TIDMTEF
RNS Number : 5925H
Telford Homes PLC
01 June 2011
Press Release 1 June 2011
Telford Homes Plc
("Telford Homes" or the "Group")
Preliminary Results
Telford Homes Plc (AIM:TEF), the residential developer in East
London noted for regeneration projects in partnership with the
public sector, today announces its preliminary results for the year
ended 31 March 2011.
Highlights
-- Contracts exchanged for the sale of 368 open market
properties, an increase of 45% (2010: 253)
-- Profit before tax and after exceptional items in line
with expectations at GBP3.0 million (2010: GBP7.3 million)
-- Final dividend of 1.25 pence making a total of 2.5
pence for the year (2010: 2.0 pence), reflecting the
strong longer term prospects for the Group
-- Number of open market properties completed in the year
is as expected at 281 (2010: 389) due to reduced output
-- GBP70 million banking facility finalised with The Royal
Bank of Scotland, HSBC and Santander in March 2011
-- Strong demand for early sales of future developments,
particularly from purchasers in the Far East
-- Over 170 sales at Avant-garde, E1, following a launch
in the Far East and UK in April and May 2011
-- The Group has been acquiring land during the period,
to enable future growth
Andrew Wiseman, Chief Executive of Telford Homes, commented: "As
anticipated, the Group's strategy during the recession has resulted
in reduced output and margins, but it is expected that these
effects will have been worked through the business by March 2012.
Beyond this date the Board expects significant growth as the market
in East London remains robust, and is continuing to benefit from
the substantial investment being made in advance of the 2012
Olympics.
"Sales performance during the period has been better than
expected, with off-plan marketing of developments in the Far East
showing particular success. The Board is confident that the long
term prospects for the business remain strong."
- Ends -
Enquiries:
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 7408
4090
Media enquiries:
Abchurch
Henry Harrison-Topham / Quincy Allan Tel: +44 (0) 20 7398
7710
quincy.allan@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 the Group's website
www.telfordhomes.plc.uk.
CHAIRMAN'S STATEMENT
In the year to 31 March 2011 Telford Homes exchanged contracts
for the sale of 368 open market properties, an increase of 45 per
cent over last year. This performance has been driven by successful
marketing campaigns in the Far East, selling properties before
construction has commenced, together with a steady rate of demand
from UK buyers.
During the recession the Group reduced its investment in new
land opportunities and switched some of its developments to wholly
affordable housing. As expected this has reduced both the output of
finished open market homes and profit margins. Despite this the
Group met market forecasts for the year to 31 March 2011 achieving
profit before tax and after exceptional items of GBP3.0
million.
Our success in marketing developments in the Far East has
continued with the launch of Avant-garde in April and May 2011.
Together with a strong performance at the UK launch we have
achieved over 170 sales out of the 257 open market homes on the
development. These sales secure the recognition of profit for
Telford Homes and our new joint venture partner, The William Pears
Group, when the homes are handed over in 2013 and 2014.
Reduced output and margins will continue to keep profits at a
lower level in the new financial year but these effects will have
substantially been worked through the business by March 2012.
Beyond this date the Board expects significant growth in the number
of finished homes from the existing development pipeline and has
secured pre-sales on some of those developments at normal margins.
The signing of our new bank facility in March this year will
improve our ability to add to the development pipeline for future
years in a climate where many smaller developers are struggling to
access finance.
As a result the Board is maintaining a progressive dividend
policy in proposing a final dividend of 1.25 pence making a total
of 2.5 pence for the year (2010: 2.0 pence).
Finally it gives me great pleasure to welcome Jon Di-Stefano as
our new Chief Executive with effect from 1 July 2011. Jon replaces
Andrew Wiseman and I am confident that Telford Homes will continue
to prosper under his leadership. After ten years in our current
roles Andrew will take over from me on his full time return to
Telford Homes in January 2012, assuming the position of Executive
Chairman, thus retaining his skills and knowledge within the
business. I have been delighted to serve as Chairman over a
successful decade and I look forward to continuing as a
Non-Executive Director in the future.
David Holland
Chairman (Non-Executive)
31 May 2011
CHIEF EXECUTIVE'S REVIEW
The Board is pleased to report that profit before tax for the
year to 31 March 2011 is in line with expectations at GBP3.0
million after exceptional items (2010: GBP7.3 million). Although
the number of open market properties completed in the year is lower
at 281 (2010: 389) the Group has experienced strong demand for
early sales of its future developments, particularly from
purchasers in the Far East, such that the number of sales secured
by contracts exchanged in the year has increased to 368 (2010:
253). As a result of this and continued sales of affordable housing
to our housing association partners, the Group has revenue secured
by contracts exchanged of over GBP135 million to flow into the
business over the next three years.
Sales and completions
Telford Homes is in the middle of a two year period during which
the number of open market homes being finished is lower than
capacity. The Group refrained from investing in new land during the
recession and, given the average construction period for a
development is two years, this is affecting the number of homes
available for sale and legal completion up to the middle of 2012.
Therefore the decline in the number of open market completions in
the year to 31 March 2011 is caused more by the reduced supply of
finished homes than by market demand or the ability to make sales.
Overall sales performance has been better than expected due to the
successful off-plan marketing of developments that are due to be
finished between mid-2012 and mid-2014.
Profit margins in the year to 31 March 2011 have been affected
by changes made during the recession to favour affordable housing
and by impaired open market developments that were acquired by the
Group in 2006 and 2007. As expected this combination of reduced
supply of finished open market homes and lower profit margins has
brought total profits in the business down. The impact of both will
continue into the year to 31 March 2012 such that the Board expects
profit before exceptional items to be similar year-on-year. Almost
all of the developments that switched to affordable housing and
those impaired by prices falling during the recession will have
worked through the development pipeline by the end of the new
financial year.
The rate of sales of finished homes to UK buyers has remained
steady and visitor levels to the Group's sales centres have been
consistent during the year. Construction of the third and final
phase of Queen Mary's Gate in Woodford finished towards the end of
2010 and we now have fewer than 60 homes left to sell out of nearly
500 across the development. In September 2010 the Group acquired
The Royal Bank of Scotland's 50 per cent interest in Telford Homes
(Creekside) Limited, the joint venture set up to develop Greenwich
Creekside. This development is undergoing a period of phased
handovers and over half of the 121 open market homes in the first
phase have now been handed over to their purchasers.
The availability of mortgage finance for new build properties
remains the most significant restriction on demand in the UK and
this is particularly true for first time buyers. Bank of England
statistics show mortgage approvals have been continuing at a steady
rate, albeit at just 40 per cent of the long term average. Whilst
there have been some signs of improvement in the number of
mortgages available, the Council of Mortgage Lenders expects gross
lending for housing to be unchanged in 2011.
Alongside a steady UK market, overseas launches including
Matchmakers Wharf, E9, the Hawksmoors, E1 and, in April and May
2011, Avant-garde in Shoreditch have been very successful.
Avant-garde is located just a few minutes from Liverpool Street
station and over 120 off-plan sales have been secured with buyers
in the Far East, an unprecedented performance for this type of
development. There has been equally strong off-plan demand in the
recovering London market such that in total over 170 of the 257
open market homes have been sold in just two months of initial
marketing. Construction is underway and handovers will take place
from late 2013 onwards.
The majority of overseas sales are secured with a 20 per cent
deposit either all paid at contract exchange or paid in stages not
later than one year before completion. This provides the Group with
equity to be used for further site acquisitions and the repayment
of debt. The Group will continue to market appropriate developments
overseas to secure revenue that will be recognised on legal
completions in future years.
Partnerships and affordable housing
Telford Homes remains a grant partner of the Homes and
Communities Agency ("HCA") and has now completed the first four
developments under its 2008 to 2011 grant agreement. The Group has
received GBP55.1 million out of a total grant allocation of GBP72.9
million and the vast majority of the remainder will be received by
March 2012 as affordable homes are completed in accordance with
their construction programmes.
The Group has a secured revenue stream contracted for the
affordable housing on all of its current developments and is now
developing a greater proportion of open market housing such that it
is not reliant on future, uncertain, grant funding. New
opportunities are appraised on a conditional basis until the value
and amount of affordable housing required is clear.
The Spending Review has had a significant impact on the new four
year affordable housing grant programme for 2011 to 2015. Central
funding for new projects is expected to be around 25 per cent of
the total grant allocation for 2008 to 2011 and housing
associations have been invited to close the funding gap by charging
higher rents to new tenants under the new 'affordable rent' model.
This will only partially substitute for the reduction in government
funding and therefore less affordable housing will be built.
There remains a housing shortage in London and Telford Homes
will continue to work with both the HCA and the local authorities
to address the need for new housing developments to be brought
forward and to provide affordable housing whilst ensuring that each
new development remains financially viable.
Land acquisition
The developments in the Group's ownership during 2008 and 2009
were in good locations and were flexible in terms of housing mix
such that write downs were less than three per cent of total assets
and profitable development could proceed with increased levels of
affordable housing. However the impact of not investing in new
sites during the recession, albeit a necessity at the time, is now
being felt in terms of reduced output.
In February 2010 Telford Homes raised GBP7.2 million of equity
through a placing of new shares to bolster the Group's ability to
purchase land. In addition to this the Board was delighted to sign
a three and a half year GBP70 million banking facility with The
Royal Bank of Scotland, HSBC and Santander on 31 March 2011. The
process to secure this finance involved a year of extensive
investigation of every aspect of the business and its financial
position. It is great credit to Telford Homes that at the end of
this process these three major banks are prepared to support the
Group to this extent.
The new banking facility provides significant headroom for
future investment but even without this finance the Group has been
acquiring land. The successful partnership with Eastend Homes to
develop new homes across several estates in Tower Hamlets continues
and during the last twelve months the Group has exercised options
to purchase eight sites to provide 141 new open market homes. The
Group's partnership with Poplar HARCA also resumed in the year with
contracts in place for the development of four sites.
The Group's development pipeline is the total number of
properties not yet legally completed that are to be constructed on
land in its ownership or held under option contracts. A significant
number of affordable homes, 400, have been completed during the
year with revenue and profit having been recognised over the entire
construction period. The total number of properties in the pipeline
was 1,904 at 31 March 2011 (2010: 2,370) with finance in place to
significantly add to this over the next few years. On 27 May 2011
the Group exchanged contracts with Eastend Homes to develop 209 new
homes on the Holland Estate on Commercial Street, E1, increasing
the number of properties in the development pipeline to over
2,100.
All of the Group's developments have planning permission and the
Group is careful to limit its exposure to planning risk, especially
given uncertainty over future planning policy and the impact of
'localism'. The New Homes Bonus introduced by the coalition
government is valuable to local authorities and it is hoped that
this will encourage a more pragmatic approach to planning policy
where appropriate. Telford Homes is working with several landowners
to secure planning for developments that are not yet under the
Group's control.
Operations
Few developers possess the expertise and experience of Telford
Homes in East London. The quality of the Group's developments both
in design and construction has been recognised by many awards in
the last year including two special commendations from the London
Evening Standard 2010 Homes and Property Awards and two National
House-Building Council awards.
An independent survey of the Group's customers throughout 2010
resulted in a 97% customer recommendation rate, a record high. The
reasons include the quality of the finished apartments, the lack of
defects and the high level of customer service provided. Once again
the Board extends its gratitude to each of the Group's employees,
without whom the excellent standards maintained across every part
of the business would not be possible.
Board changes
I am standing down as Chief Executive with effect from 30 June
2011 and I look forward to returning as Executive Chairman in 2012.
At that time I will take on special responsibility for land
acquisition alongside the normal responsibilities of the Chairman.
I look forward to remaining with Telford Homes for many years to
come working alongside Jon Di-Stefano as he steps into the role of
Chief Executive. I would like to thank David Holland for his
significant contribution to the business in his ten years as
Non-Executive Chairman and I am pleased that he will also remain on
the Board as the Senior Non-Executive Director.
I am also delighted to announce the appointment of Katie Rogers
as our new Financial Director with effect from the Annual General
Meeting on 14 July 2011. Katie has been with Telford Homes for
three and a half years and is currently the Group's Financial
Controller. She has been instrumental in securing the new banking
facility and is well known to the Group's bankers.
Current trading and outlook
A high level of sales has been maintained throughout the last
year due primarily to overseas pre-sales. Since 1 April 2011 this
trend has continued and, with the successful launch of Avant-garde,
the Group has already sold 200 open market homes in the new
financial year of which over 130 have been secured by exchanging
contracts.
Profits are expected to remain at a similarly reduced level in
the year to 31 March 2012 but the developments that switched to
affordable housing or were impaired during the recession will be
finished by the middle of 2012 and significant growth both in
output and margin is expected in future years. The number of
pre-sales being achieved on developments that will be completed
from 2012 onwards gives the Board confidence in this expectation
and as such the dividend being paid this year has been increased by
25 per cent to 2.5 pence.
The Group has finance in place to add to the development
pipeline and the market in East London remains robust and the
subject of significant and ongoing undersupply. The 2012 Olympics
in London are just over a year away and East London can only
benefit from the anticipation and excitement that this major event
brings to the area, let alone the substantial investment already
made. The longer term prospects for Telford Homes remain
strong.
Andrew Wiseman
Chief Executive
31 May 2011
FINANCIAL REVIEW
A new GBP70 million banking facility secured on 31 March 2011
has ensured that Telford Homes is able to continue existing
developments and invest in new sites to enhance the longer term
development pipeline. In addition the Group has recently agreed
terms with HSBC to finance the joint venture that is responsible
for Avant-garde and as such will have finance in place for every
one of its developments.
Operating results
Revenue fell to GBP121.1 million (2010: GBP159.3 million) with
gross profit before exceptional items of GBP15.4 million (2010:
GBP21.0 million). Gross profit is stated after expensing loan
interest that has been capitalised within inventories of GBP2.9
million (2010: GBP5.3 million) and before charging this interest
the gross margin in the year was 15.1 per cent compared to 16.5 per
cent last year. The reductions in revenue and margin are primarily
due to lower output of finished homes and a higher than normal
proportion of affordable housing under construction, both of which
were as anticipated.
Profit margins will remain lower than usual next year but the
impact of those sites that were impaired by the effects of the
recession will have been almost fully accounted for in twelve
months time and as such the Group will be back to more normal
margins for the year to 31 March 2013.
The operational teams continue to monitor and control
development costs with a focus on achieving cost savings wherever
possible, while maintaining good relationships with all suppliers.
Some savings have been made in the light of reduced development
activity in London although raw material costs can be volatile and
occasionally the Group holds stock of materials such as steel to
maximise the benefit when prices are lower.
Administrative expenses have remained under close control and
have fallen to GBP9.3 million (2010: GBP9.7 million) mainly due to
lower employee bonus payments. Selling expenses have increased by
42 per cent to GBP2.7 million (2010: GBP1.9 million) in line with
the increase in the number of contracts exchanged in the year.
Overseas selling events are a significant investment regardless of
the level of success but where a large number of sales are secured
this is reducing the marketing expenditure needed in the future.
Unfortunately the required accounting treatment for selling
expenses does not enable the Group to match revenues with costs in
relation to overseas events. The costs must be expensed as incurred
even though profit recognition from any sales made is two to three
years in the future.
Exceptional items
On 17 September 2010 the Group acquired the other 50 per cent of
Telford Homes (Creekside) Limited, the joint venture set up to
develop Greenwich Creekside, from The Royal Bank of Scotland. Their
interest was acquired for the sum of GBP500 with all existing
equity injected by the bank being converted to debt. As a result
the Group recognised a 'bargain gain' of GBP511,000 on the
acquisition representing the value of 50 per cent of the net assets
of Telford Homes (Creekside) Limited on 17 September 2010 less the
GBP500 purchase price. This gain is shown as an exceptional item in
the income statement to 31 March 2011. The exceptional items
reported in the year to 31 March 2010 of GBP0.8 million were
primarily write downs to the value of land and work in
progress.
Interest
The total borrowings of the Group reduced from GBP70.8 million
to GBP64.9 million at 31 March 2011 and interest paid in the year
reduced from GBP3.5 million to GBP2.7 million. The security of
funding provided by the new longer term banking facility attracts a
higher rate of interest at 3.5 per cent over LIBOR and this will
increase the average rate of interest paid on borrowings in the new
financial year. The benefits of the new facility far outweigh this
increased cost and the rate is competitive in the current market
compared to other developers.
For the first time the Board has agreed to take out some
protection against future interest rates. Although the Board does
not believe significant rate rises are likely in the near future
the cost of interest rate protection is currently quite low for the
same reason and as such it is worth investing a small amount to
protect the business and ensure that interest cover covenants
remain achievable. The Group has purchased a cap on LIBOR of three
per cent on GBP30 million of debt which expires in September 2014.
The cost of this cap was GBP290,000 paid up front and this will be
expensed over the term of the product.
Interest charged to the income statement includes GBP2.9 million
in cost of sales (2010: GBP5.3 million) and a further GBP1.1
million of finance costs (2010: GBP1.7 million) mainly as a result
of suspending the capitalisation of interest on certain sites that
were not progressing in terms of design or construction for parts
of the year.
Dividend
The Board has decided to propose a final dividend of 1.25 pence
which, together with the 1.25 pence interim dividend paid on 14
January 2011, makes a total dividend for the year of 2.5 pence
(2010: 2.0 pence). This increase is in line with the Board's stated
intention of paying a year-on-year progressive dividend in line
with the business building the foundations for future profit
growth.
The final dividend is expected to be paid on 22 July 2011 to
those shareholders on the register at the close of business on 24
June 2011.
Balance sheet
Net assets at 31 March 2011 were GBP64.7 million, increased from
GBP63.1 million last year. Net assets per share were 132.1 pence
and the share price on 31 March 2011 represented just 58 per cent
of that value per share (31 March 2010: 71 per cent). The Group has
remained profitable, increased its volume of sales due to
pre-selling developments that will complete in future years and
secured finance for the next three and a half years and hence the
Board believes the current share price to be significantly
undervalued.
Cash balances remain high at 31 March 2011 at GBP18.8 million
although down from GBP33.6 million last year. This balance includes
operational balances of GBP12.7 million and grant monies held for
future expenditure of GBP6.1 million. The cash balance was inflated
on the final day of the year by the first drawdown under the new
banking facility which generated funds over and above the repayment
of previous facilities of GBP7.1 million.
Cash balances were expected to reduce over the year both through
ongoing expenditure of grant monies held and also through
investment of the placing funds received in March 2010. The cash
flow statement shows that the Group has made a net investment in
working capital this year as opposed to the significant reduction
in work in progress last year.
On 30 September 2010 the Group announced that it had repaid all
of the outstanding loan notes in relation to the acquisition of
Clifford Contracting which took place in June 2009. This
acquisition provided a form of finance against unsold properties
and would have been available until 30 September 2011. The rate of
sales being secured resulted in the Board concluding that the
funding was no longer required. The early redemption of the loan
notes saved GBP300,000 of interest and the Group repurchased and
cancelled the 1,130,089 shares that formed part of the transaction
for a total sum of GBP1.
Cash management and cash flow forecasting
Control of cash remains important and a detailed month-by-month
cash flow forecast is maintained as part of the Group's management
information systems. This enables continuous monitoring of the
forecast and actual cash flows over a five year period. The
forecasts are necessarily subject to a number of assumptions and
judgements and these are tested on a reasonable basis by
sensitivity analysis. These forecasts are reviewed by the Board in
detail on a monthly basis.
Borrowings
Net debt at 31 March 2011 was GBP46.1 million (2010: GBP37.2
million) with gearing at 71.2 per cent (2010: 58.9 per cent). 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 consistent with debt
being provided at 60 per cent of cost.
On 31 March 2011 the Group signed a GBP70 million corporate
banking facility, which extends to 30 September 2014, with a club
of three banks being The Royal Bank of Scotland, HSBC and
Santander. The debt is secured against a portfolio of land and
development sites with only Greenwich Creekside, owned by a
subsidiary, and Avant-garde, in a joint venture with The William
Pears Group, remaining outside of the facility.
Interest will be charged on the new facility at 3.5 per cent
over LIBOR with an arrangement fee of 1.25 per cent payable in two
tranches. Funds will be advanced at 60 per cent of cost and site
specific funding under the overall facility umbrella will be repaid
from the first 65 per cent of the open market residential proceeds
on each site. The first ten per cent of any deposits received can
be retained by the Group without any loan repayment.
There are a number of site specific loan to value covenants
along with corporate covenants concerning net asset value, gearing
and interest cover. The Board performed a detailed assessment of
these covenants, including sensitivity analysis, to ensure that
they were appropriate when compared to current forecasts before
signing the new facility.
As part of the acquisition of the remaining 50 per cent of
Telford Homes (Creekside) Limited the Group secured finance from
The Royal Bank of Scotland to complete its Greenwich Creekside
development. The facility totals GBP57.7 million including the
equity replacement mezzanine debt and is repayable in phases on 31
December 2011 and 31 December 2012. To date GBP18.3 million of the
first phase debt has been repaid.
The William Pears Group ("William Pears") has recently become
the new joint venture partner to Telford Homes in Bishopsgate
Apartments LLP which is developing Avant-garde. William Pears
purchased a 50 per cent interest from Genesis Housing Group at
cost. HSBC has a long relationship with William Pears and has just
started a relationship with Telford Homes; as a result the joint
venture has been able to secure credit approval for a land and
development facility of GBP45.9 million. This facility will repay
the existing Allied Irish Bank loan of GBP15 million and enable the
development to proceed. The formal paperwork is expected to be
signed later in June 2011 and, with significant pre-sales secured,
development of the open market tower is already underway.
These facilities combined ensure that the Group has sufficient
bank finance available for the foreseeable future in an environment
where this is not the case for all of our competitors. The initial
drawdown under the GBP70 million facility was GBP31.9 million
leaving headroom of GBP38.1 million and this will be utilised over
the next three years to invest in new sites and support the future
growth of Telford Homes.
Jonathan Di-Stefano
Financial Director
31 May 2011
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 MARCH 2011
Year Year
Note ended ended
31 March 31 March
2011 2010
GBP000 GBP000
---------- ----------
Revenue 121,071 159,338
Cost of sales (105,709) (138,291)
Exceptional items 511 (710)
Gross profit 15,873 20,337
Administrative expenses (9,255) (9,691)
Selling expenses (2,725) (1,920)
Exceptional items - (70)
Operating profit 3,893 8,656
Finance income 249 333
Finance costs (1,108) (1,651)
Profit before income tax 3,034 7,338
Analysed as:
Profit before income tax
and exceptional items 2,523 8,118
Exceptional items 3 511 (780)
3,034 7,338
-------------------------- ----- ---------- ----------
Income tax expense 4 (742) (2,019)
Profit after income tax 2,292 5,319
---------- ----------
Earnings per share:
Basic 6 4.8p 13.7p
Diluted 6 4.7p 13.5p
---------- ----------
All activities are in respect of continuing operations.
GROUP STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2011
Year ended Year ended
31 March 31 March
2011 2010
GBP000 GBP000
----------- -----------
Movement in excess tax
on share options (12) 14
Other comprehensive (expense)
income net of tax (12) 14
Profit for the year 2,292 5,319
Total comprehensive income
for the year 2,280 5,333
----------- -----------
GROUP BALANCE SHEET
AT 31 MARCH 2011
31 March 31 March
2011 2010
GBP000 GBP000
--------- ---------
Non current assets
Property, plant and equipment 358 380
Deferred income tax assets 50 109
--------- ---------
408 489
Current assets
Inventories 125,181 120,047
Trade and other receivables 14,211 7,638
Cash and cash equivalents 18,837 33,642
--------- ---------
158,229 161,327
Total assets 158,637 161,816
Non current liabilities
Hire purchase liabilities (19) -
--------- ---------
(19) -
Current liabilities
Trade and other payables (28,554) (27,065)
Borrowings (64,877) (70,800)
Current income tax liabilities (431) (871)
Hire purchase liabilities (16) -
--------- ---------
(93,878) (98,736)
Total liabilities (93,897) (98,736)
Net assets 64,740 63,080
--------- ---------
Capital and reserves
Issued share capital 4,900 4,978
Share premium 37,075 37,357
Retained earnings 22,765 20,745
Total equity 64,740 63,080
--------- ---------
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2011
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 year - - 5,319 5,319
Total other comprehensive
income - - 14 14
Dividend on equity
shares - - (295) (295)
Proceeds of equity
share issues 1,103 7,343 - 8,446
Costs arising from
shares issued - (331) - (331)
Share-based payments - - 283 283
Purchase of own shares - - (312) (312)
Sale of own shares - - 149 149
Write down in value
of own shares - - 126 126
Option to repurchase
own shares - - (624) (624)
Balance at 31 March
2010 4,978 37,357 20,745 63,080
Profit for the year - - 2,292 2,292
Total other comprehensive
expense - - (12) (12)
Dividend on equity
shares - - (1,227) (1,227)
Proceeds of equity
share issues 35 238 - 273
Share-based payments - - 264 264
Purchase of own shares - - (273) (273)
Sale of own shares - - 191 191
Write down in value
of own shares - - 138 138
Dividend paid on consideration
shares - - 14 14
Cancellation of own
shares (113) (520) 633 -
Balance at 31 March
2011 4,900 37,075 22,765 64,740
--------- --------- ---------- --------
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2011
Year Year
ended ended
31 March 31 March
2011 2010
GBP000 GBP000
--------- ---------
Cash flow from operating activities
Operating profit 3,893 8,656
Depreciation 175 288
Write down in value of own shares 138 126
Share-based payments 264 283
Profit on sale of tangible assets (49) -
(Increase) decrease in inventories (3,580) 59,565
(Increase) decrease in receivables (6,573) 1,460
Increase (decrease) in payables 1,510 (3,308)
--------- ---------
(4,222) 67,070
Interest paid (2,683) (3,483)
Income taxes paid (1,135) (888)
--------- ---------
Cash flow from operating activities (8,040) 62,699
--------- ---------
Cash flow from investing activities
Purchase of tangible assets (109) (50)
Proceeds from sale of tangible
assets 52 -
Interest received 249 333
--------- ---------
Cash flow from investing activities 192 283
--------- ---------
Cash flow from financing activities
Proceeds from issuance of ordinary
share capital 273 8,446
Costs arising from shares issued - (331)
Purchase of own shares (273) (312)
Sale of own shares 191 149
Increase in bank loans 64,438 33,272
Repayment of bank loans (70,347) (75,116)
Dividend paid (1,227) (295)
Capital element of hire purchase
payments (12) (18)
--------- ---------
Cash flow from financing activities (6,957) (34,205)
--------- ---------
Net (decrease) increase in cash
and cash equivalents (14,805) 28,777
Cash and cash equivalents brought
forward 33,642 4,865
--------- ---------
Cash and cash equivalents carried
forward 18,837 33,642
--------- ---------
NOTES
1 Basis of preparation
The financial information set out above does not constitute
statutory accounts for the year ended 31 March 2011
or 2010 but is derived from those accounts. Statutory
accounts for the year ended 31 March 2010 have been
delivered to the Registrar of Companies and the statutory
accounts for the year ended 31 March 2011 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 statutory accounts for the year ended 31 March 2011,
including the comparative information for the year ended
31 March 2010 have been prepared in accordance with
International Financial Reporting Standards (IFRS) as
adopted by the European Union, International Financial
Reporting Interpretations Committee (IFRIC) interpretations
and with those parts of the Companies Act 2006 applicable
to companies reporting under IFRS.
2 Accounting policies
Accounting convention
The statutory accounts for the year ended 31 March 2011
have been prepared under historical cost convention
and on a basis consistent with the accounting policies
in the financial statements for the year ended 31 March
2010. The accounting policies will be disclosed in full
within the Group's forthcoming financial statements.
3 Exceptional items
The exceptional item for the year ended 31 March 2011
of GBP0.5 million is a 'bargain gain' arising as a result
of the purchase of 50% of the ordinary shares in Telford
Homes (Creekside) Limited in the period (note 7).
The exceptional items for the year ended 31 March 2010
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. The remaining
GBP0.1 million relates to redundancy costs.
4 Taxation
Taxation has been calculated on the profit for the year
ended 31 March 2011 at the estimated effective tax rate
of 24.5% (2010: 27.5%). The 'bargain gain' arising on
the acquisition of 50% of the issued share capital of
Telford Homes (Creekside) Limited is not subject to
taxation (note 7).
5 Dividend paid Year ended Year ended
31 March 31 March
2011 2010
GBP000 GBP000
----------------------------------------- ----------- ----------
Final dividend paid in July 2010 of
1.25p (July 2009: nil) 621 -
Interim dividend paid in January 2011
of 1.25p (January 2010: 0.75p) 606 295
1,227 295
----------------------------------------- ----------- ----------
The final dividend proposed for the year ended 31 March
2011 is 1.25p per ordinary share. This dividend was declared
after 31 March 2011 and as such the liability of GBP612,500
has not been recognised at that date.
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. 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 2011 31 March 2010
Weighted average number of shares
in issue 47,886,813 38,804,588
Dilution - effect of share schemes 675,778 689,918
------------------------------------ ------------- -------------
Diluted weighted average number
of shares in issue 48,562,591 39,494,506
Profit on ordinary activities after GBP2,292,000 GBP5,319,000
taxation
Earnings per share:
Basic 4.8p 13.7p
Diluted 4.7p 13.5p
------------------------------------ ------------- -------------
7 Business combination
On 17 September 2010, the Group acquired 50% of the
issued share capital of Telford Homes (Creekside) Limited,
a property development company currently developing
land in Greenwich, London. Following the acquisition,
the Group owns 100% of the ordinary shares of Telford
Homes (Creekside) Limited and has sole control of the
company.
The book value and fair value of the assets and liabilities
of Telford Homes (Creekside) Limited at the date of
acquisition are set out below:
Book and fair
value 50% acquired
---------------- --------------- -------------
GBP000 GBP000
---------------- --------------- -------------
Inventories 58,716 29,358
---------------- --------------- -------------
Cash 2,414 1,207
---------------- --------------- -------------
Trade and other
payables (28,102) (14,051)
---------------- --------------- -------------
Borrowings (32,006) (16,003)
---------------- --------------- -------------
Net assets 1,022 511
---------------- --------------- -------------
The total consideration paid for 50% of the ordinary
shares in issue was GBP500 in cash. As a result, the
Group recognised a 'bargain gain' of GBP510,500 representing
50% of the fair value of the net assets of Telford Homes
(Creekside) Limited on 17 September 2010 less the GBP500
purchase price. This gain is included in exceptional
items in the results to 31 March 2011. The assets and
liabilities acquired all relate to the company's site
in Greenwich and will be realised as the development
is completed over the next two years.
There was no difference between the fair value and the
book value of the assets and liabilities of Telford
Homes (Creekside) Limited at the date of acquisition
and therefore no gain or loss arose on the existing
shareholding.
This acquisition contributed additional revenue of GBP9.7
million and profit before tax of GBP0.9 million to the
Group for the period between the date of acquisition
and the balance sheet date. Had the acquisition occurred
on 1 April 2010, the consolidated income statement would
have included total additional revenue of GBP11.1 million
and profit before tax of GBP0.8 million.
Acquisition related costs amounting to GBP2,000 are
included in administrative costs in the Group income
statement.
8 Repurchase and cancellation of shares
On 30 September 2010 the Company repaid all outstanding
loan notes in relation to the acquisition of Clifford
Contracting Limited which took place on 23 June 2009.
This final repayment amounted to GBP4.3 million.
As a result of the loan notes being repaid the Company
immediately exercised its option to repurchase 1,130,089
ordinary shares from the vendors of Clifford Contracting
Limited for a total sum of GBP1. These repurchased shares
were cancelled on 30 September 2010.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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