East London housebuilder Telford Homes has reported reduced profits and earnings at its half-year results, showing the impact of a sudden development slowdown as the housing market stalled last year.
However, the builder is confident of future profits as it rebuilds its business, and has upped the half-year dividend by 67 per cent to 1.25p as a sign of confidence. This is being driven by strong forward sales to Asian investors, which management say make up more than 50 per cent of the 250 sales achieved since 1 April 2010.
The remainder of the sales have mainly been to equity rich owner-occupiers, as mortgage debt remains a problem for unassisted first-time buyers and UK buy-to-let investors. Properties sold off-plan at overseas trade fairs command a deposit of 10 to 20 per cent up front with a further 10 per cent payable a year prior to completion.
New land for private housing is now being acquired as a result of February's successful £7.5m placing, with social housing sites being avoided until further clarity on government subsidies can be provided. The company shrewdly acquired £73m of grant funding for social housing before the coalition's cutbacks which will be developed by 2011.
Broker Shore Capital forecasts full-year pre-tax profits of £2.5m and EPS of 3.6p, rising to £4m and 5.8p, the following year (2010: £1.5m and 2.2p).
| TELFORD HOMES (TEF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 80p | MARKET VALUE: | £39.8m | |
| TOUCH: | 78-81p | 12-MONTH HIGH: | 116p | LOW: 69p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 129p | NET DEBT: | 83% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 85.9 | 5.74 | 10.6 | 0.75 |
| 2010 | 58.2 | 2.00 | 3.3 | 1.25 |
| % change | -32 | -65 | -69 | +67 |
Ex-div:15 Dec Payment:14 Jan | ||||
