RNS Number:2362L
Telford Homes PLC
19 May 2003
EMBARGOED FOR RELEASE AT 7.00AM ON 19 MAY 2003
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
Telford Homes, the London-based house builder specialising in the redevelopment
of sites within residential areas principally in North and East London, today
announces its financial results for the year ended 31st March 2003.
Highlights
* Turnover for the year of #25.3 million (16 months to 31st March 2002
- #8.8 million)
* Contracts exchanged on 132 properties, including 112 private homes at
an average price of #214,000
* Profit before tax of #4.3 million (2002 - #1.3 million)
* Basic earnings per share 12.7 pence (2002 - 10.1 pence)
* Final dividend proposed of 2.0 pence per share - total annual
dividend of 3.0 pence per share is covered in excess of four times by
basic earnings per share
* Six developments now completed with a further four due to be
completed by the end of June 2003
* Currently developing another seven sites, design is ongoing on a
further five and five more are proceeding to contract
* Development stock, including sites proceeding to contract, of 616
units
* Continuing development of relationships with public sector housing
providers
* Operational and management teams strengthened
* Strong demand for the Company's product in niche areas of London
Commenting on the results, Andrew Wiseman, Chief Executive of Telford Homes,
said :
"We are delighted with the results for our second period of trading and continue
to receive strong support for our product. Since 31st March 2003, we have
exchanged contracts on 15 properties and sold, subject to contract, a further 28
and we are optimistic about the prospects for the coming year. In the niche area
in which we specialise, pre-completion sales remain healthy, particularly to
investment buyers of properties below #250,000. I look forward to reporting
continued growth in the trading performance of Telford Homes in the current
year."
For further information, please contact :
Telford Homes
Andrew Wiseman, Chief Executive 020 8498 6789
Jon Di-Stefano, Financial Director
Shore Capital
Alex Borrelli, Jonathan Nelson 020 7408 4090
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
CHIEF EXECUTIVE'S REVIEW
Financial results
I am delighted to report a substantial performance, generating profit before tax
of #4.3 million, in our second period of trading. Since incorporation in
December 2000, the growth of Telford Homes has been tremendous and reflects the
efforts of everybody who is involved with the Company.
Turnover for the year ended 31st March 2003 was #25.3 million compared with #8.8
million in our first 16 month period of trading to 31st March 2002. Earnings per
share for the year were 12.7p (2002 - 10.1p) and the directors are proposing a
final dividend of 2.0p per share making 3.0p for the year.
Over the course of the year we exchanged contracts on the sale of 112 "
open-market" private homes at an average selling price of #214,000. In our
first 16 month trading period we exchanged contracts on 61 "open-market" homes
at an average price of #210,000.
Increasingly our business involves building mixed developments. During the year
our income was complemented by the sale of 11 "affordable" homes, six small
retail units, 6,500 square feet of office space, a construction contract to
build a community centre and the sale of a small development site. Including
those sales, we exchanged contracts on 132 properties in the year. Our target
for the full year, set out in the Interim Statement announced on 19th November
2002, was to exchange contracts on 137 properties. However, the mix of sales in
the year and our progress on development sites was such that our performance in
reported turnover and profit before tax is in excess of our expectations at that
time.
Our product and the market place
We remain focused on a small geographical area to the east of the City of London
and the area in and around Docklands. In addition we have one development in
Chelmsford town centre. We continue to appraise land purchase opportunities in
these as well as wider areas and we may consider opportunities that will broaden
our geographical spread, but still be within one hour's travel from our offices.
The majority of our homes have been sold at an early stage of construction,
usually 12 months prior to build completion. Purchasers have generally been
investment buyers who either sell-on or hold the flat for letting purposes.
Despite signs of a housing market slowdown for property priced above #250,000,
buyers of our properties continue to be active and our performance since the
year end, as detailed below, supports this statement.
Development sites and development partners
During the year we made two substantial site acquisitions and both sites benefit
from outline planning consents for residential development.
The first is the site of the former Island Gardens DLR station which lies
directly opposite the new DLR station, on the river at the Greenwich foot
tunnel. This site has a development capacity of more than 100 residential
apartments and was acquired as a joint venture with Asda Property Holdings Ltd.
The second is a redundant warehouse, accessed from the A13, and bordering the
Regents Canal at its entrance into the Limehouse Basin.
Detailed planning consents for these two sites as well as for our major joint
development with East Thames Housing Association, at Abbotts Wharf on the
Limehouse Cut, are nearing conclusion after negotiations with the local planning
authority on design and the provision of "affordable" housing. The length of
time it takes to achieve a satisfactory planning consent acts as a significant
brake to the supply of new homes. In this environment our relationships with
planning authorities and housing associations have proved valuable in enabling
us to achieve planning consents and I am delighted to report that the local
authority resolved to grant planning consent at Abbotts Wharf for 201 units on
14th May 2003.
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
CHIEF EXECUTIVE'S REVIEW (continued)
We have also acquired three smaller sites in East London including one where we
are providing a community centre beneath private apartments and another where we
will be working with Ujima, which will be a new housing association partner for
us. The provision of attractive apartments to the private market is
increasingly entwined with the provision of "affordable" housing and good
relationships with registered social landlords are essential to us. Our
relationships with East Thames Housing Association, Boleyn & Forest HA, Bethnal
Green & Victoria Park HA and Poplar HARCA continue and we look forward to
further involvement with them.
We have agreed terms to acquire five more sites in East London to provide an
additional 133 homes which will bring our stock of land, assuming receipt of
expected detailed planning consents, to 616 units.
Our current development capacity will allow us cautiously to expand the business
and produce further growth.
People and systems
The heart of our business is the management of our construction where we have a
youthful and enthusiastic management team supported by experienced site managers
controlling the sub-contracted trades. This team has been strengthened, in
preparation for the major construction projects at Abbotts Wharf and Island
Gardens, by the recruitment of John Fitzgerald. John has excellent experience
in complex residential construction and will be a key member of the executive
team.
Our design, surveying and buying team at head office are providing a
professional service to construction and we are therefore able to produce a high
quality and attractive product for our customers.
Our success relies on the construction process supported by effective sales and
marketing, land buying and finance teams. Teamwork is a fundamental strength of
the business and the quality people we now have in place will help to continue
the development of Telford Homes as a successful niche house builder.
Current trading and outlook
Since the year end we have recognised 15 contract exchanges at a combined value
of #3.1 million and we have sold, subject to contract, a further 28 properties
with a value of #5.3 million.
There are several development launches due in the coming months and interest for
these sites is already very encouraging. We are confident that we will continue
to achieve significant pre-sales and therefore look forward to another
successful year.
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
FINANCIAL REVIEW
Results for the year
The results for the year ended 31st March 2003 are excellent and reflect a
period of significant growth and success for the Company. Telford Homes is now
well placed to produce another year of well-managed growth as the business
continues to develop.
Operating results
Turnover has increased to #25.3 million compared with #8.8 million in the first
16 months of trading to 31st March 2002. An analysis of the sales that have
contributed to this almost three-fold increase is given in the Chief Executive's
review.
Gross profit has increased to #6.9 million from #2.5 million with a margin
achieved of 27.2% against 28.2% in the first period of trading. This fall in the
margin reflects a slowing in the rate of increase in selling prices over the
period and prices are now static in our market.
Our operating margin has improved to 19.6% from 19.2%. Overheads have increased
to #1.9 million in the year to 31st March 2003, a consequence of the growth in
the business and the need to ensure that we have the right people and systems in
place to manage the Company and build for our future success.
Interest
Interest paid was #0.7 million compared with #0.4 million in our first 16
months. Interest rates have remained low over the course of the year and the
majority of our finance is currently at base rate plus 1.5%. Our interest cover
is 7.1 times and we monitor this to ensure that the Company is not exposed to
significant interest risk arising from future rate changes.
Our profit before tax is #4.3 million increased from #1.3 million and this
exceptional result is well in excess of our original expectation for the year.
This result enables us to report a substantial pre-tax return on average equity
of 40.6%, an increase on last year of over six percentage points. Our return on
average total capital has also increased to 20.4% from 18.2%.
Taxation
The effective tax charge remains approximately 30%.
Dividends
The Company paid an interim dividend of 1.0p per share in January 2003. A final
dividend of a further 2.0p is now proposed making a total for the year of 3.0p
against a final dividend last year of 1.0p. This dividend is covered in excess
of four times by earnings per share. The final dividend is expected to be paid
on 11th July 2003 to ordinary shareholders on the register on 20th June 2003.
Earnings per share
Earnings per share increased to 12.7p from 10.1p. The weighted average number of
shares in issue increased from 9.3 million to 23.6 million.
The Company carried out a successful share placing in July 2002 which raised #3
million before costs and a further placing in November 2002 which raised #0.5
million. Despite this the return on average equity and earnings per share have
grown, demonstrating immediate success in investing the additional capital to
produce continued growth.
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
FINANCIAL REVIEW (continued)
Balance sheet
Net assets at 31st March 2003 were #13.3 million increased from #7.7 million.
This increase reflects the #2.2 million of retained profit for the year and the
new equity invested into the business.
Our asset base has been expanded and we now hold total assets of #38.9 million
increased from #19.9 million. The vast majority of these assets are represented
by work in progress on many of our sites and by debtors awaiting legal
completion of the properties we have exchanged to date. We have now finished
work on six developments in total with a further four due to be completed in the
next few weeks.
Finance
Our banks provide 70% of development land and construction expenditure with
repayments made as completion monies are received. We continue to have excellent
relationships with all of our banking partners, with our primary bankers Allied
Irish Bank providing finance for the majority of our sites with total facilities
of #18 million. The Royal Bank of Scotland is financing some of our significant
sites with facilities of #30 million including our joint venture facilities with
Asda Property Holdings Ltd. Heritable Bank have also assisted us in the year
with their financing of the land purchase at Abbotts Wharf.
Our combined overdraft facility now stands at #1.5 million which gives us
significant short-term flexibility. We are not currently using this facility.
Gearing at 31st March 2003 stands at 126% down from 138% last year. Our
successful policy of pre-selling has enabled us to sustain this level of gearing
and while we continue to achieve early sales on key developments we intend to
maximise shareholder returns by maintaining gearing at these levels.
Cash flow
Cash flows are carefully monitored and continuously re-assessed to ensure that
the continuing growth of the business can be financed by a combination of equity
and debt. This situation is reported on a monthly basis to both the board and
our major banking partners.
Share price
The share price on 31st March 2003 was 76.0p (31st March 2002 - 60.5p) with a
high in the year of 84.5p and a low of 60.5p.
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
PROFIT AND LOSS ACCOUNT
Note 12 months ended 16 months ended
31st March 2003 31st March 2002
#000 #000
Turnover 25,334 8,805
Cost of sales (18,449) (6,318)
Gross profit 6,885 2,487
Administrative expenses (1,910) (798)
Operating profit 4,975 1,689
Interest receivable 22 28
Interest payable and similar charges (725) (386)
Profit on ordinary activities before taxation 4,272 1,331
Taxation on profit on ordinary activities 2 (1,282) (389)
Profit on ordinary activities after taxation 2,990 942
Dividends paid and proposed 3 (755) (203)
Retained profit for the period 2,235 739
Retained profit brought forward 739 -
Retained profit carried forward 2,974 739
Earnings per share:
Basic 4 12.67p 10.10p
Diluted 4 12.58p 9.99p
The Company has no other recognised gains and losses other than those included
in the profit and loss account.
All activities are in respect of continuing operations.
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
BALANCE SHEET
Note As at As at
31st March 2003 31st March 2002
#000 #000
Fixed assets
Tangible assets 681 279
Current assets
Stocks and work in progress 19,810 13,107
Debtors 18,152 6,476
Cash at bank and in hand 239 44
38,201 19,627
Creditors - amounts falling due within one year (25,427) (12,058)
Net current assets 12,774 7,569
Total assets less current liabilities 13,455 7,848
Creditors - amounts falling due after more than (109) (109)
one year
Provision for liabilities and charges (4) (4)
Net assets 13,342 7,735
Financed by:
Capital and reserves
Called up share capital 5 2,518 2,025
Share premium 6 7,850 4,971
Profit and loss account 2,974 739
Equity shareholders' funds 7 13,342 7,735
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
CASH FLOW STATEMENT
Note 12 months ended 16 months ended
31st March 2003 31st March 2002
#000 #000
Cash outflow from operating activities 8 (7,052) (17,045)
Returns on investments and servicing of finance
Interest received 22 28
Interest paid (713) (380)
Hire purchase interest (12) (6)
(703) (358)
Taxation (382) -
Capital expenditure
Purchase of tangible fixed assets (404) (80)
Sale of tangible fixed assets 12 -
Equity dividends paid (454) -
Cash outflow before financing (8,983) (17,483)
Financing
Issue of ordinary share capital 3,530 7,305
Expenses of share issue (158) (309)
Increase in bank loans 6,350 10,220
Issue of subordinated loan - 2,200
Repayment of subordinated loan - (2,200)
Capital element of hire purchase payments (139) (94)
9,583 17,122
Increase (decrease) in cash 600 (361)
Reconciliation of net cash flow to movement in
net debt
Increase (decrease) in cash 600 (361)
Increase in bank loans (6,350) (10,220)
Capital element of hire purchase payments 139 94
Increase in debt arising from cash flow (5,611) (10,487)
Inception of hire purchase agreements (177) (276)
Movement in net debt in the period (5,788) (10,763)
Net debt brought forward (10,763) -
Net debt carried forward 9 (16,551) (10,763)
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
NOTES
1 Basis of preparation
The financial information set out above does not constitute statutory accounts
within the meaning of section 240 of The Companies Act 1985. Statutory accounts
for the year ended 31st March 2003 will be delivered to the Registrar of
Companies and sent to all Shareholders shortly. An unqualified audit report has
been given on the accounts.
The results for the period ended 31st March 2002 and the balance sheet of that
date are an extract from the statutory accounts for that period, which have been
filed with the Registrar of Companies and on which the Company's auditors also
gave an unqualified report.
2 Taxation
Taxation has been calculated on profit for the year ended 31st March 2003 at the
estimated effective rate of tax of 30 percent.
3 Dividends paid and proposed 12 months ended 16 months ended
31st March 2003 31st March 2002
#000 #000
Interim dividend paid at 1p per ordinary share 251 -
Final dividend proposed at 2p (1p) per ordinary share 504 203
755 203
4 Earnings per share 12 months ended 16 months ended
31st March 2003 31st March 2002
Weighted average number of shares in issue 23,595,753 9,329,072
Dilution - effect of share options 172,631 102,843
Diluted weighted average number of shares in issue 23,768,384 9,431,915
Profit on ordinary activities after taxation #2,990,000 #942,000
Earnings per share:
Basic 12.67p 10.10p
Diluted 12.58p 9.99p
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
NOTES (continued)
5 Share capital As at As at
31st March 2003 31st March 2002
#000 #000
Authorised
100,000,000 ordinary shares of 10p each 10,000 10,000
Allotted, called up and fully paid
25,175,000 (20,250,000) ordinary shares of 10p each 2,518 2,025
On 5th July 2002, as a result of a share placing, 4,000,000 ordinary 10p shares
were issued at 75p per share.
On 3rd September 2002, a further 300,000 ordinary shares were issued at par as a
result of share options being exercised.
On 19th November 2002, a further 625,000 ordinary shares were issued at 80p per
share.
6 Share premium account
#000
At 31st March 2002 4,971
Arising on issue of shares during the period 3,037
Costs arising from shares issued (158)
At 31st March 2003 7,850
7 Equity shareholders' funds
#000
Profit for the year 2,990
Dividends paid and proposed (755)
2,235
New share capital subscribed 3,530
Costs arising from shares issued (158)
5,607
At 31st March 2002 7,735
At 31st March 2003 13,342
TELFORD HOMES PLC ('Telford' or 'the Company')
Preliminary results for the year ended 31st March 2003
NOTES (continued)
8 Reconciliation of operating profit to cash flow from operating
activities
12 months ended 16 months ended
31st March 2003 31st March 2002
#000 #000
Operating profit 4,975 1,689
Depreciation 179 77
Profit on sale of tangible fixed assets (12) -
Increase in stocks and work in progress (6,703) (13,107)
Increase in debtors (11,676) (6,476)
Increase in creditors 6,185 772
Cash flow from operating activities (7,052) (17,045)
9 Analysis of change in debt
net
At 31st March Cash flows Inception of At 31st March
2002 finance leases 2003
#000 #000 #000 #000
Cash at bank and in hand 44 195 - 239
Bank overdraft (405) 405 - -
Bank loans (10,220) (6,350) - (16,570)
Hire purchase liabilities (182) 139 (177) (220)
(10,763) (5,611) (177) (16,551)
_________________________________________________________________________________
10 Annual report and AGM
Copies of this announcement are available from the Company at 3 Buckingham
Court, Rectory Lane, Loughton, Essex IG10 2QZ.
The Company's annual report for the year ended 31st March 2003 will be posted to
shareholders in early June.
The Annual General Meeting will be held at the Registered Office of the Company
on 3rd July 2003 at 12.00 noon and a notice of this meeting will be sent out
with the annual report.
_________________________________________________________________________________
This information is provided by RNS
The company news service from the London Stock Exchange
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