Profits slide at Telford amid housing uncertainty and move into rental market
Telford Homes has posted a double-digit drop in full-year profits before tax, as a move into less lucrative rental projects and a slowdown in the capital’s property market hit the London-based housebuilder.
The developer said margins had been hit by its direction away from traditional private house sales and into the build-to-rent market, as it looks to offset waning house sales by putting more focus on the growing number of renters in London.
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The figures
Pre-tax profits plunged 13 per cent to £40.1m for the year to the end of March, as the group had warned earlier this year, with steeper discounting and a Brexit-driven slowdown in the property market also driving the drop.
The proportion of revenue from build to rent developments rose from 21 per to 31 per cent.
The group, which is listed on London’s Alternative Investment Market (AIM), reported record total revenue of £354.3m, rising 12 per cent from the previous 12 months.
Telford also reiterated its pre-tax profit expectations for the year ahead.
In February the firm slashed its full-year profit forecast down from £50m to roughly £40m, sending shares down more than 10 per cent.
The firm’s share price has plunged by more than a third in the last year.
Telford's proposed final dividend stands at 8.5p per share, as it maintained the total dividend for the year at 17p pence per share.
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What the group said
Jon Di-Stefano, Telford Homes chief executive, told Morning Wire: "It has been subdued in owner occupier sales partly because of political and economic uncertainty. The way the market has been has further validated our move to do more in rental."
He added: "I don’t think we’ll end up with a no-deal Brexit, but even if we do, there’ll be some negativity but people still exist and still nee to live somewhere. London wont fall off the edge off a cliff."
On whether he thought Boris Johnson was a viable candidate for the Conservatie party, Di-Stefano responded: "Boris Johnson, for all his interesting traits, was a great mayor of London from a development point of view so he understood some of the pressure on wanting and needing to build more homes."