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Telford Homes

  • BY: Andrew Hore |
  • POSTED: 02/12/2008 |

Telford Homes has changed its accounting practices and that has led to a significant restatement of its figures.

The housebuilder has also decided to pass its interim dividend and will decide whether to pay a final dividend when the full year figures are announced.

Revenues have been restated from £82.1m to £11.3m in the six months to September 2007. This is because they are no longer recognised when contracts are exchanged. Instead they are recognised when the sale is legally completed. This meant that a profit of £9.5m has turned into a loss of £3.6m.

The latest interim figures show revenues of £35.6m and a loss of £1.1m, after a £1.4m land write down. There were 119 completions in the six months to September 2008, most of which were in the first quarter. In October and November there were a further 52. There are currently two projects which are available for completions.

Net debt was £125.3m at the end of September 2008. Management feels confident that its bank facilities will be renewed.

House prices have not fallen far enough for buyers to pull out of the deals they made a couple of years ago so there has only been one contract failure in the first half.

The share price fell 8.75p to 42.75p, which values Telford at £16.3m.

House broker Shore Capital has cut its full year profit forecast from £10m to £7.5m. The 2009-10 profit forecast has also been reduced - from £7.8m to £5.3m.

Lack of mortgage finance remains a worry. Further falls in house prices could lead to additional land write downs and some buyers failing to complete. Valuations are currently high enough to cover the agreed sale prices but if they fall below the sale prices then mortgages will be difficult to get.

There are more than 6000 pre-sold homes due for completion over the next 15 months. 

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