Telford Homes says sales picking up

LONDON (Reuters) - House builder Telford Homes Plc (TELF.L) reported a decline in pretax profit due to falling land values but said a focus on affordable housing had helped shelter it from tough market conditions and sales were picking up.

The company, which specialises in regeneration projects and affordable homes in East London, said on Wednesday pretax profit for the year ending March 31 was 4.3 million pounds, against 6.5 million for the same period last year.

"Despite the doom and the gloom we've actually recorded a profit," chief executive Andrew Wiseman told Reuters.

Wiseman said he was cautiously optimistic for the coming year and noted sales activity had picked up over the last few weeks.

"Things are improving," he said. "I wouldn't say it is bright and sunny out there but it seems like spring."

Shares in Telford jumped 24 percent to 62.5 pence by 0937

GMT.

Telford said its partnerships with affordable housing providers, its lack of national exposure and its strategy of pre-selling several hundred homes in 2006 and 2007 had helped it withstand the property downturn.

A 57 million pound grant from the Homes and Communities Agency HCA.L, announced last month, would underpin performance over the next few years, leaving the company well-placed to benefit from future improvement in market conditions, it added.

"We've managed to shelter ourselves from the toughness of the lack of credit and the lack of confidence in the open market by our relationships with the housing associations and the HCA," Wiseman said.

COMPLETION CHALLENGE

Finance director Jon Di-Stefano said the biggest challenge now facing the company was securing completions on the 600 homes it pre-sold between 2006 and 2008.

Between 60 and 80 of these were expected to fail to complete due to the impact of the credit crisis on the availability and cost of mortgages, he said, but the company would either resell or rent out these properties to lessen the impact on revenue.

The company, which in December announced it expected to have to cut up to a third of its staff in 2009, said the HCA grant and other planned developments meant redundancies were now likely to be around 10, rather than the 50 first predicted.

Before exceptionals, predominantly a 2.9 million pound writedown on the value of land and developments in progress due to the continued fall in property values, full-year pretax profit was 7.3 million pounds.

Total revenue for the year rose 10 percent to 106.7 million pounds while net assets were 50.3 million pounds, up from 48.9 million in 2008.

Telford said it would not pay a full-year dividend however, as it remained cautious of the impact an increase in the rate of failed contracts would have on cash flow.

Di-Stefano said he expected the company would return to paying a dividend in the coming financial year.

(Editing by David Cowell)