Sept. 20 (Bloomberg) -- Telford Homes Plc, a developer focused on east London, said annual profit will more than double through 2013 as private sales lift margins and its projects get a boost from the Olympics and Europe’s largest urban mall.
Pretax profit will grow to about 7.5 million pounds ($11.8 million) in the year through March 2013 from 3 million pounds in fiscal 2011, Chief Executive Officer Jon Di-Stefano said in an interview. Telford’s operating margin before interest and tax will grow to 9 percent in 2013 from 6 percent in 2012.
“We believe the share price is significantly undervalued but we have to prove it, and that’ll be toward 2013,” Di- Stefano said in an interview at Celtic Manor in Wales. “We’re still making a small profit.”
Telford, based in Waltham Cross, England, is selling more homes on the open market to increase margins after it focused on regeneration and sales of low-cost homes to non-profit housing associations after the property market crashed in 2007. The company has remained profitable since the slump.
Telford’s shares, which peaked at 4.30 pounds on July 17, 2007, were priced at 66.5 pence at yesterday’s market close in London, giving the company a market value of 33.1 million pounds. The stock has retreated 19 percent this year, compared with a 2.8 percent increase for the Bloomberg Europe Homebuilder’s Index of which it’s not a member.
The London 2012 Olympics and the 1.45 billion-pound Westfield Stratford City mall close to the main stadium will help boost values in the east of the city, said Di-Stefano, a former Telford financial director who became CEO in July.
“It’s a little like the impact of Canary Wharf on the Isle of Dogs,” he said, referring to London’s second-biggest financial district. “The Olympic Park isn’t going to collapse and Westfield Stratford isn’t going away.”
Though home prices near the 560-acre Olympic park fell 7 percent in the year through July, they have gained about 19 percent overall since London won the right to host the games five years ago, according to Zoopla.co.uk.
The company’s Bow Trinity project is around 2 miles (3 kilometers) south of the Olympic Park and a mile and a half north of Canary Wharf, while its Kinetica development is about 3 miles west of the stadium.
--Editors: Ross Larsen, Andrew Blackman.
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