Announcing record revenues, housebuilder warns over EU workers’ status in Brexit talks
Telford Homes said it would be closely monitoring Brexit talks between the UK and the EU in the coming months and would be looking for assurances “as soon as possible on the rights of EU workers to remain in the UK”.
While the vote to leave the EU had caused uncertainty in the market, Telford said that to date it had not been a “significant concern” for the business. However it would be looking for “stability” throughout the negotiation process.
The housebuilder’s comments came as it announced what it called record revenues for the year, up 19% year-on-year to £291.9m, with annual pre-tax profits ahead of expectations at £34.1m, up 8%.
Profits were slightly ahead of the level anticipated at the beginning of the year, the firm said, due to more open market completions in the second half of the year and “additional build-to-rent profit recognition”. Telford said it planned to increase its focus on the rental sector, one attraction being that forward funded developments required little, if any, equity or any debt finance.
Gross margins before interest charges of 22.3% and an operating margin before interest of 13.4% were in line with expectations, Telford said, “reflecting the increasing mix between developments sold to individual buyers and build to rent transactions secured at lower margins in exchange for enhanced capital returns”.
The company said it was on track to hit £40m in pre-tax profits next year, and £50m in 2019.
Its build-to-rent pipeline accounted for around 500 homes worth a contract value of an estimated £230m, while its overall development pipeline was worth in excess of £1.5bn. The average anticipated price of the open market homes within the pipeline was £527,000, it added, up from £513,000 last year.
The firm said that subject to planning approval it expected to start work on its development on the old London Electricity Board site in east London next year, with completion due in 2021. It expected to start work on two other developments, one in Hackney Wick, the other in South Kilburn, later this year.
Commenting on the results, chief executive Jon Di-Stefano said: “Despite uncertainty in relation to the outcome of the EU referendum and tax changes impacting primarily UK based individual investors, our underlying market has remained resilient.
“Any potential dampening effect of these factors has been outweighed by the structural imbalance between supply and need for new homes in London, particularly at our typical price point.”