Developing in London Where we build 1 TELFORD HOMES Plc - - PowerPoint PPT Presentation

Developing in London

PRELIMINARY RESULTS 31 MARCH 2014

Where we build

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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www.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

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TELFORD HOMES Plc Preliminary Results 31 March 2014

2017 2016

0% 20% 40% 60% 80% 100%

2015 98% 72% 27%

Percentage of expected open market completions that have already been sold

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www.telfordhomes.plc.uk

Sales performance

STRATFORD 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

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TELFORD HOMES Plc Preliminary Results 31 March 2014

• Split of sales has changed slightly in favour
• f 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
• f 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

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UK investors Owner-occupiers Overseas investors

33%

35% 32% Breakdown of open market contracts exchanged in the year to 31 March 2014

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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www.telfordhomes.plc.uk

• 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
• wners and tenants

London market

HORIZONS E14

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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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

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www.telfordhomes.plc.uk

• 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
• n 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

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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

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Cash and debt finance

THE BOATYARD E14

Partnerships

• Affordable housing accounts for around a third
• f 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

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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www.telfordhomes.plc.uk

• 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, DALSTON E8

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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www.telfordhomes.plc.uk

• Acquiring a number of sites without planning
• r 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

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TELFORD HOMES Plc Preliminary Results 31 March 2014

• 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

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www.telfordhomes.plc.uk

FIELDER APARTMENTS, BOW TRINITY E3

CITYSCAPE E1

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TELFORD HOMES Plc Preliminary Results 31 March 2014

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www.telfordhomes.plc.uk

• 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 Plc Telford House Queensgate Britannia Road Waltham Cross Hertfordshire EN8 7TF