LONDON PRELIMINARY RESULTS 31 MARCH 2015 CITYSCAPE E1 01 TELFORD - - PowerPoint PPT Presentation

DEVELOPING IN

LONDON

PRELIMINARY RESULTS 31 MARCH 2015

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CITYSCAPE E1

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Highlights

• Focused on affordable locations in London where demand

exceeds supply

• Strong performance at every sales launch with 661 sales

in the year

• Total forward sales now over £550 million, more than three

times current annual revenue

• Development pipeline of £1.07 billion, an increase of more

than 70% in two years

• Profjt before tax ahead of market expectations at £25.1 million
• Continued improvement in gross and operating profjt margins
• Proposed fjnal dividend of 6.0 pence making 11.1 pence

for the year

• New four year £180 million revolving credit facility
• Outcome of Election has provided certainty and stability
• Very confjdent in long term prospects for Telford Homes

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Forward sales

• Contracts exchanged for sale of 661 open market properties

in the year (2014: 515)

• Strong sales rate continued into new fjnancial year
• Increase in forward sold position to over £550 million

(2014: £341 million)

• Record high for Telford Homes and more than three times

current annual revenue

• Security over future cash fmows and exceptional visibility
• ver future profjts
• Immediate benefjts in terms of deposits received in advance
• f build completion
• Minimum 10% deposit on exchange and typically another

10% a year later

• Total deposits taken in advance of £63.7 million

(2014: £45.3 million)

• Recent sales launches have continued trend evident for

last three years

STRATOSPHERE E15

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MANHATTAN PLAZA E14

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Sales performance

• Launch of Manhattan Plaza in April 2015 secured over 70 sales

in three weeks

• Quarter sold to UK investors and remainder sold overseas
• Close to Canary Wharf with new Crossrail station due to open

in 2018

• Smaller UK launches earlier in 2015 also exceeded expectations
• Phenomenal success with Stratosphere in late 2014 securing

£110 million of revenue

• Continued strong performance from on-site sales centres
• Less than 50 properties currently released for sale
• No unsold completed homes
• Bermondsey Works next signifjcant launch in June 2015

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BERMONDSEY WORKS SE16

Breakdown of open market contracts exchanged in the year to 31 March 2015

UK investors Owner-occupiers Overseas investors

38% 13% 49%

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• Split of sales refmects Group’s incredible success at forward

selling its homes

• Taking advantage of continued investor demand based on

a thriving rental market

• Homes designed to appeal to both tenants and owner-occupiers
• Both markets have remained very strong in the last year
• Telford Homes will continue to sell a proportion of its homes

to overseas investors

• Investors achieving rental yields of 4% to 6% and do not leave

properties empty

• Strong brand and reputation for quality leading to many

repeat purchasers

• Monitoring increasing emergence of institutional investment

in the private rented sector

Our customers

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THE JUNCTION E1

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• Availability of mortgage fjnance has improved for both

investors and owner-occupiers

• Mortgage rates have decreased whilst base rate remains low
• Typical loan to values remain below 80% for our customers
• First fjve sales under ‘Help to Buy’ scheme
• Impact of this scheme still not expected to be signifjcant

for Telford Homes

• Mortgage providers continue to carefully control applications
• Very different environment to 2006 / 2007
• Affordability constraints have tempered excessive price

infmation as expected

• Modest price growth over the last six months in the

Group’s locations

Mortgage finance

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VIBE E8

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London market

• Our business revolves around the fundamental strengths
• f London
• International reputation, economic performance and

improving transport network

• Crossrail directly benefjts a number of the Group’s locations
• Demand for somewhere to live in London far exceeds the

supply of new homes

• This imbalance is key reason behind our plans to increase
• utput over the next few years
• Prime London markets have cooled in recent months
• Telford Homes operates in relatively affordable areas of

inner London

• All developments have an average price of under £1,000

per square foot

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

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Group income statement

March 2015 March 2014

Revenue £173.5m £140.8m Gross profjt £53.9m £42.1m Gross margin adjusted for interest 32.4% 31.9% Operating profjt £28.0m £21.2m Operating margin adjusted for interest 17.5% 17.1% Profit before tax £25.1m £19.2m EPS 33.2p 26.4p Dividend per share 11.1p 8.8p

AVANT-GARDE E1

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Profits and margins

• Profjt before tax has increased tenfold since 2011
• Margins ahead of last year and in excess of expectations
• Commercial sales at strong prices and build costs less

than prudent estimates

• Margins expected to return to normal levels in the future
• Previous strong price growth tempered by overage

arrangements with land vendors

• Modest current price infmation offset by increasing labour

and material costs

• Costs under control and anticipated in forecasts
• Continue to monitor trends and react accordingly
• Strong supplier relationships and placing orders as early

as possible

• Pre-tax profjts expected to reach circa £40 million by 2018
• Profjts may fmuctuate around an upward trend but

dividend expected to remain progressive

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Group balance sheet

STRATFORD PLAZA E15

March 2015 March 2014

Non current assets £1.9m £2.2m Inventories £277.2m £173.1m Cash £39.7m £33.0m Other current assets £11.5m £6.6m Borrowings (£92.6m) (£28.1m) Other liabilities (£117.3m) (£81.4m) Net assets £120.4m £105.4m (Net debt) / net cash (£52.9m) £4.8m Gearing 43.9% 0%

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Cash and debt finance

• New £180 million revolving credit facility extending to

March 2019

• Club facility involving RBS, HSBC, Santander and AIB
• Provides greater working capital fmexibility
• Ability to act more swiftly on site acquisitions
• Secured on improved terms
• Gross drawn debt of £95 million at 31 March 2015 leaving

headroom of £85 million

• Net debt and gearing expected to increase further
• Comfortable with anticipated levels of debt given forward

sold position

• Cash position boosted by deposits received

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HORIZONS E14

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Development pipeline

• Development pipeline exceeded £1 billion for the fjrst

time in 2014

• This followed a number of signifjcant acquisitions
• Including purchase of 5.5 acre site in Stratford in a JV

with Notting Hill Housing Group

• More opportunities acquired since reaching this milestone
• No shortage of development sites in Group’s locations
• Unlocking these sites is part of the challenge of increasing

the supply of homes

• Excellent relationships with landowners and reputation

for maximising value

• Development pipeline of £1.07 billion of future revenue

at 31 March 2015

• Over 70% increase in just two years and more than

six times current annual revenue

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HACKNEY SQUARE E9

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The planning process

• Group owns sites without planning and will continue to

acquire more

• Knowledge of process and ability to work in partnership

removes majority of risk

• Strong relationships with affordable housing providers

assist in delivering policy compliant schemes

• Planning process remains challenging and time consuming
• Can result in delays to the Group’s expected

development programmes

• Time taken to achieve consent at Caledonian Road is an

example of typical issues faced

• Government and Greater London Authority both recognise

need to increase supply

• System needs reform but small adjustments will make a

big difference

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PARKSIDE QUARTER E14

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Operations

• As business grows, economies of scale become evident
• Average development size has increased
• By end of 2015 will be constructing over 2,200 homes

across 16 developments

• Two years ago this was just under 1,700 homes across

22 developments

• Operational structure is changing to accommodate

further growth

• Small number of redundancies at a senior level
• Production under one Managing Director with support

from extended management structure

• Restructure is needed to ensure Telford Homes can

step up to next level

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PARLIAMENT HOUSE SE1

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• Outcome of Election has provided certainty and stability
• Government has a clear understanding of the need

to build more homes

• Concerns over housing policies proposed by other parties

have been removed

• London has a strong economy and an excellent

transport network

• Focused on relatively affordable locations in London
• High demand due to a chronic shortage of supply
• Development pipeline over £1 billion of future revenue
• More than £550 million of this has already been secured

by forward sales

• Board expects signifjcant growth in output and profjts
• ver the next few years
• Very confjdent in the long term prospects for Telford Homes

Outlook

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