LONDON (Alliance News) - Telford Homes PLC said Wednesday its annual revenue grew on increased build to rent contracts, however, profit fell on slower sales rate and contract delays.
For the year to the end of March, the residential property developer's pretax profit was GBP40.1 million, down from GBP46.0 million the year before, and below the company's expectations of GBP50 million.
The drop in profit was due to a subdued London sales market resulting in a slower sales rate, and a delay in two build contracts that were expected in the 2019 financial year due to planning issues and are now anticipated in the 2020 financial year.
"The individual sale market in London has been subdued by a prolonged period of uncertainty and customer expectations of enhanced discounts and incentives led to reduced prices on those sales that were secured," Telford said in a statement.
There was also the increased proportion of lower margin build to rent developments within Telford's total revenue.
Group revenue however continued to reach record levels, growing by 12% to GBP354.3 million from GBP316 million, with growth mainly generated from build to rent contracts.
Build to rent revenue rose sharply to GBP108.7 million from GBP67.7 million the prior year, while revenue from open market sale developments dropped to GBP231.7 million from GBP244.2 million.
The number of open market completions dropped to 390 from 476, even as the average price increased to GBP552,000 from GBP473,000 year-to-year.
Telford Homes declared a final dividend of 8.5 pence per share, bringing the total payout to 17.0 pence in line with the prior year.
Looking ahead, Telford Homes made no change to its pretax profit expectations for its 2020 financial year stated in February, guided to be down "significantly" year-on-year.
"Our business model is increasingly focused on build to rent housing and the reduced risk and lower capital requirements it brings. Despite some challenges, our performance in the year to March 31, 2019 represents a great achievement for Telford Homes with revenue at an all-time high due primarily to an increased proportion of build to rent contracts," said Chief Executive Officer Jon Di-Stefano.
Shares in Telford Homes were down 4.0% at 291.00 pence on Wednesday.
