LONDON (Alliance News) - Property developer Telford Homes PLC on Thursday cautioned on profit for both its current and next financial years.
Shares were down 16% on Thursday at a price of 294.51 pence each.
For its current year, ending March 31, Telford expects pretax profit of approximately GBP40 million, which would be a fall from the GBP46.3 million recorded a year before.
Likewise, pretax profit in its year ending March 2020 is to be "significantly" down year-on-year, though after that the figure should grow again.
Telford blamed a six month delay at its City North project in Finsbury Park, London, which means some GBP15 million of pretax profit is to be deferred into its 2021 financial year.
Telford in November, when it released interim results, warned it may not hit its GBP50 million pretax profit target for the full year.
Despite a "positive" outlook on build-to-rent, sales in London are still subdued, being secured at a slower rate than they normally would. Further, two contracts expected to exchange in its current year will now roll over into next, hitting financial 2019 profit by GBP5 million.
"Finally, we have experienced a disappointing delay to the construction programme at City North in Finsbury Park of approximately six months due to matters outside of our control in dealing with transport bodies and the need to coincide with works undertaken by third parties," Telford said.
The company will, however, increase its dividend policy, which is current a third of earnings, to take into account reduced spending needed for a focus on build-to-rent.
It expects its annual dividend for its current year to be at least 17 pence per share, the figure it paid a year prior.
"A number of factors are affecting our short term ability to deliver the scale of profits we believe Telford Homes is capable of achieving. However our business model is increasingly focused on build to rent and the reduced risk and lower capital requirements it brings," said Chief Executive Jon Di-Stefano.
"We believe build to rent housing will be one of the keys to solving London's housing crisis and we expect to significantly increase our output of homes under this new model over the next five years."
