15 October 2013
Telford Homes Plc (AIM:TEF), the London focused residential property developer, is pleased to give the following trading update ahead of its interim results for the six months ended 30 September 2013 which will be released on 27 November 2013.
- Continued strength of London market with over 430 sales since 1 April 2013
- Several successful development launches with demand from UK investors, overseas investors and owner-occupiers
- Enhanced development pipeline utilising the placing funds raised in June 2013 to purchase a number of new sites
- Profits for the year to 31 March 2014 anticipated to be significantly ahead of market expectations due to substantially improved margins
- 100% sold for the year to 31 March 2014, over 70% pre-sold for FY 2015 and over 55% for FY 2016
- Telford Homes well positioned to considerably increase output over the next few years
Telford Homes has continued to achieve impressive and consistent sales with contracts exchanged on 341 open market properties in the six months to 30 September 2013. Including properties sold, subject to contract, the number of sales in the year to date is in excess of 430 with the customers remaining a balanced mix of owner-occupiers, UK based investors and overseas investors.
London has a robust micro-economy, international reputation, fantastic transport network and a significant shortage of homes when compared to current demand let alone future population growth. All of these are fundamental long-term factors that support the Group's business model of developing in London. In addition a wider improvement in economic confidence, some clarity over future interest rate movements and improved availability of mortgage finance have all been important in the recent strength of the London property market. Although Telford Homes has joined the initial ‘Help to Buy' scheme it is still the case that all of the Group's sales have been achieved without the need for any assistance from government supported mortgage schemes.
In August 2013 the Group launched Horizons near Canary Wharf resulting in the sale of 109 of the 131 open market homes with completions expected between Winter 2016 and Spring 2017. A third of these sales were secured in the UK and the appetite for London property from UK based investors has increased in recent months with rental demand and yields remaining high. For the first time the overseas sales include a significant number of Chinese investors and China could become a substantial market for the Group's developments in the future. The success of Horizons followed a similar result from the launch of Lime Quay, E14 earlier in the year where 43 of the 60 open market homes were also sold to a mix of UK and overseas investors.
In addition, over the last few months the Group's local sales outlets have continued to see exceptional demand from both owner-occupiers and UK investors even though the developments are being marketed a year or more ahead of completion. The Group's on-site sales centres at Bow Trinity, E3 and The Boatyard, E14 have regularly sold out of new releases within days and sometimes hours.
In June 2013, the Group successfully raised £20 million of equity through a share placing. These funds, alongside debt finance, provided the Group with an additional £50 million to invest in new development opportunities. Following the placing, Telford Homes has continued to be active in the London land market and in the period has strengthened its pipeline by securing a number of significant sites. As a result a large proportion of the placing funds have already been committed although most of the sites have been purchased subject to achieving a satisfactory planning consent and the cash remains on the balance sheet. The Group's net debt position at 31 March 2013 has been reversed to a net cash position at 30 September 2013 but this will revert back as planning consents are achieved and further site purchases occur.
The Group has invested in a number of new sites over the last few months with the most significant of these being two new developments in Stratford, building on the successful marketing of its existing Stratford Plaza development. In particular a prominent town centre site known as Broadway Chambers has been acquired with planning consent for 342 homes of which 308 are open market. Development of this site will commence in 2014 with completions in the financial year ending 31 March 2018. The second site in Stratford is part of Westfield's redevelopment of Angel Lane adjacent to their shopping centre. This site has been acquired subject to planning and is expected to provide 181 homes.
In addition the Group has acquired sites subject to planning on Limeharbour, Isle of Dogs for circa 180 homes and on Caledonian Road near King's Cross for 158 homes. Telford Homes is also acquiring smaller sites including further developments with Eastend Homes, one of the Group's long-term housing association partners.
The Board is pleased to report that it anticipates that profits for the year to 31 March 2014 will be significantly ahead of market expectations due to substantially improved margins and profit from affordable housing contracts on sites acquired ahead of schedule.
The Group is now 100 per cent sold in terms of the open market homes expected to legally complete in the year to 31 March 2014, over 70 per cent sold for 2015 and over 55 per cent for 2016. This forward sales position, an enhanced development pipeline and the strong fundamentals of the London property market are all reasons to look forward to the next few years.
Jon Di-Stefano, Chief Executive of Telford Homes, commented: "Telford Homes remains in an excellent position with profits in the year to 31 March 2014 anticipated to be significantly ahead of market expectations. In the period, the Group has been active in acquiring new sites which has enhanced our development pipeline and this, coupled with increasing margins and our forward sales position, will allow the Board to continue to grow the business over the next few years."
For Further information:
|Telford Homes Plc|
|Jon Di-Stefano||Tel: +44 (0) 1992 809 800|
|Katie Rogers, Financial Director||www.telfordhomes.plc.uk|
|Pascal Keane||Tel: +44 (0) 020 7408 4090|
|Henry Harrison-Topham / Joanne Shears||Tel: +44 (0) 20 7398 7709|