TIDMTEF
RNS Number : 4241D
Telford Homes PLC
02 December 2009
+-------------------------------------+-------------------------------------+
| Press Release | 2 December 2009 |
+-------------------------------------+-------------------------------------+
Telford Homes Plc
('Telford Homes' or 'the Group')
Interim results for the six months ended 30 September 2009
Telford Homes Plc (AIM:TEF), the residential developer in East London noted for
regeneration projects within public sector partnerships, today announces its
interim results for the six months ended 30 September 2009.
Highlights
+--------+---------------------------------------------------------------+
| · | Revenue of GBP85.9 million (H1 2008: GBP35.6 million); full |
| | year revenue and profit expected to be heavily weighted |
| | towards the first half |
+--------+---------------------------------------------------------------+
| · | Profit before tax and exceptional items of GBP6.5 million (H1 |
| | 2008: GBP0.3 million) |
+--------+---------------------------------------------------------------+
| · | Dividend payment reinstated at 0.75p given the strong results |
+--------+---------------------------------------------------------------+
| · | 224 open market homes legally completed (H1 2008: 119) |
+--------+---------------------------------------------------------------+
| · | Strengthened partnership with the Homes and Communities |
| | Agency, with the grant programme now extended to GBP73 |
| | million |
+--------+---------------------------------------------------------------+
| · | Net debt reduced to GBP71.3 million (31 March 2009: GBP107.2 |
| | million) with gearing at 130% |
+--------+---------------------------------------------------------------+
Andrew Wiseman, Chief Executive of Telford Homes, commented: "The Board is
pleased to report that it has seen a positive shift in sentiment in the market
in East London, which is reflected in the increased number of new sales during
the period. Our excellent relationships with housing associations have enabled
us to concentrate on the development of affordable housing in order to reduce
our exposure to risk and continue construction with an improved cash flow
profile achieved at reduced margins.
"Overall, we are in a strong position, having focused on cash generation and
reducing debt levels during the period. An ongoing shortage of new homes,
related demand for rental properties and regeneration led by the 2012 Olympics
all support the Board's long term confidence in East London."
- Ends -
For further information:
+-------------------------------------------+----------------------------+
| Telford Homes Plc | |
+-------------------------------------------+----------------------------+
| Andrew Wiseman, Chief Executive | Tel: +44 (0) 1992 809 800 |
+-------------------------------------------+----------------------------+
| Jon Di-Stefano, Financial Director | www.telfordhomes.plc.uk |
+-------------------------------------------+----------------------------+
+-------------------------------------------+----------------------------+
| Shore Capital | |
+-------------------------------------------+----------------------------+
| Graham Shore / Pascal Keane | Tel: +44 (0) 20 7468 7910 |
+-------------------------------------------+----------------------------+
Media enquiries:
+-------------------------------------------+----------------------------+
| Abchurch | |
+-------------------------------------------+----------------------------+
| Henry Harrison-Topham / Joanne Shears | Tel: +44 (0) 20 7398 7709 |
+-------------------------------------------+----------------------------+
| joanne.shears@abchurch-group.com | www.abchurch-group.com |
+-------------------------------------------+----------------------------+
Copies of this announcement are available from the Group at First Floor, Stuart
House, Queensgate, Britannia Road, Waltham Cross, Hertfordshire EN8 7TF and on
our website www.telfordhomes.plc.uk.
CHIEF EXECUTIVE'S STATEMENT
The housing market in East London has shown encouraging signs in the past few
months and the Group has secured an increased number of sales across several of
its developments. There is a shortage of homes in the area and this, along with
the continued strength in the lettings market, is underpinning an improvement in
sentiment.
Results for the six months ended 30 September 2009
Revenue for the six months ended 30 September 2009 was GBP85.9 million (H1 2008:
GBP35.6 million) with a total of 224 open market homes legally completed (H1
2008: 119 homes) as well as two commercial units. The restricted availability of
mortgage finance has made it very difficult for many off-plan investment buyers
to complete their contractual obligations. Telford Homes has continued to work
with each individual purchaser to achieve completions as far as possible, and
has been successful in securing re-sales in situations where the original
purchaser could not possibly complete the transaction. With fewer pre-sold
properties remaining to complete, revenue and profit expected for the year to 31
March 2010 will be heavily weighted towards the first half although the overall
expectation for the year remains unchanged.
Gross profit before exceptional items was GBP12.6 million (H1 2008: GBP5.1
million) which is stated after expensing loan interest that had been capitalised
within inventories of GBP3.2 million (H1 2008: GBP1.2 million).
As anticipated, gross margin before exceptional items and interest declined
slightly to 18.3 per cent (full year to 31 March 2009: 20.0 per cent). This is
in line with the Group's more cautious approach to risk, as developments now
being constructed entirely for affordable housing achieve lower margins
commensurate with the risk taken.
The margin has also been impacted by lower selling prices achieved on new sales.
The average price of sales of open market homes on which contracts were
exchanged in the first six months of the financial year was GBP228,000. While
the mix of homes sold in each period will not be the same, this is 12.6 per cent
lower than the average price of pre-sales secured in 2007 and 2008.
Construction costs, administrative expenses and selling expenses remain under
careful control. The commercial teams within the Group have been successful in
reducing anticipated costs during a period which has seen less construction
activity across the industry, although raw material prices and exchange rates
have constrained overall savings.
Total loan interest paid during the six months to 30 September 2009 was GBP2.0
million including interest capitalised within inventories (H1 2008: GBP3.1
million) with lower average borrowings and falls in the base rate and LIBOR
contributing to the reduction against the same period last year.
Profit before tax and exceptional items was GBP6.5 million (H1 2008: GBP0.3
million). The exceptional items reported in the period are write downs to the
value of land and work in progress of GBP0.7 million along with a final GBP0.1
million of redundancy costs. The write downs are primarily due to elongated
selling periods and mortgage availability issues for some stock units. No write
downs are expected in the second half of the year given the change in market
sentiment in East London in the last few months. Profit before tax and after
exceptional items for the six months ended 30 September 2009 was GBP5.7 million
against a loss last year of GBP1.1 million.
Dividend
Given the results for the first half of the year, along with enhanced cash
balances and reduced borrowings, the Board feels it appropriate to declare a
modest interim dividend of 0.75 pence per share. The dividend policy will remain
under review while the Group continues to manage the effects of the downturn and
will consider anticipated profits over an extended timeframe. The interim
dividend is expected to be paid on 15 January 2010 to those shareholders on the
register at the close of business on 18 December 2009.
Sales
Sales performance has been much improved since the start of the Group's new
financial year as the market in East London has shown signs of recovery. The
Group has continued to market finished homes at Queen Mary's Gate, Woodford and
Nayland Court, Romford and across the two sites 48 homes have been sold since 1
April 2009, including 19 since 1 October 2009. The recent improvement in sales
at Queen Mary's Gate has given the Board confidence to continue with the
development of the third and final phase, and marketing is expected to commence
early in 2010. In addition, a total of 52 homes have been sold off-plan at
developments completing in 2010 and beyond, principally Greenwich Creekside,
signalling that there is still investor demand for the Group's homes in East
London.
Since 1 April 2009, a total of 57 pre-sold homes have failed to reach completion
and the contracts have been rescinded with the 10 per cent deposit being
retained and the Group reserving the right to recover any further loss. The
Board is pleased to report that 44 of these homes have subsequently been re-sold
to new buyers. These re-sales, together with the 10 per cent deposits retained,
generally achieve almost the same total revenue as the original sales.
Completions
Mortgage finance remains a constraint to achieving legal completions on homes
pre-sold in previous years. The availability of mortgages and the time taken to
process each application have not yet improved and lead to inevitable delays in
each completion. However, as of 30 November 2009, 470 of the 613 pre-sold homes
that were due to complete between 1 October 2008 and 31 March 2010 had either
completed or been re-sold. This success has assisted Telford Homes in reducing
net debt.
The level of re-sales being secured has led to the Group rescinding a number of
contracts earlier than foreseen. The Group has been achieving successful
completions by negotiating modest discounts to original purchasers where
mortgage valuations have been abnormally poor and where the purchaser would be
unable to complete without a slight price reduction. This has been commercially
necessary given the numbers involved and has resulted in significant progress
being made. However, with a more active market in new homes, the Group is
increasingly able to rescind existing contracts and re-sell the properties
rather than negotiating any further discounts or accepting significant delays.
The Board expects that, although the total number of contracts rescinded will
therefore be in excess of original estimates, the vast majority of these will be
re-sold over the course of the next 12 months.
Grants and affordable housing
The Group's status as a grant partner of the Homes and Communities Agency (HCA)
has been a significant strength over the last 12 months with the grant programme
of GBP57 million reported in May 2009 now extended to GBP73 million. Commencing
construction of 324 affordable homes across three development sites and two
estate regeneration projects has led to GBP28 million of HCA grants being
received to date including GBP13 million since 30 September 2009. These grants
will pay for the construction of the affordable homes and as such a proportion
of the GBP15 million that had been received by 30 September 2009 is held for
future expenditure and is included within cash in the balance sheet.
Telford Homes continues to maintain excellent relationships with housing
associations both in terms of the delivery of affordable housing and partnership
arrangements to develop land within their ownership. These relationships have
enabled the Group to sell a number of developments entirely for affordable
housing that were originally intended to provide both open market and affordable
housing. Supported by the HCA grants, this has allowed construction to commence
on several developments during the last six months with no exposure to the risk
of open market housing, and a better cash flow profile achieved at a reduced
margin.
Cash and borrowings
Cash balances at 30 September 2009 were GBP15.1 million including GBP5.6 million
of HCA grants held for future expenditure and GBP6.3 million as a result of the
acquisition of Clifford Contracting Limited announced on 23 June 2009. The funds
within this acquired company are available should Telford Homes need to access
alternative finance against unsold properties as opposed to normal bank debt.
The availability of this funding has given the Group's banking partners
increased confidence leading to them offering additional or extended facilities
where completions have been delayed. In addition, it has provided the Group with
potential resources to enable the re-sales of homes that failed to complete with
original purchasers to be achieved in an orderly manner.
Telford Homes has focused on cash generation and reducing net debt over the last
six months. Borrowings at 30 September 2009 were GBP86.4 million down from
GBP112.0 million at 31 March 2009. Net debt at 30 September 2009 was GBP71.3
million down from GBP107.2 million at 31 March 2009 with gearing reduced to 130
per cent. This has been achieved through securing completions to repay site
specific facilities, not investing in new land, controlling work in progress and
the receipt of HCA grants.
The Group's business model requires finance for future land acquisitions and
subsequent development. However, the Board has determined that long term growth
can be achieved at lower levels of gearing than those required in previous years
and as such expects this to remain below 150 per cent in the future. This is
also consistent with sources of finance being restricted and only available at
lower loan to cost percentages. Bank finance is currently difficult to secure
for new projects but the Group expects to be able to replace some of its
existing facilities with new facilities over time, and in addition has made
encouraging progress towards securing lines of funding through non-bank sources
either purely as debt finance or as part of joint venture arrangements.
Partnerships and development pipeline
The Group's partnership with Eastend Homes continues to be an excellent source
of potential development sites. The British Estate, E3 set the model for the
partnership where land payments have been reinvested in the third party
refurbishment of existing homes on the estate. Construction has now commenced on
54 affordable homes on the St George's Estate, E1 and on 74 affordable homes on
the Bede Estate, E3. The Group holds options to purchase and develop a number of
sites on both estates for open market housing either directly or through joint
venture arrangements. These options will be exercised as appropriate depending
on market conditions. Plans are being progressed on a further four estates with
Eastend Homes including the Holland Estate in Aldgate, E1.
At 30 September 2009, the total pipeline of open market and affordable
properties not yet legally completed was 2,368 (31 March 2009: 2,635) including
2,344 with planning permission. This total includes sites under option contracts
within the control of the Group. Of these properties 1,234 are under
construction and a total of 821 had been secured by contracts exchanged either
for open market sale or for affordable housing by 30 September 2009.
Outlook
The Group has performed well during the period both in terms of achieving
completions and securing new sales at a steady rate. The Board anticipates that
the results for the full year to 31 March 2010 will be in line with market
expectations. As a result of not purchasing new land and restricted expenditure
on work in progress over the last 18 months the Board expects reduced output of
completed homes over the next two financial years. Growth should then follow
this supported by a less leveraged balance sheet.
A prudent approach to investment and strong partnerships with housing
associations have positioned the Group well in the economic downturn. The Board
remains cautious but the steady activity in the market over the last few months
has been encouraging. An ongoing shortage of new homes, related demand for
rental properties and regeneration led by the 2012 Olympics all support the
Board's long term confidence in East London.
Andrew Wiseman
Chief Executive
1 December 2009
GROUP INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
+--------------------------+------+--------------+--------------+--------------+
| |Note | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year |
| | | ended | ended | ended |
+--------------------------+------+--------------+--------------+--------------+
| | | 30 September | 30 September | 31 March |
| | | 2009 | 2008 | 2009 |
+--------------------------+------+--------------+--------------+--------------+
| | | GBP000 | GBP000 | GBP000 |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Revenue | | 85,904 | 35,564 | 106,662 |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Cost of sales before | | (73,343) | (30,420) | (89,044) |
| exceptional items | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Exceptional items | 3 | (710) | (1,400) | (2,868) |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Gross profit | | 11,851 | 3,744 | 14,750 |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Administrative expenses | | (4,642) | (3,893) | (7,971) |
+--------------------------+------+--------------+--------------+--------------+
| Selling expenses | | (738) | (718) | (1,373) |
+--------------------------+------+--------------+--------------+--------------+
| Exceptional items | 3 | (70) | - | (116) |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Operating profit (loss) | | 6,401 | (867) | 5,290 |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Finance income | | 190 | 156 | 216 |
+--------------------------+------+--------------+--------------+--------------+
| Finance costs | | (851) | (388) | (1,163) |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Profit (loss) before | | 5,740 | (1,099) | 4,343 |
| income tax | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Analysed as: | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Profit before income tax | | 6,520 | 301 | 7,327 |
| and exceptional items | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Exceptional items | 3 | (780) | (1,400) | (2,984) |
+--------------------------+------+--------------+--------------+--------------+
| | | 5,740 | (1,099) | 4,343 |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Income tax (expense) | 4 | (1,635) | 84 | (1,320) |
| credit | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Profit (loss) after | | 4,105 | (1,015) | 3,023 |
| income tax | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Earnings (loss) per | | | | |
| share: | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Basic | 6 | 10.6p | (2.7p) | 8.1p |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Diluted | 6 | 10.5p | (2.7p) | 8.1p |
+--------------------------+------+--------------+--------------+--------------+
All activities are in respect of continuing operations.
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
+--------------------------+------+--------------+--------------+--------------+
| | | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year |
| | | ended | ended | ended |
+--------------------------+------+--------------+--------------+--------------+
| | | 30 September | 30 September | 31 March |
| | | 2009 | 2008 | 2009 |
+--------------------------+------+--------------+--------------+--------------+
| | | GBP000 | GBP000 | GBP000 |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Movement in excess tax | | 7 | (30) | (30) |
| on share options | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Other comprehensive | | 7 | (30) | (30) |
| income (expense) net of | | | | |
| tax | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Profit (loss) for the | | 4,105 | (1,015) | 3,023 |
| period | | | | |
+--------------------------+------+--------------+--------------+--------------+
| | | | | |
+--------------------------+------+--------------+--------------+--------------+
| Total comprehensive | | 4,112 | (1,045) | 2,993 |
| income (expense) for the | | | | |
| period | | | | |
+--------------------------+------+--------------+--------------+--------------+
GROUP BALANCE SHEET
AT 30 SEPTEMBER 2009
+-------------------------+------+--------------+--------------+--------------+
| | | Unaudited | Unaudited | Audited |
| | | 30 September | 30 September | 31 March |
| | | 2009 | 2008 | 2009 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| | | GBP000 | GBP000 | GBP000 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Non current assets | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Property, plant and | | 462 | 788 | 618 |
| equipment | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Deferred income tax | | 20 | - | 13 |
| assets | | | | |
+-------------------------+------+--------------+--------------+--------------+
| | | 482 | 788 | 631 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Current assets | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Inventories | | 146,193 | 200,216 | 177,941 |
+-------------------------+------+--------------+--------------+--------------+
| Trade and other | | 8,158 | 7,461 | 9,098 |
| receivables | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Current income tax | | - | 5,491 | 342 |
| assets | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Cash and cash | | 15,073 | 2,247 | 4,865 |
| equivalents | | | | |
+-------------------------+------+--------------+--------------+--------------+
| | | 169,424 | 215,415 | 192,246 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Total assets | | 169,906 | 216,203 | 192,877 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Non current liabilities | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Hire purchase | | - | (3) | - |
| liabilities | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Deferred income tax | | - | (264) | - |
| liabilities | | | | |
+-------------------------+------+--------------+--------------+--------------+
| | | - | (267) | - |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Current liabilities | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Trade and other | | (27,502) | (42,254) | (30,534) |
| payables | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Borrowings | | (86,369) | (127,499) | (112,020) |
+-------------------------+------+--------------+--------------+--------------+
| Current income tax | | (1,301) | - | - |
| liabilities | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Hire purchase | | (1) | (51) | (18) |
| liabilities | | | | |
+-------------------------+------+--------------+--------------+--------------+
| | | (115,173) | (169,804) | (142,572) |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Total liabilities | | (115,173) | (170,071) | (142,572) |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Net assets | | 54,733 | 46,132 | 50,305 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Capital and reserves | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Issued share capital | | 4,040 | 3,800 | 3,875 |
+-------------------------+------+--------------+--------------+--------------+
| Share premium | | 31,125 | 30,221 | 30,345 |
+-------------------------+------+--------------+--------------+--------------+
| Retained earnings | | 19,568 | 12,111 | 16,085 |
+-------------------------+------+--------------+--------------+--------------+
| | | | | |
+-------------------------+------+--------------+--------------+--------------+
| Total equity | | 54,733 | 46,132 | 50,305 |
+-------------------------+------+--------------+--------------+--------------+
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009 (UNAUDITED)
+--------------------------------+---------+---------+----------+---------+
| | Share | Share | Retained | Total |
| | capital | premium | earnings | equity |
+--------------------------------+---------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------------+---------+---------+----------+---------+
| | | | | |
+--------------------------------+---------+---------+----------+---------+
| Balance at 1 April 2009 | 3,875 | 30,345 | 16,085 | 50,305 |
+--------------------------------+---------+---------+----------+---------+
| Profit for the period | - | - | 4,105 | 4,105 |
+--------------------------------+---------+---------+----------+---------+
| Total other comprehensive | - | - | 7 | 7 |
| income | | | | |
+--------------------------------+---------+---------+----------+---------+
| Dividend on equity shares | - | - | - | - |
+--------------------------------+---------+---------+----------+---------+
| Proceeds of equity share issue | 165 | 780 | - | 945 |
+--------------------------------+---------+---------+----------+---------+
| Share-based payments | - | - | 102 | 102 |
+--------------------------------+---------+---------+----------+---------+
| Purchase of own shares | - | - | (312) | (312) |
+--------------------------------+---------+---------+----------+---------+
| Sale of own shares | - | - | 142 | 142 |
+--------------------------------+---------+---------+----------+---------+
| Write down in value of own | - | - | 72 | 72 |
| shares | | | | |
+--------------------------------+---------+---------+----------+---------+
| Option to repurchase own | - | - | (633) | (633) |
| shares | | | | |
| (note 7) | | | | |
+--------------------------------+---------+---------+----------+---------+
| | | | | |
+--------------------------------+---------+---------+----------+---------+
| Balance at 30 September 2009 | 4,040 | 31,125 | 19,568 | 54,733 |
+--------------------------------+---------+---------+----------+---------+
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2008 (UNAUDITED)
+--------------------------------+---------+---------+----------+---------+
| | Share | Share | Retained | Total |
| | capital | premium | earnings | equity |
+--------------------------------+---------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------------+---------+---------+----------+---------+
| | | | | |
+--------------------------------+---------+---------+----------+---------+
| Balance at 1 April 2008 | 3,750 | 29,749 | 15,354 | 48,853 |
+--------------------------------+---------+---------+----------+---------+
| Loss for the period | - | - | (1,015) | (1,015) |
+--------------------------------+---------+---------+----------+---------+
| Total other comprehensive | - | - | (30) | (30) |
| expense | | | | |
+--------------------------------+---------+---------+----------+---------+
| Dividend on equity shares | - | - | (2,062) | (2,062) |
+--------------------------------+---------+---------+----------+---------+
| Proceeds of equity share issue | 50 | 472 | - | 522 |
+--------------------------------+---------+---------+----------+---------+
| Share-based payments | - | - | 97 | 97 |
+--------------------------------+---------+---------+----------+---------+
| Purchase of own shares | - | - | (522) | (522) |
+--------------------------------+---------+---------+----------+---------+
| Sale of own shares | - | - | 220 | 220 |
+--------------------------------+---------+---------+----------+---------+
| Write down in value of own | - | - | 69 | 69 |
| shares | | | | |
+--------------------------------+---------+---------+----------+---------+
| | | | | |
+--------------------------------+---------+---------+----------+---------+
| Balance at 30 September 2008 | 3,800 | 30,221 | 12,111 | 46,132 |
+--------------------------------+---------+---------+----------+---------+
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2009 (AUDITED)
+--------------------------------+---------+---------+----------+---------+
| | Share | Share | Retained | Total |
| | capital | premium | earnings | equity |
+--------------------------------+---------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------------+---------+---------+----------+---------+
| | | | | |
+--------------------------------+---------+---------+----------+---------+
| Balance at 1 April 2008 | 3,750 | 29,749 | 15,354 | 48,853 |
+--------------------------------+---------+---------+----------+---------+
| Profit for the year | - | - | 3,023 | 3,023 |
+--------------------------------+---------+---------+----------+---------+
| Total other comprehensive | - | - | (30) | (30) |
| expense | | | | |
+--------------------------------+---------+---------+----------+---------+
| Dividend on equity shares | - | - | (2,061) | (2,061) |
+--------------------------------+---------+---------+----------+---------+
| Proceeds of equity share issue | 125 | 596 | - | 721 |
+--------------------------------+---------+---------+----------+---------+
| Share-based payments | - | - | 195 | 195 |
+--------------------------------+---------+---------+----------+---------+
| Purchase of own shares | - | - | (721) | (721) |
+--------------------------------+---------+---------+----------+---------+
| Sale of own shares | - | - | 194 | 194 |
+--------------------------------+---------+---------+----------+---------+
| Write down in value of own | - | - | 131 | 131 |
| shares | | | | |
+--------------------------------+---------+---------+----------+---------+
| | | | | |
+--------------------------------+---------+---------+----------+---------+
| Balance at 31 March 2009 | 3,875 | 30,345 | 16,085 | 50,305 |
+--------------------------------+---------+---------+----------+---------+
GROUP CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2009
+--------------------------------+--------------+--------------+--------------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year |
| | ended | ended | ended |
+--------------------------------+--------------+--------------+--------------+
| | 30 September | 30 September | 31 March |
| | 2009 | 2008 | 2009 |
+--------------------------------+--------------+--------------+--------------+
| | GBP000 | GBP000 | GBP000 |
+--------------------------------+--------------+--------------+--------------+
| Cash flow from operating activities | | |
+-----------------------------------------------+--------------+--------------+
| Operating profit (loss) | 6,401 | (867) | 5,290 |
+--------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------+--------------+--------------+--------------+
| Depreciation | 170 | 200 | 387 |
+--------------------------------+--------------+--------------+--------------+
| Write down in value of own | 72 | 69 | 131 |
| shares | | | |
+--------------------------------+--------------+--------------+--------------+
| Share-based payments | 102 | 97 | 195 |
+--------------------------------+--------------+--------------+--------------+
| Profit on sale of tangible | - | (28) | (39) |
| fixed assets | | | |
+--------------------------------+--------------+--------------+--------------+
| Decrease (increase) in | 32,818 | (18,631) | 6,427 |
| inventories | | | |
+--------------------------------+--------------+--------------+--------------+
| Decrease in receivables | 940 | 3,851 | 3,533 |
+--------------------------------+--------------+--------------+--------------+
| Decrease in payables | (2,997) | (7,734) | (21,050) |
+--------------------------------+--------------+--------------+--------------+
| | 37,506 | (23,043) | (5,126) |
+--------------------------------+--------------+--------------+--------------+
| Interest paid | (1,956) | (3,144) | (6,425) |
+--------------------------------+--------------+--------------+--------------+
| Income taxes received (paid) | 8 | (553) | 2,915 |
+--------------------------------+--------------+--------------+--------------+
| Cash flow from operating | 35,558 | (26,740) | (8,636) |
| activities | | | |
+--------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------+--------------+--------------+--------------+
| Cash flow from investing | | | |
| activities | | | |
+--------------------------------+--------------+--------------+--------------+
| Purchase of tangible assets | (14) | (91) | (99) |
+--------------------------------+--------------+--------------+--------------+
| Proceeds from sale of tangible | - | 38 | 40 |
| assets | | | |
+--------------------------------+--------------+--------------+--------------+
| Interest received | 190 | 156 | 216 |
+--------------------------------+--------------+--------------+--------------+
| Cash flow from investing | 176 | 103 | 157 |
| activities | | | |
+--------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------+--------------+--------------+--------------+
| Cash flow from financing | | | |
| activities | | | |
+--------------------------------+--------------+--------------+--------------+
| Proceeds from issuance of | 945 | 522 | 721 |
| ordinary share capital | | | |
+--------------------------------+--------------+--------------+--------------+
| Purchase of own shares | (312) | (522) | (721) |
+--------------------------------+--------------+--------------+--------------+
| Sale of own shares | 142 | 220 | 194 |
+--------------------------------+--------------+--------------+--------------+
| Increase in borrowings | 19,054 | 27,629 | 52,774 |
+--------------------------------+--------------+--------------+--------------+
| Repayment of borrowings | (45,338) | (1,554) | (42,178) |
+--------------------------------+--------------+--------------+--------------+
| Dividend paid | - | (2,062) | (2,061) |
+--------------------------------+--------------+--------------+--------------+
| Capital element of hire | (17) | (47) | (83) |
| purchase payments | | | |
+--------------------------------+--------------+--------------+--------------+
| Cash flow from financing | (25,526) | 24,186 | 8,646 |
| activities | | | |
+--------------------------------+--------------+--------------+--------------+
| | | | |
+--------------------------------+--------------+--------------+--------------+
| Net increase (decrease) in | 10,208 | (2,451) | 167 |
| cash and cash equivalents | | | |
+--------------------------------+--------------+--------------+--------------+
| Cash and cash equivalents | 4,865 | 4,698 | 4,698 |
| brought forward | | | |
+--------------------------------+--------------+--------------+--------------+
| Cash and cash equivalents | 15,073 | 2,247 | 4,865 |
| carried forward | | | |
+--------------------------------+--------------+--------------+--------------+
NOTES
+--------------------------------------------------------------------+
| 1 Basis of preparation |
+--------------------------------------------------------------------+
| |
+--------------------------------------------------------------------+
| The interim accounts have been prepared on the basis of the |
| recognition and measurement requirements of International |
| Financial Reporting Standards (IFRS) in issue that are either |
| endorsed by the EU and effective at 31 March 2010 or are expected |
| to be endorsed and effective at 31 March 2010. |
| The interim accounts do not constitute statutory accounts within |
| the meaning of Section 240 of the Companies Act 1985 (Section 434 |
| of the Companies Act 2006). The figures for the half years ended |
| 30 September 2009 and 30 September 2008 are unaudited. The interim |
| accounts were approved by the directors on 1 December 2009 and |
| have been reviewed by the auditors whose review report is |
| unqualified and will be included in the interim report distributed |
| to shareholders. |
| 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 interim |
| accounts. |
| The Group's statutory accounts for the year ended 31 March 2009 |
| were approved by the Board of directors on 26 May 2009, have been |
| reported on by the Group's auditors and delivered to the Registrar |
| of Companies. The report of the auditors was unqualified and did |
| not contain statements under Section 237 of the Companies Act 1985 |
| (Section 498 of the Companies Act 2006). |
| 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 2009. |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| 2 Accounting policies |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| Accounting convention |
| The interim accounts have been prepared under the historical cost |
| convention and on a basis consistent with the accounting policies |
| in the financial statements for the year ended 31 March 2009 with |
| the exception of new accounting policies as noted below: |
| Grant income |
| Grants received from the Homes and Communities Agency are |
| recognised as revenue in the income statement to match with the |
| related costs that they are intended to compensate. |
+--------------------------------------------------------------------+
| |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| 3 Exceptional items |
+--------------------------------------------------------------------+
| |
+--------------------------------------------------------------------+
| The exceptional items for the six months ended 30 September 2009 |
| of GBP0.8 million include GBP0.7 million where the net realisable |
| value of land and work in progress on certain developments has |
| been assessed to be lower than the costs originally recorded in |
| inventories as a result of the deterioration in market conditions |
| (September 2008 - GBP1.4 million, March 2009 - GBP2.9 million). |
| The remaining GBP0.1 million relates to redundancy costs |
| (September 2008 - GBPnil, March 2009 - GBP0.1 million). |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| 4 Taxation |
+--------------------------------------------------------------------+
| |
+--------------------------------------------------------------------+
| Taxation has been calculated on the profit for the six months |
| ended 30 September 2009 at the estimated effective tax rate of |
| 28.5% before movements in deferred taxation (2008 - 28.8%). |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| 5 Dividends |
+--------------------------------------------------------------------+
| |
+--------------------------------------------------------------------+
| The interim dividend declared for the six months ended 30 |
| September 2009 is 0.75 pence per ordinary share and is expected to |
| be paid on 15 January 2010 to those shareholders on the register |
| at the close of business on 18 December 2009. This dividend was |
| declared after 30 September 2009. |
| There was no interim dividend paid for the six months ended 30 |
| September 2008 and no final dividend paid for the year ended 31 |
| March 2009. |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| 6 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, which are treated as |
| cancelled. 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: |
+--------------------------------------------------------------------+
+-----------------------------+--------------+----------------+--------------+
| | 6 months | 6 months | Year |
| | ended | ended | ended |
| | 30 September | 30 September | 31 March |
| | 2009 | 2008 | 2009 |
+-----------------------------+--------------+----------------+--------------+
| | | | |
+-----------------------------+--------------+----------------+--------------+
| | | | |
+-----------------------------+--------------+----------------+--------------+
| Weighted average number of | 38,759,959 | 37,210,124 | 37,381,374 |
| shares in issue | | | |
+-----------------------------+--------------+----------------+--------------+
| Dilution - effect of share | 472,283 | 18,457 | - |
| schemes | | | |
+-----------------------------+--------------+----------------+--------------+
| Diluted weighted average | 39,232,242 | 37,228,581 | 37,381,374 |
| number of shares in issue | | | |
+-----------------------------+--------------+----------------+--------------+
| | | | |
+-----------------------------+--------------+----------------+--------------+
| Profit (loss) on ordinary | GBP4,105,000 | (GBP1,015,000) | GBP3,023,000 |
| activities after taxation | | | |
+-----------------------------+--------------+----------------+--------------+
| | | | |
+-----------------------------+--------------+----------------+--------------+
| Earnings per share: | | | |
+-----------------------------+--------------+----------------+--------------+
| Basic | 10.6p | (2.7p) | 8.1p |
+-----------------------------+--------------+----------------+--------------+
| Diluted | 10.5p | (2.7p) | 8.1p |
+-----------------------------+--------------+----------------+--------------+
+--------------------------------------------------------------------+
| 7 Acquisition |
+--------------------------------------------------------------------+
| |
+--------------------------------------------------------------------+
| On 23 June 2009 the Group acquired 100% of the issued share |
| capital of Clifford Contracting Limited (CCL), a contracting |
| business supplying services to residential developers. The |
| transaction has been accounted for using the purchase method of |
| accounting. |
| The net assets acquired consist only of cash and cash equivalents |
| of GBP6,328,500 (book value and fair value) and the total |
| consideration paid by the Group for the issued share capital of |
| CCL was GBP6,328,500, comprising GBP5,695,650 in loan notes and |
| the allotment and issue of 1,130,089 new ordinary shares, fully |
| paid, in the share capital of Telford Homes Plc. The fair value of |
| the shares issued was GBP632,850 which was determined using the |
| average of the middle market quotations for an ordinary share in |
| Telford Homes Plc for each of the five business days preceding the |
| acquisition. The net cash outflow arising on the acquisition was |
| GBPnil. |
| The loan notes are repayable on 23 June 2014 or at any time at the |
| Group's option. On repayment of the loan notes the Group must |
| settle a redemption premium of GBP632,850 payable pro-rata to the |
| repayment of the loan notes. In order to offset this additional |
| liability Telford Homes Plc holds a call option enabling the Group |
| to repurchase the 1,130,089 consideration shares for an aggregate |
| consideration of GBP1 upon repayment in full of the loan notes. |
| The accounting treatment adopted in the Group accounts is to |
| recognise the redemption premium payable in the future as an |
| additional liability alongside the loan notes within borrowings. |
| The fair value of the consideration shares has been recorded in |
| equity between issued share capital and the share premium reserve. |
| The effect of the call option to repurchase the consideration |
| shares is a reduction in the retained earnings reserve equivalent |
| to GBP632,850, the fair value of the consideration shares. |
| The Group changed the name of CCL to Telford Homes Contracting |
| Limited (THCL) on 8 July 2009. |
| THCL contributed finance income of GBP13,000 to the Group's profit |
| before tax for the period between the date of acquisition and the |
| balance sheet date. |
| If the acquisition of the company had been completed on the first |
| day of the financial year the revenue of the Group would have been |
| unchanged and Group profit before tax would have been unchanged. |
+--------------------------------------------------------------------+
+--------------------------------------------------------------------+
| 8 Interim report |
+--------------------------------------------------------------------+
| Copies of this announcement are available from the Group at First |
| Floor, Stuart House, Queensgate, Britannia Road, Waltham Cross, |
| Hertfordshire EN8 7TF. The Group's interim report for the six |
| months ended 30 September 2009 will be posted to shareholders |
| shortly and will be available on our website at |
| www.telfordhomes.plc.uk. |
+--------------------------------------------------------------------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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