East London housebuilder has taken advantage of weak construction market
East London housebuilder Telford Homes has said it has saved about £1m in the last six months by negotiating cheap deals with its contractors.
The builder, which today reported half year pre-tax profits down over 50% to £1.4m, said it had managed to take advantage of the market by buying building work “at the right times.”
Chief executive Jon Di-Stefano said: “When we’re negotiating on day one with contractors we’ve in the last six months that we’ve got tenders in for a bit less than we’ve been budgeting for.”
Finance director Katie Rogers said the savings had been made on the negotiation of around £50m of work to be carried out over the next couple of years. However Di-Stefano said he didn’t think it marked a wider downturn in tender prices. “We’ve just been able to do well on individual contracts by buying at the right time,” he said.
Di-Stefano said Telford remained on course for an expansion in sales and construction next year, with analysts predicting pre-tax profits to grow threefold, and full-year revenues to jump to £130m, from £120m in the year ending March 2011.
Figures for the six months to 30 September showed revenues flat at £58.6m, with an increase in costly marketing activity related to next year’s sales, and in financing costs accounting for the drop in profits. Di-Stefano said that sales ran 30% ahead of the same period last year, with much of those pre-sales, meaning the revenue is due to come in in later financial periods.
Di-Stefano added that the government’s recently announced mortgage indemnity guarantee will “help sales” and may allow the firm to refocus its land buying efforts in areas popular with first time buyers.
The half year statement said: “A strong balance sheet and a reputable brand put Telford Homes in an excellent position to take advantage of site acquisition opportunities as they arise and to generate higher profits and continue to improve margins over the next few years.”