Telford Homes Regulatory News (TEF)

21 Nov 2006 07:01

Telford Homes PLC21 November 2006 EMBARGOED FOR RELEASE AT 7.00AM ON 21 NOVEMBER 2006 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2006 Telford Homes, the London-based house builder specialising in the redevelopmentof sites within residential areas principally in North and East London, todayannounces its interim results for the six months ended 30th September 2006. Highlights • Turnover increased by 89% to £52.6 million (2005 - £27.8 million) • Contracts exchanged on 258 private homes at an average price of £261,000 and 17 affordable homes, making a total of 275 in the period • Profit before tax increased by 120% to £7.2 million (2005 - £3.3 million) • Basic earnings per share 16.9 pence (2005 - 7.9 pence) • Interim dividend declared of 4.0 pence per share, an increase of 67% (2005 - 2.4 pence per share) • All 179 private homes at OneStratford sold in the first half of the year • Successful equity fundraising completed in October securing net funds of £14.4 million • 2,109 properties in development pipeline, with contracts proceeding to purchase sites providing a further 337 properties • Market conditions remain positive and current trading is healthy • Anticipate reporting record results for the year to 31st March 2007 Commenting on the results, Andrew Wiseman, Chief Executive of Telford Homes,said: "Our results for the six months ended 30th September 2006 reflect the sale ofall 179 private homes at OneStratford and the flow through of profits fromcontracts exchanged in previous years. The market remains positive and currenttrading is healthy, leading us to expect another record year to 31st March 2007.In addition the recent equity fundraising has given Telford Homes a financialplatform from which to drive further growth in the years to come." For further information, please contact: Telford HomesAndrew Wiseman, Chief Executive 01992 809800Jon Di-Stefano, Financial Director Shore CapitalGraham Shore, Alex Borrelli 020 7408 4090 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2006 CHIEF EXECUTIVE'S STATEMENT Financial results In the six months ended 30th September 2006 turnover increased by 89% to £52.6million and profit before tax increased by 120% to £7.2 million. This representsan extremely strong result for the first half, boosted by the sale of all 179private homes at OneStratford and the flow through of profits from contractsexchanged in previous years. In a trading update on 5th September 2006 theCompany announced that profits would be weighted towards the first half of theyear. Contracts were exchanged on 258 private homes and 17 affordable homes making atotal of 275 in the period. Included in this figure are 14 homes beingconstructed under joint ventures where we recognise half of the turnover andprofit from the development. The gross margin in the six months was 22.8%, against 23.0% for the full year to31st March 2006 with no increase in the rate of incentives given on sales.Operating margin was 17.1%, up from 16.0% for the same period last year. The Board has declared an interim dividend of 4.0p which is expected to be paidon 15th January 2007 to those shareholders on the register at the close ofbusiness on 22nd December 2006. Property sales The 258 private homes exchanged in the period achieved an average price of£261,000, compared to an average of £245,000 in the year to March 2006. Thisincrease is predominantly the result of a change in the mix of properties soldby location and type including end-user sales at premium developments such asEquinox, Estilo and Queen Mary's Villas, as well as the 179 private apartmentsat OneStratford, our landmark development in High Street, Stratford. The 122affordable homes at OneStratford were sold to Toynbee Housing Association in thelast financial year. Profit from both private and affordable homes will continueto be recognised as construction proceeds and handovers are expected from theend of 2008. We completed a total of 310 properties during the six months to 30th September2006, maintaining excellent levels of customer satisfaction despite this beingour busiest period of property handovers to date. During this period anindependent survey of customer satisfaction compared to 27 of our peers placedus fourth overall. Equity fundraising At the end of September Telford Homes announced a placing of 5.8 million newshares at a price of 260 pence per share. This placing was approved at an EGM inOctober and resulted in the Company raising £14.4 million after expenses. We arepleased to welcome a number of new institutional shareholders who have investedin the Company as a result of this placing. The funds raised will be used to accelerate the growth of the business in theshort to medium term and we expect to invest them in new opportunities over thenext year. On 3rd November 2006 we exchanged contracts to purchase a significantsite near Liverpool Street Station as the first investment of these funds. Thesite, on Bethnal Green Road, has been acquired for £25.3 million in a jointventure with Genesis Housing Group, one of the largest and most successfulaffordable housing groups in the country. This is a good opportunity to build asubstantial scheme near the heart of the City and also represents a major stepforward in our relationship with Genesis as this will be the first developmentwe have undertaken in a joint venture with a housing association. The site hasbeen confirmed as a predominantly residential site and a detailed planningconsent will now be pursued. It represents a longer term addition to ourdevelopment pipeline with construction expected to commence towards the end of2008. Development pipeline Our current development pipeline, being properties that will produce profit infuture periods not including those built for joint venture partners, consists of2,109 properties of which 1,055 have a planning consent. In addition we areproceeding to contract on a number of sites that would add a further 337properties to this pipeline. We announced in May that Telford Homes had been chosen as the developmentpartner for East End Homes on their redevelopment of the British Estate in MileEnd. We have subsequently exchanged contracts to enable us to build some 170private homes on this estate, which we are currently negotiating through theplanning process. Many estates in East London are in need of regeneration and,as a result, a programme of estate transfers has been undertaken to transferownership and responsibility from the local council to housing associations. Inorder to drive regeneration these housing associations require developerpartners to plan, design and build private homes on the estates to create a mixof housing and to deliver capital receipts which can be invested inrefurbishment of the existing homes. This is becoming an important part of the overall supply of land in East Londonand we have now been chosen as the preferred partner for East End Homes on anumber of other estates which should result in several hundred new homes to addto our development pipeline. We are also involved in a number of tenderprocesses for estates with other housing associations. Once again thisunderlines the importance of our close relationships with housing associationsdriven by our open attitude to partnerships with them. Organisation and people Our employees are a vital part of our business and without them we would nothave achieved the level of success we have experienced to date. As the Company continues to grow and looks to invest the new equity funds, it isimportant that our infrastructure grows at the same rate. During the first sixmonths of this year we recruited several people across the business including aSenior Land Buyer and a second member of the Partnerships team dealing withhousing association and local authority relationships. In addition a Health andSafety Manager is expected to join the business in January 2007 to furtherpolice our practices on site and our internal policies and procedures. Finance Telford Homes continues to receive significant support from both the Royal Bankof Scotland and Allied Irish Bank with both agreeing substantial additionalfunding during the last six months. Gearing at 30th September 2006 was 107% compared to 193% at 31st March 2006. Wehave facilities in place to increase this gearing level and we will continue tomonitor the certainty of future cash inflows against exposure to debt. Ourinternal measure of uncovered gearing excludes debt matched by the value ofcontracts exchanged on a given development. This was 18% at 30th September 2006compared to 60% at 31st March 2006. Current trading and outlook During September we commenced the marketing of apartments at Queen Mary's, ourmajor development of 498 homes in South Woodford. We have sold all 16 houses atQueen Mary's Villas and now 60 apartments at Queen Mary's Gate which is anexcellent start to sales at this site. We have also seen strong interestcontinuing at our other developments. In total, due to contracts exchanged since 30th September 2006 and propertiessold, subject to contract, we have 98 private properties to contribute to secondhalf results. The market remains positive and current trading is healthy,leading us to expect another record year to 31st March 2007. In addition therecent equity fundraising has given Telford Homes a financial platform fromwhich to drive further growth in the years to come. Andrew WisemanChief Executive21st November 2006 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2006 PROFIT AND LOSS ACCOUNT Note 6 months ended 6 months ended 12 months ended 30th September 2006 30th September 2005 31st March restated (note 1) 2006 restated (note 1) £000 £000 £000 Turnover 52,558 27,815 79,280 Cost of sales (40,585) (21,436) (61,060) Gross profit 11,973 6,379 18,220 Administrative expenses (3,003) (1,944) (5,373) Operating profit 8,970 4,435 12,847 Interest receivable 164 94 201Interest payable and similar (1,920) (1,251) (3,083)charges Profit on ordinary activities 7,214 3,278 9,965before taxation Taxation on profit on ordinary 2 (2,164) (984) (2,964)activities Profit on ordinary activities 5,050 2,294 7,001after taxation Dividends paid 3 (1,391) (1,077) (1,809) Retained profit for the period 5 3,659 1,217 5,192 Earnings per share: Basic 4 16.9p 7.9p 23.8p Diluted 4 16.4p 7.7p 23.3p The Company has no other recognised gains and losses other than those includedin the profit and loss account. All activities are in respect of continuing operations. TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2006 BALANCE SHEET Note As at As at As at 30th September 2006 30th September 31st March 2005 2006 restated (note 1) restated (note 1) £000 £000 £000Fixed assetsTangible assets 899 900 871 Current assets Stocks and work in progress 42,340 41,760 45,547Debtors 44,228 37,827 59,454Cash at bank and in hand 8,190 2,348 7,211 94,758 81,935 112,212 Creditors - amounts falling due (59,052) (54,827) (80,711)within one year Net current assets 35,706 27,108 31,501 Total assets less current 36,605 28,008 32,372liabilities Creditors - amounts falling due (136) (82) (75)after more than one year Provision for liabilities (123) (4) (136) Net assets 36,346 27,922 32,161 Financed by: Capital and reserves Called up share capital 5 3,034 2,957 2,981Share premium 5 13,228 12,501 12,656Profit and loss account 5 20,084 12,464 16,524 Equity shareholders' funds 6 36,346 27,922 32,161 TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2006 CASH FLOW STATEMENT Note 6 months ended 6 months ended 12 months ended 30th September 2006 30th September 2005 31st March restated (note 1) 2006 restated (note 1) £000 £000 £000 Cash flow from operating 7 27,568 (9,603) (25,815)activities Returns on investments andservicing of financeInterest received 164 94 201Interest paid (1,914) (1,246) (3,072)Hire purchase interest (6) (5) (11) (1,756) (1,157) (2,882) Taxation (1,608) (906) (2,389) Capital expenditurePurchase of tangible fixed assets (65) (191) (589)Sale of tangible fixed assets 28 41 351Purchase of own shares (355) - -Sale of own shares 161 119 128 Equity dividends paid (1,391) (1,077) (1,809)Cash flow before financing 22,582 (12,774) (33,005) FinancingIssue of ordinary share capital 625 246 425Expenses of share issue - - -(Decrease) increase in bank loans (22,166) 10,867 35,837Capital element of hire purchase (62) (58) (113)payments (21,603) 11,055 36,149 Increase (decrease) in cash 979 (1,719) 3,144 Reconciliation of net cash flow tomovement in net debtIncrease (decrease) in cash 979 (1,719) 3,144Decrease (increase) in bank loans 22,166 (10,867) (35,837)Capital element of hire purchase 62 58 113paymentsDecrease (increase) in debt 23,207 (12,528) (32,580)arising from cash flowInception of hire purchase (144) (89) (133)agreementsMovement in net debt in the period 23,063 (12,617) (32,713) Net debt brought forward (61,912) (29,199) (29,199)Net debt carried forward 8 (38,849) (41,816) (61,912) TELFORD HOMES PLC ('Telford' or 'the Company') Interim results for the six months ended 30th September 2006 NOTES 1 Basis of preparation The figures for the six months ended 30th September 2006 and the six months ended 30th September 2005 are unaudited anddo not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The interim reporthas been prepared under the historical cost convention and on a basis consistent with the accounting policies in thefinancial statements for the year ended 31st March 2006 except as noted below. The results for the year ended 31stMarch 2006 and the balance sheet of that date are an extract from the statutory financial statements for that period,which have been filed with the Registrar of Companies and on which the Company's auditors gave an unqualified report. The Company has adopted Financial Reporting Standard 20 'Share-based payment' for the results to 30th September 2006.As a result of this a charge is made to the profit and loss account to reflect the assumed fair value of employee shareoptions over and above the exercise price paid by employees. This charge is calculated at the date of grant of theoptions and is charged equally over the vesting period. The corresponding adjustment to reserves is made directly tothe profit and loss reserve. The Company has used the Black-Scholes-Merton formula to calculate the fair value of outstanding options granted sincethe 7th November 2002, the cut-off date proposed by FRS 20. Individual calculations have been performed for groups ofshare options with differing exercise prices and dates. Disclosure of outstanding options and their exercise price ismade in the annual report each year. The assumptions applied to the Black-Scholes-Merton formula are as follows: - Expected life of options of 4 years based on historic evidence of options exercised to date- Volatility of share price of 20% based on historic evidence- Dividend yield of 4% based on historic rates- Risk free interest rate of 4.75%- Rate of leavers from the scheme assessed at zero based on historic rates The charge calculated up to 31st March 2005 is £43,000 with a corresponding deferred tax asset at that date of £13,000.The profit and loss reserve is therefore restated by the deferred tax credit of £13,000 from £11,056,000 to£11,069,000. The charge calculated for the six months ended 30th September 2005 is £25,000 with a corresponding deferred tax assetof £7,000 recognised in the period. The profit and loss reserve is therefore restated by cumulative deferred taxcredits of £20,000 from £12,444,000 to £12,464,000. The charge calculated for the year ended 31st March 2006 is £59,000 with a corresponding deferred tax asset of £18,000recognised in the period. The profit and loss reserve is therefore restated by cumulative deferred tax credits of£31,000 from £16,493,000 to £16,524,000. The charge calculated for the six months ended 30th September 2006 is £43,000 with a corresponding deferred tax assetof £13,000 recognised in the period. The total deferred tax asset recognised at 30th September 2006 in respect ofshare-based payments is £44,000 and this is offset against deferred tax liabilities in the balance sheet. 2 Taxation Taxation has been calculated on profit for the six months ended 30th September 2006 at the estimated effective rate oftax of 30%. 3 Dividends The interim dividend declared for the six months ended 30th September 2006 is 4.0p per ordinary share and is expectedto be paid on 15th January 2007 to those shareholders on the register at the close of business on 22nd December 2006.This dividend was declared after 30th September 2006. The interim dividend paid for the six months ended 30th September 2005 was 2.4p per ordinary share and the finaldividend paid for the year ended 31st March 2006 was 4.6p per ordinary share making a total of 7.0p per ordinary share. 4 Earnings per share 6 months ended 6 months ended 12 months ended 30th September 30th September 2005 31st March 2006 restated (note 1) 2006 restated (note 1) Weighted average number of shares 29,842,792 29,163,223 29,356,371in issueDilution 970,043 619,431 727,290Diluted weighted average number 30,812,835 29,782,654 30,083,661of shares in issueProfit on ordinary activities £5,050,000 £2,294,000 £7,001,000after taxation Earnings per share:Basic 16.9p 7.9p 23.8pDiluted 16.4p 7.7p 23.3p 5 Reserves Share capital Share premium Profit and loss Total account £000 £000 £000 £000 At 1st April 2006 as 2,981 12,656 16,493 32,130previously reportedAdjustment for share-based - - 31 31paymentsAt 1st April 2006 restated 2,981 12,656 16,524 32,161Arising on issue of shares 53 572 - 625during the periodShare-based payments - - 43 43Acquisition of own shares - - (355) (355)Sale of own shares - - 161 161Write down in value of own - - 52 52sharesRetained profit for the period - - 3,659 3,659At 30th September 2006 3,034 13,228 20,084 36,346 The profit and loss account at 30th September 2006 includes a total of £145,000of non-distributable reserves relating to share-based payments. The movement in the profit and loss account for prior periods is restated inaccordance with FRS 20 as follows: 6 months ended 12 months ended 30th September 31st March 2005 2006 £000 £000 At 1st April 2005 as previously reported 11,056 11,056Adjustment for share-based payments 13 13At 1st April 2005 restated 11,069 11,069Share-based payments 25 59Sale of own shares 119 128Write down in value of own shares 34 76Retained profit for the period 1,217 5,192Profit and loss account restated 12,464 16,524 6 Equity shareholders' funds £000 Profit for the period 5,050Dividends paid (1,391) 3,659Arising on issue of shares during the period 625Share-based payments 43Acquisition of own shares (355)Sale of own shares 161Write down in value of own shares 52At 1st April 2006 restated (note 5) 32,161At 30th September 2006 36,346 7 Reconciliation of operating profit to cash flow from operating activities 6 months ended 6 months ended 12 months ended 30th September 30th September 31st March 2006 2005 2006 restated (note 1) restated (note 1) £000 £000 £000 Operating profit 8,970 4,435 12,847Depreciation 178 146 312Write down in value of own shares 52 34 76Share-based payments 43 25 59Profit on sale of tangible fixed (25) (32) (37)assetsDecrease (increase) in stocks and work 3,207 (13,184) (16,971)in progressDecrease (increase) in debtors 15,226 2,225 (19,402)Decrease in creditors (70) (3,245) (2,824)Movement in provisions (13) (7) 125Cash flow from operating activities 27,568 (9,603) (25,815) 8 Analysis of change in net debt At 1st April Cash flows Inception of At 30th September 2006 finance leases 2006 £000 £000 £000 £000 Cash at bank and in hand 7,211 979 - 8,190Bank loans (68,953) 22,166 - (46,787)Hire purchase (170) 62 (144) (252)liabilities (61,912) 23,207 (144) (38,849) 9 Interim report Copies of this announcement are available from the Company at First Floor, Stuart House, Queensgate, Britannia Road,Waltham Cross, Hertfordshire EN8 7TF. The Company's interim report for the six months ended 30th September 2006 willbe posted to shareholders shortly and will be available on our website at www.telfordhomes.plc.uk. This information is provided by RNS The company news service from the London Stock Exchange