LONDON (Alliance News) - Telford Homes PLC Wednesday reported an increase in pretax profit for the first half, as it experienced high demand for its properties due to a lack of supply in the UK capital.
The London-focused residential property developer posted pretax profit of GBP7.7 million for the period ended September 30, up from GBP6.5 million a year earlier, boosted in part by house price inflation.
Demand for properties has moved prices well ahead of those assumed at the time land was purchased, Telford said, which in some cases was several years ago.
"Cost control remains important and the group has fostered long-term relationships with some of its key subcontractors in order to manage build costs as efficiently as possible," the group said.
Earlier this year the company said it anticipated profits for the year to March 31, 2014, would be significant ahead of market expectations. Telford said it remained on track to deliver a substantial increase in profits for the year.
Revenue, however, declined to GBP73.7 million, from GBP78.3 million in 2012, which Telford blamed on the "timing of completions".
Looking ahead, Telford said that, in contrast to last year, the results for the current year are expected to be weighted towards the second half, with a greater number of open market completions due in that period.
This includes the first completions at Avant-garde, the group's joint venture development in Shoreditch, which Telford said will deliver an "exceptionally" high margin.
The number of open-market completions during the period fell to 225 from 256 last year.
Despite this Telford said it maintained a strong rate of sales, with contracts exchanged on 341 open market properties compared with 217 in the first half of 2012. This was at an average price of GBP373,000, up from GBP353,00 for the year to March 31, 2013.
"The prices achieved vary depending on the specific location of each development but there is no doubt that the group has experienced double digit price growth in some locations over the past year," it said.
The company said it is also working to increase its development pipeline, following a GBP20 million share placing in June.
The company has made progress in committing the proceeds to strengthen its development pipeline, while its land bank has grown 23% to 2,790 plots, from 2,260 last year.
Telford raised its nterim dividend to 3.7 pence per share from 2.0 pence.
In early trading Wednesday, Telford shares were down 1.05 pence at 373.95p.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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