Telford Homes on track to meet full-year expectations

AIM-listed Telford Homes said on Wednesday that it expects pre-tax profit for FY2018 to exceed £40m as it posted a slight drop in interim profit.

In the six months to the end of September, pre-tax profit slipped to £8.7m from £9m in the same period a year ago, which the company said was due to development timings rather than the underlying performance of the business, while revenue declined to £99.3m from £104.3m.

Telford said that while there were more open market completions than in the first half of 2016, there has been less revenue from construction contracts, particularly affordable housing, due again solely to the timing of developments starting and finishing. Market completions rose to 116 from 85.

The company said it expects total forward sales to be recognised this financial year of more than £580m. It lifted its interim dividend by 11.1% to 8p per share and said it is on track to deliver more than £40m of pre-tax profit for FY 2018, having secured over 95% of anticipated gross profit.

Chief executive Jon Di-Stefano said: "The board is very happy with the current position of the business and our move into build to rent is a significant part of our long term strategy as we continue to develop homes in non-prime locations across London.

"We have a development pipeline of nearly 4,200 homes, worth £1.4bn, set to be delivered into an undersupplied London market over the next few years. We are confident that we can deliver on our aspirations and continue to grow Telford Homes in order to secure long term value for our shareholders."

Canaccord Genuity said: "The group continues to have a strong forward order book and pipeline, and confirms it is on track to meet consensus expectations for the full year, which we think is unlikely to change materially today. The group continues to operate in a segment of the market that remains under-supplied. It looks well placed to deliver profits against expectations. In terms of valuation, the shares look relatively un-stretched in absolute terms, but arguably more reasonable, in the context of its returns, relative to the sector."

At 0935 GMT, the shares were up 4.4% to 417.75p.