preliminary results 31 march 2014 - telfordhomes-ir.london€¦ · central e15 • continuing sales...

Developing in London

PRELIMINARY RESULTS 31 MARCH 2014

Where we build

1 TELFORD HOMES Plc Preliminary Results 31 March 2014

2www.telfordhomes.plc.uk

• Buoyant London market

• Strong forward sales position

• No sales through ‘Help to Buy’

• Not enough homes to meet demand

• Operating where people want to live and can afford to live

• Substantial increase in margins, profits and dividends

• New equity and deposits on forward sales driving investment in new opportunities

• Development pipeline increased by 40 per cent

• Net cash and zero gearing

• More than £120 million of cumulative pre-tax profit over the next four years

AVANT-GARDE

Highlights

E1


201

7

201

6

0%

20%

40%

60%

80%

100%

201

59

8%

72%

27%

Percentage of expected open market completions that have already been sold


Sales performanceSTRATFORD CENTRAL

E15

• Continuing sales success with contracts exchanged on 515 open market properties in the year

• Exceeds the 492 open market completions thereby increasing the forward sold position

• £341 million of revenue secured but not yet recognised at 31 March 2014 (2013: £280 million)

• Achieved without any significant launches in the second half of the year

• Enhanced by phenomenal success of Stratford Central development in recent weeks

• Most of the 157 open market homes already sold for over £70 million

• More than 60 sales at a UK only sales launch held ahead of similar events overseas

• Stratford Central completes in the year to 31 March 2018

• Therefore secured forward sales four financial years ahead for the first time


• Split of sales has changed slightly in favour of owner-occupiers and UK based investors

• Respected brand and reputation for quality and service

• Many repeat purchasers buying at recent sales events

• There has been negative commentary on marketing London property to overseas investors

• Investors are not leaving properties empty and instead invest to secure a rental return

• Telford Homes will continue to sell a proportion of its homes overseas

• Strong demand from potential tenants who either cannot afford to buy or do not want to buy

Our customers

PARKSIDE QUARTER E14


UK investors Owner-occupiers Overseas investors

33%

35%

32%

Breakdown of open market contracts exchanged in the year to 31 March 2014


• Strategy to secure forward sales to control risk and enhance profit and cash flow visibility

• Success has allowed the Board to manage sales releases to take advantage of improving prices

• Underlying price inflation in our locations of between 10 and 15%

• Concerns over property bubble overlook the underlying imbalance between supply and demand

• Imbalance leads to increasing prices but only if those who want to live in London can afford to do so

• Mortgage availability has improved but much better controlled than in 2007

• Purchasers typically less than 80% LTV mortgages and still no sales through ‘Help to Buy’

• Our developments are affordable to many prospective owners and tenants

London market HORIZONSE14

9 TELFORD HOMES Plc Preliminary Results 31 March 20149 TELFORD HOMES Plc Preliminary Results 31 March 2014

2014 2013

Revenue £140.8m £142.4m

Gross profit £42.1m £31.4m

Gross margin adjusted for interest

31.9% 24.3%

Operating profit £21.2m £10.6m

Operating margin adjusted for interest

17.1% 9.7%

Profit before tax £19.2m £9.0m

EPS 26.4p 14.3p

Dividend per share 8.8p 4.8p

Group income statement

PARLIAMENT HOUSE SE1


• Sales prices significant factor in increasing margins

• Gross margin of 31.9% compares favourably with target margin on appraising land of circa 24%

• Increasing profit from affordable housing contracts due to higher open market prices

• Robust control of construction costs resulting in savings on developments completed in the year

• Already budgeting for future cost increases as construction activity picks up

• Selling expenses reduced but recognition depends on timing and success of development launches

• Maintaining policy of paying one third of earnings in dividends

• Total dividend for the year increased by 83%

Increasing profits


March 2014

March 2013

Non current assets £2.2m £1.1m

Inventories £173.1m £132.5m

Cash £33.0m £23.7m

Other current assets £6.6m £19.4m

Borrowings (£28.1m) (£58.1m)

Other liabilities (£81.4m) (£45.9m)

Net assets £105.4m £72.7m

Net cash (debt) £4.8m (£34.4m)

Gearing 0% 47%

Uncovered gearing 0% 0%ABODE E3

Group balance sheet

• Cash balances remain high but proportion committed to future land and development costs

• £20 million of equity raised in June 2013

• Deposits received on forward sales exceed £45 million at 31 March 2014

• Reduction in gross borrowings with net cash position at year end

• Gearing and uncovered gearing both zero

• Net debt and gearing expected to increase as the Group invests in existing and new developments

• Loan facility of £120 million expiring 30 September 2016

• Significant financial headroom to add to the development pipeline


Cash and debt finance

THE BOATYARDE14

Partnerships

• Affordable housing accounts for around a third of the homes on each development

• Contributed 17.5% of revenue for the year to 31 March 2014

• Long term partnerships built up to secure best value on each development

• These partners are also important sources of new development opportunities

• Many of the Group’s development sites have been purchased from public sector landowners

• These relationships are vital in a competitive land market



• New equity and deposits on forward sales being used to strengthen pipeline

• Pipeline at 31 March 2014 expected to deliver over £875 million of future revenue (2013: £627 million)

• Represents more than six times the revenue reported for the year to 31 March 2014

• Developing in up and coming inner London locations

• Not involved in the increasingly expensive prime central London market

• New sites spread across many boroughs but all well connected to the heart of the city

• Cash and undrawn debt available to fund further acquisitions

• Broad spread of site sizes to manage return on capital

• Pre-tax ROCE of 17.5% in the year to 31 March 2014 (2013: 11.2%)

STRATFORD PLAZA

E15

Development pipeline

VIBE, DALSTONE8



• Acquiring a number of sites without planning or subject to planning

• Only when the Board is confident of achieving a satisfactory consent

• Excellent track record of achieving consents in a challenging environment

• Majority of risk removed by knowledge of process and working in partnership with all interested parties

• Consent achieved for 181 homes at Stratford Central earlier this year

• 47 homes and a church at Hackney Square, Frampton Park

• 101 homes and a new school at Vibe in Dalston

• 18 homes at Allcroft Road, Camden after protracted discussions and an appeal

The planning process


• Telford Homes brand represents consistent delivery of high quality, desirable new homes

• Quality of developments recognised by many awards

• NHBC A1* rating enables 20% deposits to be taken from customers rather than usual 10%

• New Customer Relations team to manage the ‘customer experience’

• Working alongside Sales team and Customer Service team

• Enhanced ability to look after customers when their purchase is years ahead of delivery

• 98% recommendation rate in 2013

Quality and customer service


FIELDER APARTMENTS, BOW TRINITY

E3

CITYSCAPE E1



• London remains one of the strongest and most robust property markets in the world

• Operating in locations where our customers want to live and can afford to live

• ‘Strong demand and not enough supply’ underpins long term growth plans

• Sales being achieved at increasing prices

• Reporting significantly higher margins and profits

• Considerable level of forward sales already achieved for year to 31 March 2015 and beyond

• Pre-sold position and substantially increased pipeline give good visibility over future profits

• Board expects pre-tax profit to double again by 31 March 2018

• Anticipate that cumulative pre-tax profit over the next four financial years will exceed £120 million

• Positioning Telford Homes as one of the most significant developers in London

Outlook

Telford Homes PlcTelford HouseQueensgateBritannia RoadWaltham CrossHertfordshire EN8 7TF

preliminary results 31 march 2014 - telfordhomes-ir.london€¦ · central e15 • continuing sales...

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