Telford Homes Regulatory News (TEF)

8 Apr 2008 07:01

Telford Homes PLC08 April 2008 Press Release 8 April 2008 Telford Homes Plc ("Telford Homes" or "the Company") Trading update Telford Homes Plc (AIM:TEF), the residential developer in East London noted forregeneration projects within public sector partnerships, is pleased to give thefollowing trading update ahead of its preliminary results for the year ended 31March 2008 which will be released on 28 May 2008. Financial update Telford Homes has had a strong second half with continued success in pre-sellinghomes to the investor market at an early stage in the development process. Thispolicy of de-risking the business through pre-selling properties is integral tothe Company's longer term strategy. A number of planning consents have been achieved during the last six months. Inparticular a major joint venture development with Genesis Housing Group inBethnal Green Road has received a resolution to grant planning permission for360 homes. As a result of the Company's strong trading performance, the Board expects toannounce results in line with market expectations for the year ended 31 March2008. Sales performance In the last three months, three new development sales launches have taken placewith excellent results notwithstanding the lack of confidence in some aspects ofthe national housing market. On 31 January 2008, the 66 open market apartments at Vellum, Walthamstow, E17,were launched and to date contracts have been exchanged on 23 of theseproperties. In addition, on 20 February 2008, 41 open market apartments atKinetica, E8, were launched with contracts subsequently exchanged on 24properties. Both developments are expected to be completed in 2010. At Casa,E14, the Company is pleased to report that all 14 open market apartments havebeen sold with contracts exchanged during March 2008 and completion expected inearly 2009. Queen Mary's Gate in South Woodford is the Company's only major sales outletwith properties largely for the owner-occupier market. The first phase is beingcompleted now and is 93% sold with contracts exchanged on 172 of the 184 privateapartments. Over 100 of these homes have now been handed over to customers. Thesecond phase is due to be completed in November 2008, and currently 17 of the 93private apartments are sold with contracts exchanged. Current market conditions The national housing market has been challenging in the last six months, as hasbeen widely reported by other UK house builders. The Company has continued topre-sell homes in East London during this period and contracts have beenexchanged for the sale of 85% of the 1,700 homes that have been underconstruction for more than three months. The number of properties pre-sold oncurrent developments puts Telford Homes in a very secure position going forward. The key issue now is the restricted availability and higher cost of mortgagefinance and therefore greater difficulty for prospective purchasers in financingtheir properties. This is limiting the rate of sales in the short term, both toinvestors and owner-occupiers, but the Company will be able to time new saleslaunches appropriately given the level of pre-sales already achieved.Restrictions in mortgage finance also make the process of legally completingfinished properties more complex. In spite of this the Company has successfullymanaged this process on over 250 completions in the last four months. Due to the uncertainty in the national housing market and the associatedmortgage finance issue, the Board has taken a prudent approach to investment inland in the last six months. This has meant reduced overall expenditure witheven greater focus on partnerships and joint ventures with housing associationsand stock transfer organisations. This approach is expected to continue into thenew financial year with the protection of cash flow remaining a priority. Outlook Current market conditions will affect the Company in the new financial year foras long as they continue but the medium to longer term outlook remains positive.The regeneration of East London is ongoing, supported by the Olympicdevelopment, and demand for rental properties in the area is still strong.Recent success in pre-selling to investors demonstrates the market's belief inthe Telford Homes product and in the future success of East London. The partnerships that Telford Homes has with housing transfer organisations suchas Eastend Homes and Poplar HARCA, as well as many housing associations,underpin the future supply of land into the development pipeline and will drivefurther growth of the Company in the future. Andrew Wiseman, Chief Executive of Telford Homes, commented: "The year to 31March 2008 has been another successful period for Telford Homes. Recentdevelopment launches have gone well and as a result we expect to meet marketexpectations for the year, following a period of continued strong growth." "Our business model is robust due to our policy of reducing risk throughpre-selling properties and maintaining a controlled development pipeline. We arewell positioned to benefit when the availability of mortgage finance improvesand confidence returns to the housing market. Until this happens we will becautious in our approach to the new financial year. The medium to longer termoutlook remains positive for the Company and we will continue to work closelywith housing partners over the coming years to increase our contribution to theregeneration of East London." - Ends - For further information:Telford Homes PlcAndrew Wiseman, Chief Executive Tel: +44 (0) 1992 809 800Jon Di-Stefano, Financial Director www.telfordhomes.plc.uk Shore CapitalAlex Borrelli Tel: +44 (0) 20 7408 4090 Media enquiries:AbchurchChris Lane / Joanne Shears Tel: +44 (0) 20 7398 7708Joanne.shears@abchurch-group.com www.abchurch-group.com Notes to Editors Telford Homes is an established house builder focusing on the regeneration ofbrownfield sites in the East and North London area. Since its inception in2000, the Company has delivered strong growth; for the year 2006/7, turnover was£104 million, a rise of 32% over 2005/6. The Company uses a mixture of debt andequity to purchase each site, and typically takes 70% debt on any newdevelopment both in terms of land cost and total development costs. The Company's successful record of selling properties at an early stage in thedevelopment allows greater visibility, and typically one third of anydevelopment is sold for affordable housing. Telford Homes has an excellenttrack record of working with housing associations and has forged many strongrelationships. Whilst the majority of every scheme is residential, often somecommercial units are required as a condition of the planning consent, which maybe used for office space, retail units, or community use. The Company's development pipeline reported on 4 December 2007 included over2,000 properties expected to produce around £95 million of gross profit overthree to four years; this does not account for the properties which areanticipated to come from its significant partnership with Eastend Homes. Thispartnership alone is expected to deliver an additional 1,300 new homes between2008 and 2011. The Company currently has 19 developments in progress, with manymore going through the planning process. For further information, please see www.telfordhomes.plc.uk This information is provided by RNS The company news service from the London Stock Exchange