(Sharecast News) - Residential property developer Telford Homes posted a drop in full-year pre-tax profit on Wednesday as it increased its focus on lower margin build to rent developments. In the year to the end of March 2019, pre-tax profit fell to £40.1m from £46m even as revenue rose 12% to a record £354.3m, as the proportion of lower margin build to rent developments within total revenue grew to a record 31% from 21% in 2018. Telford pointed out that build to rent transactions generate lower margins but reduce exposure to market risk and require no debt and limited equity investment. As a result, gearing reduced to 37% at 31 March 2019 from 52.2% at 30 September 2018.The company said its ability to reach its original target of £50m of pre-tax profit for FY2019 was hampered by a "subdued" individual sale market in London. Its full-year results were also hit by the delay of two build contracts that were pushed back to 2020 from 2019, mostly due to planning issues. Telford proposed a final dividend of 8.5p per share, maintaining the total dividend for the year at 17p.It said the split of the current pipeline in terms of the number of homes is now expected to be 70% on build to rent led developments and 30% on developments led by individual sales.Chief executive officer Jon Di-Stefano said: "Whilst the financial year to 31 March 2019 was not without its challenges, we remain confident that our strategic move towards the growing rental market in London will enable us to increase our delivery of much needed new homes in the years ahead."At 1300 BST, the shares were down 3.5% at 292.50p.
