Telford Homes logs loss of £1.1m

Telford Homes, East London residential developer specialising in public-private regeneration partnerships, has slipped into the red with an interim pre-tax loss of £1.1m.

The figure is the consequence of a £1.4m write-down in the value of work-in-progress as the true figure has now been assessed to be “lower than the costs originally recorded in inventories as a result of the deterioration in market conditions”.

Telford’s interim results cover the six months to 30 September 2008.

The latest interim turnover of £36m is well ahead of the figure in the comparable period last year when there was a pre-tax loss of £3.6m on the back of turnover running to £11m.

Highlights of the period were listed as:

• 119 open-market private homes legally completed (figure in previous comparable period: 19);
• More than 600 open-market homes becoming due for legal completion in the next 12 to 15 months, representing an income of almost £160m.

Andrew Wiseman, chief executive, said:  "Market conditions in the last six months have been the most difficult faced by Telford Homes since the company started trading in 2000.”

Going forward it is expected that margins will be lower than previously forecast. 

Prices have fallen by 5%-15% in the London area over the last 12 months.  “Prices in some areas are now back to the levels at which our properties were sold during 2006 and early 2007,” said Wiseman.

“Labour costs are responding to the deteriorating market but some material costs remain high, further squeezing achievable margins,” he added. 

Telford is thinking of building out some developments, which have not yet been started on site, entirely for affordable housing. This will result in lower margins.

The exceptional item of £1.4m is a write down in the carrying value of land and work in progress on just one site.

Wiseman warned that he can not rule out the possibility of additional write downs being required in the future.