that date are an extract from the statutory financialstatements for that period, which have been filed with the Registrar ofCompanies and on which the Company's auditors gave an unqualified report. The Company has adopted Financial Reporting Standard 21 'Events after thebalance sheet date' for the results to 30th September 2005. As a result of thisdividends declared for an accounting period, after the balance sheet date, areno longer recognised as a liability at the balance sheet date. Profit and loss reserves as at 31st March 2004 have been restated from£6,190,000 by the value of the final dividend proposed for the year of £869,000resulting in restated reserves of £7,059,000 (note 5). The dividend recognised in the results for the six months ended 30th September2004 is restated to be the final dividend declared and paid for the year ended31st March 2004 of £873,000 and profit and loss reserves are restatedaccordingly (note 5). The dividend recognised in the results for the year ended 31st March 2005 isrestated to be the final dividend declared and paid for the year ended 31stMarch 2004 of £873,000 together with the interim dividend declared and paid forthe six months ended 30th September 2004 of £521,000 and profit and lossreserves have been restated accordingly (note 5). The dividend recognised in the results for the six months ended 30th September2005 is the final dividend declared and paid for the year ended 31st March 2005of £1,077,000. The dividend for the six months ended 30th September 2005 hasbeen declared after the balance sheet date and this is disclosed in note 3. 2 Taxation Taxation has been calculated on profit for the six months ended 30th September2005 at the estimated effective rate of tax of 30%. 3 Dividends The interim dividend declared for the six months ended 30th September 2005 is2.4p per ordinary share and is expected to be paid on 16th January 2006 to thoseshareholders on the register at the close of business on 23rd December 2005.This dividend was declared after 30th September 2005 and the liability of£709,000 has not been recognised in the interim results in accordance with FRS21 (note 1). The interim dividend paid for the six months ended 30th September 2004 was 1.8pper ordinary share and the final dividend paid for the year ended 31st March2005 was 3.7p per ordinary share making a total of 5.5p per ordinary share. TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 NOTES (continued) 4 Earnings per share 6 months ended 6 months ended 12 months ended 30th September 30th September 2004 31st March 2005 2005 Weighted average number of shares 29,163,223 29,002,791 28,834,816in issueDilution - effect of share 619,431 798,289 795,720optionsDiluted weighted average number 29,782,654 29,801,080 29,630,536of shares in issueProfit on ordinary activities £2,312,000 £1,718,000 £5,467,000after taxation Earnings per share:Basic 7.93p 5.92p 18.96pDiluted 7.76p 5.76p 18.45p 5 Reserves Share capital Share premium Profit and loss Total account £000 £000 £000 £000 At 1st April 2005 as 2,912 12,300 9,985 25,197previously reportedFinal dividend proposed for - - 1,071 1,071year ended 31st March 2005At 1st April 2005 restated 2,912 12,300 11,056 26,268 Arising on issue of shares 45 201 - 246during the periodSale of own shares - - 119 119Write down in value of own - - 34 34sharesRetained profit for the period - - 1,235 1,235At 30th September 2005 2,957 12,501 12,444 27,902 The change in accounting policy as a result of the adoption of FRS 21 (note 1)is reflected in the restated figures as at 1st April 2005. The profit and loss account for prior periods is restated in accordance with FRS21 as follows: 6 months ended 12 months ended 30th September 31st March 2004 2005 £000 £000 At 1st April 2004 as previously reported 6,190 6,190Final dividend proposed for year ended 31st March 2004 869 869At 1st April 2004 restated 7,059 7,059 Purchase of own shares - (216)Sale of own shares 92 95Write down in value of own shares 21 45Retained profit for the period 845 4,073Profit and loss account restated 8,017 11,056 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2005 NOTES (continued) 6 Equity shareholders' funds £000 Profit for the period 2,312Dividends paid (1,077) 1,235 Arising on issue of shares during the period 246Sale of own shares 119Write down in value of own shares 34At 1st April 2005 restated (note 5) 26,268At 30th September 2005 27,902 7 Reconciliation of operating profit to cash flow from operating activities 6 months ended 6 months ended 12 months ended 30th September 30th September 31st March 2005 2004 2005 £000 £000 £000 Operating profit 4,460 3,165 9,471Depreciation 146 124 271Write down in value of own shares 34 21 45Profit on sale of tangible fixed (32) (27) (38)assetsIncrease in stocks and work in (13,184) (4,801) (4,132)progressDecrease (increase) in debtors 2,225 (882) (14,569)(Decrease) increase in creditors (3,245) (594) 4,544Movement in provisions - - 74Cash flow from operating activities (9,596) (2,994) (4,334) 8 Analysis of change in net debt At 1st April Cash flows Inception of At 30th September 2005 finance leases 2005 £000 £000 £000 £000 Cash at bank and in hand 4,067 (1,719) - 2,348Bank loans (33,116) (10,867) - (43,983)Hire purchase (150) 58 (89) (181)liabilities (29,199) (12,528) (89) (41,816) 9 Interim report Copies of this announcement are available from the Company at 3 BuckinghamCourt, Rectory Lane, Loughton, Essex IG10 2QZ. The Company's interim report forthe six months ended 30th September 2005 will be posted to shareholders shortly. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Telford Homes