TIDMTEF
RNS Number : 5912P
Telford Homes PLC
30 May 2018
30 May 2018
Telford Homes Plc
('Telford Homes' or the 'Group')
Final Results
Telford Homes Plc (AIM:TEF), the London focused residential
property developer, today announces its final results for the year
ended 31 March 2018.
Highlights
-- Record total revenue of GBP316.2 million (2017: GBP291.9
million)
-- Total profit before tax for the year exceeded original
market expectations increasing by 35 per cent to GBP46.0
million (2017: GBP34.1 million)
-- Well placed to exceed GBP50 million of total pre-tax profit
for the year to 31 March 2019, representing a 100 per cent
increase over four years
-- Strong performance reflected in improvement in adjusted
gross margin of 4.2 percentage points and adjusted operating
margin of 3.3 percentage points, up to 16.7 per cent (2017:
13.4 per cent)
-- Proposed final dividend of 9.0 pence per share bringing
the total dividend for the year to 17.0 pence per share
(2017: 15.7 pence), an increase of just over 8 per cent
-- 100 per cent customer recommendation rate in 2017 places
Telford Homes top of the housebuilder rankings
-- Robust London market for housing at our typical price point
with demand from a broad base of build to rent investors,
individual investors, owner-occupiers and housing associations
-- Over 100 homes sold at the launch of New Garden Quarter,
Stratford in January 2018
-- Strong demand from build to rent investors with the Group
exploring a number of interesting opportunities to enhance
supply to this sector
-- Development pipeline of over 4,000 homes with several new
acquisitions being actively pursued
-- New longer term GBP210 million corporate loan facility
negotiated at lower interest rate
Commenting on the Final Results, Jon Di-Stefano, Chief Executive
of Telford Homes, said: "Telford Homes continues to perform well
and I am delighted to report such a strong set of results which
again have produced record levels of revenue and profit. As we
increase the scale of the business, our growth is underpinned by
the under supply of new homes in London and robust demand at more
affordable price points, particularly for rental housing. Our
substantial development pipeline and increasing expertise in the
burgeoning build to rent sector provide us with confidence for the
future. I believe our increased focus on build to rent will drive
the next phase of our growth and allow us to consistently deliver
total pre-tax profits in excess of GBP50 million.
The strength of our position and our ability to capitalise on
the exciting possibilities ahead are a result of the hard work and
dedication of the whole Telford Homes team. I am exceptionally
proud of the customer recommendation and employee satisfaction
scores we achieved last year and I am confident there is a
relationship between them. I look forward to us building on the
solid foundation we have created for Telford Homes both in the year
ahead and beyond."
- Ends -
For further information:
Telford Homes Plc
Jon Di-Stefano, Chief Executive
Katie Rogers, Group Financial Director Tel: +44 (0) 1992 809
800
Guy Lambert, Head of Corporate Communications www.telfordhomes-ir.london
Shore Capital (Nomad and Joint Broker)
Dru Danford / Patrick Castle Tel: +44 (0) 20 7408
4090
Peel Hunt LLP (Joint Broker)
Charles Batten / Capel Irwin Tel: +44 (0) 20 7418
8900
Media enquiries:
Buchanan
Henry Harrison-Topham / Steph Watson Tel: +44 (0) 20 7466
5000
telfordhomes@buchanan.uk.com www.buchanan.uk.com
Note: Figures in this announcement include the Group's share of
joint venture results on a proportionally consolidated basis. For
further details of key management information and alternative
performance measures refer to the financial review, note 6 and note
7.
CHIEF EXECUTIVE'S REVIEW
It gives me great pleasure to report that Telford Homes has
achieved record levels of revenue and profit once again in the year
to 31 March 2018. Our substantial development pipeline and
increasing expertise in the burgeoning London build to rent sector
underpin our confidence for the future.
Performance
Total profit before tax in the year to 31 March 2018 increased
by nearly 35 per cent to GBP46.0 million (2017: GBP34.1 million)
[1], ahead of original market expectations. This strong performance
was reflected in an improvement in our adjusted gross margin of 4.2
percentage points and a 3.3 percentage point increase in our
adjusted operating margin, up to 16.7 per cent (2017: 13.4 per
cent). The margin improvements are partly due to the mix of
developments that completed during the period but also a
combination of other factors, particularly some prudent estimates
for build cost inflation that were not realised.
I am also delighted that we have been able to declare a final
dividend of 9.0 pence per share, making a total of 17.0 pence per
share for the year, an increase of 8.3 per cent compared with the
previous year (2017: 15.7 pence). We expect to continue to pay at
least one third of our annual earnings to shareholders in
dividends.
Due to our strong growth and financial performance there have
been many highlights in the last year but amongst those I am
particularly pleased to report that the Telford Homes commitment to
quality and service was demonstrated by a customer recommendation
rating of 100% in 2017. This significant achievement places us at
the top of housebuilder customer recommendation rankings, and is
testament to the dedication and hard work of our employees. There
is an increasing focus on the quality of new homes and this score
only serves to further underpin our reputation for delivering an
excellent product whether it is for open market sale, affordable
housing or build to rent.
Market context and sales
The London market for housing at our typical price point has
remained robust, with ongoing demand from a broad base of
purchasers spanning individual investors from the UK and overseas,
owner-occupiers, housing associations and build to rent investors.
Although prices have fallen in some prime locations, our market has
been more stable. The average price of the open market homes within
our development pipeline is GBP539,000 (2017: GBP527,000) and we
expect that to remain relatively constant in the future.
In January 2018 we commenced the launch of the second phase of
New Garden Quarter in Stratford, marketed initially in the UK and
subsequently to international investors. We were delighted to
secure more than 100 reservations across three weeks which exceeded
our expectations. A quarter of these reservations were to UK
buyers, a greater proportion than anticipated given that demand
from domestic investors has been muted following recent tax
changes. The remaining sales were generated in Hong Kong and
multiple cities in China, with the latter accounting for more than
50 sales. We are seeing growing investment from China due to the
continued international attraction of London, despite Brexit, and
strong rental demand relative to supply.
The Group is also securing sales to owner-occupiers with a
proportion of those sales being under the Government Help to Buy
scheme. The level of demand is dependent on price point rather than
the explicit need for financial assistance through Help to Buy and
therefore the scheme remains an enhancement to demand rather than
something the London market depends on. All of the remaining homes
at Bermondsey Works have been sold in recent weeks alongside a
slower but continuing rate of sale of the remaining higher priced
homes at Manhattan Plaza. Homes priced above GBP750,000 are taking
longer to sell and this supports our targeted approach to land
acquisition with regard to average price point.
Due to a number of developments being sold for build to rent
rather than individual sale the Group has undertaken fewer sales
launches in the last year than usual. In addition some developments
have been held back until nearer build completion to encourage
sales to owner-occupiers where the location and price point is
particularly attractive to first time buyers. In late March 2018
the Group launched all 83 homes at Bow Garden Square, E3, focused
on owner-occupiers with prices starting from GBP390,000. Initial
interest has been encouraging and nine reservations have been
secured to date. Owner-occupiers take longer to commit to a
purchase, especially under Help to Buy, but the Board expects
ongoing demand particularly as the development moves towards
completion later this year.
The Group completed and handed over 476 open market homes in the
year to 31 March 2018 (2017: 289). A combination of the significant
increase in recognised profit from these completions of forward
sold homes and fewer launches in the last year have reduced our
total forward sold position to GBP344 million (2017: GBP546
million). This is exacerbated by the timing of some significant
build to rent transactions occurring in the final few months of the
year to 31 March 2017 with the next new build to rent sales
expected in the year to 31 March 2019. Forward sales still equate
to over 100 per cent of the total revenue recognised in the year to
31 March 2018.
Forward selling remains at the core of our business model, and
our approach of securing sales early in the development cycle,
where appropriate, has a favourable effect on our risk profile and
our ability to direct investment to new opportunities. This model
also gives the Board significant visibility over profit recognition
and expected cash flows. This is one of the many reasons why the
emergence of forward funded build to rent transactions, as an
increasing feature of the London market, has proved very attractive
to the Group and why it fits so well with our existing approach to
balancing risk and return.
London is still not building enough homes and, whilst new home
construction starts per annum have recently fallen under 20,000,
according to the Ministry of Housing, Communities and Local
Government ('MHCLG') figures, the annual requirement in the Greater
London Authority's ('GLA') latest draft 'London Plan' has now
reached over 60,000 based on expected population growth. Meanwhile
more and more people are looking to rent in London, often due to
affordability constraints but increasingly through choice, and as a
result tenant demand is set to remain strong. The rental market
itself is evolving with tenants calling for higher quality
facilities and levels of service and in some cases greater security
of tenure and longer leases. This market trend sits well with the
emergence of purpose built rental developments with enhanced
resident amenity space and a full on-site service offering.
Political recognition of the urgent need for rental housing adds
further weight to our strategy to focus on the forward funded build
to rent sector, to enhance growth, increase capital returns and
reduce required debt finance. As our reputation grows in the
sector, we are increasingly being approached directly by
institutions and rental operators seeking investment opportunities
and each trying to achieve significant scale as swiftly as
possible.
On the one side we have a significant increase in capital keen
to invest in residential housing, as already occurs in countries
like the US, and on the other we have strong demand from tenants
looking for exactly the type of product that those investors want
to fund. The missing ingredient is the ability to source
development opportunities, obtain planning consents and build the
homes themselves and our expertise in these areas makes Telford
Homes an attractive partner for build to rent investors. The Board
continues to evaluate whether longer term partnerships with one or
more of these investors could enhance our ability to undertake
build to rent transactions and further grow that side of the
business.
Development pipeline
Our development pipeline now includes over 4,000 homes of which
almost 75 per cent are in detailed design or under construction. In
December 2017 we acquired a sizeable residential-led development
site in Walthamstow, E17 for a total consideration of GBP33.8
million. Having completed some initial design work, we recently
began a formal sale process to identify a build to rent investor
for the 257 open market homes. This process is going well and we
have had encouraging responses from a number of investors.
Depending on the timeframe to get into contract with the successful
party we expect to announce the transaction in the next few
months.
As announced previously, in June 2017 we signed a
pre-construction agreement with the US-headquartered global rental
housing operator, Greystar, to develop just under 900 build to rent
homes in Nine Elms, Battersea. Having worked closely with Greystar
and the London Borough of Wandsworth for a number of months, the
detailed scheme is expected to go before the local planning
committee in the near future. Soon after receipt of a detailed
planning consent we expect to enter a full design and build
contract and we will make a further announcement at that time. At
this point the scheme is not included in our reported development
pipeline. We have formed a strong relationship with Greystar and we
are actively exploring the possibility of undertaking further
developments together.
The planning process in London has long been challenging and
time consuming, particularly for large regeneration sites. Although
this has caused delays in recent months, we are confident that our
experience and relationships in each borough, as well as with the
GLA, position us to navigate this difficult environment. The
appointment in February 2018 of Jerome Geoghegan as Group Land and
Planning Director will provide greater focus and expertise in this
regard. Formerly at L&Q Housing Group, Jerome brings a wealth
of experience and is well connected in the sector. Our partnerships
with providers of affordable housing have been an important factor
in our success to date. Subsidised affordable housing typically
represents over a third of each new development and is forward
funded by our partners in much the same way as build to rent with
all of the same advantages.
We are pursuing several opportunities at our preferred price
point in London and we have recently agreed heads of terms on two
separate acquisitions with a combined land value of just under
GBP50 million. One of these already has a planning consent and the
other has been agreed subject to securing a satisfactory consent.
Each will now progress through the legal process and a period of
due diligence. Both are expected to be individual sale developments
and as a result we are able to direct our immediate acquisition
focus to predominantly build to rent opportunities. Our ability to
add to the Group's development pipeline has been enhanced by the
negotiation of a new GBP210 million corporate loan facility. This
enlarged revolving credit facility extends to December 2022 and has
been secured at a lower rate of interest than the previous GBP180
million loan facility.
External market developments
The economic and political outlook for the London housing market
is encouragingly benign. Notwithstanding uncertainty surrounding
the UK's exit from the EU, the economy has remained relatively
robust and regardless of the outcome of the Brexit negotiations
there is an understanding across the political spectrum that not
enough homes are being built. Clearly the housing market is
sensitive to interest rates and the Bank of England increased base
rates from 0.25 per cent to 0.5 per cent in November 2017. Any
subsequent changes to rates are likely to be gradual, and given the
current level this is not a cause for concern to the Board. The
Help to Buy scheme is currently forecast to end in 2021 but this is
not of material importance to the performance of Telford Homes with
relatively few sales being made to Help to Buy customers and an
increased strategic focus on the rental market.
In the aftermath of the Grenfell Tower tragedy in June 2017, a
wide ranging independent review of building regulations and fire
safety was initiated, led by Dame Judith Hackitt. The industry must
be fully supportive of that review and Telford Homes has been
represented by our Group Managing Director, John Fitzgerald, on one
of the working parties.
Another independent review relating to the housebuilding sector
was unveiled in January 2018. Led by Sir Oliver Letwin, the review
is charged with explaining the gap between the number of homes for
which planning permission has been granted against those being
built, particularly in areas of high demand. The review's initial
comments indicate that typically developers do not just sit on
consented sites and that delays can include absorbing large numbers
of homes on bigger sites into the local market. It was noted that
build to rent therefore had the potential to assist in delivering
much needed new homes more swiftly as rental stock does not suffer
from the same absorption timeframe. Build to rent also features in
the new draft London Plan and the new draft National Planning
Policy Framework demonstrating that politicians recognise that it
can be a core part of the solution to the housing shortfall.
A potential shortage of skilled labour is another ongoing issue
in the sector and to help address this, the Home Builders
Federation has set up the 'Home Building Skills Partnership', which
is running campaigns to encourage people into the industry. Telford
Homes wants to play an active role in this initiative and John
Fitzgerald has been appointed to the Home Building Skills
Partnership Leadership Board. We are very proud of the huge
advances we have made with our internal training programme. We now
have over 20 trainees working within the business across various
disciplines and are in the process of setting up the 'Telford Homes
Academy' to help develop our trainees and to support and train
staff at all levels within the business.
Strategy
Our key objective is to develop the homes and create the places
that London needs. We are making sound progress towards achieving
our stated ambition to generate marked growth in pre-tax profits,
and have made great strides in putting in place the internal
structures and capabilities to support further growth in the coming
years. Over the next few years we have the ability, the desire and
the market opportunity to do far more in London than we are already
doing. Our focus on the build to rent sector has helped us to
broaden our geographical reach across London and it is the core of
our current strategy if we are going to achieve our growth
ambitions without taking excessive risk or needing additional
equity capital.
We also remain committed to driving our sustainability
initiatives, and measuring our ability to deliver against our
targets. We were delighted to be recognised as the most improved
homebuilder in the 2017 'NextGeneration' sustainable housing
benchmark report moving up from seventeenth to sixth place in the
rankings. The benchmark enables developers to understand the
sustainability of their operations and the places and homes they
build. The criteria are based on best practice standards and
guidance, and are designed to be challenging and go beyond
statutory requirements or standard practice. This progress
recognises the ongoing development of our 'Building a Living
Legacy' sustainability strategy and is a real achievement for a
business of our size.
People and culture
During the past year we have undertaken some work on
articulating our brand purpose and consulted with external and
internal stakeholders to understand what people think about our
business. Our research underlined that we are recognised and
respected for building homes and creating places, with expertise in
design, sustainability and community liaison, but identified that
we could do more to clarify and communicate the value we actually
create. As a result we have adopted a new statement of our brand
purpose 'developing the homes and creating the places that London
needs' and have sought to 'shout a little more' about some of the
benefits we bring to everything we do. This has been recognised in
numerous award wins over the last 12 months culminating in Telford
Homes being named 'Large Developer of the Year' at the prestigious
2018 RESI awards.
We also strive to ensure that Telford Homes continues to feel
like a family to all those who work for the Group despite a
relatively rapid increase in employee numbers in recent years. We
now undertake an annual staff survey and act upon the suggestions
that arise. This year we were very pleased to receive a staff
satisfaction rating of 98 per cent. An enjoyable working
environment will be even more important as we look ahead to further
growth.
Outlook
Telford Homes has delivered significant profit growth over the
last three years with total profit before tax increasing from just
over GBP25 million in 2015 to GBP46 million in 2018. Furthermore,
we are well placed to achieve our stated goal of exceeding GBP50
million of total pre-tax profit for the year to 31 March 2019 which
will represent a 100 percent increase over four years. Having
arrived at this point in a short period of time the challenge now
is to establish the business consistently delivering over GBP50
million of profit every year and furthermore to generate and
sustain the next significant growth period.
Without the advent of build to rent we would not have been able
to achieve consistency of profits and would instead have fluctuated
around an overall upward trend. Our industry is very capital
intensive and the business would have required sustained injections
of new capital just to maintain the profit levels achieved in the
last few years on an ongoing basis. However our increasing success
in the build to rent sector means we expect to consistently deliver
profit in excess of GBP50 million over the next three years
predicated on a certain level of new build to rent business. We
also expect to set a platform for delivering the next significant
phase of profit growth in the medium to longer term. The level of
build to rent business we are able to secure will be crucial to
achieving our ambitions and to outperforming them if the
opportunity arises.
The strength of our position and our ability to capitalise on
the exciting possibilities ahead are a result of the hard work and
dedication of the whole Telford Homes team. I am exceptionally
proud of the customer recommendation and employee satisfaction
scores we achieved last year and I am confident there is a
relationship between them. I look forward to us building on the
solid foundation we have created for Telford Homes both in the year
ahead and beyond.
Jon Di-Stefano
Chief Executive
29 May 2018
[1] GAAP profit before tax (i.e. excluding the Group's share of
joint ventures) was GBP46.3 million (2017: 34.6 million)
FINANCIAL REVIEW
Telford Homes has experienced another record breaking year
fuelled by higher than expected margins in a robust market
environment. For the first time, total revenue achieved exceeded
GBP300 million and total profit before tax is up by almost 35 per
cent to a record high of GBP46.0 million (2017: GBP34.1 million).
The Group has been successful in achieving significant profit
growth over the last few years and remains focused on continuing
its traditional business of selling homes to individuals on the
open market but also driving future growth by increasing its
activity in the London build to rent sector. To facilitate this
growth, the Group has continued to invest in land and work in
progress and recently signed a new five year GBP210 million
corporate loan facility providing additional development capital to
support further investment.
Presentation of results and alternative performance measures
In the year to 31 March 2015 the Group adopted IFRS 11 'Joint
Arrangements' which states that joint ventures should be accounted
for as equity investments rather than by proportional
consolidation. The Group's joint ventures are an integral part of
the business and all developments are treated consistently within
the business whether wholly owned or partially owned in a joint
venture structure. As such the Board believes that the financial
results are most appropriately presented using proportional
consolidation which means including the relevant share of the
results of joint ventures in each line of the income statement and
balance sheet. This therefore remains the method of presentation
within the Group's internal management accounts.
The Board has prepared an income statement and a balance sheet
using proportional consolidation along with Generally Accepted
Accounting Principles (GAAP) compliant versions presenting joint
ventures as equity investments. The key performance indicators and
other figures within this report include the Group's share of joint
venture results. For further details, definitions and
reconciliations of alternative performance measures see notes 6 and
7.
Operating results
Total revenue has increased to GBP316.2 million from GBP291.9
million last year (GAAP 2018: GBP294.8 million, 2017: GBP266.0
million) with the increase mainly due to a greater number of open
market residential completions in the year.
Open market residential revenue increased to GBP225.1 million
(2017: GBP153.5 million) from 476 completions (2017: 289) with an
average price of GBP473,000 (2017: GBP531,000). The lower average
price is due to the mix of developments completing in each period
in terms of product and location and to some degree reflects when
individual contracts were exchanged with a significant proportion
of the homes forward sold a number of years ago.
The Group also recognises contract revenue on construction
contracts, in relation to both affordable housing and build to rent
homes under development, on a percentage of completion basis
throughout the build programme. This includes new contracts in the
year but also ongoing profit recognition on contracts exchanged in
previous years as the typical build programme spans a number of
years.
Contract revenue in the year, including the Group's share of
joint venture results, was GBP86.8 million (2017: GBP126.6 million)
with the reduction purely down to the timing of entering into new
contracts as revenue recognition is often weighted somewhat towards
the start of the contract as both land and build costs are included
in the percentage of completion calculation. In the current year,
the Group exchanged contracts to deliver 279 affordable homes
whereas in the prior year, the Group exchanged contracts to deliver
400 affordable homes and entered into three new build to rent
contracts to deliver 387 build to rent homes.
The Group's strategy to increase the number of homes developed
for build to rent investors will, over time, result in a greater
proportion of the Group's revenue and profit being recognised on a
percentage of completion basis over the life of each development as
opposed to individual open market sales where revenue and profit is
recognised at the point of legal completion. Build to rent sales
will therefore result in the Group recognising revenue and profit
earlier than if the homes had been sold to individual
purchasers.
Total gross profit has increased to GBP79.5 million from GBP63.2
million (GAAP 2018: GBP74.8 million, 2017: GBP57.0 million). Total
gross profit is stated after expensing loan interest that has been
capitalised within inventories of GBP4.2 million (2017: GBP1.9
million) and therefore before charging this interest the adjusted
gross margin was 26.5 per cent compared to 22.3 per cent last year.
The significant increase in adjusted gross margin was due to strong
margins achieved on both individual open market sale developments
and build to rent developments.
The margin achieved on open market sale completions of 28.2 per
cent was higher than that achieved last year (2017: 25.4 per cent)
and also ahead of the Group's target when appraising new sites of
24 per cent. The majority of the open market completions in the
current year were forward sold a number of years ago where the
sales achieved had benefitted from some price inflation prior to
launch. This, together with an easing of build cost inflation in
the last year, has resulted in strong margins overall. The margin
recognised on open market homes is expected to trend down towards
the target margin over time as older developments which benefitted
from more significant sales price inflation and minimal build cost
inflation are replaced with sites appraised more recently.
On build to rent contracts, the Group is prepared to accept a
lower gross margin due to the advantages of forward funding and
savings in selling expenses and interest costs. Forward funding
broadly means an initial payment reimbursing the cost of the land
followed by monthly construction payments and finally a payment on
completion. As such very little equity is used during construction
and no debt is required. The Group expects build to rent
transactions to achieve a net margin of approximately 12 to 13 per
cent. The Group's normal target gross margin is 24 per cent which
after allowing for selling and finance cost savings of circa 8 per
cent means a net margin reduction for build to rent of 3 to 4 per
cent. In the Board's view this reduction is more than offset by a
substantially improved return on capital.
The actual margin achieved on the build to rent revenue
recognised in the year to 31 March 2018 was well ahead of target at
17.8 per cent (2017: 16.0 per cent). This is due to some of the
land being purchased at more advantageous rates prior to becoming
part of the build to rent portfolio but also due to build cost
savings recognised in the period. When appraising future build to
rent developments, the Group's target margins are still expected to
be around 12 to 13 per cent to remain competitive in the land
market but also to remain attractive to build to rent investors and
their yield requirements.
Administrative expenses have increased to GBP24.2 million (2017:
GBP20.8 million) including the Group's share of joint ventures and
GBP24.1 million excluding joint ventures (2017: GBP20.7 million).
This increase is mainly due to higher employee costs as the Group
embeds a new structure established during the year to increase
operational capacity and enable further growth in the future. As a
percentage of revenue, administrative expenses have remained
relatively similar year on year at between seven and eight per
cent.
Selling expenses have increased to GBP6.5 million (2017: GBP5.1
million) including the Group's share of joint ventures and GBP5.7
million excluding the Group's share of joint ventures (2017: GBP4.1
million). This increase is mainly due to the higher number of open
market completions in the year and the sales commission payable as
a result, together with the cost of opening and running two new
development specific sales centres in the year. There was one
significant launch in the year, New Garden Quarter, incurring
selling costs of GBP0.7 million, similar to the GBP0.9 million of
costs associated with the one major launch in the prior year at
City North.
The Group's adjusted operating margin has increased by over
three percentage points to 16.7 per cent (2017: 13.4 per cent)
flowing through from the strong gross margin achieved across a
number of developments.
Total profit before tax has increased by almost 35 per cent to a
record high of GBP46.0 million from GBP34.1 million last year (GAAP
2018: GBP46.3 million, 2017: GBP34.6 million). This was ahead of
original market expectations mainly due to cost efficiencies
achieved in the latter part of the year.
The Board expects the year to 31 March 2019 to show continued
growth in revenue and profits with the development pipeline already
secured to deliver this growth and a strong forward sold position.
Margins are likely to trend towards the targets used during initial
site appraisal although this could be improved upon if there is any
further easing in build cost pressures. In addition the Group
expects to move more towards build to rent transactions as a
percentage of its business in the coming years which will reduce
reported combined margins.
Finance costs
Finance costs incurred by the Group mainly consist of interest
on development financing, non-utilisation fees and amortised
arrangement fees. Interest on development financing is capitalised
into work in progress as required by IAS 23 and all other fees are
charged directly to the income statement.
Total finance costs incurred, including our share of joint
venture costs, increased to GBP8.8 million (2017: GBP5.5 million).
The increase in total finance costs was mainly attributable to an
increase in average total borrowings in the year of GBP111.7
million (2017: GBP55.1 million) resulting in an increase in
interest capitalised within work in progress at GBP5.2 million
(2017: GBP2.2 million). The increase in borrowings during the year
was anticipated as the business continues to grow, funding this
expansion through a combination of debt and equity. The increase
would have been greater without the build to rent transactions
undertaken to date as these have reduced the Group's required debt
drawdowns.
Dividend
The Board's policy is to pay one third of earnings as dividends.
Following the equity placing concluded in 2015 the Board committed
to paying a higher dividend for the subsequent two years to remove
the dilutive effect of the new shares, resulting in dividend
payments in excess of 40 per cent of earnings.
In the year to March 2018, the dividend is transitioning back to
one third. As a result, a final dividend of 9.0 pence has been
proposed which, together with the interim dividend of 8.0 pence
paid on 12 January 2018, makes a total dividend for the year of
17.0 pence (2017: 15.7 pence). Earnings per share increased to 49.8
pence (2017: 36.8 pence) and therefore the dividend equates to just
over 34 per cent of earnings.
The final dividend is expected to be paid on 20 July 2018 to
those shareholders on the register at the close of business on 8
June 2018. The ex-dividend date is 7 June 2018.
Balance sheet
Net assets at 31 March 2018 were GBP231.1 million, increased
from GBP204.3 million last year mainly due to retained profits.
This equates to net assets per share of 306 pence (31 March 2017:
271 pence). As the Group continues to grow, there is ongoing
investment in land and work in progress with inventories, including
the Group's share of joint ventures, increasing from GBP339.4
million to GBP373.9 million. Excluding joint ventures inventories
increased from GBP287.7 million to GBP300.0 million with the
balance being recorded within investments in joint ventures.
The inventories balance is largely made up of land being
progressed through the planning system and land and development
costs on sites in design and under construction. The Group has
invested over GBP100 million in new land opportunities since 1
April 2017 and has a development pipeline of just over 4,000 homes,
approximately three quarters of which have a planning consent and
are under construction. Land creditors, including the Group's share
of joint ventures are minimal at GBP1.5 million (2017: GBP28.4
million) and GBP0.2 million (2017: GBP26.9 million) excluding joint
ventures. The significant land creditor in the prior year of
GBP26.9 million was in relation to a development site on Cambridge
Heath Road, E2 which unwound following completion of the land
transaction in October 2017.
Forward sales
The Group continues to seek to secure forward sales to
individuals, affordable housing providers and build to rent
investors. The Group had secured forward sales of GBP344 million at
1 April 2018 to be recognised in future years. This is comprised of
GBP243 million in relation to open market contracts, GBP49 million
of affordable housing revenue and GBP52 million of build to rent
revenue.
In all cases, the forward sales not only de-risk developments,
they also enhance cash flows and return on capital due to
non-refundable deposits received in advance from individual open
market buyers and more significantly, the forward funding of
affordable housing and build to rent transactions.
Borrowings
The Group funds its development costs through a combination of
debt and equity unless subject to a forward funding arrangement. As
the business continues to grow, net debt has increased to GBP103.1
million (2017: GBP14.3 million) and gearing is higher at 44.6%
(2017: 7.0%).
Gearing was always anticipated to rise given the capital
intensive nature of the business. Furthermore net debt and gearing
have been unusually low over the past few years due to significant
cash inflows from the GBP50 million share placing in 2015 followed
by upfront payments received on build to rent contracts entered
into during 2016 and 2017.
The Group is still anticipating using debt to fund developments
for open market individual sales and the Board is comfortable to do
so given that many of the Group's developments have been
substantially de-risked by the level of forward sales secured.
However as build to rent becomes a more significant part of the
business, it will assist in keeping debt and gearing levels at a
more modest level. The actual level will depend on the timing of
future land purchases and how much the business moves towards build
to rent as a proportion of its output.
Telford Homes secured a new five year GBP210 million revolving
credit facility in December 2017, ensuring there is sufficient
headroom and longevity to fund the growth of the business over the
next few years. The facility, provided by Natwest, HSBC, Santander
and AIB, was negotiated with lower interest rates than the previous
facility and is governed by standard corporate covenants together
with site covenants on a portfolio basis. As at 31 March 2018, the
Group had drawn GBP115 million of this facility leaving headroom of
GBP95 million to fund future site acquisitions and construction
costs. The Group has excellent long term relationships and is well
supported by the banks that fund the revolving credit facility as
evidenced during the recent negotiations.
Joint venture developments are funded outside of the revolving
credit facility with site specific loans secured as and when
required. In July 2016, the Group secured a GBP110 million facility
with LaSalle Residential Finance Fund to fund its 50 per cent owned
joint venture at City North and, in February 2017, it signed a
GBP33 million facility with RBS to fund Balfron Tower in which the
Group has a 25 per cent stake.
Telford Homes is in a strong financial position with significant
headroom within existing debt facilities and equity available to
deliver the growth targeted over the next few years. This will be
complemented by expanding the Group's build to rent output which
requires limited equity and no debt and therefore will enable
swifter growth with lower gearing requirements.
Katie Rogers
Group Financial Director
29 May 2018
GROUP INCOME STATEMENT INCLUDING PROPORTIONAL SHARE OF JOINT
VENTURE RESULTS FOR THE YEARED 31 MARCH 2018
Non-GAAP Non-GAAP
Year Year
ended ended
31 March 31 March
2018 2017
GBP000 GBP000
---------- ----------
Total revenue 316,241 291,921
Cost of sales (236,772) (228,720)
Total gross profit 79,469 63,201
Administrative expenses (24,159) (20,805)
Selling expenses (6,548) (5,091)
Total operating profit 48,762 37,305
Finance income 898 160
Finance costs (3,622) (3,337)
Total profit before income
tax 46,038 34,128
Income tax expense (8,623) (6,609)
Total profit after income
tax 37,415 27,519
---------- ----------
Key management information is presented to the Board with the
Group's share of joint venture results proportionally consolidated
and therefore including the relevant share of the results of joint
ventures in each line of the income statement and balance
sheet.
The Group's joint ventures are an integral part of the business
and all developments are treated consistently within the business
whether wholly owned or partially owned in a joint venture
structure. In addition, the proportion of results generated from
joint ventures will fluctuate year to year depending on the timing
of developments. As such the Board believes that the financial
results presented in this way are the most appropriate for
assessing the true underlying performance of the business. A
reconciliation between the key management information income
statement and balance sheet and Generally Accepted Accounting
Principles (GAAP) compliant information, accounting for joint
ventures under IFRS 11 as equity investments, is included in note
6.
The key management information presented in this way is deemed
to be an alternative performance measure. For further details on
alternative performance measures including definitions and
reconciliations, see note 7.
GROUP BALANCE SHEET INCLUDING PROPORTIONAL SHARE OF JOINT
VENTURE RESULTS AT 31 MARCH 2018
Non-GAAP Non-GAAP
31 March 31 March
2018 2017
GBP000 GBP000
---------- ----------
Non current assets
Goodwill 818 818
Property, plant and equipment 2,543 1,272
Trade and other receivables - 100
---------- ----------
3,361 2,190
Current assets
Inventories 373,859 339,380
Trade and other receivables 55,688 42,893
Total cash and cash equivalents 13,829 39,834
---------- ----------
443,376 422,107
Total assets 446,737 424,297
Non current liabilities
Trade and other payables (1,268) (1,527)
Financial liabilities (360) (1,096)
Deferred income tax liabilities (48) (194)
---------- ----------
(1,676) (2,817)
Current liabilities
Trade and other payables (92,445) (159,878)
Total borrowings (116,899) (54,085)
Financial liabilities (200) -
Current income tax liabilities (4,426) (3,232)
(213,970) (217,195)
Total liabilities (215,646) (220,012)
Net assets 231,091 204,285
---------- ----------
Capital and reserves
Issued share capital 7,551 7,529
Share premium 108,178 107,395
Retained earnings 115,362 89,361
Total equity 231,091 204,285
---------- ----------
GROUP INCOME STATEMENT
FOR THE YEARED 31 MARCH 2018
Year Year
Ended Ended
31 March 31 March
Note 2018 2017
GBP000 GBP000
---------------- -----------
Total revenue 316,241 291,921
Less share of revenue
from joint ventures (21,460) (25,946)
Revenue 294,781 265,975
------------------------------ ----- ----- --------- -----------
Cost of sales (220,026) (208,966)
Gross profit 74,755 57,009
Administrative expenses (24,055) (20,727)
Selling expenses (5,706) (4,143)
Share of results of joint
ventures 2,443 4,634
Operating profit 47,437 36,773
Finance income 773 90
Finance costs (1,902) (2,231)
Profit before income tax 46,308 34,632
Income tax expense 3 (8,893) (7,113)
Profit after income tax 37,415 27,519
---------------- -----------
Earnings per share:
Basic 5 49.8p 36.8p
Diluted 5 49.4p 36.6p
---------------- -----------
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 MARCH 2018
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
----------- -----------
Movement in derivative financial
instruments hedged 536 (241)
Movement in deferred tax on
derivative financial instruments
hedged (102) 37
Other comprehensive income
(expense) net of tax (items
that may be subsequently reclassified
into profit or loss) 434 (204)
Profit for the year 37,415 27,519
Total comprehensive income
for the year 37,849 27,315
----------- -----------
GROUP BALANCE SHEET
AT 31 MARCH 2018
31 March 31 March
2018 2017
GBP000 GBP000
---------- ----------
Non current assets
Goodwill 289 289
Investment in joint ventures 54,259 47,554
Property, plant and equipment 2,471 1,272
Trade and other receivables - 100
---------- ----------
57,019 49,215
Current assets
Inventories 300,008 287,652
Trade and other receivables 57,853 38,288
Cash and cash equivalents 12,808 38,629
---------- ----------
370,669 364,569
Total assets 427,688 413,784
Non current liabilities
Trade and other payables (1,268) (1,527)
Financial liabilities (360) (1,096)
Deferred income tax liabilities (193) (323)
---------- ----------
(1,821) (2,946)
Current liabilities
Trade and other payables (77,891) (149,516)
Borrowings (112,259) (53,805)
Financial liabilities (200) -
Current income tax liabilities (4,426) (3,232)
(194,776) (206,553)
Total liabilities (196,597) (209,499)
Net assets 231,091 204,285
---------- ----------
Capital and reserves
Issued share capital 7,551 7,529
Share premium 108,178 107,395
Retained earnings 115,362 89,361
Total equity 231,091 204,285
---------- ----------
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 MARCH 2018
Share Share Retained Total
capital premium earnings equity
GBP000 GBP000 GBP000 GBP000
--------- --------- ---------- ---------
Balance at 1 April
2016 7,485 106,423 73,062 186,970
Profit for the year - - 27,519 27,519
Total other comprehensive
expense - - (204) (204)
Movement in excess
tax on share options - - (5) (5)
Dividend on equity
shares - - (11,135) (11,135)
Proceeds of equity
share issues 44 972 - 1,016
Share-based payments - - 255 255
Purchase of own shares - - (860) (860)
Sale of own shares - - 729 729
Balance at 31 March
2017 7,529 107,395 89,361 204,285
Profit for the year - - 37,415 37,415
Total other comprehensive
income - - 434 434
Movement in excess
tax on share options - - 43 43
Dividend on equity
shares - - (12,383) (12,383)
Proceeds of equity
share issues 22 783 - 805
Share-based payments - - 455 455
Purchase of own shares - - (726) (726)
Sale of own shares - - 763 763
Balance at 31 March
2018 7,551 108,178 115,362 231,091
--------- --------- ---------- ---------
GROUP CASH FLOW STATEMENT
FOR THE YEARED 31 MARCH 2018
Year Year
ended ended
31 March 31 March
2018 2017
GBP000 GBP000
---------- ---------
Cash flow from operating activities
Operating profit 47,437 36,773
Depreciation 906 599
Write down in value of own shares 455 255
Profit on sale of property, plant
and equipment (2) (20)
Increase in inventories (8,145) (46,525)
Increase in receivables (19,465) (6,726)
(Decrease) increase in payables (73,150) 44,953
Share of results from joint ventures (2,443) (4,634)
---------- ---------
(54,407) 24,675
Interest paid and debt issue
costs (6,393) (3,898)
Income taxes paid (7,385) (6,511)
---------- ---------
Cash flow from operating activities (68,185) 14,266
---------- ---------
Cash flow from investing activities
Distribution from joint ventures 20,016 12,045
Investment in joint ventures (24,781) (9,308)
Purchase of property, plant and
equipment (2,105) (387)
Proceeds from sale of property,
plant and equipment 2 20
Consideration paid for business
combination - (3,556)
Interest received 773 90
---------- ---------
Cash flow from investing activities (6,095) (1,096)
---------- ---------
Cash flow from financing activities
Proceeds from issuance of ordinary
share capital 805 1,016
Purchase of own shares (726) (860)
Sale of own shares 763 729
Increase in bank loans 60,000 15,000
Dividend paid (12,383) (11,135)
Cash flow from financing activities 48,459 4,750
---------- ---------
Net (decrease) increase in cash
and cash equivalents (25,821) 17,920
Cash and cash equivalents brought
forward 38,629 20,709
---------- ---------
Cash and cash equivalents carried
forward 12,808 38,629
---------- ---------
NOTES
1 Basis of preparation
The financial information set out above does not constitute
statutory accounts for the years ended 31 March 2018 and 31 March
2017 but is derived from those accounts. Statutory accounts for the
year ended 31 March 2017 have been delivered to the Registrar of
Companies and the statutory accounts for the year ended 31 March
2018 will be delivered to the Registrar of Companies and sent to
all shareholders shortly. The auditors have reported on those
accounts; their reports were unqualified, did not draw attention to
any matters by way of emphasis without qualifying their report and
did not contain statements under Section 498 (2) or (3) of the
Companies Act 2006 or equivalent preceding legislation.
The Group adopted IFRS 10, IFRS 11, IFRS 12 and IAS 28 (revised)
from 1 April 2014 and as a result, proportional consolidation of
joint venture results is no longer allowed. Under these accounting
standards, key line items such as statutory revenue, cost of sales,
inventory and debt no longer include the Group's portion of joint
venture balances. Instead, the Group's share of the statutory
results from joint ventures is accounted for under the equity
method. Therefore the Group's share of the results in joint
ventures is presented in one line in the income statement and the
statutory balance sheet includes one line representing the Group's
investment in joint ventures.
Joint ventures are an integral part of the business and the
Board has included an income statement and a balance sheet using
proportional consolidation for the results of joint ventures within
the Group's financial statements. These are presented in addition
to the Generally Accepted Accounting Principles (GAAP) compliant
versions of the income statement and balance sheet which present
joint ventures as equity investments. For further information see
notes 6 and 7.
The statutory accounts for the year ended 31 March 2018,
including the comparative information for the year ended 31 March
2017 have been prepared in accordance with International Financial
Reporting Standards (IFRS) including International Accounting
Standards (IAS) and International Financial Reporting
Interpretations Committee (IFRIC) interpretations as adopted for
use in the European Union and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS.
The directors have assessed the Group's projected business
activities and available financial resources together with detailed
forecasts for cash flow and relevant sensitivity analysis. The
directors believe that the Group remains well placed to manage its
business risks successfully. After making appropriate enquiries the
directors have a reasonable expectation that the Group has adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the directors continue to adopt the going
concern basis in preparing the statutory accounts for the year
ended 31 March 2018.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets, liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of uncertainty were
principally the same as those applied to the Group's financial
statements as at 31 March 2017.
2 Accounting policies
Accounting convention
The statutory accounts for the year ended 31 March 2018
have been prepared under historical cost convention
as modified for reassessment of derivatives at fair
value and on a basis consistent with the accounting
policies in the financial statements for the year ended
31 March 2017. The accounting policies will be disclosed
in full within the Group's forthcoming financial statements.
3 Taxation
Taxation has been calculated on the profit for the year
ended 31 March 2018 at the estimated effective tax rate
of 19.2 per cent (2017: 20.5 per cent).
4 Dividend paid Year Year ended
ended
31 March 31 March
2018 2017
GBP000 GBP000
----------------------------------------- ---------- ------------
Prior year final dividend paid in July
2017 of 8.5p
(July 2016: 7.7p) 6,378 5,746
Interim dividend paid in January 2018
of 8.0p
(January 2017: 7.2p) 6,005 5,389
12,383 11,135
----------------------------------------- ---------- ------------
The final dividend proposed for the year ended 31 March
2018 is 9.0 pence per ordinary share. This dividend was
declared after 31 March 2018 and as such the liability
of GBP6.8 million has not been recognised at that date.
5 Earnings per share
Basic earnings per share is calculated by dividing the
earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding
during the year, excluding those held in the Share Incentive
Plan. For diluted earnings per share, the weighted average
number of ordinary shares in issue is adjusted to assume
conversion of all dilutive potential ordinary shares.
Earnings per share have been calculated using the following
figures:
Year ended Year ended
31 March 2018 31 March
2017
Weighted average number of shares
in issue 75,061,664 74,716,939
Dilution - effect of share schemes 669,202 395,643
-------------------------------------- --------------- ---------------
Diluted weighted average number
of shares in issue 75,730,866 75,112,582
Profit on ordinary activities after
taxation GBP37,415,000 GBP27,519,000
Earnings per share:
Basic 49.8p 36.8p
Diluted 49.4p 36.6p
-------------------------------------- --------------- ---------------
6 Segmental reporting
The Group has only one reportable segment, being housebuilding
in the United Kingdom. Financial analysis is presented to the chief
operating decision makers of the Group, being the Board of
directors, on a site by site basis. It is on this basis that the
Board makes decisions as to the allocation of resources and
assesses the Group's performance. The information is aggregated and
presented as one reportable segment given the sites share similar
economic characteristics.
Management information is presented to the Board of directors
with the Group's share of joint venture results proportionally
consolidated to reflect the true underlying performance of the
Group and the importance of joint ventures to the business. The
results disclosed within the Group's financial statements do not
proportionally consolidate joint venture results and instead they
are accounted for on an equity basis. A reconciliation between
management information and the Generally Accepted Accounting
Principles (GAAP) compliant information in the financial statements
is as follows:
Remove
Management share of
Year ended 31 March 2018 Information joint ventures GAAP
GBP000 GBP000 GBP000
---------------------------- -------------- ---------------- ------------
Revenue 316,241 (21,460) 294,781
Cost of sales (236,772) 16,746 (220,026)
---------------------------- -------------- ---------------- ------------
Gross profit 79,469 (4,714) 74,755
Administrative expenses (24,159) 104 (24,055)
Selling expenses (6,548) 842 (5,706)
Share of results of joint
ventures - 2,443 2,443
---------------------------- -------------- ---------------- ------------
Operating profit 48,762 (1,325) 47,437
Net finance costs (2,724) 1,595 (1,129)
---------------------------- -------------- ---------------- ------------
Profit before income
tax 46,038 270 46,308
Income tax expense (8,623) (270) (8,893)
---------------------------- -------------- ---------------- ------------
Profit after income tax 37,415 - 37,415
---------------------------- -------------- ---------------- ------------
Inventories 373,859 (73,851) 300,008
Cash and cash equivalents 13,829 (1,021) 12,808
Other assets 59,049 55,823 114,872
Borrowings (116,899) 4,640 (112,259)
Other liabilities (98,747) 14,409 (84,338)
Net assets 231,091 - 231,091
--------------------------- ---------- --------- ----------
Remove
Management share of
Year ended 31 March 2017 Information joint ventures GAAP
GBP000 GBP000 GBP000
---------------------------- -------------- ---------------- ------------
Revenue 291,921 (25,946) 265,975
Cost of sales (228,720) 19,754 (208,966)
---------------------------- -------------- ---------------- ------------
Gross profit 63,201 (6,192) 57,009
Administrative expenses (20,805) 78 (20,727)
Selling expenses (5,091) 948 (4,143)
Share of results of joint
ventures - 4,634 4,634
---------------------------- -------------- ---------------- ------------
Operating profit 37,305 (532) 36,773
Net finance costs (3,177) 1,036 (2,141)
---------------------------- -------------- ---------------- ------------
Profit before income
tax 34,128 504 34,632
Income tax expense (6,609) (504) (7,113)
---------------------------- -------------- ---------------- ------------
Profit after income tax 27,519 - 27,519
---------------------------- -------------- ---------------- ------------
Inventories 339,380 (51,728) 287,652
Cash and cash equivalents 39,834 (1,205) 38,629
Other assets 45,083 42,420 87,503
Borrowings (54,085) 280 (53,805)
Other liabilities (165,927) 10,233 (155,694)
Net assets 204,285 - 204,285
--------------------------- ---------- --------- ----------
7 Key Management Information and Alternative Performance
Measures
This report includes both statutory and alternative performance
measures (APMs). The Board uses APMs which, although financial
measures of either historical or future performance, financial
position or cash flows, are not defined or specified by IFRSs. The
alternative performance measures, in managements view, better
reflect the underlying performance of the business and provide a
more meaningful comparison of how the business is managed and
measured on a day-to-day basis.
Our APMs and associated KPIs are aligned to our strategy and are
used by the Board for planning, reporting, to measure the
performance of the business and form the basis of the performance
measures linked to remuneration. The measures are also used in
discussions with the investment analyst community and current and
potential shareholders.
The APMs used by the Board are defined and explained below.
Key management information including the Group's share of joint
ventures result proportionally consolidated
Key management information is presented to the Board with the
Group's share of joint venture results proportionally consolidated
and therefore including the relevant share of the results of joint
ventures in each line of the income statement and balance sheet as
set out above.
Where revenue and profit metrics include the Group's share of
joint venture results proportionally consolidated, they are defined
and referred to as set out below.
Total revenue - Total revenue is defined as IFRS revenue plus
the Group's share of revenue from its joint ventures.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Revenue 294,781 265,975
Share of joint venture
revenue 21,460 25,946
------------------------ -----------
Total revenue 316,241 291,921
------------------------ ----------- -----------
Total gross profit - Total gross profit is defined as IFRS gross
profit plus the Group's share of gross profit from its joint
ventures.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Gross profit 74,755 57,009
Share of joint venture
gross profit 4,714 6,192
------------------------ -----------
Total gross profit 79,469 63,201
------------------------ ----------- -----------
Total operating profit - Total operating profit is defined as
IFRS operating profit plus the Group's share of operating profit
from its joint ventures.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Operating profit 47,437 36,773
Share of joint venture operating
profit 1,325 532
---------------------------------- ------------------
Total operating profit 48,762 37,305
--------------------------------- ------------------- ------------
Total profit before tax - Total profit before tax is defined as
IFRS profit before tax plus the Group's share of profit before tax
from its joint ventures.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Profit before tax 46,308 34,632
Share of joint venture profit
before tax (270) (504)
------------------------------- -----------
Total profit before tax 46,038 34,128
------------------------------- ----------- -----------
Adjusted margins
The Board reviews margins at a gross and operating level before
the inclusion of any interest costs capitalised within work in
progress and subsequently expensed through cost of sales. This is
consistent with the approach used by the business when appraising
land and therefore allows comparability to the original site
purchase viability and also comparability across the sector as many
of the Group's peers do not capitalise interest per IAS 23.
Adjusted gross margin - is calculated as the IFRS gross profit
plus the Group's share of gross profit from its joint ventures
(total gross profit), adjusted for interest expensed through cost
of sales, divided by total revenue, expressed as a percentage.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Total gross profit 79,469 63,201
Adjust for interest expensed within
cost of sales 4,180 1,907
---------------------------------------- ----------
Adjusted total gross profit 83,649 65,108
---------------------------------------- ---------- ------------
Total revenue 316,241 291,921
---------------------------------------- ----------
Adjusted gross margin 26.5% 22.3%
---------------------------------------- ---------- ------------
Adjusted operating margin - is calculated as the IFRS operating
profit plus the Group's share of operating profit from its joint
ventures (total operating profit), adjusted for interest expensed
through cost of sales, divided by total revenue, expressed as a
percentage.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Total operating profit 48,762 37,305
Adjust for interest expensed within
cost of sales 4,180 1,907
------------------------------------------ --------
Adjusted total operating profit 52,942 39,212
------------------------------------------ -------- ------------
Total revenue 316,241 291,921
------------------------------------------ --------
Adjusted operating margin 16.7% 13.4%
------------------------------------------ -------- ------------
Other APMs
The other APMs and KPIs used by the Group are defined below.
Total finance costs incurred - Total finance costs incurred,
including the Group's share of joint venture finance costs, consist
mainly of interest on development financing, non-utilisation fees
and amortised arrangement fees. Interest on development financing
is capitalised into work in progress as required by IAS 23 and all
other fees are charged directly to the income statement.
Year ended Year ended
31 March 31 March
2018 2017
GBP000 GBP000
Non-utilisation fees 2,445 2,522
Amortisation of arrangement fees 905 788
Other finance costs 272 27
Interest capitalised within work
in progress 5,175 2,151
------------------------------------- ------------
Total finance costs incurred 8,797 5,488
------------------------------------- ------------ ------------
Gearing - Gearing is calculated as net debt (total borrowings
less total cash), including the Group's share of joint venture net
debt, divided by net assets expressed as a percentage.
31 March 31 March
2018 2017
GBP000 GBP000
Total borrowings 116,899 54,085
Total cash (13,829) (39,834)
------------------ --------- ---------
Net debt 103,070 14,251
Net assets 231,091 204,285
------------------ ---------
Gearing 44.6% 7.0%
------------------ --------- ---------
Development pipeline - The development pipeline is defined as
revenue under our control, including the Group's share of joint
venture revenue, to be recognised in future years.
Forward sales - Forward sales is calculated as revenue secured
by exchange of contracts, including the Group's share of joint
venture revenue, to be recognised in future years.
- ENDS -
Copies of this announcement are available from the Group at
Telford House, Queensgate, Britannia Road, Waltham Cross,
Hertfordshire EN8 7TF and on our website
www.telfordhomes-ir.london
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR ALMFTMBTTBBP
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