Telford Homes Plc (AIM:TEF), the residential property developer in East London, is pleased to give the following trading update ahead of its preliminary results for the year ended 31 March 2012 which will be released on 30 May 2012.
Strong sales achieved in the financial year, exchanging contracts on 460 open market properties (2011: 368) with demand from both UK and overseas buyers
Profit before tax for the year to 31 March 2012 anticipated to be ahead of market expectations
Significant increase in profit expected for the year to 31 March 2013 from the delivery of pre-sales already secured
A total of† 314 open market properties completed in the year to 31 March 2012 (2011: 281)
Improvement in gross and operating profit margins compared to the prior year
Since 1 April 2011, acquired or agreed terms on 19 new sites which are expected to add over 1,200 properties to the development pipeline
Telford Homes has achieved a healthy rate of sales throughout the year, exceeding internal sales targets at a number of developments. †The Group exchanged contracts on 460 open market properties in the year to 31 March 2012, a 25 per cent increase compared to the previous financial year (2011: 368). †These sales were made to owner-occupiers and investment buyers both in the UK and overseas.
The number of open market completions in the year to 31 March 2012 increased to 314 (2011: 281). †This was ahead of management's expectations, mainly due to strong sales performance in the second half of the financial year. †Improvements in gross and operating profit margins will be delivered as a result of build cost savings achieved in the year and also due to a greater proportion of output from developments less affected by the housing downturn.
As a result of the increased number of open market completions, together with margin improvement, profit before tax for the financial year to 31 March 2012 is anticipated to be ahead of market expectations. †The Board also confirms that it expects a significant increase in profit before tax for the year to 31 March 2013 given the current development pipeline and pre-sales already secured.
At 31 March 2012, 348 open market properties had been secured by exchange of contracts which will legally complete and deliver profits in future financial years. The Group will continue to target pre-sales in the UK and overseas where it is deemed appropriate based on an assessment of expected demand for each development.
Telford Homes has been pursuing new land opportunities since securing a £70 million long term bank facility in March 2011. †From 1 April 2011, the Group has purchased or agreed to purchase 19 sites with a total land value of £47 million.† Together these sites are expected to add over 1,200 properties to the development pipeline, of which over 900 are for open market sale.† This includes three significant sites located in Stratford, close to Canary Wharf and adjacent to the Albert Embankment. †The Group will continue to remain active in the land market acquiring sites located in its target areas in and around East London and also adjoining areas of North and Central London.
Visitor numbers and reservation rates have increased by more than 50 per cent in the first few months of 2012 compared to the same period last year and the Board expects a steady rate of sales to UK buyers to continue to be complemented by demand from overseas investment buyers.
The new sites acquired and the bank facility secured last year have positioned the Group well to take advantage of both a continued shortage of supply of new homes and the fundamental strengths of the London market.
Jon Di-Stefano, Chief Executive of Telford Homes, commented: "The London market has proved particularly resilient and, together with improved margins, our sales performance means profits for the year to 31 March 2012 are anticipated to be ahead of market expectations. †The Board remains positive in its outlook with profit levels expected to increase significantly in the new financial year underpinned by pre-sales already secured and by some of the new sites we have acquired in the last 12 months."
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