DEVELOPING IN LONDON DELIVERING SUSTAINABLE GROWTH FINAL RESULTS 31 MARCH 2017
CITY NORTH N4 01 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
OVERVIEW OF TELFORD HOMES PLC • Specialists in planning, designing and building developments in London • Residential led alongside commercial uses, schools and religious buildings • Focus on brownfjeld and regeneration opportunities • A hands on developer with in-house construction expertise • A fjrst class safety record and a focus on sustainability • Concentrating on locations where the need for homes exceeds supply • A respected partner with a strong reputation and brand • A growing business with a development pipeline of over 4,000 homes • Experienced management team leading a workforce of over 1,000 people each day 02 www.telfordhomes.london
AMBITION AND STRATEGY Ambition There is a chronic shortage of new homes in London. Our goal is to grow Telford Homes over the next five years to help address this shortage. This will involve doubling our output of new homes in one of the world’s greatest cities. Our strategy 1 2 3 4 5 6 Increasing our Broadening Focusing on Positioning Maintaining a Driving the average site our geographic affordable non- Telford Homes strong forward evolution of our size due to focus within prime locations as a key sold position to sustainability economies of London to for open build to rent limit risk strategy scale access more market sale developer and opportunities homes partner across London 03 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
AREA OF OPERATION ENFIELD BARNET HARROW REDBRIDGE HARINGEY WALTHAM FOREST HAVERING BRENT HACKNEY CAMDEN ISLINGTON BARKING & DAGENHAM NEWHAM TOWER HILLINGDON HAMLETS EALING CITY WESTMINSTER SOUTHWARK H&F K&C GREENWICH HOUNSLOW LAMBETH BEXLEY WANDSWORTH RICHMOND LEWISHAM UPON THAMES MERTON KINGSTON UPON THAMES BROMLEY SUTTON CROYDON KEY Traditional area of operation Expanded area of operation 04 www.telfordhomes.london
VIBE E8 05 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
HIGHLIGHTS • A record year exceeding expectations • On track to deliver further substantial growth in profjt before tax • Signifjcant security from forward sales underpinning growth forecasts • Maintaining a growing dividend • Increasing strategic focus on build to rent • Individual sales market remains supported by a lack of supply • Continued focus on our customers with excellent feedback received • Successfully added to development pipeline in last few months 06 www.telfordhomes.london
MARKET DATA ECONOMIC GROWTH LONDON POPULATION (M) VS. COMPLETIONS (000) 12% 30 9.2 8.7 6% 20 8.2 0% 7.7 10 -6% 7.2 -12% 6.7 0 1992 1996 2000 2004 2008 2012 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 Real Gross Value Added (GVA) growth London Completions ('000) – London (LHS) (year on year), London and rest of UK Rest of UK Population (m) – London (RHS) Source: Experian data provided to GLA Source: DCLG, ONS ANNUAL HOUSING STARTS CHANGE IN AVERAGE PRIVATE IN LONDON (000) RENTS INDEX ON A YEAR EARLIER 30 6% 4% 20 2% 10 0% 0 -2% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: DCLG Source: DCLG London Rest of UK 07 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
MARKET CONTEXT • Positive market factors continue to outweigh negative infmuences • Imbalance between supply of homes and need in London • Uncertainty created by EU referendum has not caused any signifjcant concern • Some sales launches briefmy deferred but demand remained robust • Stability and rights of EU workers key issues in exit negotiations • No signifjcant impact on labour or material costs to date • Additional 3% stamp duty and phased removal of mortgage interest relief mainly impacting UK based investors • Strong rental demand continues to drive appetite from overseas and build to rent investors • Government support for building more homes is unlikely to change THE LIBERTY BUILDING E14 08 www.telfordhomes.london
THE PAVILIONS N1 09 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
TELFORD HOMES SALES MIX 2017 2016 3% 7% 20% 24% 69% 77% Individual investors Build to rent investors Owner-occupiers 100 80 60 % 40 20 0 2013 2014 2015 2016 2017 Year 10 www.telfordhomes.london
BERMONDSEY WORKS SE16 11 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
INDIVIDUAL SALES • Historic forward sales strategy has kept owner-occupier sales at low levels • Most unable to commit to a purchase more than six months ahead of completion • Signifjcant demand from this sector supported by Help to Buy • Encouraging launch of residual homes at Bermondsey Works aimed at owner-occupiers • Expect to hold back selected launches in the future to encourage balanced sales mix • Continued demand from investors in China and Hong Kong • Successful launch of City North in November 2016 secured over £43 million of sales • No other signifjcant launches in the year due to shift towards build to rent sales 12 www.telfordhomes.london
THE FORGE E6 13 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
BUILD TO RENT • Signifjcant step change in our build to rent activity over just 16 months Proforma margin comparison • Entered into four transactions since February 2016 comprising nearly 500 Individual sale Build to rent homes for over £230 million Revenue 100 88 • Secured sales with blue chip investors on forward funded basis needing no Land and build (76) (76) debt and limited equity Gross profjt 24 12 • Working with L&Q, Notting Hill Housing and on two developments with Gross margin 24% 14% M&G Real Estate Selling expense (4) (1) • Already a recognised build to rent developer leading to multiple approaches Finance costs (4) 0 from other investors Net profjt 16 11 • Valued partner to large scale investors due to construction expertise, delivery Net margin 16% 13% record and fjnancial standing • Expectation of longer term partnerships with key build to rent investors • Would enable the purchase of land and bespoke build to rent design with a secured sale already in place • Build to rent will remain a strategic focus enabling accelerated growth and reduced reliance on debt 14 www.telfordhomes.london
GROUP INCOME STATEMENT 2013 2014 2015 2016 2017 Revenue £142.4m £140.8m £173.5m £245.6m £291.9m Gross profjt £31.4m £42.1m £53.9m £63.1m £63.2m Administrative expenses (£12.9m) (£14.1m) (£16.7m) (£19.2m) (£20.8m) Selling expenses (£7.9m) (£6.8m) (£9.2m) (£9.4m) (£5.1m) Operating profjt £10.6m £21.2m £28.0m £34.5m £37.3m Net fjnance costs (£1.6m) (£2.0m) (£2.9m) (£2.3m) (£3.2m) Profit before tax £9.0m £19.2m £25.1m £32.2m £34.1m Gross margin adjusted for interest 24.3% 31.9% 32.4% 26.5% 22.3% Operating margin adjusted for interest 9.7% 17.1% 17.5% 15.0% 13.4% Earnings per share 14.3p 26.4p 33.2p 39.3p 36.8p Dividend per share 4.8p 8.8p 11.1p 14.2p 15.7p 15 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
RESULTS AND MARGINS • Record levels of revenue and profjt Revenue analysis • Increase in revenue despite reduction in open market completions to 289 (2016: 482) 4% 4% 8% 8% 26% • Signifjcant increase in build to rent and affordable revenue 53% 17% 80% 2017 2016 • Blended gross margin lower due to greater proportion of build to rent Open market Affordable Build to rent Other income • Margins expected to trend down towards target levels over time • Selling expenses reduced due to changing sales mix therefore Margin analysis fewer launches Gross Gross Revenue profit Revenue profit 2017 2016 £m margin £m margin • Signifjcant growth in profjts expected in the next two years Open market 153.5 25.4% Open market 195.9 27.3% • Normal dividend policy to pay one third of earnings each year Affordable 50.1 23.0% Affordable 19.1 27.7% Build to rent 76.5 16.0% Build to rent 19.9 18.1% • Dividend of 15.7 pence in excess of policy to offset dilution caused by Other income 11.8 20.3% Other income 10.7 26.2% the placing in 2015 291.9 22.3% 245.6 26.5% 16 www.telfordhomes.london
GROUP BALANCE SHEET 2013 2014 2015 2016 2017 Non current assets £1.1m £2.2m £1.9m £2.1m £2.2m Inventories £132.5m £173.1m £277.2m £285.6m £339.4m Cash £23.7m £33.0m £39.7m £20.9m £39.8m Other current assets £19.4m £6.6m £11.5m £31.4m £42.9m Borrowings (£58.1m) (£28.1m) (£92.6m) (£38.2m) (£54.1m) Other liabilities (£45.9m) (£81.4m) (£117.3m) (£114.8m) (£165.9m) Net assets £72.7m £105.4m £120.4m £187.0m £204.3m Net assets per share 145p 177p 200p 250p 271p (Net debt) / net cash (£34.4m) £4.8m (£52.9m) (£17.3m) (£14.3m) Gearing 47% 0% 44% 9% 7% 17 TELFORD HOMES Plc FINAL RESULTS 31 MARCH 2017
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