LONDON (Alliance News) - Telford Homes PLC Tuesday said its profit more than doubled in its last financial year, driven by an under supply of new homes and strong demand from owner occupiers and investors in London.
The housebuilder posted pretax profit of GBP19.2 million for the year to March 31, up from GBP9.0 million a year earlier, as it kept tight cost control across its developments and experienced stronger than expected sales prices.
Revenue, however, was slightly down at GBP140.8 million, from GBP142.4 million. Revenue is driven by open market completions along with affordable housing contracts and although the number of open market completions increased to 492 from 374, a total of 244 were within joint ventures where only 50% of the revenue and profit is recognised.
During the period the company exchanged contracts for the sale of 515 open market properties, boosting its overall forward sold position. At the period-end, the company was 98% sold in terms of the open market homes expected to be legally complete for the year to March 31, 2015, over 70% sold for 2016 and 25% sold for 2017.
Including contract revenue from affordable housing, Telford said the total value of secured but unrecognised revenue at the period-end was GBP341 million, compared with GBP280 million a year earlier.
London-focused Telford said gross margin before selling expenses rose to 31.9% compared with 24.3% a year earlier. Operating margin increased to 17.1%, from 9.7% in the corresponding period.
The AIM-listed company said it has also benefited from robust control of construction costs over the last 12 months resulting in a number of savings on the developments completed in the year.
"Whilst inflationary pressures on construction costs will undoubtedly become more evident as activity across London increases, the group retains excellent relationships with its key contractors and suppliers and is budgeting for such inflation particularly where success on achieving forward sales is fixing the future revenue from each scheme," Telford said.
The residential property developer said it continues to strengthen its development pipeline, utilising the GBP20 million of equity it raised in a share placing in June. At the period-end, Telford Homes said its development pipeline is expected to deliver future revenue of over GBP875 million, up from GBP627 million a year ago.
Looking ahead, the company said it expects annual pretax profit to more than double again by March 2018, assuming a stable market.
"As a result the board anticipates that cumulative pretax profit over the next four financial years will be in excess of GBP120 million positioning Telford Homes as one of the most significant developers in London," the firm said.
On the back of its strong performance, the firm increases its final dividend to 5.1 pence, from 3.0 pence, making a total dividend of 8.8 pence compared with 4.8 pence a year earlier.
Telford Homes shares were quoted up 2.6% at 298.45 pence Wednesday morning.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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