2 Dec 2015 07:00
Press Release | 2 December 2015 |
Telford Homes Plc
('Telford Homes' or the 'Group')
Interim results for the six months ended 30 September 2015
Telford Homes Plc (AIM:TEF), the London focused residential property developer, today announces its interim results for the six months ended 30 September 2015.
Highlights
· | Profit before tax more than doubled to £21.0 million (H1 2014: £9.4 million) |
· | Margins remain in excess of the Group's target levels |
· | Interim dividend increased to 6.5 pence (H1 2014: 5.1 pence) |
· | Focus on non-prime locations in London where demand remains strong |
· | Acute shortage of new homes driving longer term growth plans |
· | Forward sales of more than £700 million to be recognised from the year to 31 March 2016 onwards |
· | Institutional private rented sector investment expected to contribute sales in the future |
· | United House acquisition has increased the development pipeline to over £1.5 billion |
· | Successful equity placing raising £50 million to take new opportunities and accelerate growth |
· | Immediate progress made in utilising the funds raised following the acquisition of Carmen Street site with detailed planning consent for 206 homes |
· | Telford Homes well placed to cement its position as one of London's leading developers |
Jon Di-Stefano, Chief Executive of Telford Homes, commented: "I am delighted to be reporting another excellent set of results for Telford Homes including more than doubling pre-tax profits to £21 million. A fundamental lack of supply of homes in London is contributing to strong demand for our properties in non-prime locations. As a result we have a sector leading forward sold position which gives the Board exceptional visibility over future profits and cash flows.
Our recent acquisition of the regeneration business of United House and an equity placing raising £50 million are important steps in delivering on the Board's longer term growth targets. We will continue to invest the placing funds over the next few months, having already acquired a substantial site with planning permission for 206 homes, and the Board is very confident in the prospects for Telford Homes over the next few years."
- Ends -
For further information:
Telford Homes Plc |
|
|
Jon Di-Stefano, Chief Executive | Tel: +44 (0) 1992 809 800 |
|
Katie Rogers, Financial Director | www.telfordhomes.london |
|
Shore Capital - Nomad and Joint Broker |
| |
Pascal Keane / Patrick Castle | Tel: +44 (0) 20 7408 4090 | |
Peel Hunt LLP - Joint Broker |
|
Hugh Preston / Charles Batten | Tel: +44 (0) 20 7418 8900 |
Media enquiries: Abchurch |
|
Quincy Allan / Alex Shaw | Tel: +44 (0) 20 7398 7710 |
quincy.allan@abchurch-group.com | www.abchurch-group.com |
Copies of this announcement are available from the Group at Telford House, Queensgate, Britannia Road, Waltham Cross, Hertfordshire EN8 7TF and on our website www.telfordhomes.london.
CHIEF EXECUTIVE'S STATEMENT
Telford Homes is pleased to report that profit before tax has more than doubled to £21.0 million for the six months to 30 September 2015 compared to the same period last year (H1 2014: £9.4 million). The Group continues to experience strong demand for its homes in non-prime London with every sales launch exceeding the Board's expectations. This has resulted in a sector leading forward sold position which gives exceptional visibility over future profits and cash flows.
The fundamental lack of supply of affordable new homes in London has encouraged the Board to set substantial but achievable growth targets for the next five years and output is expected to increase by more than 100 per cent over that period. In the last six months the Group has started to deliver on this ambition with the acquisition of the regeneration business of United House and an equity placing to raise £50 million of new capital. As a result the Group now anticipates more than £1.5 billion of revenue from its development pipeline with funds available to invest in new opportunities as they arise.
Results for the six months ended 30 September 2015
The results for the year to 31 March 2016 are expected to be weighted towards the first half with a greater number of open market completions occurring in this period. The number of open market completions in the six months to 30 September 2015 was 282, up from 140 last year. The balance between the two half years simply reflects the timing of completion of the Group's developments with the remaining homes at Cityscape, E1, Parkside Quarter, E14 and The Boatyard, E14 handing over in the first half of the year together with over one third of the 198 open market homes at Stratford Plaza, E15.
Revenue, including the Group's share of joint ventures, increased to £139.6 million (H1 2014: £65.1 million) and gross profit increased to £37.5 million (H1 2014: £22.7 million). Gross profit is stated after expensing loan interest that has been capitalised within inventories and, adjusting for that interest, the gross profit margin achieved in the six months to 30 September 2015 was 27.6 per cent, which remains comfortably above the Group's target margin when appraising new opportunities of 24 per cent.
As expected the double digit sales price inflation observed in London in 2013 and early 2014 has tempered and affordability constraints have ensured a more stable and sustainable market over the last 12 months with increases of circa four to five per cent per annum. Build cost inflation is still evident across the industry but this has also moderated to a similar rate of increase and is in line with the Board's expectations. The Group minimises its exposure to build cost inflation, wherever possible, by placing orders with subcontractors at an early stage in the development programme and, where this is not realistic due to the timeframes involved, inflationary allowances are incorporated into forecasts. The Group also monitors trends in labour and material costs and, where feasible, reacts by adapting the construction of its buildings to minimise reliance on a particular trade or material.
Administrative expenses of £9.6 million have increased against the same period last year (H1 2014: £7.8 million) mainly due to higher employee costs along with legal and professional fees associated with the corporate acquisition in September. Selling expenses have increased to £5.8 million (H1 2014: £4.3 million) as a result of the successful sales launches in the first half of the year, together with an increase in the number of completions. Selling expenses are written off as incurred and are heavily influenced by the timing and success of individual sales launches. The operating margin for the six months to 30 September 2015, before charging any interest, was 16.5 per cent and this continues to exceed the Group's target of 15 per cent.
Net finance costs are similar to last year at £1.1 million (H1 2014: £1.1 million). These are mainly comprised of non-utilisation fees on the Group's £180 million bank facility, where there has been less need to drawdown due to the scale of deposits received from forward sales, and continued amortisation of facility fees.
The substantial increase in profit before tax for the first six months of the year, together with the Group's forward sold position, leads the Board to be very confident of meeting market expectations for reported profits in the year to 31 March 2016. In addition, Telford Homes is already making significant progress towards delivering on the Board's longer term growth targets over the following few years.
Dividend
The Board is pleased to declare an increase in the interim dividend to 6.5 pence per share (H1 2014: 5.1 pence). The Board's current policy is to pay one third of earnings as dividends in each financial year, ignoring the weighting of profits between half years. However, due to the long term nature of the Group's developments the recent equity placing is expected to cause an initial dilution of earnings albeit with an enhanced net asset value per share. The Board has already stated that it intends to increase its dividend payments above the current policy to offset this dilution in earnings in the short term. Therefore the interim dividend together with the full year dividend payable in July 2016 will equate to more than one third of earnings for this financial year.
The interim dividend will be paid on 8 January 2016 to those shareholders on the register at the close of business on 11 December 2015. The ex-dividend date is therefore 10 December 2015.
Balance sheet and borrowings
Despite significant investment in land and work in progress over the last six months net debt has reduced to £50.4 million at 30 September 2015 (31 March 2015: £52.9 million) due to the number of open market completions in the first half of the year and deposits received on forward sales. As a result gearing has fallen to 37.3 per cent at 30 September 2015 (31 March 2015: 43.9 per cent). Total deposits received in advance of completions were £67.5 million at 30 September 2015 (31 March 2015: £63.7 million).
The Group had drawn debt of £65 million at 30 September 2015 from its £180 million corporate loan facility, leaving headroom of £115 million to fund future site acquisitions and construction costs on existing developments. The facility extends to March 2019 and the Group expects to utilise it in full over the next few years as the business continues to grow. The Board is comfortable with increased levels of debt given that many of the Group's developments have been substantially de-risked by the level of forward sales secured.
London market
The fundamental strengths of London remain unchanged given its robust economy, international reputation and an ever improving transport network which will include Crossrail from 2018. Telford Homes is focused on developing in relatively affordable non-prime locations in London where prices are typically between £500 and £800 per square foot. At this price point the Group is seeing consistently strong demand and there is no evidence of that slowing.
London still suffers from an acute shortage of homes compared to current need, let alone future population growth, and it is clear that any increase in supply needs to be in areas where tenants and owner-occupiers can actually afford to live. The imbalance between supply and demand in the Group's typical locations is the primary driver of the Board's plans to increase the number of homes that Telford Homes is building over the next few years.
The measures taken to maintain prudence in the mortgage market continue to benefit the Group by ensuring that affordability constraints act as a natural brake on excessive price inflation. The availability of mortgage finance has improved for those that can afford the payments and the cost of that finance is tempered by a low base rate. Notwithstanding this backdrop, the Group's customers typically require relatively low loan to value mortgages and there have been no financing related issues affecting either the rate of sales or the ability of customers to complete their purchases. In addition the Group has only made six sales under the Government's existing nationwide 'Help to Buy' scheme since it was introduced and does not expect this to materially increase in the future.
Sales
Strong demand for the Group's homes has led to continuing sales success across a number of different developments. The launches of both Manhattan Plaza, E14 and Bermondsey Works, SE16 earlier this year exceeded the Board's expectations. Alongside this consistent sales have been achieved from on-site sales centres and through agents. In September the Group opened a new central sales and marketing suite in Stratford which has already proved its worth through the launch of the remaining 32 homes at Stratosphere, E15 with 18 reservations secured on the first day and only eight now remaining for sale.
Including the revenue reported for the first half of the current financial year the Group has secured total forward sales of more than £700 million to be recognised from the year to 31 March 2016 onwards. This represents over four times the revenue reported in the year to 31 March 2015. The Group takes a minimum 10 per cent deposit on each sale and typically another 10 per cent one year later where exchange of contracts takes place more than two years ahead of completion. This not only brings immediate cash flow benefits but also gives Telford Homes a very secure position from which to access capital and grow the business.
The Group has sold to a broad mix of customers over a number of years and, given the substantial forward sold position, the Board has considerable flexibility over its future sales strategy. Investor demand continues due to a thriving rental market in typical Telford Homes locations and, despite recent tax changes, this is expected to remain a significant component of the Group's sales over the next few years. This is simply down to the number of tenants ready and waiting to move into new homes in London. However owner-occupier demand is also prevalent and the Board expects to derive more benefit from the new Stratford sales and marketing suite on future schemes across a wide spectrum of buyers.
Telford Homes has already indicated that it has been monitoring the emergence of institutional investment in the Private Rented Sector (PRS) and the Board expects this to be a feature of the Group's sales in the future. Strong values can still be achieved based on rental demand and yields in certain locations and, as receipts are paid during construction, return on equity is significantly improved with no need for external debt finance. The Group has recently been marketing one of its developments for PRS and hopes to conclude a sale in the near future. If this is successful further developments could be sold to the same market representing a potentially exciting addition to the Group's established sales channels.
United House acquisition and development pipeline
In September 2015 the Group enhanced its development pipeline through the acquisition of the regeneration business of United House Developments. The development opportunities that were acquired in this transaction are all in the Group's core area and, subject in some cases to contractual conditions and achieving planning consents, they have increased the Group's development pipeline to more than £1.5 billion of future revenue. The acquisition has also added a longer term strategic element to the development pipeline which now stretches over the next eight years to 2024 and provides the Group with a substantial platform from which to undertake further investment.
Planning environment
The Group continues to acquire sites subject to receipt of a planning consent or unconditionally without planning but only when the Board is confident of achieving a satisfactory consent. The Group's knowledge of the planning process in its typical locations and ability to work in partnership with local authorities, the Greater London Authority and other interested parties removes the majority of the risk associated with the land purchase. In addition, subsidised affordable housing is an important component of any new development and the Group has strong relationships with a number of providers who make competitive offers and assist in delivering policy compliant subsidised housing in planning proposals.
The Group has achieved significant success in progressing planning for a number of its key developments. After an initial delay, full planning permission is now in place for 156 homes at Caledonian Road, N1 and work is underway on site. In addition permission has been granted in the last few weeks for 471 homes at Chobham Farm, Stratford in partnership with Notting Hill Housing Group, for 192 homes at Redclyffe Road, E6 and for an increased scheme of 155 homes at Limeharbour, E14.
Equity placing
In November 2015 the Group successfully concluded an equity placing of 13,888,889 new ordinary shares of 10 pence each at 360 pence raising £50 million before expenses. This placing has enhanced the Group's balance sheet and enables Telford Homes to take advantage of the long term lack of supply of new homes in London by acquiring additional development opportunities within its area of operation.
The net proceeds of the placing are expected to be committed within one year and fully utilised within two years with an initial focus on driving sustained profit growth and targeting annual profit before tax exceeding £45 million from 2019 onwards. Beyond this the Board expects to maintain controlled growth towards profit before tax of £60 million whilst also utilising the recycled equity to manage future debt requirements and therefore reduce longer term gearing.
The Group has already begun allocating the net placing proceeds to new opportunities and on 26 November the Group announced that it had conditionally exchanged contracts for the purchase of a significant development site on Carmen Street in Poplar, E14, for in excess of £20 million. Completion is subject only to the receipt of outstanding documentation. The site has full detailed planning consent for a 22 storey development, consisting of 206 new homes and a nursery and represents an improvement on the Board's expectation of committing the new equity to sites requiring a planning consent. Work is expected to commence in 2016 with completions anticipated in 2019 and 2020.
Outlook
London has a strong economy with an improving transport network and yet suffers from an acute shortage of new homes. Telford Homes is focused on non-prime, relatively affordable, locations in London where the imbalance between supply and demand is at its greatest. Whilst this dynamic is unlikely to be solved quickly the Government has introduced several measures to promote housebuilding and home ownership. The Board welcomes the clear political support for the industry and will explore where these measures might directly benefit the Group and its customers.
The Group has a significant forward sold position and a development pipeline of more than £1.5 billion of future revenue. The United House acquisition and the recent equity placing are important steps in delivering on the Board's longer term growth targets and Telford Homes is well placed to cement its position as one of London's leading developers.
Jon Di-Stefano
Chief Executive
1 December 2015
GROUP INCOME STATEMENT INCLUDING PROPORTIONAL SHARE OF JOINT VENTURE RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
|
|
Non-GAAP 6 months ended 30 September 2015 |
Non-GAAP 6 months ended 30 September 2014 |
Non-GAAP Year ended 31 March 2015 |
|
| £000 | £000 | £000 |
Revenue |
|
139,584 |
65,051 |
173,452 |
Cost of sales |
| (102,100) | (42,401) | (119,592) |
Gross profit |
| 37,484 | 22,650 | 53,860 |
|
|
|
|
|
Administrative expenses |
| (9,584) | (7,808) | (16,693) |
Selling expenses |
| (5,828) | (4,293) | (9,147) |
Operating profit |
| 22,072 | 10,549 | 28,020 |
|
|
|
|
|
Finance income |
| 101 | 75 | 146 |
Finance costs |
| (1,203) | (1,204) | (3,038) |
Profit before income tax |
| 20,970 | 9,420 | 25,128 |
|
|
|
|
|
Income tax expense |
| (4,149) | (1,975) | (5,464) |
Profit after income tax |
| 16,821 | 7,445 | 19,664 |
Key management information is presented to the Board with the Group's share of joint venture results proportionally consolidated and therefore including the relevant share of the results of joint ventures in each line of the income statement and balance sheet. The Group's joint ventures are an integral part of the business and as such the Board believes that the financial results presented in this way are the most appropriate for assessing the true underlying performance of the business. The key metrics included within the Chief Executive's Statement are therefore reported on this basis. A reconciliation between key management information and Generally Accepted Accounting Principles (GAAP) compliant information accounting for joint ventures under IFRS 11 as equity investments is included in note 6.
GROUP BALANCE SHEET INCLUDING PROPORTIONAL SHARE OF JOINT VENTURE RESULTS AT 30 SEPTEMBER 2015
|
|
Non-GAAP 30 September 2015 | Non-GAAP 30 September 2014 | Non-GAAP 31 March 2015 |
|
| £000 | £000 | £000 |
|
|
|
|
|
Non current assets Goodwill |
| 383 | - | - |
Property, plant and equipment |
| 1,547 | 1,170 | 1,028 |
Financial asset |
| - | 51 | - |
Deferred income tax assets |
| 390 | 732 | 866 |
|
| 2,320 | 1,953 | 1,894 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
| 290,801 | 244,751 | 277,161 |
Trade and other receivables |
| 16,777 | 8,399 | 11,451 |
Cash and cash equivalents |
| 12,482 | 12,958 | 39,701 |
|
| 320,060 | 266,108 | 328,313 |
|
|
|
|
|
Total assets |
| 322,380 | 268,061 | 330,207 |
|
|
|
|
|
Non current liabilities |
|
|
|
|
Trade and other payables |
| (737) | (396) | (679) |
Financial liabilities |
| (300) | - | (389) |
|
| (1,037) | (396) | (1,068) |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| (119,721) | (103,098) | (113,732) |
Borrowings |
| (62,853) | (52,189) | (92,559) |
Current income tax liabilities |
| (3,832) | (1,833) | (2,460) |
|
| (186,406) | (157,120) | (208,751) |
|
|
|
|
|
Total liabilities |
| (187,443) | (157,516) | (209,819) |
|
|
|
|
|
Net assets |
| 134,937 | 110,545 | 120,388 |
|
|
|
|
|
Capital and reserves |
|
|
|
|
Issued share capital |
| 6,065 | 5,959 | 6,025 |
Share premium |
| 58,831 | 57,638 | 58,551 |
Retained earnings |
| 70,041 | 46,948 | 55,812 |
|
|
|
|
|
Total equity |
| 134,937 | 110,545 | 120,388 |
GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
|
| Unaudited 6 months ended | Unaudited 6 months ended | Audited Year ended |
|
| 30 September 2015 | 30 September 2014 | 31 March 2015 |
| Note | £000 | £000 | £000 |
|
|
|
|
|
Total revenue |
| 139,584 | 65,051 | 173,452 |
|
|
|
|
|
Less share of revenue from joint ventures |
| (834) | (22,756) | (33,007) |
|
|
|
|
|
Group revenue |
| 138,750 | 42,295 | 140,445 |
|
|
|
|
|
Cost of sales |
| (101,693) | (30,983) | (102,215) |
|
|
|
|
|
Gross profit |
| 37,057 | 11,312 | 38,230 |
|
|
|
|
|
Administrative expenses |
| (9,556) | (7,800) | (16,675) |
Selling expenses |
| (5,832) | (3,788) | (8,569) |
Share of results of joint ventures |
| 444 | 10,836 | 15,047 |
|
|
|
|
|
Operating profit |
| 22,113 | 10,560 | 28,033 |
|
|
|
|
|
Finance income |
| 100 | 73 | 142 |
Finance costs |
| (1,187) | (1,204) | (3,038) |
|
|
|
|
|
Profit before income tax |
| 21,026 | 9,429 | 25,137 |
|
|
|
|
|
Income tax expense | 3 | (4,205) | (1,984) | (5,473) |
|
|
|
|
|
Profit after income tax |
| 16,821 | 7,445 | 19,664 |
|
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
Basic | 5 | 28.0p | 12.6p | 33.2p |
|
|
|
|
|
Diluted | 5 | 27.7p | 12.3p | 32.6p |
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
|
| Unaudited 6 months ended | Unaudited 6 months ended | Audited Year ended |
|
| 30 September 2015 | 30 September 2014 | 31 March 2015 |
|
| £000 | £000 | £000 |
Movement in derivative financial instruments hedged |
|
89 |
(176) |
(616) |
Movement in deferred tax on derivative financial instruments hedged |
| (18)
| 37
| 125
|
|
|
|
|
|
Other comprehensive income (loss) net of tax - items that may subsequently be reclassified into profit or loss |
| 71
| (139)
| (491)
|
|
|
|
|
|
Profit for the period |
| 16,821 | 7,445 | 19,664 |
|
|
|
|
|
Total comprehensive income for the period |
|
16,892
|
7,306
|
19,173
|
GROUP BALANCE SHEET
AT 30 SEPTEMBER 2015
|
| Unaudited 30 September 2015 | Unaudited 30 September 2014 | Audited 31 March 2015 |
|
| £000 | £000 | £000 |
|
|
|
|
|
Non current assets Goodwill |
| 304 | - | - |
Investments in joint ventures |
| 19,576 | 5,468 | 2,686 |
Property, plant and equipment |
| 1,547 | 1,170 | 1,028 |
Financial asset |
| - | 51 | - |
Deferred income tax assets |
| 413 | 732 | 866 |
|
| 21,840 | 7,421 | 4,580 |
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
| 246,969 | 238,262 | 254,704 |
Trade and other receivables |
| 16,980 | 9,397 | 11,694 |
Cash and cash equivalents |
| 11,976 | 12,529 | 39,659 |
|
| 275,925 | 260,188 | 306,057 |
|
|
|
|
|
Total assets |
| 297,765 | 267,609 | 310,637 |
|
|
|
|
|
Non current liabilities |
|
|
|
|
Trade and other payables |
| (737) | (396) | (679) |
Financial liabilities |
| (300) | - | (389) |
|
| (1,037) | (396) | (1,068) |
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| (95,106) | (102,646) | (94,162) |
Borrowings |
| (62,853) | (52,189) | (92,559) |
Current income tax liabilities |
| (3,832) | (1,833) | (2,460) |
|
| (161,791) | (156,668) | (189,181) |
|
|
|
|
|
Total liabilities |
| (162,828) | (157,064) | (190,249) |
|
|
|
|
|
Net assets |
| 134,937 | 110,545 | 120,388 |
|
|
|
|
|
Capital and reserves |
|
|
|
|
Issued share capital |
| 6,065 | 5,959 | 6,025 |
Share premium |
| 58,831 | 57,638 | 58,551 |
Retained earnings |
| 70,041 | 46,948 | 55,812 |
|
|
|
|
|
Total equity |
| 134,937 | 110,545 | 120,388 |
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015 (UNAUDITED)
| Share capital | Share premium | Retained earnings | Total equity |
| £000 | £000 | £000 | £000 |
Balance at 1 April 2015 | 6,025 | 58,551 | 55,812 | 120,388 |
Profit for the period | - | - | 16,821 | 16,821 |
Total other comprehensive income | - | - | 71 | 71 |
Excess tax on share options | - | - | 242 | 242 |
Dividend on equity shares | - | - | (3,618) | (3,618) |
Proceeds of equity share issues | 40 | 280 | - | 320 |
Share-based payments | - | - | 102 | 102 |
Purchase of own shares | - | - | (5) | (5) |
Sale of own shares | - | - | 616 | 616 |
Balance at 30 September 2015 | 6,065 | 58,831 | 70,041 | 134,937 |
|
|
|
|
|
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2014 (UNAUDITED)
| Share capital | Share premium | Retained earnings | Total equity |
| £000 | £000 | £000 | £000 |
Balance at 1 April 2014 | 5,940 | 57,529 | 41,923 | 105,392 |
Profit for the period | - | - | 7,445 | 7,445 |
Total other comprehensive loss | - | - | (139) | (139) |
Excess tax on share options | - | - | (23) | (23) |
Dividend on equity shares | - | - | (3,029) | (3,029) |
Proceeds of equity share issues | 19 | 109 | - | 128 |
Share-based payments | - | - | 111 | 111 |
Purchase of own shares | - | - | (21) | (21) |
Sale of own shares | - | - | 681 | 681 |
Balance at 30 September 2014 | 5,959 | 57,638 | 46,948 | 110,545 |
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2015 (AUDITED)
| Share capital | Share premium | Retained earnings | Total equity |
| £000 | £000 | £000 | £000 |
Balance at 1 April 2014 | 5,940 | 57,529 | 41,923 | 105,392 |
Profit for the year | - | - | 19,664 | 19,664 |
Total other comprehensive loss | - | - | (491) | (491) |
Excess tax on share options | - | - | 305 | 305 |
Dividend on equity shares | - | - | (6,061) | (6,061) |
Proceeds of equity share issues | 85 | 1,022 | - | 1,107 |
Share-based payments | - | - | 218 | 218 |
Purchase of own shares | - | - | (670) | (670) |
Sale of own shares | - | - | 924 | 924 |
Balance at 31 March 2015 | 6,025 | 58,551 | 55,812 | 120,388 |
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
| Unaudited 6 months ended | Unaudited 6 months ended | Audited Year ended |
| 30 September 2015 | 30 September 2014 | 31 March 2015 |
| £000 | £000 | £000 |
Cash flow from operating activities |
|
| |
Operating profit | 22,113 | 10,560 | 28,033 |
|
|
|
|
Depreciation | 236 | 295 | 603 |
Share-based payments | 102 | 111 | 218 |
(Profit) loss on sale of tangible fixed assets | (25) | - | 15 |
Decrease (increase) in inventories | 8,874 | (81,357) | (96,134) |
Increase in receivables | (5,305) | (1,936) | (4,250) |
Increase in payables | 1,090 | 27,444 | 19,530 |
Share of results from joint ventures | (444) | (10,836) | (15,047) |
| 26,641 | (55,719) | (67,032) |
|
|
|
|
Interest paid and debt issue costs | (2,102) | (1,572) | (6,603) |
Income tax paid | (2,459) | (1,744) | (4,324) |
Distribution from joint ventures | 2,116 | 17,472 | 24,465 |
Cash flow from operating activities | 24,196 | (41,563) | (53,494) |
|
|
|
|
Cash flow from investing activities |
|
|
|
Purchase of tangible assets | (755) | (312) | (492) |
Proceeds from sale of tangible assets | 25 | - | - |
Consideration paid for business combination | (18,562) | - | - |
Interest received | 100 | 73 | 142 |
Cash flow from investing activities | (19,192) | (239) | (350) |
|
|
|
|
Cash flow from financing activities |
|
|
|
Proceeds from issuance of ordinary share capital | 320 | 128 | 1,107 |
Purchase of own shares | (5) | (21) | (670) |
Sale of own shares | 616 | 681 | 924 |
Increase in bank loans | - | 37,632 | 95,000 |
Repayment of bank loans | (30,000) | (13,822) | (29,559) |
Dividend paid | (3,618) | (3,029) | (6,061) |
Cash flow from financing activities | (32,687) | 21,569 | 60,741 |
|
|
|
|
Net (decrease) increase in cash and cash equivalents | (27,683) | (20,233) | 6,897
|
Cash and cash equivalents brought forward | 39,659 | 32,762 | 32,762
|
Cash and cash equivalents carried forward | 11,976 | 12,529 | 39,659 |
|
|
|
|
NOTES
1 Basis of preparation |
|
The interim accounts have been prepared on the basis of the recognition and measurement requirements of International Financial Reporting Standards (IFRS) in issue that are either endorsed by the EU and effective at 31 March 2016 or are expected to be endorsed and effective at 31 March 2016.
The interim accounts do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The figures for the half years ended 30 September 2015 and 30 September 2014 are unaudited. Consistent with previous years, the Board has included within the interim results an income statement and a balance sheet using proportional consolidation for the results of joint ventures along with the Generally Accepted Accounting Principles (GAAP) compliant versions of the income statement and balance sheet which present joint ventures as equity investments.The interim accounts were approved by the directors on 1 December 2015 and the GAAP compliant information has been reviewed by the auditors whose review report is unqualified and will be included in the interim report distributed to shareholders.
The directors have assessed the Group's projected business activities and available financial resources together with detailed forecasts for cash flow and relevant sensitivity analysis. The directors believe that the Group remains well placed to manage its business risks successfully. After making appropriate enquiries the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly the directors continue to adopt the going concern basis in preparing the interim accounts.
The Group's statutory accounts for the year ended 31 March 2015 were approved by the Board of directors on 26 May 2015, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 498 of the Companies Act 2006.
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The significant judgements made by management in applying the Group's accounting policies and the key sources of uncertainty were principally the same as those applied to the Group's financial statements as at 31 March 2015. |
2 Accounting policies |
Accounting convention The interim accounts have been prepared under the historical cost convention and on a basis consistent with the accounting policies in the financial statements for the year ended 31 March 2015 with exception of the new accounting standards and accounting policies listed below.
Due to the business combination which took place with effect from 30 June 2015 the Group has adopted IFRS 3 'Business combinations'. The adoption of this standard has resulted in the following accounting policies:
Business combinations Business combinations are accounted for from the date control is transferred and the Group applies the acquisition method of accounting. The identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at the fair value at the acquisition date. Acquisition related costs are expensed as incurred.
|
3 Taxation |
|
Taxation has been calculated on the profit for the six months ended 30 September 2015 at the estimated effective tax rate of 20.0% (30 September 2014: 21.0%). |
4 Dividends | |||||||
| |||||||
The interim dividend declared for the six months ended 30 September 2015 is 6.5 pence per ordinary share and is expected to be paid on 8 January 2016 to those shareholders on the register at the close of business on 11 December 2015. The ex-dividend date is therefore 10 December 2015. This dividend was declared after 30 September 2015.
The interim dividend paid for the six months ended 30 September 2014 was 5.1 pence per ordinary share and the final dividend paid for the year ended 31 March 2015 was 6.0 pence per ordinary share.
| |||||||
| Unaudited | Unaudited | Audited |
| |||
| 6 months ended 30 September 2015 | 6 months ended 30 September 2014 | Year ended 31 March 2015 |
| |||
Weighted average number of shares in issue | 60,141,603 | 59,063,188 | 59,246,624 |
| |||
Dilution - effect of share schemes | 679,365 | 1,363,127 | 1,067,436 |
| |||
Diluted weighted average number of shares in issue | 60,820,968
| 60,426,315
| 60,314,060
|
| |||
|
|
|
|
| |||
Profit on ordinary activities after taxation | £16,821,000
| £7,445,000
| £19,664,000
|
| |||
|
|
|
|
| |||
Earnings per share: |
|
|
|
| |||
Basic | 28.0p | 12.6p | 33.2p |
| |||
Diluted | 27.7p | 12.3p | 32.6p |
| |||
|
|
|
|
| |||
6 Segmental reporting
The Group has only one reportable segment being housebuilding in the United Kingdom. Financial analysis is presented on this basis to the chief decision makers for the Group these being the directors.
Management information is presented to the directors with the Group's share of joint venture results proportionally consolidated to reflect the true underlying performance of the Group. The Group adopted IFRS 11 'Joint Arrangements' in the year to 31 March 2015 and as such joint ventures within these condensed financial statements are accounted for as equity investments rather than by proportional consolidation. A reconciliation between management information including a proportional share of joint venture results and the GAAP compliant information in the condensed financial statements is as follows:
6 months ended 30 September 2015 |
Management information £000 |
Remove share of joint ventures £000 |
GAAP £000 |
Revenue |
139,584 |
(834) |
138,750 |
Gross profit | 37,484 | (427) | 37,057 |
Profit before income tax | 20,970 | 56 | 21,026 |
|
|
|
|
Total assets | 322,380 | (24,615) | 297,765 |
Total liabilities Net assets | (187,443) 134,937 | 24,615 - | (162,828) 134,937 |
|
|
|
|
6 months ended 30 September 2014 | Management Information £000 | Remove share of joint ventures £000 | GAAP £000 |
Revenue |
65,051 |
(22,756) |
42,295 |
Gross profit | 22,650 | (11,338) | 11,312 |
Profit before income tax | 9,420 | 9 | 9,429 |
|
|
|
|
Total assets | 268,061 | (452) | 267,609 |
Total liabilities Net assets | (157,516) 110,545 | 452 - | (157,064) 110,545 |
For the year ended 31 March 2015 | Management Information £000 | Remove share of joint ventures £000 | GAAP £000 |
Revenue |
173,452 |
(33,007) |
140,445 |
Gross profit | 53,860 | (15,630) | 38,230 |
Profit before income tax | 25,128 | 9 | 25,137 |
|
|
|
|
Total assets | 330,207 | (19,570) | 310,637 |
Total liabilities Net assets | (209,819) 120,388 | 19,570 - | (190,249) 120,388 |
7 Business combinations | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
On 30 June 2015 the Group acquired and took control of the regeneration business of United House Developments ('UHD') from United House Group Holdings Limited ('UHGHL'). The regeneration business of UHD consists of a group of companies that have various interests in four significant development opportunities in North and East London.
An amount of £22.97 million was paid on 19 September once the Group had undertaken a detailed diligence process. This includes an amount which is held in escrow relating to one of the four developments, Gallions Quarter, where completion is conditional on UHGHL securing a legal interest in the site. In addition it also includes payments for expenditure during the period from 30 June 2015 to 19 September 2015. The consideration for the business combination as at 30 June was £18.56 million.
The consideration paid for the acquisition, the fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition related costs of £393,000 have been charged to administrative expenses in the consolidated income statement for the period ended 30 September 2015.
Revenue and profit recognised since the date of acquisition are minimal and not significant to the Group.
The fair value of inventories acquired including the Group's share of joint venture inventories was £18,153,000. Included within this value is an uplift on cost of £1,917,000. The method for determining the fair value of inventory is to use the expected selling price less costs to complete, costs of disposal and expected margin for each development.
All other assets and liabilities were valued at fair value which corresponds to the previous book value.
8 Post balance sheet event
Equity issue
On 16 November 2015 the Company issued 13,888,889 10 pence ordinary shares of at 360 pence per share as a result of a share placing.
- ENDS -