21 October 2009
Telford Homes Plc (AIM:TEF), the residential property developer in East London noted for regeneration projects within public sector partnerships, is pleased to give the following trading update ahead of its interim results for the six month period ended 30 September 2009 which will be released on 2 December 2009.
- Extended the £57 million grant programme agreed with the Homes and Communities Agency ("HCA") to £73 million
- £14.8 million of HCA grant received by 30 September 2009 with a further £13.4 million received in October as a result of starting the construction of 324 new affordable homes since 1 April 2009
- Net debt reduced in the period by £36 million to £71 million
- Successful H1 securing 224 open market completions (H1 2008: 119)
- Full year figures expected to be in line with market expectations
Current market conditions
The six months to 30 September 2009 has seen Telford Homes achieve 224 open market completions, continuing the Group's programme of handing over developments which were pre-sold primarily during 2006 and 2007. However the availability of mortgage finance and the time taken to process mortgage applications, whether for owner-occupiers or investors, has not improved and continues to delay the completion of the majority of pre-sold properties.
Despite the constraints on mortgages, the housing market in East London has shown positive signs during the period with the ongoing shortage of homes in the area, a strong lettings market and the 2012 Olympics all contributing towards improving sentiment. Telford Homes has continued to market finished homes at Queen Mary's Gate, Woodford, and at Nayland Court, Romford and since 1 April 2009, 19 sales have been completed across the two sites. There are 26 additional sales currently proceeding as a result of increased demand in recent weeks.
The Group has also been able to re-sell 36 properties that have either failed to complete or were significantly delayed, and has retained the original 10 per cent deposit in each case.
Affordable housing and HCA grants
Telford Homes has maintained its strong position with housing associations, which minimise the risk of each development and reduce exposure to the open market. The Group's status as a grant partner of the HCA is a significant strength and the original £57 million grant programme has been extended to £73 million during the period. £14.8 million of this had been received by 30 September 2009 and a further £13.4 million has been received in October as a result of starting the construction of 324 affordable homes across three development sites and two estate regeneration projects. The remaining grant will be received over the next three years as the construction of affordable housing on the Group's developments is undertaken and completed.
The Group has focused on cash generation and reducing net debt by achieving completions, not investing in new land, and controlling expenditure on work in progress. Assisted by the HCA grant receipts this has been very successful and has exceeded management expectations by reducing net debt to £71 million at 30 September 2009 from £107 million at 31 March 2009.
The Group has performed well during the period achieving a number of completions earlier than forecast and with new sales being secured at a steady rate. The Board anticipates that the results for the full year to 31 March 2010 will be in line with market expectations.
Andrew Wiseman, CEO of Telford Homes, commented: “The Board is pleased with the resilience of the housing market in East London, which affirms our confidence in our area of operation. Our prudent approach and strong partnerships with housing associations positioned us well for the downturn, allowing us to adapt successfully to economic conditions and enabling us to continue construction with reduced risk. We are experiencing steady activity in the market but we remain cautious in our approach to new investment."
For further information:
|Telford Homes Plc|
|Andrew Wiseman, Chief Executive||Tel: +44 (0) 1992 809 800|
|Jon Di-Stefano, Financial Director|
|Pascal Keane||Tel: +44 (0) 020 7468 7995|
|Henry Harrison-Topham / Joanne Shears||Tel: +44 (0) 20 7398 7709|
Notes to Editors
Telford Homes is an established residential property developer focusing on the regeneration of brownfield sites in the East and North London area. The Group's strong public sector partnerships afford it a certain level of security of sales before commencing development. Whilst the majority of every scheme is residential, often some commercial units are required as a condition of the planning consent, which may be used for office space, retail units, or community facilities.
The Group's successful record of selling properties at an early stage in the development allows greater visibility. Telford Homes also has an excellent track record of working with housing associations and has forged many strong relationships, and typically part of every development is sold for affordable housing. The Group's affiliations with housing associations in the area have meant that during this downturn in the open housing market the Group is able to deliver some developments as 100% affordable housing schemes.
Telford Homes has secured grant funding of £73 million from the Homes and Communities Agency (“HCA") across five of Telford's own sites and three estate regeneration partnership projects with Eastend Homes. This funding enables the Group to develop affordable housing sites with sales to housing associations already secured.
The Greater London Authority is predicting an increase of 800,000 in London's population over the next ten years, and forecasts that the city will need 30,000 new homes per year throughout this period. This huge pressure on the supply of new homes creates significant demand for Telford Homes' services in this region.
For further information, please see www.telfordhomes.plc.uk