Annu Al Repo Rt 
& Accounts 2012
building
gRowth
t elford homes p lc
First Floor
stuart house
Queensgate
b ritannia Road
w altham cross
h ertfordshire en 8 7t F
Annu Al Repo Rt & Accounts 2012 t elford homes p lc “London, and East London in particular, will soon be 
firmly in the international spotlight with the longer 
term benefits of the Olympics already evident in 
terms of transport infrastructure and new facilities. 
The Board is looking forward to another year of 
improving margins, increased profit levels and  
a major sporting event on the doorstep.”
Jon Di-Stefano, Chief Executive www.telfordhomes.plc.uk 01
Business Profile
Location 02
Quality & Service 04
Investment & Returns 06
Review of the Year
Highlights 08
Chairman’s statement 09
Chief Executive’s review 10
Financial review 20
Operations
Structure 28
Training and apprenticeships 29
Health and Safety 30
Environment and sustainability 32
Key risks and uncertainties 34
Corporate Governance
Board of directors 36
Policy on corporate governance 38
Directors’ remuneration report 40
Report of the directors 42
Statement of directors’ responsibilities 45
Auditors’ report 46
Financial Statements
Income statement 48
Statement of comprehensive income 48
Balance sheet 49
Statement of changes in equity 50
Cash flow statement 51
Statement of accounting policies 52
Notes to the financial statements 56
Company Information 72
COntent S
Sales and profits  
ahead of expectations
Quality of construction 
and excellent 
customer service
Investing to deliver 
higher returns
p4
p6
p10
p36
Experienced 
Board
A focused location in London
p2 02
tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012
Business Profile
02
04
01
10
18 03
08
17 09
lOC at IOn
06
Includes some Computer Generated Images
Completed
01 Matchmakers Wharf
02 Queen Mary's Gate
03 Saunders Apartments
04 Greenwich Creekside
05 Brownfield Estate
06 David House
07 Trades Hall
08 Wingfield Mews, Hendon 
(not shown on the map)
In design / under construction
09 Avant-garde
10 St Georges Estate
11 Bede Estate (Bow Trinity)
12 Eric and Treby Estate  
(Bow Trinity)
13 The Panoramic
14 E-pad
15 High Cedars
16 Daubeney Road
17 Chapel House Street
18 Black Prince Road
19 Station House
20 Oakfield House
21 Island Gardens
22 Holland Estate
Future sites
23 Yabsley Street
24 Allcroft Road
25 Tredegar Road
17
10 Business Profile
03 www.telfordhomes.plc.uk
07 05
15
LOCATION
www.telfordhomes.plc.uk
Map of London 04
tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012
Business Profile
QUal It Y & SeRVICe
nh BC 2011 Pride in the Job  
awards Supreme Winner 
Greenwich Creekside 
RoSPa Gold award 
for Occupational Health and Safety
RoSPa Silver award 
for Management of Occupational  
Road Risk
Waltham Forest design  
awards 2011 
Commendation for Trades Hall
nh BC 2011 Pride  
in the Job awards 
4 South Eastern regional winners
nh BC t op 100 Seal of  
excellence award 
Damien Barden
Considerate Contractor award 
Luke Heslin Bronze award for Vellum
British Standards  
Institution accreditation 
for our Environment  
Management System
awards
The quality of the design and construction of our developments 
has been recognised by many awards including:
Brand 
The Telford Homes brand is about 
consistent delivery of high quality, 
desirable new homes backed up by 
our dedicated Customer Service 
team, providing product finish and 
service that’s second to none.
Ongoing service
For the first two years of ownership 
Telford Homes provides a 24/7, 365 
days a year free emergency service, 
ensuring there is always someone to 
help deal with any urgent problems 
that may arise out of hours. Business Profile
05 www.telfordhomes.plc.uk
QUALITY  
& SERVICE
Customer service
Over 97
%
 
customer recommendation rate 
in each of the last two years  
based on independent surveys
“Telford Homes is committed to 
providing high quality homes  
with an outstanding level of  
customer service and support.”
anthony atkinson, Estates & Customer Service Director 06
tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012
Business Profile
06
Some of the new sites  
since 1 april 2011
01 Station House, Stratford 
02 Black Prince Road, Lambeth
03 Daubeney Road, E5
04 Chapel House Street, E14
05 Holland Estate, E1
06 Island Gardens, E14
07 The Panoramic, E14
In VeStment & R et URn S 
Business Profile
05
04
02
Computer Generated Images
03
01 Business Profile
07 www.telfordhomes.plc.uk 07
Business Profile
INVESTMENT  
& RETURNS 
Increasing dividends
Growing profits
Investment in land
3.0p
+20
%
–  Focus remains predominantly in East 
London, in and around the City  
and Canary Wharf
–  Board has also widened its focus 
into adjoining areas of North and 
Central London
–  Agreed to acquire nearly £50  
million of new land opportunities 
since securing a long term bank 
facility in March 2011
–  The development pipeline  
at 31 March 2012 included  
1,969 properties
–  These are expected to deliver more 
than £100 million of gross profit 
over the next four years
–  The Board has reaffirmed its 
intention to pay a progressive 
dividend year-on-year
–  The final dividend proposed for the 
year to 31 March 2012 is 1.5 pence 
making a total of 3.0 pence (2011: 
2.5 pence) 
–  The Board expects to pay around a 
third of its future earnings in dividends
–  Higher than expected sales and 
margin improvements
–  Profit before tax and exceptional 
items is up 20 per cent at £3.0 million 
(2011: £2.5 million)
–  Of the open market homes expected 
to be handed over to customers in the 
year to 31 March 2013 over 65 per 
cent have already been sold
–  Expect to report a substantial 
increase in pre-tax profits for the  
year to 31 March 2013
07
06
£50 million tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 08
Review of the Year
hIG hl IGht S
* Before all interest charges including those expensed within cost of sales of £2.9 million (2011: £2.9 million) 
and exceptional items
** Before exceptional items of £nil (2011: £0.5 million credit)
adjusted gross  
profit margin*
adjusted  
operating margin*
Profit before tax**
n umber of open market completions
earnings per share
Dividend per share
Gross debt Gearing
n umber of open market sales (contracted)
15.1%
5.2%
17.6%
6.2%
+16.6
%
+19.2
%
+20.0
%
+11.7
%
+25.0
%
314
4.7p
3.0p
£67.6 million 82.4
%
460
2011: 281
2011: 4.8p
2011: 1,904
2011: 2.5p
2011: £64.9 million 2011: 71.2%
2011: 368
11
11
12 12
1,969 properties
Development pipeline
Revenue
£121.1 million
£124.4 million
+2.7
%
11
12
11
12
£2.5 million
£3.0 million 09
Review of the Year
www.telfordhomes.plc.uk
Cha IRman’ S Statement
I am pleased to be reporting on another good 
year for Telford Homes where both sales rates 
and profit levels have exceeded the Board’s 
expectations. The housing market in London has 
remained robust, particularly relative to the rest 
of the country, and the Group’s activities are 
focused on some of the more successful locations 
within this market.
The Group’s open market customers are split 
between UK buyers, both owner-occupiers and 
investors, and a continuing level of investment 
demand from overseas buyers.
Telford Homes’ land buying strategy ensures 
that sites purchased are attractive to the Group’s 
target markets and in locations where we expect 
sufficient finance to be available for buyers to 
purchase the homes. The overseas launch of  
The Panoramic, just north of Canary Wharf, 
earlier this month proves there is demand in the 
Far East for the right product in the right location 
with 44 of the 90 open market homes already sold.
The Group has reached the end of the two year 
period during which the Board anticipated profits 
at lower levels, due to the longer term effects of 
the housing downturn in 2008 and 2009, and 
Telford Homes is now in a strong position with 
available finance as well as a healthy development 
pipeline. This enables the Board to be confident 
in forecasting a significant increase in profit for 
the year to 31 March 2013 and continued growth 
beyond that.
The Board has reaffirmed its intention to pay a 
progressive dividend year-on-year and as such 
the final dividend proposed is 1.5 pence making a 
total of 3.0 pence for the year (2011: 2.5 pence). 
Looking forward the Board expects to pay around 
a third of its future earnings in dividends.
After ten years as Non-Executive Chairman  
David Holland has moved aside for me but  
will continue to contribute as our senior  
Non-Executive Director. I returned to the business  
on 1 January 2012 following a six month break  
and I have been delighted at the way that 
Jon Di-Stefano has managed the handover of 
responsibilities to his new role as Chief Executive 
and the success the Group has achieved since.
There are some exciting developments in our 
immediate pipeline and, together with the rest  
of the Board, I look forward to supporting Jon  
in the years ahead.
Andrew Wiseman
Executive Chairman
29 May 2012
“ Telford Homes is now in a strong 
position with available finance as well 
as a healthy development pipeline.”
andrew Wiseman, Executive Chairman tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 10
Review of the Year
ChIeF exe CUt IVe’S ReVIeW
MATCHMAKERS 
WHARF
E9  11
Review of the Year
www.telfordhomes.plc.uk
Telford Homes has exchanged contracts on  
460 open market properties in the year to  
31 March 2012, an increase of 25 per cent  
(2011: 368). As in previous years a significant 
proportion of these sales have been achieved 
ahead of build completion and there are now 
more than 400 pre-sold open market homes  
that will contribute to profit in the new financial 
year and beyond.
Open market completions
The number of open market properties legally 
completed in the year to 31 March 2012 
increased to 314 (2011: 281). This was ahead of 
the Board’s expectations mainly due to strong 
sales of finished homes in the last six months 
of the year. For the last two years the Group has 
been delivering a lower proportion of open market 
homes and has been achieving lower than normal 
margins due to the change in strategy required to 
protect the business during the downturn in the 
housing market.
The Board targeted margin improvement during 
the year and gross and operating profit margins 
are now moving in the right direction. The gross 
margin before interest charges and exceptional 
items has increased to 17.6 per cent (2011:  
15.1 per cent) and the operating margin before 
interest charges and exceptional items has 
increased to 6.2 per cent (2011: 5.2 per cent).  
As a result of higher than expected sales and 
margin improvements, the Group has reported 
profit before tax and exceptional items up  
20 per cent at £3.0 million (2011: £2.5 million).
All of the developments with a greater proportion 
of affordable housing than usual, and the open 
market homes achieving lower than expected 
sales prices as a result of the last recession, 
have now been substantially completed. As such 
it is anticipated that there will be an increased 
number of open market completions in the new 
financial year and that margins will return to more 
normal levels. In addition, of the open market 
homes expected to be handed over to customers 
in the year to 31 March 2013 over 65 per cent 
have already been sold. The Board has previously 
stated that it expects to report a substantial 
increase in pre-tax profits for the year to  
31 March 2013 and this remains the case.
l ondon housing market
The London housing market has continued 
to outperform the rest of the country and its 
fundamental strengths, in terms of being a  
major international centre for finance and 
business with a growing population and a lack 
of supply of new homes, suggest this is likely to 
continue. Not only is the population growing but 
projections from the Office of National Statistics 
indicate that 70 per cent of household growth in 
the next decade will be formed by single person 
households. The Mayor’s London Plan predicts 
that more than 30,000 new homes are required 
across the capital each year for the next  
20 years. The number of new build starts 
in London, recorded by the Department for 
Communities and Local Government, has been 
consistently below this and less than half of the 
required number for the last four years.
“ The Board has previously stated  
that it expects to report a substantial 
increase in pre-tax profits for the year 
to 31 March 2013 and this remains 
the case.”
Jon Di-Stefano, Chief Executive tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 12
Review of the Year
Whilst some commentators question these 
dynamics of supply and demand it is clear that, 
regardless of the inability of some purchasers to 
access mortgage finance, there is an increasing 
rental demand that is not being satisfied. As a 
result, rents in some parts of London rose by 
more than 10 per cent in 2011.
Open market sales
Where possible the Group will sell open market 
homes early in the development cycle, typically 
to investors. These investors are predominantly 
based overseas but there has also been demand 
from UK buyers, all of whom are attracted by 
rental yields of around six per cent.
In April and May of 2011 the Group secured 
186 sales at Avant-garde, E1 its joint venture 
development with The William Pears Group. Of 
these 62 were to UK buyers. Subsequently some 
smaller developments have secured sales in the 
Far East followed more recently by the launch of 
The Panoramic in Poplar, E14 which took place 
in Hong Kong and Singapore earlier this month. 
The Panoramic is a striking 20 storey tower in a 
strong location just to the north of Canary Wharf 
and, as a result, 44 of the 90 open market homes 
have already been sold. Completions are due in 
late 2013. Selling nearly half of this development 
at this stage is a great achievement given current 
economic concerns across Europe and confirms 
that London is still regarded as a safe haven for 
overseas investment.
Alongside these successful overseas marketing 
campaigns a significant proportion of the  
Group’s sales remain in the UK and particularly  
to owner-occupiers. Over 50 per cent of the  
open market homes completed in the year to 
31 March 2012 were sold to UK buyers. There 
have been strong sales recorded across all 
of the Group’s developments during the year, 
particularly at Bow Trinity, E3, Greenwich 
Creekside, SE8 and Matchmakers Wharf, E9 
amongst others. All nine homes, including 
detached houses, at Wingfield Mews in Hendon 
have been sold and completed in the year and  
at High Cedars in Wanstead 15 out of 24 homes 
are already sold three to four months ahead of 
build completion. Additionally, there is now just 
one finished apartment left for sale at Queen 
Mary’s Gate in Woodford compared to 70 at  
the start of the financial year.
Tight mortgage availability restricts demand 
from potential owner-occupiers and particularly 
first time buyers. Although there was some 
improvement in the last year, mortgage lending 
is still at very low levels and whilst this is 
unlikely to get much better in the short term, 
it seems equally unlikely that the situation will 
get any worse. Lenders continue to discriminate 
against new build properties by requiring higher 
deposits. The new Government backed 95 per 
cent mortgage product ‘NewBuy’ should  
assist some purchasers but the Group will 
monitor the level of success the scheme enjoys  
before deciding whether to join at a later date. 
ChIeF exe CUt IVe’S ReVIeW 13
Review of the Year
www.telfordhomes.plc.uk
HIGH CEDARS
WANSTEAD
Computer Generated Images tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 14
Review of the Year
ChIeF exe CUt IVe’S ReVIeW
THE PANORAMIC
E14
Computer Generated Images 15
Review of the Year
www.telfordhomes.plc.uk
The Board has ensured that the Group’s land 
acquisitions have been in locations that appeal 
to owner-occupiers with greater levels of equity 
available, sometimes sourced from extended 
family, and investors that are seeking a return  
on their equity and are funding their purchases  
at lower loan to value ratios.
Partnerships and affordable housing
Despite a return to constructing a more normal 
proportion of open market homes, affordable 
housing remains a significant and important  
part of the business. In the year to 31 March 2012 
the Group completed 542 affordable homes, 
handing them over to its various partners, and 
as a result has received the vast majority of its 
2008–2011 grant allocation from the Homes  
and Communities Agency (HCA). The HCA in 
London has now become part of the Greater 
London Authority (GLA) and the Group has 
secured a grant allocation in the new 2011–2015 
programme which will primarily assist the  
delivery of estate regeneration schemes  
expected to commence in the next few months.
The funding regime for affordable housing 
underwent significant change in the last year  
and this led to uncertainty in modelling the 
expected value of affordable homes for all 
concerned. As the sector has got to grips with 
the new regime, the Group has developed a clear 
understanding of the value of affordable homes 
to be delivered at various rent levels, including 
the new ‘affordable rent’ model where rents are 
charged at a proportion of market levels.  
In assessing these values, the Group has forged 
new relationships with some major housing 
associations keen to embrace the new funding 
model. This is an important aspect of remaining 
competitive in land acquisitions.
l and acquisition
During 2011 the Board reviewed its land 
acquisition strategy and as a result made some 
small changes to the Group’s area of operation. 
The focus of the Group’s land buying remains 
predominantly in East London but is now 
concentrated on the areas in and around the City 
and Canary Wharf where demand is stronger and 
less reliant on mortgage constrained buyers. 
These areas are also benefitting from transport 
improvements as a result of the Olympics, the 
£16 billion investment in Crossrail and new 
facilities such as the Westfield shopping centre  
in Stratford.
As a result of reducing the scope for acquisition 
in the outer boroughs of East London, the Board 
has widened its focus into adjoining areas of 
North and Central London where higher priced 
properties are in demand both from investors and 
owner-occupiers. The Group has purchased its 
first development site in Lambeth, near the Albert 
Embankment, to provide 101 homes in a new  
24 storey tower and also acquired its first site  
in the London Borough of Camden.
It is highly likely that this change in focus will 
increase the average price of the properties being 
developed by the Group in the next few years.  
In the year to 31 March 2012 the average price  
of the open market homes sold was £339,000,  
a significant increase on £259,000 last year.  tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 16
Review of the Year
ChIeF exe CUt IVe’S ReVIeW
AVANT-GARDE
E1 17
Review of the Year
www.telfordhomes.plc.uk
However this was heavily influenced by the  
sales achieved at Avant-garde which has a  
much higher price point and excluding this 
development the average price of the  
remaining sales was £266,000.
In total Telford Homes has agreed to acquire 
nearly £50 million of new land opportunities since 
securing a long term bank facility in March 2011. 
All of these acquisitions have been purchased 
on the basis of an appropriate expected profit 
margin and return on capital. The majority have a 
full planning consent or are contracted subject to 
achieving a satisfactory consent and all of them 
are on ‘brownfield’ land. The Group has, and 
will, purchase smaller sites without a planning 
consent where the risk of not achieving a consent 
is assessed to be very low. Despite excellent 
relationships within the Group’s area of operation 
the planning environment remains challenging 
and, whilst any attempts to improve this are 
welcome, it remains to be seen what impact the 
new ‘National Planning Policy Framework’ will 
have. Telford Homes has secured some significant 
planning consents in the last year, including 
estate regeneration schemes, and these can only 
be achieved by continuous engagement with both 
the local authority and the local community.
The development pipeline at 31 March 2012 
included 1,969 properties (2011: 1,904 
properties) of which 1,949 have a detailed 
planning consent. This total includes sites under 
option contracts within the control of the Group. 
There are 1,487 properties under construction 
with the remainder expected to commence 
within the next year. As the business returns to a 
more normal mix of open market and affordable 
housing, the balance of the pipeline is changing. 
The number of open market homes has increased 
to 1,677 compared to 1,338 last year. In total the 
development pipeline is expected to deliver more 
than £100 million of gross profit over the next 
four years.
Operations
The Board has always taken great pride in the 
quality of construction undertaken by Telford 
Homes and the level of customer service the 
Group provides. This year that quality was 
recognised with four NHBC ‘Pride in the Job’ 
awards and Greenwich Creekside went on to 
achieve the honour of winning the national 
NHBC ‘Pride in the Job Supreme Award’ in 
the multi-storey category. In addition, for the 
second successive year, more than 97 per cent 
of the Group’s customers would recommend 
Telford Homes to others and this demonstrates 
both the quality of the product and the service 
the customers receive at the point of sale, on 
handover and beyond.
Computer Generated Images tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 18
Review of the Year
ChIeF exe CUt IVe’S ReVIeW
Despite the cost of changes in building 
regulations and the Group’s own efforts to 
remain as environmentally friendly as possible 
there have been some significant cost savings 
identified in the last year which are helping to 
improve margins both now and going forward. 
In addition the Health and Safety record of the 
Group was once again excellent this year with 
only a small number of accidents, well below  
the industry average.
It has been a year of some changes in terms of 
the Board of Telford Homes. I remain delighted 
to have been given the chance to build on the 
decade of success already behind us and to  
help take the Group forward as Chief Executive. 
I am particularly grateful to Andrew Wiseman for 
providing me the space to take on the challenge 
but equally I am pleased to have his support 
and continuing guidance as Executive Chairman. 
We have also welcomed Katie Rogers and David 
Campbell to the Board during the last year. Katie 
has built on her previous roles within Telford 
Homes to take full control of the financial side of 
the business and the key banking relationships. 
David has been a more recent appointment as 
Group Sales and Marketing Director but has 
already achieved some excellent results and has 
the necessary experience to build on the strong 
platform that his predecessor, Sheena Ellwood, 
left behind.
The Group has taken on an in-house legal 
department during the year and the Board 
has welcomed the contribution already made 
by Richard Ellis as Director of Legal Services, 
along with his team. The ethos of Telford Homes 
remains largely unchanged and employee 
retention rates are high due partly to a supportive 
environment but also to the quality and 
dedication of each employee.
Current trading and outlook
The strong sales performance in the year to 
31 March 2012 has continued into the first few 
months of the new financial year. Coupled with 
recent overseas success, both visitor numbers 
and reservation rates from UK buyers have 
been well ahead in the first few months of 2012 
compared to 2011.
The Board will continue to monitor the economic 
situation to be aware of any change in sentiment 
but the fundamental strengths of the London 
housing market and the Group’s forward sales 
position are reasons to be positive. East London 
will soon be firmly in the international spotlight 
and the longer term benefits of the Olympics 
are already evident in terms of transport 
infrastructure and new facilities. The Board is 
looking forward to another year of improving 
margins, increased profit levels and a major 
sporting event on the doorstep.
Jon Di-Stefano
Chief Executive
29 May 2012 19
Review of the Year
www.telfordhomes.plc.uk
BOW  
TRINITY
E3
Includes some Computer Generated Images tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 20
Review of the Year
Telford Homes has had a successful year 
exceeding expectations in terms of profits and 
sales. As a result of improving profit margins, 
increasing open market output and pre-sales 
already secured, a substantial increase in profit 
before tax is expected in the year to 31 March 2013. 
The Group’s corporate banking facility has 
enabled it to invest heavily in land in the year and 
together with equity, this facility ensures that 
Telford Homes has funding available to develop 
existing sites and invest in more land, facilitating 
further growth in the future.
Operating results
Revenue increased to £124.4 million  
(2011: £121.1 million) with gross profit  
before exceptional items of £18.9 million  
(2011: £15.4 million). Gross profit is stated  
after expensing loan interest that has been 
capitalised within inventories of £2.9 million 
(2011: £2.9 million) and before charging this 
interest the gross margin in the year was  
17.6 per cent compared to 15.1 per cent  
last year.
The increase in revenue is due to a greater volume 
of open market completions partially offset by 
a reduction in the level of affordable revenue. 
During the recession, the Group switched a 
number of developments to affordable housing 
and as a result the output of the Group became 
more heavily weighted towards affordable homes 
than in pre-recession years. Most of the affected 
developments completed during the year to  
31 March 2012 and the Group expects to return 
to a more normal output going forward as new 
sites are acquired with a traditional mix of 
housing, usually around two thirds open market 
and one third affordable.
The improvement in gross profit margin is driven 
by a greater proportion of the completions in  
the year being at developments less affected  
by the housing downturn compared to the 
prior year together with build cost savings. 
The operational teams continue to monitor 
and control development costs with a focus on 
identifying cost savings wherever possible and 
significant build cost savings have been achieved, 
some of which were recognised in the year to  
31 March 2012 with the remainder to be 
recognised in future years.
Administrative expenses have increased to  
£10.6 million (2011: £9.3 million) essentially  
due to higher employee costs. Employee  
numbers have gradually risen over the last  
18 months, necessary to manage the growing 
level of construction activity and resulting  
support services required, which in turn will  
deliver higher output levels in the future. The year  
to 31 March 2012 was the busiest since Telford 
Homes was formed with 1,769,707 man-hours 
recorded across the business compared to 
1,456,837 in 2011. Additional employee and 
administrative costs were incurred in relation 
to the set-up of the in-house legal department 
recruited in the year which reduces external  
legal costs and will result in a net benefit to  
the Group in future years.
“ Telford Homes has funding available 
to develop existing sites and invest 
in more land, facilitating further 
growth in the future.”
FInan CIal R eVIeW
Katie Rogers, Financial Director 21
Review of the Year
www.telfordhomes.plc.uk
WINGFIELD MEWS
HENDON tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 22
Review of the Year
FInan CIal R eVIeW
GREENWICH 
CREEKSIDE 
SE8 23
Review of the Year
www.telfordhomes.plc.uk
Selling expenses have risen in the year from  
£2.7 million to £3.5 million broadly in line with 
the increase in contracts exchanged in the year. 
A proportion of the selling expenses incurred in 
the year were in relation to successful launches 
of new developments. These launches generated 
a significant number of pre-sales of homes 
which are scheduled to complete, and therefore 
deliver profits, in future financial years. However 
the accounting treatment for selling expenses 
is that they must be expensed as incurred even 
though profit recognition from any sales is when 
the property legally completes, which can be a 
number of years later.
Despite this, the operating margin before 
exceptional items and interest increased to 
6.2 per cent compared to 5.2 per cent for the 
year ended 31 March 2011. Profit margins are 
expected to continue to improve back to more 
normal levels in the year to 31 March 2013. 
Finance costs
Finance costs incurred in the year have increased 
to £4.9 million from £2.7 million. This is 
comprised of £3.1 million (2011: £1.6 million) 
of interest capitalised into work in progress 
and £1.8 million (2011: £1.1 million) of finance 
costs charged directly to the income statement, 
predominantly non-utilisation fees, arrangement 
fees and hedging costs.
The increased finance costs were anticipated  
as the corporate banking facility attracts a  
higher rate of interest compared to previous 
borrowings being LIBOR plus a margin of  
3.5 per cent and also non-utilisation fees at  
1.75 per cent. Additionally, the arrangement  
fee is being expensed over the life of the facility 
and therefore £232,000 has been charged in  
the year to 31 March 2012.
For the first time, the Group has taken out some 
protection against future interest rate rises in 
the form of interest rate caps. Although the 
Board does not believe significant rate rises are 
likely in the near future the cost of interest rate 
protection has been quite low for the same reason 
and as such it is worth investing a small amount 
to protect the business and ensure that interest 
cover covenants remain achievable. The interest 
rate caps are individually fair valued at each 
period end with any movement in the value being 
charged or credited to the income statement and 
this has resulted in some hedging costs in the 
year to 31 March 2012.
The Board believes the security of having  
longer term bank funding outweighs the 
increased finance costs in the year and considers 
the rates being charged are competitive in the 
current market. tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 24
Review of the Year
FInan CIal R eVIeW
Dividend
The Board has proposed a final dividend of  
1.5 pence which, together with the 1.5 pence 
interim dividend paid on 13 January 2012,  
makes a total dividend for the year of 3.0 pence,  
a 20 per cent increase compared to the prior  
year (2011: 2.5 pence). This increased dividend is 
in line with the Board’s stated intention of paying 
a year-on-year progressive dividend. The final 
dividend is expected to be paid on 20 July 2012  
to those shareholders on the register at the  
close of business on 22 June 2012.
Balance sheet
Net assets at 31 March 2012 were £66.2 million, 
increased from £64.7 million last year. This is 
equivalent to net assets per share of 133.7 pence 
(31 March 2011: 132.1 pence).
Cash balances at 31 March 2012 of £12.4 million 
remain relatively high although down from  
£18.8 million last year. At 31 March 2011,  
£6.1 million of the cash balance related to grant 
monies held for future expenditure on specific 
sites. This has been fully expended in the year 
on the relevant sites and therefore the cash 
balance at 31 March 2012 is freely available for 
operational purposes. Since 1 April 2011, final 
grant tranches totalling £21.3 million have been 
received on the completion of specific affordable 
housing units.
Cash management and  
cash flow forecasting
Control of cash remains important to the Group 
and a detailed month-by-month cash flow 
forecast is maintained as part of the management 
information system. This enables continuous 
monitoring of the forecast and actual cash 
flows over a five year period. The forecasts are 
necessarily subject to a number of assumptions 
and judgements and these are regularly analysed 
for reasonableness. The forecasts are reviewed by 
the Board in detail on a monthly basis.
The Group has invested heavily in land since 
1 April 2011 and has purchased or committed 
to spend £47 million on new site acquisitions. 
Significant cash inflows are expected over 
the coming months from a high volume of 
open market completions on recently finished 
developments and a number of these are on 
developments where the loan has already been 
repaid in full from completions to date. The Group 
remains active in the land buying market and will 
continue to reinvest the equity of the business, 
together with the headroom in the corporate 
facility, into new developments.
Borrowings
Gross borrowings at 31 March 2012 were  
£67.6 million (31 March 2011: £64.9 million)  
and net debt was £54.6 million (31 March 2011: 
£46.1 million). At 31 March 2012 gearing was  
82.4 per cent (2011: 71.2 per cent). The Board 
monitors ‘uncovered gearing’ which excludes  
debt which would be repaid by the value 
of contracts already exchanged on each 
development. Uncovered gearing is significantly 
lower than actual gearing at 37.9 per cent due  
to our success in pre-selling properties  
(31 March 2011: 24.0 per cent). 25
Review of the Year
www.telfordhomes.plc.uk
ST GEORGES ESTATE 
E1 tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 26
Review of the Year
FInan CIal R eVIeW
E-PAD
E14 
Computer Generated Images 27
Review of the Year
www.telfordhomes.plc.uk
As expected, borrowings, net debt and gearing 
have increased year-on-year due to utilisation  
of the new corporate bank facility. Since  
1 April 2011, loan repayments of £61 million  
have been made from open market residential 
sales proceeds and loan drawdowns against  
site acquisitions and development costs total  
£64 million.
All developments, with the exception of Greenwich 
Creekside and Avant-garde, are funded by the 
corporate facility provided by a club of three 
banks being The Royal Bank of Scotland, HSBC 
and Santander which extends to 30 September 
2014. At 31 March 2012, Telford Homes had 
utilised £46 million of the facility leaving an 
unutilised balance of £24 million. Funds are 
advanced at 60 per cent of cost and site specific 
funding under the overall facility umbrella is 
repaid from the first 65 per cent of the open 
market residential proceeds on each site. The 
facility includes a number of site specific loan to 
value covenants along with corporate covenants 
concerning net asset value, gearing and interest 
cover. The Board monitors performance against 
these covenants on a monthly basis and has had 
no issues in relation to compliance.
In addition to the corporate facility, Telford 
Homes (Creekside) Limited, a wholly owned 
subsidiary has a loan facility with The Royal Bank 
of Scotland in relation to its Greenwich Creekside 
development. The development is now complete 
in terms of construction and to date over  
£47.0 million of the original £57.7 million  
facility has been repaid from sales proceeds. 
Bishopsgate Apartments LLP, a joint venture with 
The William Pears Group signed a £43.1 million 
loan facility with HSBC in July 2011 to fund 
the development of Avant-garde. William Pears 
became the new joint venture partner to Telford 
Homes in Bishopsgate Apartments LLP in May 
2011 when they purchased a 50 per cent interest 
from Genesis Housing Group. The new facility was 
partially used to refinance the existing £15 million 
land loan with Allied Irish Bank with the balance 
available to fund development costs over the 
course of construction.
At 31 March 2012, Bishopsgate Apartments LLP 
had utilised £19.8 million of this facility leaving 
an unutilised balance of £23.3 million. The loan 
is repayable by September 2014 and interest is 
charged at LIBOR plus a margin of 3.5 per cent.
Together these facilities ensure that the Group 
has sufficient bank finance available for all 
existing schemes and headroom within the 
corporate facility to purchase and develop new 
sites over the next few years.
Katie Rogers 
Financial Director 
29 May 2012 tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 28
Operations
28
DEVELOPMENT PIPELINE
Nearly 2,000 properties 
St RUCt URe
The Group has nearly 2,000 properties in the 
development pipeline and these properties need to be 
managed through the planning process, in design and 
ultimately during construction. In order to control this 
process Telford Homes is organised into two operating 
divisions being Alto and Metro. 
This structure is necessary in order to manage 
the delivery of several hundred homes per annum 
and ensures management control to yield excellent 
design, high standards of construction and delivery on 
programme. Each division predominantly specialises in 
certain sizes of development and styles of construction.
Mark Parker and John Fitzgerald jointly take on the roles 
and responsibilities of Group Managing Director. Mark 
Parker is responsible for Metro and John Fitzgerald is 
responsible for Alto and each division has a management 
team responsible for day-to-day operations.
Sales and Marketing, Land Acquisition and Partnerships, 
Customer Service, Finance, Legal Services and Buying 
are regarded as core central services that deliver 
economies of scale in a relatively small geographic 
region by remaining outside of the divisional structure.
Includes some Computer Generated Images 29
Operations
29 www.telfordhomes.plc.uk
tR aInIn G an D aPPRent ICeShIPS
Telford Homes operates in an industry sector 
where up-to-date qualifications, standards and 
knowledge are vital to the safe and successful 
operation of the business. The Group has a 
supply-chain of partners that provide all the 
necessary design and building services to 
complete each development. The Group has 
established an ‘apprentice trainee’ strategy that is 
propagated through its supply-chain by delivering 
apprenticeships that provide a quality of training 
sufficient to give each apprentice the opportunity 
for long term employment. Over the last few years 
the Group, along with its partners, has assisted 
dozens of local apprentices to gain a valuable 
qualification within the construction industry. 
The Group also operates a comprehensive 
Management Trainee programme under which 
trainees from school or a place of higher 
education are employed annually. Trainees either 
join a particular department if they have chosen 
their career path or are enrolled on a three year 
programme where they rotate through various 
roles. Where applicable, they are enrolled on 
college or university courses funded by Telford 
Homes, with encouragement to progress to 
complete a construction or surveying degree. 
A combination of higher education and on the job 
training alongside experienced staff allows the 
apprentices and trainees to develop technical as 
well as personal skills. 
With a constant flow of new apprentices and 
trainees developing their skills and being 
promoted, Telford Homes has developed a highly 
skilled workforce that is constantly benefitting 
from updated industry knowledge combined with 
practical on the job training.
The Group puts training at the heart of its 
operations ensuring its employees maintain 
their industry knowledge. Training is seen as a 
necessity and it is important to continually assess 
training needs whilst anticipating changes in the 
external environment that will dictate new skills 
and knowledge that our employees may need. The 
focus on high quality industry specific training 
allows the Group to have a fresh approach and 
the Board views training, particularly through 
apprenticeships, as an essential investment in 
the future of the Group and the future of the 
construction industry.  tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 30
Operations
30 30
health an D SaFet Y
Steve n icoll 31
Operations
31 www.telfordhomes.plc.uk
“ The Group received a gold award 
for health and safety at the Royal 
Society for the Prevention of 
Accidents awards 2012.”
The health, safety and wellbeing of every  
person involved in, or affected by, our business 
is fundamental to our operations. We promote 
a positive safety culture and communicate this 
to all employees and everyone working on our 
sites ensuring that health and safety procedures 
are understood by recipients and identify all the 
relevant risks and dangers that are likely to be 
encountered in the course of their work and set  
out the appropriate precautionary measures. 
We invest in the training and development of our 
people with the continuation of our ‘Health and 
Safety Core’ training programme. This programme 
ensures that all employees and in particular those 
deemed as ‘safety critical’ have the appropriate 
skills and level of training. We demand that our 
suppliers employ competent people and encourage 
continual professional development of those 
holding safety critical posts. To support this we 
have held subsidised onsite training specifically  
for their employees.
In the economic climate of the last few years 
a number of our suppliers have struggled 
and some have ceased trading. As part of our 
vetting procedure the commercial viability of 
each supplier is scrutinised in an attempt to 
ensure they are able to meet their obligations. 
Our operational teams demand and expect the 
highest health and safety standards from each 
supplier and this is considered during the tender 
process for new work. We continually monitor our 
suppliers and take the necessary steps to ensure 
they meet our high expectations.
Our accident frequency rate for the year to 
31 March 2012 was better than the industry 
average. The majority of our accidents and 
incidents over the last few years have arisen 
as a result of the behavioural failings of those 
persons directly involved. We have implemented, 
and will continue to run, a programme of simple 
behavioural based solutions to make people 
consciously aware of themselves and their 
interaction with the workplace. 
Our health and safety management system, 
accredited to BS OHSAS 18001:2007, continues 
to be audited every six months by the British 
Standards Institution (BSI) in accordance with 
their stringent auditing processes. This year our 
occupational health and safety performance 
was again recognised by the ‘Royal Society 
for the Prevention of Accidents’ (RoSPA) with 
a gold award and similarly our management 
of occupational road risk was recognised with 
a silver award. The RoSPA awards and the 
BSI certification recognise the maturity of our 
occupational health and safety management 
system and the culture of the Group.   
Our ‘Executive Safety Committee’ and 
‘Operational Safety Forum’ continue to meet 
regularly and are instrumental in developing 
significant changes to the way health and  
safety is managed. 
John Fitzgerald and Mark Parker remain 
responsible for health and safety in each of the 
operating divisions and John Fitzgerald is the 
board member with overall responsibility for 
health and safety.
This year has been our busiest on record with 
over 1.7 million man-hours worked and it has 
also been the safest in terms of our Accident 
Frequency Rate. The Group will always strive to 
improve further however our overall health and 
safety performance during the year has been 
excellent and this stands us in good stead for  
the future.
Steve Nicoll
Group Health and Safety Manager “ Our environmental management 
system was certified this year with 
the British Standards Institution.”
tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 32
Telford Homes is committed to designing and 
constructing developments that both minimise 
ecological impact and improve energy efficiency. 
Our approach means that we re-use, recycle and 
adopt renewable materials wherever viable and 
continually look for new ways to meet and exceed 
environmental expectations in all our activities. 
The Group has an environmental policy and we 
ensure that this is communicated throughout 
our operations. Our environmental policy and 
environmental management system is regularly 
reviewed to ensure the prevention of pollution 
and compliance with relevant legislation. Our 
environmental management system was certified  
this year with the British Standards Institution to  
BS EN ISO 14001:2004.
We have adopted the Building Research 
Establishment SMARTER
©
 waste programme 
which assists the construction industry to manage 
site waste in compliance with regulations. It 
is also fully aligned with the requirements of 
Building Research Establishment Environmental 
Assessment Method (BREEAM) and The Code for 
Sustainable Homes enabling the monitoring of 
onsite energy consumption, water consumption 
and the procurement of certified timber. 
The materials we use during our construction 
projects contribute to our environmental 
performance and as such we recognise the 
contribution sustainable materials make to 
improved environmental performance. We 
continue to increase the amount of recycled 
materials we use, particularly aggregates and 
crushed concrete in excavation reinstatements 
and piling mats. 
The majority of our developments benefit from 
low energy lighting, methods of reducing internal 
water usage including flow restrictors and dual 
flushes, recycling facilities, cycle storage and 
local transport links. In addition we use both 
established and cutting edge technologies to 
improve the energy efficiency of our developments 
once they are occupied. 
We strive to achieve the sustainability 
expectations required by legislation, including 
recently increased targets for the level of carbon 
savings required from developments. Energy 
strategies are being continually adapted to suit 
these expectations with new emphasis being 
placed on the reduction of energy usage through 
not only the building process but enhancement 
of the building envelope and the manner in 
which the building is used. We continue to 
explore renewable energy technologies with the 
ultimate aim of reducing the carbon footprint of 
future developments.
Operations
en VIROnment an D SUSta Ina BIl It Y 33 33 www.telfordhomes.plc.uk
BaSe
202.3T CO²
lean
193.0T CO²
GReen
148.3T CO²
Clean
155.2T CO²
» » »
lean – 9.3 t CO
2
 saving
– Achieved through increased enhanced  
envelope performance.
– Improved insulation values and building  
air tightness.
Clean – 37.8 t CO
2
 further saving
– Achieved through increased efficiency of 
domestic heating.
– Centralised boilers and combined heat and 
power plant together with ventilation systems 
with heat recovery. 
– Provision of low energy lighting.
GReen – 6.9t CO
2
 further saving
– Achieved through introduction of renewable  
energy sources.
– Photovoltaic panels located on roof areas  
to provide electrical energy.
An example of this energy strategy is demonstrated using one of our 
future developments of 87 homes highlighting the anticipated carbon 
output reduction by adapting sustainable technologies. In the example, 
a total of 54T CO² saving in carbon output will be achieved as a result 
of the energy strategy adopted for this particular development.
Operations tel FORD h OmeS Plc  
Annual Report & Accounts for the year ended 31 March 2012 34
Operations
KeY RISKS an D Un CeRta Int IeS
Operations
economic environment
Demand for properties from both investors and 
owner-occupiers is dependent on confidence 
in both the local housing market and the wider 
economy. This confidence is heavily influenced by 
factors such as interest rates, the availability of 
mortgage finance, rental incomes, unemployment 
and increasing consumer costs for other goods 
and services. All of these are outside of the 
Group’s control.
The Group’s policy has been to sell early in the 
development process, wherever possible, to 
minimise the risk in each site. This policy has 
been successful to date and pre-sales are still 
being secured with housing associations, overseas 
buyers and UK buyers. In addition, the Sales and 
Marketing team have detailed knowledge of the 
local market and are able to formulate the best 
sales strategy for each development and to work 
with purchasers and prospective purchasers 
to ensure that all stages of the process from 
reservation to legal completion run as smoothly 
as possible.
l and acquisition
The Group needs new land to maintain a 
development pipeline and to enable the business 
to continue to operate at a certain capacity. This 
land needs to be sourced in appropriate locations 
and where optimum planning consents can be 
obtained. The appraisal process that determines 
the price paid for land is critical in maintaining 
margins and return on equity at acceptable levels.  
The Land Acquisition and Partnerships team 
are responsible for sourcing land and our strong 
relationships with various land owners including 
local authorities and affordable housing providers 
play a key role in our ability to acquire new sites. 
Our existing partnerships with housing transfer 
organisations are expected to continue to be a 
source of land in the next few years. The appraisal 
process for new sites includes due diligence by 
an experienced solicitor and authorisation of all 
prospective purchases at appropriate levels.
Planning process
The flow of properties through the development 
pipeline is dependent on achieving suitable 
planning permission on sites purchased without 
planning or subject to planning. The process 
is time consuming and involves a number of 
supporting reports and detailed consultations 
with many different bodies. Delays in achieving 
suitable planning permissions affect the number 
of properties that can be brought to market and 
impact the timing of future cash flows. Failure  
to achieve a suitable planning permission may 
lead to cost write offs or reduced margins on 
individual developments.
Telford Homes has extensive knowledge of local 
planning requirements, excellent relationships 
with planning authorities and takes care in the 
appointment of professional architects, planning 
consultants and engineers. Early consultations 
with the planning authorities are a key part of 
the land acquisition process. While this cannot 
remove planning risks it mitigates them as much 
as possible. All bar one of the sites currently 
owned by the Group have the benefit of a full 
planning permission. The Board ensures that 
the Group is not overexposed to planning risks 
by limiting the total investment in sites without a 
planning permission at any one time.
health and Safety
Construction sites are dangerous places and 
there are many different health and safety risks 
to consider. The health and safety of everyone 
associated with Telford Homes, both employees and 
sub-contractors, is the first priority of the Group.
Investment in training, the promotion of health 
and safety to all employees and extensive policies 
and procedures all contribute to a comprehensive 
approach to health and safety management with 
the objective of minimising risk and providing 
a safe working environment. The Group has 
a dedicated Health and Safety manager who 
conducts Health and Safety audits on a regular 
basis and processes are modified as required with 
a view to seeking continuous improvement.
The Group’s financial and operational performance is subject to a number of risks.  
These risks are continually assessed by management to mitigate and minimise their 
effects on the business. There are also many risks which are outside of the Group’s 
control. The key risks facing the business are: 35
Operations
35 www.telfordhomes.plc.uk
Construction
The construction process is critical to the efficient 
and timely delivery of properties to purchasers 
which affects both cash flow and customer 
satisfaction. The quality of the construction work 
and finish in each property affects the reputation 
of the Group and can impact on repeat purchase 
and recommendation rates. 
Standards of construction and control of the 
building process on site are of paramount 
importance to each operating division. Careful 
planning is required to assess a development 
programme before construction commences 
and this is monitored over the course of the 
building work. The construction teams work very 
closely with the Customer Service team and their 
interaction commences at an early stage in the 
development. The Customer Service team spend 
a substantial proportion of their time on site 
carrying out quality control before a purchaser 
sees the property for the first time.
availability of materials and labour
The availability of materials and sub-contracted 
labour for each site can affect both the 
construction programme and the cost of 
construction. Build cost inflation will impact 
directly on the margin achieved on each site 
where this is in excess of forecasts.
Planning of the construction programme and 
timely management of the tender process for each 
sub-contracted trade reduces the risk of delays 
in the construction programme due to availability 
of materials and labour. The tender process 
ensures that competitive rates are achieved on 
every trade. Telford Homes works in partnership 
with all of its sub-contractors and makes timely 
payments to encourage an equal relationship that 
is beneficial to all parties.
Cash requirements and bank finance
Property development is a capital intensive 
business with significant initial outlays supported 
by bank finance and lengthy time periods before 
the majority of the cash inflows on each project. 
Forecasting of cash flows is critical to ensure 
the Group is not operating beyond its financial 
capacity. Part of this process involves the forecast 
of bank funding for each development and the 
availability of sufficient bank finance is therefore 
also of critical importance.
Telford Homes maintains a detailed cash flow 
forecast as part of its management information 
systems. This extends five years into the future 
and is subject to continual re-assessment and 
sensitivity analysis. The cash flow position is 
reviewed by the Board and by each of the Group’s 
banking partners on a monthly basis. Telford 
Homes has excellent relationships with the banks 
funding the business and has secured sufficient 
facilities to ensure the continuing operation of  
the business. 
Political environment
Changes in laws and regulations can have a direct 
impact on the efficient running of the Group and 
the costs incurred on each development. Changes 
in both local and national government can have a 
direct bearing on the regulatory environment.
Telford Homes works closely with specialist 
consultants to ensure that it is up to date  
with current regulations and aware of any  
future changes so that operations can be  
planned accordingly.  telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 36
Corporate Governance
david durant
Group Planning & Design Director, 50 
David Durant is a co-founder of Telford 
Homes Plc and has over 30 years 
experience in the construction and 
house building sectors including  
14 years at Furlong Homes where he 
was Group Technical Director from 
1997 to 2000. David had been Group 
Managing Director since the start of 
the Company’s operations in 2001. 
In 2005 he supervised devolving 
responsibility for the finished Telford 
Homes product into two divisions 
in order to handle the high level of 
growth in units under construction. 
David’s role is focused on major 
planning consents, product design  
and maintaining key partnerships.
James f urlong
Land Director, 76 
Jim Furlong has over 40 years 
experience in all aspects of the 
construction and building industry 
through his involvement in roofing, 
civil engineering, construction and 
house building companies which 
all bore the ‘Furlong’ name. Prior 
to joining Telford Homes as Land 
Director Jim was a driving force 
within Furlong Homes, where he was 
Chairman with specific responsibility 
for land acquisition. Jim’s wide 
experience of land acquisition played 
a central role in the initial growth of 
Telford Homes and continues to be 
beneficial to the Group.
david Campbell 
Group Sales & Marketing Director, 46
David Campbell joined Telford Homes 
in November 2011 and was appointed 
as Group Sales & Marketing Director 
on 2 April 2012. He is responsible 
for all residential and commercial 
property sales, targeting both 
domestic and overseas buyers. 
David has over 25 years experience 
in the property development sector, 
operating as both a Sales & Marketing 
Director and Regional Managing 
Director for a number of major 
residential and mixed use developers, 
including the Berkeley Group, Barratt 
Developments and Wilson Bowden 
Plc. With this experience he brings a 
wide appreciation of the development 
process and the importance of 
strategic planning for long-term 
complex projects.
Andrew Wiseman BA (hons), f CmA
Executive Chairman, 55
Andrew Wiseman, together with 
close colleagues, founded Telford 
Homes Plc in December 2000 
following ten years with Furlong 
Homes Plc initially as Financial 
Director then as Chief Executive for 
the final three years. Andrew headed 
the flotation of Telford Homes on 
AIM in December 2001, building 
on excellent relationships with 
institutional investors. In his role as 
Chief Executive of Telford Homes, 
from formation until 30 June 2011, 
Andrew positioned the Group as 
a partner of affordable housing 
providers as well as a first class 
developer of open market homes. 
Andrew became Executive Chairman 
on 1 January 2012.
Jonathan di-stefano mA (econ), ACA
Chief Executive, 37
Jon Di-Stefano joined Telford 
Homes Plc as Financial Director in 
October 2002. He had one year with 
Mothercare following five years with 
Arthur Andersen. Jon built up a strong 
finance function over a number of 
years and has played a significant 
role in establishing relationships 
with the Group’s banking partners 
culminating in a long term £70 million 
facility signed in March 2011. Jon 
has also developed relationships with 
institutional investors through regular 
presentations and has been heavily 
involved in the strategic direction of 
the Group in recent years. Jon became 
Chief Executive on 1 July 2011. 
Katie r ogers BA (hons), ACA
Financial Director, 31 
Katie Rogers joined Telford 
Homes Plc in 2007 as Financial 
Analyst following four years at 
PricewaterhouseCoopers. Katie 
progressed to Group Financial 
Controller within a year of joining 
Telford Homes and was appointed 
to the Board as Financial Director on 
14 July 2011. Besides leading and 
managing the finance team for the 
Group, Katie has been responsible 
for a number of accounting projects 
including IFRS conversion and 
designing a new management 
accounts package. She was heavily 
involved in negotiating the £70 million 
banking facility signed in March 2011 
and is responsible for maintaining on-
going relationships with the Group’s 
banking partners.
Bo Ard of dire Ctors 37
Corporate Governance
www.telfordhomes.plc.uk
John f itzgerald iCio B
Joint Group Managing Director, 41
John Fitzgerald began his career in 
1987 with Willmot Dixon Construction 
followed by Willmot Dixon Housing.  
He has over 20 years experience in the 
construction and house building sector 
and spent the four years prior to 
joining Telford Homes as Project and 
Contract Manager with Furlong Homes. 
He joined Telford Homes in February 
2003 and was jointly responsible 
for construction until March 2005 
when, following re-structuring, he was 
appointed divisional managing director 
of Telford Homes Alto where he has 
built a very successful team. John  
was appointed a director on  
1 August 2007 and is the director 
with responsibility for health and 
safety throughout the business.
mark parker Bsc (hons), mCioB
Joint Group Managing Director, 49 
Mark Parker joined the Wimpey Group 
as a management trainee in 1981 
and spent the following 21 years with 
various Wimpey divisions culminating 
in the post of Construction Director 
for McAlpine Homes East. He spent 
the next three years as one of the 
two initial directors of the new North 
London division of KingsOak Homes 
involved in all aspects of the business, 
from land acquisition to sales and 
customer care. Mark joined Telford 
Homes in February 2005 as divisional 
managing director of Telford Homes 
Metro and has been influential in 
developing strong partnerships with 
housing associations. Mark was 
appointed a director on 1 August 2007.
david h olland
Non-Executive Director, 71
David Holland has over 40 years 
experience in the development and 
house building sector having joined 
George Wimpey Plc in 1966. On 
his retirement he held the position 
of Group Managing Director with 
responsibility for worldwide housing 
and land development. David was 
appointed Non-Executive Chairman 
of Telford Homes in December 2001 
and advised on all development 
issues and matters of strategic 
planning. On 1 January 2012, David 
stepped down from the role of Non-
Executive Chairman and became a 
Non-Executive Director of Telford 
Homes. He chairs the remuneration 
committee and is a member of the 
audit committee.
r obert Clarke fCA
Non-Executive Director, 69
Robert Clarke was a partner in Binder 
Hamlyn and subsequently Arthur 
Andersen until his retirement in 2000. 
Robert joined Telford Homes Plc as a 
non-executive director at the time of 
the AIM flotation in December 2001 
and he has been influential in the 
fields of corporate governance and 
strategic direction. He has also been 
a non-executive director of various 
other public and private companies 
and served on committees of national 
charities. Robert is chairman of the 
audit committee and a member of  
the remuneration committee. telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 38
poliCY oN CorporA te Go VerNANCe
Corporate Governance
Application of principles
Although not formally required to do so, the directors have sought to embrace the principles contained in the 
UK Corporate Governance Code (2010) (the Code) applicable to fully listed companies, in formulating and 
applying the Group’s corporate governance policies. These policies are monitored to ensure that they are 
appropriate to the Group’s circumstances and comply as far as possible with the provisions of the Code given 
the size of the Group. 
directors
The Company and Group are managed by a board of directors and they have the necessary skills and 
experience to effectively operate and control the business. There are ten directors in total of whom two 
are non-executive directors. David Holland and Robert Clarke, the non-executive directors, are considered 
independent and they comprise both the audit and remuneration committees. The Board meets once a month 
and the directors make every effort to attend all board meetings.
The Board is responsible for taking all major strategic decisions and also addressing any significant 
operational matters. In addition the Board reviews the risk profile of the Group and ensures that an adequate 
system of internal control is in place. Management information systems are in place to enable the directors to 
make informed decisions to properly discharge their duties.
The roles of the Chairman and the Chief Executive are separate. The Chairman is responsible for running 
the Board and he meets regularly and separately with the Chief Executive and the non-executive directors to 
discuss matters for the Board.
As the business has developed, the composition of the Board has been under constant review to ensure that it 
remains appropriate to the managerial requirements of the Group. One third of the directors retire annually in 
rotation in accordance with the Company’s articles of association. This enables the shareholders to decide on 
the election of the Company’s Board.
The Board takes decisions regarding the appointment of new directors as a whole and this is only done 
following a thorough assessment of a potential candidate’s skills and suitability for the role. New directors are 
given a full induction to the Group where required so as to ensure they can properly fulfil their role and meet 
their responsibilities.
All directors are offered appropriate coaching and training to develop their knowledge and ensure they remain 
up to date in relevant matters for which they have responsibility as a member of the Board.
The Chairman’s statement and Chief Executive’s review included in this annual report give the Board’s 
current assessment of the Group’s prospects. The directors are responsible for preparing the financial 
statements as set out in the statement of directors’ responsibilities. The responsibilities of the auditors are 
set out in their report.
r emuneration committee
Details concerning the composition and meetings of the remuneration committee are contained in the 
directors’ remuneration report on pages 40 to 41.
Audit committee
During the period, the audit committee, which is chaired by Robert Clarke an independent non-executive 
director, has met twice with the external auditors being in attendance on both occasions. The non-executive 
directors meet separately with the auditors up to twice a year.
The committee has a responsibility for reviewing the financial statements provided to shareholders. In 
addition the committee reviews the business and financial risks and internal controls as described below.
The duties of the committee also include ensuring that the auditors provide a cost effective service to the 
Group and remain objective and independent and to consider from time to time the need for an internal 
audit function. 39
Corporate Governance
www.telfordhomes.plc.uk
r elations with shareholders
The Company has institutional shareholders and is, where practicable, willing to enter into a dialogue with 
them. The Chief Executive and the Financial Director meet regularly with institutional investors within the 
confines of relevant legislation and guidance.
The Board invites communication from its private investors and encourages participation by them at the 
Annual General Meeting (AGM). All Board members present at the AGM are available to answer questions 
from shareholders. Notice of the AGM in excess of 21 clear days is given and the business of the meeting is 
conducted with separate resolutions, voted on initially by a show of hands and with the result of the voting 
being clearly indicated.
internal control
The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness. Such 
a system is designed to mitigate the risk of failure to achieve business objectives and can only provide 
reasonable but not absolute assurance against material misstatement or loss.
The Board is of the view that there is an ongoing process for identifying, evaluating and managing the Group’s 
significant risks and that it has been in place for the period ended 31 March 2012 and up to the date of 
approval of the annual report and accounts, and that it is regularly reviewed by the Board.
The internal control procedures are delegated to executive directors and senior management in the Group 
operating within a clearly defined departmental structure. The Board regularly reviews the internal control 
procedures in the light of the ongoing assessment of the Group’s significant risks.
On a monthly basis, management accounts, including a comprehensive cash flow forecast, are reviewed 
by the Board in order to provide effective monitoring of financial performance. At the same time the Board 
considers other significant strategic, organisational and compliance issues to ensure that the Group’s assets 
are safeguarded and financial information and accounting records can be relied upon. The Board formally 
monitors monthly progress on each development.
  telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 40
Corporate Governance
direCtors’ remUNerA tioN report
The directors present the remuneration report for the year ended 31 March 2012.
Composition of the remuneration committee
The remuneration committee comprises the independent non-executive directors, David Holland and Robert 
Clarke. The committee makes recommendations to the Board on executive directors’ service agreements 
and remuneration. In doing so it has undertaken relevant research to ensure that remuneration levels are 
competitive with the industry average. The committee met three times during the year.
r emuneration policy
It is the Group’s policy to provide remuneration packages sufficient to attract, retain and motivate directors 
of the quality required. To add further incentive the directors have adopted two annual bonus schemes, 
one applicable to all staff and a scheme for executive directors and senior management. Both schemes are 
dependent on the Group meeting certain financial performance targets. The maximum amount that can be 
earned under the executive bonus scheme is 100% of basic salary.
The Company also operates a Share Incentive Plan (SIP) in which all employees are entitled to participate.  
The SIP exists in order to increase employee ownership of shares and further details are given in note 17 to 
the financial statements.
During 2006, the Company set up a Deferred Payment Share Purchase Plan (DPSPP) for the benefit of 
selected senior employees. Further details are given in note 17 to the financial statements. The remuneration 
committee is responsible for approving any offers of shares made under the DPSPP. 
The Board as a whole determines the remuneration of the non-executive directors after considering external 
market research. They do not participate in the bonus schemes or in the personal pension scheme. They are 
entitled to participate in the SIP. 
service contracts
The executive directors have service contracts that can be terminated on twelve months notice. These  
provide for termination payments equivalent to twelve months basic salary and contractual benefits.
The non-executive directors have letters of appointment that can be terminated on three months notice.
directors’ emoluments
The directors’ emoluments for the year ended 31 March 2012 are as follows:
salary 
and fees Bonus
Benefits 
in kind
pension 
contributions total 2012 total 2011
Andrew Wiseman
1
 101,250 36,000 12,846 10,125 160,221 219,216
Jonathan Di-Stefano 167,500 36,000 27,202 16,750 247,452 202,588
David Durant 141,251 36,000 13,150 14,125 204,526 194,361
Sheena Ellwood
2
 140,000 36,000 22,561 14,000 212,561 203,848
John Fitzgerald 141,250 36,000 21,456 14,125 212,831 202,837
James Furlong 87,750 36,000 34,054 – 157,804 146,201
Mark Parker 141,250 36,000 20,393 14,125 211,768 205,602
Katie Rogers
3
 92,054 36,000 6,879 9,124 144,057 –
Robert Clarke 46,375 – – – 46,375 44,500
David Holland 58,914 – – – 58,914 57,500
Total 1,117,594 288,000 158,541 92,374 1,656,509 1,476,653
1 Resigned as Chief Executive on 1 July 2011 and was appointed Executive Chairman on 1 January 2012. 
2 Resigned from the Board on 31 March 2012. 
3 Appointed to the Board on 14 July 2011.
When Directors were appointed or resigned during the year, the figures in the table relate only to the time 
when the relevant Director was a member of the Board. 41
Corporate Governance
www.telfordhomes.plc.uk
directors’ interests in shares and share options
Directors’ interests in shares are disclosed in the report of the directors. 
The share options held by the directors in the Telford Homes Plc Employee Share Option Scheme at  
31 March 2012 and the movements during the year then ended were as follows:
Company 
scheme
31 march 
2011 
Number
Granted 
in year 
Number
forfeited 
in year 
Number
 31 march 
2012 
Number
exercise 
price dates exercisable
Jonathan Di-Stefano unapproved 60,000 – – 60,000 75p 1 Oct 2005 to 1 Oct 2015
unapproved – 100,000 – 100,000 90.5p 9 Feb 2015 to 9 Feb 2022
approved 14,051 – (14,051) – 213.5p –
approved – 33,000 – 33,000 90.5p 9 Feb 2015 to 9 Feb 2022
David Durant approved 14,051 – (14,051) – 213.5p –
approved – 33,000 – 33,000 90.5p 9 Feb 2015 to 9 Feb 2022
Sheena Ellwood
1
 unapproved 59,732 – – 59,732 74.5p 20 Feb 2006 to 20 Feb 2013
approved 14,051 – (14,051) – 213.5p –
approved – 33,000 – 33,000 90.5p 9 Feb 2015 to 9 Feb 2022
John Fitzgerald unapproved 160,000 – – 160,000 75p 1 Oct 2005 to 1 Oct 2015
approved 14,051 – (14,051) – 213.5p –
approved – 33,000 – 33,000 90.5p 9 Feb 2015 to 9 Feb 2022
Mark Parker unapproved 50,542 – (50,542) – 138.5p –
unapproved – 100,000 – 100,000 90.5p 9 Feb 2015 to 9 Feb 2022 
approved 21,660 – (21,660) – 138.5p –
approved – 33,000 – 33,000 90.5p 9 Feb 2015 to 9 Feb 2022
Katie Rogers
2
approved 40,000 – – 40,000 64p 20 July 2012 to 20 July 2019
unapproved – 100,000 – 100,000 79p 23 May 2014 to 23 May 2021
1 Resigned from the Board on 31 March 2012.
2 Appointed to the Board on 14 July 2011.
In the year ended 31 March 2012, 128,406 options were forfeited and 465,000 new options were granted to 
various directors.
During the year, the last exercisable date was amended on some of the unapproved share options held by 
Jonathan Di-Stefano and John Fitzgerald. Options previously due to lapse on 1 October 2012 have been 
amended to lapse on 1 October 2015.
No share options were exercised by directors in the year ended 31 March 2012.
David Campbell was appointed to the Board on 2 April 2012 and at that time he held 33,000 approved options 
and 67,000 unapproved options at 90.5 pence exercisable from 9 February 2015 to 9 February 2022.
In total, the share-based payments charge in respect of directors’ share options was £8,595 (2011: £5,815).
By order of the Board 
David Holland 
Chairman of the Remuneration Committee
29 May 2012 telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 42
Corporate Governance
report of the direCtors
The directors present their report and the audited consolidated financial statements for the year ended  
31 March 2012.
r eview of activities
The principal activity of the Group is that of property development.
A review of the activities and prospects of the Group is given in the Chairman’s statement, the Chief 
Executive’s review and the financial review on pages 9 to 27. The Group is required to prepare a business 
review incorporating comments on key performance indicators and this is covered in the review of activities 
and prospects.
The primary key performance indicators are disclosed on page 8.
r esults and dividends
Profit after income tax for the year ended 31 March 2012 was £2,286,000 (2011: £2,292,000).
The directors recommend a final dividend of 1.5 pence per ordinary share which, together with the interim 
dividend of 1.5 pence paid on 13 January 2012, makes a total of 3.0 pence for the year (2011: 2.5 pence).
Going concern
The Group’s business activities, together with factors likely to affect its future development and performance 
are set out in the Chairman’s statement and the Chief Executive’s review on pages 9 to 19 and the key risks 
and uncertainties affecting the Group are set out on pages 34 to 35. The financial position of the Group, its 
cash flows and borrowing facilities are described in the financial review on pages 20 to 27. In addition note 20 
to the financial statements includes details of the Group’s financial instruments and its exposure to credit risk 
and liquidity risk.
The directors have assessed the Group’s projected business activities and available financial resources 
together with detailed forecasts for cash flow and relevant sensitivity analysis. The directors believe that the 
Group is well placed to manage its business risks successfully.
After making appropriate enquiries the directors have a reasonable expectation that the Company and the 
Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly  
the directors continue to adopt the going concern basis in preparing the annual report and accounts.
substantial shareholdings
As at 24 May 2012, the Company had been advised of the following notifiable interests in its ordinary share 
capital:-
Number of 
shares held percentage
Telford Homes Trustees Limited 3,066,539 6.20%
Cazenove Capital Management Limited 2,748,233 5.55%
Artemis Investment Management Limited 2,325,000 4.70%
T D Waterhouse Nom (R Stokes)  1,607,760 3.25%
The shares held by Telford Homes Trustees Limited include shares held on behalf of employees under the 
Share Incentive Plan (note 17). 43
Corporate Governance
www.telfordhomes.plc.uk
directors
Details of the directors of the Company are shown on pages 36 to 37.
Katie Rogers was appointed to the Board on 14 July 2011. 
Sheena Ellwood resigned on 31 March 2012.
David Campbell was appointed to the Board on 2 April 2012 and will retire at the next Annual General Meeting 
and, being eligible, offer himself for re-election.
David Durant and Andrew Wiseman retire by rotation at the next Annual General Meeting and, being eligible, 
offer themselves for re-election.
directors’ interests
The directors of the Company are listed below together with their interest in the shares of the Company at  
31 March 2012 and movements in the year:
At 31 march 
2011 
Number
share incentive 
plan 
Number
market 
acquisitions 
and disposals 
Number
At 31 march 
2012 
Number
Andrew Wiseman 2,314,479 5,062 – 2,319,541
Jonathan Di-Stefano 354,212 5,061 – 359,273
David Durant 1,245,903 5,062 – 1,250,965
Sheena Ellwood
1
 358,480 4,931 – 363,411
John Fitzgerald 226,940 835 – 227,775
James Furlong 1,328,888 5,062 – 1,333,950
Mark Parker 177,312 4,859 – 182,171
Katie Rogers
2
 27,331 4,636 – 31,967
Robert Clarke 173,212 4,931 – 178,143
David Holland 1,003,212 4,931 – 1,008,143
1 Resigned from the Board on 31 March 2012.
2 Appointed to the Board on 14 July 2011.
David Campbell was appointed to the Board on 2 April 2012 and he did not hold any shares in the Company  
at 31 March 2012.
These interests include shares purchased under the Telford Homes Share Incentive Plan (SIP) which all 
employees, including directors, are eligible to participate in. All shares purchased under the SIP are matched 
by shares provided by the Company on a one for one basis. These ‘Matching’ shares are also included in 
the interests stated but must remain in the SIP for a period of not less than three years otherwise they are 
forfeited. Further details on the SIP are included in note 17 to the financial statements.
Details of share options held by directors are given in the directors’ remuneration report on pages 40 to 41. telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 44
Corporate Governance
report of the direCtors
o rdinary shares
The Company issued 500,000 new ordinary shares during the year. Further information is disclosed in note 16.
The Company’s investment in own shares relates solely to the Share Incentive Plan and further details of the 
total holding and movements in the holding are disclosed in note 17.
Creditors
It is Group policy to settle all debts with its creditors on a timely basis. Sub-contractors are paid upon 
agreement of the value of works completed based on their applications for payment and the terms agreed.  
In general, other suppliers are paid during the month following the month of receipt of the invoice unless  
other terms have been specifically agreed.
At 31 March 2012 trade payables represented 15 days purchases (2011: 18 days).
employees
The Group places considerable value on the involvement of its employees and keeps them informed of all 
relevant matters on a regular basis. Telford Homes is an equal opportunities employer and all applications  
for employment are considered fully on the basis of suitability for the job.
Charitable donations
The Group made charitable donations of £19,000 (2011: £18,000). These donations were made to a number 
of different charities supporting a broad range of good causes.
Annual General meeting
The Annual General Meeting will be held at the registered office at First Floor, Stuart House, Queensgate, 
Britannia Road, Waltham Cross, Hertfordshire on 12 July 2012 at 12.30pm.
Auditors
A resolution to re-appoint PricewaterhouseCoopers LLP as auditors to the Company will be proposed at the 
Annual General Meeting in accordance with section 489 of the Companies Act 2006.
Each of the directors at the time this report was approved has confirmed the following:
•	 s o	f a r	 a s	 e a c h	 d i r e c t o r	 i s	 a w a r e ,	 t h e r e	 i s	 n o	r e l e v a n t	 a u d i t	 i n f o r m a t i o n	 o f	w h i c h	 t h e	 C o m p a n y ’ s	 a u d i t o r s	 a r e	
unaware; and
•	 e ach 	 d i re c t or 	 has 	 t ak en 	 st eps 	 tha t 	 oug ht 	 t o 	 hav e 	 b e en 	 t ak en 	 as 	 a 	 d i re c t or 	 i n 	 order 	 t o 	 mak e 	 th emselv e s 	 a wa re	
of any relevant audit information and to establish that the Company’s auditors are aware of that information.
By order of the Board
Sara Debenham 
Company Secretary
29 May 2012
  45
Corporate Governance
www.telfordhomes.plc.uk
The directors are responsible for preparing the annual report and the financial statements in accordance with 
applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the 
directors have prepared the Group and Parent Company financial statements in accordance with International 
Financial Reporting Standards (IFRS) as adopted by the European Union. Under company law the directors 
must not approve the financial statements unless they are satisfied that they give a true and fair view of 
the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In 
preparing these financial statements, the directors are required to:
•	 s e l e c t	s u i t a b l e	 a c c o u n t i n g	 p o l i c i e s	 a n d	 t h e n	 a p p l y	t h e m	 c o n s i s t e n t l y ;
•	 m a k e	j u d g e m e n t s	 a n d	a c c o u n t i n g	 e s t i m a t e s	t h a t	 a r e	 r e a s o n a b l e	 a n d	 p r u d e n t ;
•	 s t a t e	w h e t h e r	 a p p l i c a b l e	 I F R S	a s	a d o p t e d	b y	 t h e	 E u r o p e a n	U n i o n	 h av e	b e e n	 f o l l o w e d ,	 s u b j e c t	 t o	 a n y	
material departures disclosed and explained in the financial statements;
•	 p r e p a r e	 t h e	 f i n a n c i a l	 s t a t e m e n t s	 o n	t h e	 g o i n g	 c o n c e r n	b a s i s	u n l e s s	 i t	 i s	 i n a p p r o p r i a t e	t o	 p r e s u m e	t h a t	 t h e	
Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain 
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the 
Company and the Group and enable them to ensure that the financial statements comply with the Companies 
Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for 
taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Group’s website. Legislation in the 
United Kingdom governing the preparation and dissemination of financial statements may differ from 
legislation in other jurisdictions.
 
 
st AtemeNt of direCtors’ respoNsiBilities telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 46
Corporate Governance
iNdepeNdeNt AUditors’ report to the memBers of telford homes pl C
We have audited the Group and Parent Company financial statements (the ‘financial statements’) of Telford 
Homes Plc for the year ended 31 March 2012 which comprise the Group Income Statement, the Group 
Statement of Comprehensive Income, the Group and Parent Company Balance Sheets, the Group and 
Parent Company Statement of Changes in Equity, the Group and Parent Company Cash Flow Statements, 
the Statement of Accounting Policies and the related notes. The financial reporting framework that has 
been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) 
as adopted by the European Union and, as regards the Parent Company financial statements, as applied in 
accordance with the provisions of the Companies Act 2006.
respective responsibilities of directors and auditors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 45, the directors are 
responsible for the preparation of the financial statements and for being satisfied that they give a true and 
fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with 
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us  
to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a  
body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We  
do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other 
person to whom this report is shown or into whose hands it may come save where expressly agreed by  
our prior consent in writing.
scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements 
sufficient to give reasonable assurance that the financial statements are free from material misstatement, 
whether caused by fraud or error. This includes an assessment of: whether the accounting policies 
are appropriate to the Company’s circumstances and have been consistently applied and adequately 
disclosed; the reasonableness of significant accounting estimates made by the directors; and the 
overall presentation of the financial statements. In addition, we read all the financial and non-financial 
information in the annual report to identify material inconsistencies with the audited financial statements. 
If we become aware of any apparent material misstatements or inconsistencies we consider the 
implications for our report.
o pinion on financial statements 
In our opinion: 
•	 t h e	f i n a n c i a l	 s t a t e m e n t s	 g i v e	a	 t r u e	 a n d	f a i r	 v i e w	 o f	t h e	 s t a t e	 o f	t h e	 G r o u p ’ s	 a n d	 o f	t h e	 P a r e n t	C o m p a n y ’ s	
affairs as at 31 March 2012 and of the Group’s profit and Group’s and Parent Company’s cash flows for 
the year then ended;
•	 t h e	G r o u p	 f i n a n c i a l	 s t a t e m e n t s	 h av e	b e e n	p r o p e r l y	p r e p a r e d	 i n	a c c o r d a n c e	 w i t h	 I F R S s	 a s	 a d o p t e d	 b y	 t h e	
European Union; 
•	 t h e	P a r e n t	 C o m p a n y	 f i n a n c i a l	 s t a t e m e n t s	 h av e	 b e e n	 p r o p e r l y	p r e p a r e d	 i n	a c c o r d a n c e	 w i t h	 I F R S s	 a s	
adopted by the European Union and as applied in accordance with the provisions of the Companies Act 
2006; and
•	 t h e 	 f i n a n c i a l 	 s t a t e m e n t s 	 h av e 	 b e e n 	 p r e p a r e d 	 i n 	 a c c o r d a n c e 	 w i t h 	 t h e 	 r e q u i r e m e n t s 	 o f 	 t h e 	 C o m p a n i e s	
Act 2006. 47
Corporate Governance
www.telfordhomes.plc.uk
o pinion on other matter prescribed by the Companies Act 2006
In our opinion, the information given in the Report of the Directors for the financial year for which the financial 
statements are prepared is consistent with the financial statements.
matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to 
report to you if, in our opinion:
•	 a d e q u a t e	 a c c o u n t i n g	 r e c o r d s	 h av e	 n o t	 b e e n	k e p t	 b y	 t h e	 P a r e n t	C o m p a n y ,	 o r	 r e t u r n s	 a d e q u a t e	 f o r	 o u r	 a u d i t	
have not been received from branches not visited by us; or
•	 t h e	P a r e n t	 C o m p a n y	 f i n a n c i a l	 s t a t e m e n t s	 a r e	 n o t	 i n	a g r e e m e n t	 w i t h	 t h e	 a c c o u n t i n g	 r e c o r d s	 a n d	 r e t u r n s ;	 o r
•	 c e r t a i n	 d i s c l o s u r e s	 o f	d i r e c t o r s ’	 r e m u n e r a t i o n	 s p e c i f i e d	 b y	 l a w	 a r e	 n o t	 m a d e ;	o r
•	 w e	h av e	 n o t	r e c e i v e d	 a l l	 t h e	 i n f o r m a t i o n	 a n d	 e x p l a n a t i o n s	w e	 r e q u i r e	 f o r	 o u r	 a u d i t .
Andrew Latham (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory Auditors 
St Albans
29 May 2012 Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 48
Note
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
revenue 124,352 121,071
Cost of sales before exceptional items (105,432) (105,709)
Exceptional items – 511
Gross profit 18,920 15,873
Administrative expenses (10,637) (9,255)
Selling expenses (3,533) (2,725)
o perating profit 1 4,750 3,893
Finance income 3 127 249
Finance costs 3 (1,832) (1,108)
profit before income tax 3,045 3,034
Analysed as:
profit before income tax and exceptional items 3,045 2,523
Exceptional items 1 – 511
3,045 3,034
Income tax expense 4 (759) (742)
profit after income tax 2,286 2,292
earnings per share:
Basic 6 4.7p 4.8p
Diluted 6 4.6p 4.7p
All activities are in respect of continuing operations.
Group st Ateme Nt of comprehe Nsive i Ncome 31 MARCh 2012
Note
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
Movement in excess tax on share options 9 54 (12)
o ther comprehensive income (expense) net of tax 54 (12)
Profit for the year 2,286 2,292
t otal comprehensive income for the year 2,340 2,280
Group i Ncome st Ateme Nt 31 MARCh 2012 Financial Statements
www.telfordhomes.plc.uk 49
Group c ompany
Note
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011
£000
Non current assets
Investments 7 – – 638 638
Property, plant and equipment 8 381 358 381 358
Deferred income tax assets 9 155 50 155 50
536 408 1,174 1,046
c urrent assets
Inventories 10 135,810 125,181 74,325 58,300
Trade and other receivables 11 16,861 14,211 37,887 40,118
Cash and cash equivalents 12 12,419 18,837 11,939 17,575
165,090 158,229 124,151 115,993
total assets 165,626 158,637 125,325 117,039
Non current liabilities
hire purchase liabilities 13 (3) (19) (3) (19)
(3) (19) (3) (19)
c urrent liabilities
Trade and other payables 14 (31,937) (28,554) (23,639) (24,500)
Borrowings 15 (66,983) (64,877) (39,364) (30,786)
Current income tax liabilities (484) (431) (271) –
hire purchase liabilities 13 (16) (16) (16) (16)
(99,420) (93,878) (63,290) (55,302)
t otal liabilities (99,423) (93,897) (63,293) (55,321)
Net assets 66,203 64,740 62,032 61,718
c apital and reserves
Issued share capital 16 4,950 4,900 4,950 4,900
Share premium 37,503 37,075 37,503 37,075
Retained earnings 23,750 22,765 19,579 19,743
total equity 66,203 64,740 62,032 61,718
These financial statements were authorised for issue by the board of directors on 29 May 2012 and signed 
on its behalf by:
Jonathan Di-Stefano    Katie Rogers
Chief Executive     Financial Director
c ompany number: 4118370
BAl ANce sheet 31 MARCh 2012 Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 50
st Ateme Nt of ch ANGes i N equit Y 31 MARCh 2012
Group statement of changes in equity
share 
capital
£000
share 
premium
£000
retained 
earnings 
£000
total 
equity
£000
Balance at 1 April 2010 4,978 37,357 20,745 63,080
Profit for the year –  – 2,292 2,292
Total other comprehensive expense –  – (12) (12)
Dividend on equity shares –  – (1,227) (1,227)
Proceeds of equity share issue 35 238 – 273
Share-based payments –  – 264 264
Purchase of own shares –  – (273) (273)
Sale of own shares –  – 191 191
Write down in value of own shares –  – 138 138
Dividend paid on consideration shares –  – 14 14
Cancellation of own shares (113) (520) 633 –
Balance at 31 march 2011 4,900 37,075 22,765 64,740
Profit for the year –  – 2,286 2,286
Total other comprehensive income –  – 54 54
Dividend on equity shares –  – (1,348) (1,348)
Proceeds of equity share issue 50  428 – 478
Share-based payments –  – 157 157
Purchase of own shares –  – (510) (510)
Sale of own shares –  – 217 217
Write down in value of own shares –  – 129 129
Balance at 31 march 2012 4,950 37,503 23,750 66,203
c ompany statement of changes in equity
share 
capital
£000
share 
premium
£000
retained 
earnings
£000
total 
equity
£000
Balance at 1 April 2010 4,978 37,357 17,555 59,890
Profit for the year –  – 2,460 2,460
Total other comprehensive expense –  – (12) (12)
Dividend on equity shares –  – (1,227) (1,227)
Proceeds of equity share issue 35 238 – 273
Share-based payments –  – 264 264
Purchase of own shares –  – (273) (273)
Sale of own shares –  – 191 191
Write down in value of own shares –  – 138 138
Dividend paid on consideration shares –  – 14 14
Cancellation of own shares (113) (520) 633 –
Balance at 31 march 2011 4,900 37,075 19,743 61,718
Profit for the year –  –  1,137 1,137
Total other comprehensive income –  –  54 54
Dividend on equity shares –  – (1,348) (1,348)
Proceeds of equity share issue 50  428  – 478
Share-based payments –  –  157 157
Purchase of own shares –  – (510) (510)
Sale of own shares –  –  217 217
Write down in value of own shares –  –  129 129
Balance at 31 march 2012 4,950 37,503 19,579 62,032 Financial Statements
www.telfordhomes.plc.uk 51
cAsh flow st Ateme Nt 31 MARCh 2012
Group c ompany
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
c ash flow from operating activities
Operating profit 4,750 3,893 2,602 1,220
Depreciation 196 175 196 175
Write down in value of own shares 129 138 129 138
Share-based payments 157 264 157 264
Profit on sale of tangible assets (13) (49) (13) (49)
(Increase) decrease in inventories (7,452) (3,580) (15,005) 20,126
(Increase) decrease in receivables (3,516) (6,573) 1,422 (12,991)
Increase (decrease) in payables 3,511 1,510 (670) 1,039
(2,238) (4,222) (11,182) 9,922
Interest paid (4,851) (2,683) (2,311) (1,200)
Income tax (paid) received (757) (1,135) 6 (1,135)
c ash flow from operating activities (7,846) (8,040) (13,487) 7,587
c ash flow from investing activities
Dividends received – – – 1,959
Purchase of tangible assets (220) (109) (220) (109)
Proceeds from sale of tangible assets 14 52 14 52
Interest received 127 249 123 192
c ash flow from investing activities (79) 192 (83) 2,094
c ash flow from financing activities
Proceeds from issuance of  
ordinary share capital
478 273 478 273
Purchase of own shares (510) (273) (510) (273)
Sale of own shares 217 191 217 191
Increase in bank loans 63,618 64,438 39,489 36,535
Repayment of bank loans (60,932) (70,347) (30,376) (52,720)
Dividend paid (1,348) (1,227) (1,348) (1,227)
Capital element of hire  
purchase payments
(16) (12) (16) (12)
c ash flow from financing activities 1,507 (6,957) 7,934 (17,233)
Net decrease in cash  
and cash equivalents
(6,418) (14,805) (5,636) (7,552)
Cash and cash equivalents  
brought forward
18,837 33,642 17,575 25,127
c ash and cash equivalents 
carried forward
12,419 18,837 11,939 17,575 Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 52
st Ateme Nt of A ccou Nti NG policies 31 MARCh 2012
Basis of preparation
The financial statements have been prepared in 
accordance with applicable International Financial 
Reporting Standards (IFRS) including International 
Accounting Standards (IAS) and International 
Financial Reporting Interpretations Committee 
(IFRIC) interpretations as adopted for use in 
the European Union and with those parts of the 
Companies Act 2006 applicable to companies 
reporting under IFRS. 
The financial statements have been prepared 
under the historical cost convention as modified for 
reassessment of derivatives at fair value and on a 
going concern basis.
The preparation of financial statements in 
conformity with generally accepted accounting 
principles requires the use of estimates and 
assumptions that affect the reported amounts of 
assets and liabilities at the date of the financial 
statements and the reported amounts of revenues 
and expenses during the reporting period. Although 
these estimates are based on the directors best 
knowledge of the amounts, events or actions, actual 
results ultimately may differ from those estimates. 
The most significant estimates made by the 
directors in these financial statements are set out  
in ‘Critical accounting judgements and key sources 
of estimation uncertainty’.
The accounting policies set out below have been 
applied consistently for all periods presented in 
these financial statements. 
Basis of consolidation
The consolidated financial statements include 
the financial statements of the Company, its 
subsidiaries and the Group’s share of jointly 
controlled entities up to 31 March 2012. The results 
of subsidiaries acquired or disposed of during the 
year are included in the financial statements from 
the effective date of acquisition or up to the effective 
date of disposal, as appropriate. All intra-group 
transactions, balances, income and expenses are 
eliminated on consolidation.
exemptions
The directors have taken advantage of the exemption 
available under Section 408 of the Companies Act 
2006 and have not presented an income statement 
or statement of comprehensive income for the 
Company alone.
Jointly controlled entities
A jointly controlled entity is an entity in which 
the Group holds an interest with one or more 
other parties where a contractual arrangement 
has established joint control over the entity. 
Jointly controlled entities are accounted for using 
proportional consolidation.
segmental reporting
The Group has only one business segment being 
housebuilding and one geographical segment being 
the United Kingdom. Financial analysis is presented 
on this basis to the chief operating decision makers 
for the Group these being the board of directors. 
r evenue and profit recognition
Properties for open market sale
Revenue and profit is recognised at the point of legal 
completion of each property.
Construction contracts
Contracts are treated as construction contracts 
when they have been specifically negotiated for 
the construction of a development or a number of 
properties. These contracts are primarily for the 
construction of affordable homes sold to affordable 
housing providers. Revenue is only recognised 
on a construction contract where the outcome 
can be estimated reliably. Revenue and costs are 
recognised by reference to the stage of completion 
of contract activity at the balance sheet date. This 
is normally measured by an assessment of work 
performed to date on a cost basis.
Where the outcome of a construction contract 
cannot be estimated reliably, contract revenue is 
recognised to the extent of contract costs incurred 
that it is probable will be recoverable. When it is 
probable that total contract costs will exceed total 
contract revenue, the expected loss is recognised as 
an expense immediately.
On the balance sheet, the Group reports the net 
contract position for each contract either as an 
asset or liability. A contract represents an asset 
where costs incurred plus recognised profits exceed 
progress billing and a contract represents a liability 
where the opposite is the case. These are disclosed 
as amounts recoverable on contracts.
Grant income
Grants received from the Greater London Authority 
(formerly the homes and Communities Agency) are 
recognised as revenue in the income statement to 
match with the related costs that they are intended 
to compensate.
selling expenses
Selling expenses are charged to the income 
statement as incurred.
Borrowings
Interest bearing bank loans and overdrafts are 
initially measured at fair value, being proceeds 
received net of transaction costs and are 
subsequently measured at amortised cost,  
using the effective interest rate method.  Financial Statements
www.telfordhomes.plc.uk 53
Borrowing costs directly attributable to the 
development of properties that take a substantial 
period of time to get ready for sale, are capitalised 
within inventories. Capitalisation of borrowing costs 
commences from the date of initial expenditure 
on a given development and continues until the 
properties are ready for sale. 
The capitalisation of borrowing costs is suspended 
where land assets are being held for strategic 
purposes or where there are prolonged periods 
when development activity on a site is interrupted. 
Capitalisation is not normally suspended during a 
period when substantial technical and administrative 
work is being carried out.
All other borrowing costs are charged to the income 
statement using the effective interest method. 
Borrowing costs paid are classified as operating 
activities in the cash flow statement. 
interest rate cap assets
Interest rate caps are individually valued at each 
period end and adjusted to ensure that they are held 
at fair value. Any change in the fair value is charged or 
credited to the income statement within finance costs.
exceptional items
Exceptional items are those significant items which 
are separately disclosed by virtue of their size or 
incidence to enable a full understanding of the 
Group’s financial performance.
f inance leases and hire purchase contracts
Leases are classified as finance leases whenever the 
terms of the lease transfer substantially all the risks 
and rewards of ownership to the lessee. All other 
leases are classified as operating leases.
Assets held under finance leases and hire purchase 
contracts are recognised as assets of the Group at 
their fair value or, if lower, at the present value of 
the minimum lease payments, each determined at 
the inception of the lease and depreciated over the 
shorter of their expected useful lives and the lease 
term. The corresponding liability is included in the 
balance sheet as a finance lease or hire purchase 
obligation. Lease payments are apportioned between 
finance charges and reduction of the lease obligations 
so as to achieve a constant rate of interest on the 
remaining balance of the liability. Finance charges  
are charged to the income statement.
o perating leases
Operating lease rentals are charged to the income 
statement on a straight line basis over the life of 
the lease.
pension costs
Contributions paid to group personal pension 
schemes (defined contribution), in respect of 
employees, are charged to the income statement  
as incurred.
property, plant and equipment
Property, plant and equipment is stated at cost less 
accumulated depreciation. Depreciation is provided 
on a straight line basis at rates calculated to write 
down the cost, less estimated residual value, of each 
asset over its expected useful life as follows:
Leasehold improvements – shorter of term of lease  
  and 10 years
Plant and machinery – 2 to 5 years
Motor vehicles – 3 years
investments
Interests in subsidiary undertakings and jointly 
controlled entities are valued at cost less impairment.
inventories
Development properties are included in inventories 
and are stated at the lower of cost and net realisable 
value. Cost comprises costs of acquisition and 
development, including directly attributable fees and 
expenses, direct labour costs and borrowing costs. 
Included within development properties are freehold 
interests held in completed developments valued at 
a multiple of annual ground rents. These are held for 
future sale.
financial instruments
Financial assets and financial liabilities are 
recognised on the Group’s balance sheet when the 
Group becomes a party to the contractual provision 
of the instrument.
Trade receivables and other receivables
Trade receivables on normal terms do not carry 
any interest and are stated at their nominal value 
reduced by appropriate allowances for estimated 
unrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents are defined as cash 
balances in hand and in the bank (including short-
term cash deposits) which mature within three 
months or less from the date of acquisition.
Borrowings
Interest bearing bank loans and overdrafts are 
initially measured at fair value, being proceeds 
received net of transaction costs and are 
subsequently measured at amortised costs, using 
the effective interest rate method. Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 54
st Ateme Nt of A ccou Nti NG policies 31 MARCh 2012
financial instruments continued
Trade payables
Trade payables on normal terms are not interest 
bearing and are stated at their nominal value.
Deposits received in advance
Deposits received on exchange of contracts of open 
market properties are held within trade and other 
payables until legal completion of the related property.
Land creditors
When land is purchased on extended payment 
terms, the Group initially records it at its fair value 
with a land creditor recorded for any outstanding 
monies based on this fair value assessment. Fair 
value is determined by using the effective interest 
method. The difference between the nominal value 
and the initial fair value is amortised over the period 
of the extended credit term and charged to finance 
costs, increasing the value of the land creditor so 
that at the date of maturity, the land creditor equals 
the payment required.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are 
classified according to the substance of the 
contractual arrangements entered into. An equity 
instrument is any contract that evidences a residual 
interest in the assets of the Group after deducting 
all of its liabilities. Equity instruments issued by the 
Group are recorded at the proceeds received, net of 
direct issue costs.
c urrent assets and liabilities
Assets that are expected to be realised in, or are 
intended for sale or consumption in, the Group’s 
normal operating cycle are treated as current even 
to the extent these are expected to be realised 
after twelve months from the balance sheet 
date. Liabilities that are expected to be settled in 
the Group’s normal operating cycle are treated 
as current even though these may be due for 
settlement after twelve months from the balance 
sheet date.
c ontingent liabilities
Disclosures are made for each class of contingent 
liabilities at the balance sheet date detailing, where 
practicable, an estimate of its financial effect and an 
indication of uncertainties associated with the timing 
or amount of the outflow, unless the possibility of a 
financial outflow is remote.
t axation
The tax expense represents the sum of the tax 
currently payable and deferred tax.
The tax currently payable is based on the profits 
for the year. Taxable profit differs from net profit 
as reported in the income statement because it 
excludes items of income or expense that are tax 
deductible in other years and it further excludes 
items that are never taxable or deductible. The 
Group’s liability for current tax is calculated using 
tax rates that have been enacted or substantively 
enacted by the balance sheet date.
Deferred tax is recognised in respect of all temporary 
differences that have originated but not reversed at 
the balance sheet date where transactions or events 
that result in an obligation to pay more tax in the 
future or a right to pay less tax in the future have 
occurred at the balance sheet date.
A net deferred tax asset is regarded as recoverable 
and therefore recognised only when, on the basis 
of all available evidence, it can be regarded as 
more likely than not that there will be suitable 
taxable profits from which the future reversal of the 
underlying timing differences can be deducted.
Deferred tax is charged or credited in the income 
statement, except when it relates to items charged 
or credited directly to equity, in which case the 
deferred tax is also dealt with in equity.
share-based payments
In accordance with IFRS 2, the fair value of equity 
settled share options granted is recognised as an 
employee expense with a corresponding increase in 
equity. The fair value is measured as at the date the 
options are granted using the Black-Scholes-Merton 
pricing model and is charged equally over the vesting 
period. The amount recognised as an expense is 
adjusted each reporting period to reflect the actual 
number of options that are expected to vest.
With respect to share-based payments, a deferred 
tax asset is recognised on the relevant tax base. The 
tax base is then compared to the cumulative share-
based payment expense recognised in the income 
statement. Deferred tax arising on the excess of the 
tax base over the cumulative share-based payment 
expense recognised in the income statement has 
been recognised directly in equity.
o wn shares
Shares held by employee benefit trusts in order to 
satisfy awards under the Group’s share plans are 
included net within equity until such time as the 
shares are vested to the relevant employees. Financial Statements
www.telfordhomes.plc.uk 55
critical accounting judgements and key 
sources of estimation uncertainty
Construction contract revenue and profit recognition
Contract revenue is recognised from the date 
of exchange of construction contracts at a rate 
equivalent to the value of work undertaken in respect 
of land development. Contract profit on construction 
contracts is recognised in proportion to revenue 
only to the extent that the total eventual profit on the 
contract can be foreseen with reasonable certainty.
Assessing the percentage complete on each contract 
involves estimation of total expected costs to be 
incurred until the end of the contract. Recognition 
of profit also involves estimation of the total 
expected revenues from each contract and therefore 
the expected profit margin that will be achieved. 
Judgement is required to assess whether the total 
eventual profit on each contract can be foreseen 
with reasonable certainty (note 11).
Carrying value of land and work in progress
Inventories include land and work in progress in 
respect of development sites. On each development 
judgement is required to assess whether the cost 
of land and any associated work in progress is in 
excess of its net realisable value (note 10).
Adoption of new and revised standards  
and interpretations
During the year IFRIC 19 and amendments to 
IAS 24 and IFRIC 14 have become effective and 
have been adopted by the Group. In addition, 
amendments made to a number of standards as 
part of the IASB’s annual improvement process, 
‘Improvements to IFRSs 2010’ have been adopted 
in the year. Adoption of the new and revised 
standards and interpretations has not had any 
significant impact on the amounts reported  
in these financial statements but may impact  
the accounting for future transactions  
and arrangements.
At the date of the authorisation of these financial 
statements, there are a number of standards, 
amendments and interpretations that have been 
published but are not yet effective for the year ended 
31 March 2012 and have not been adopted early.
The standards, amendments and interpretations 
that are expected to impact upon the Group are:
•	 IFRS 10 ‘Consolidated financial statements’ 
builds on existing principles by identifying the 
concept of control as the determining factor in 
whether an entity should be included within the 
consolidated financial statements. 
•	 IFRS 11 ‘Joint arrangements’ provides for a 
more realistic reflection of joint arrangements 
by focusing on the rights and obligations of the 
arrangement, rather than its legal form. 
•	 IFRS 12 ‘Disclosure of interest in other entities’ 
includes the disclosure requirements for all forms 
of interests in other entities. 
•	 IAS 28 (revised) ‘Investment in associates and 
joint ventures’ includes the requirement for joint 
ventures to be equity accounted following the 
issue of IFRS 11. 
The four standards above are all applicable to the 
Group from 1 April 2013 and are expected to have a 
presentational impact on the Group as proportional 
consolidation will no longer be allowed.
The following standards, amendments and 
interpretations are not expected to have any material 
impact on the financial statements of the Group:
•	 IFRS 1 (amendment) ‘First time adoption’ on 
hyperinflation and fixed dates is applicable to the 
Group from 1 April 2012.
•	 IFRS 7 (amendment) ‘Financial instruments: 
Disclosure’ is applicable to the Group from  
1 April 2012.
•	 IFRS 9 ‘Financial instruments’ is applicable to the 
Group from 1 April 2013.
•	 IFRS 13 ‘Fair value measurement’ is applicable to 
the Group from 1 April 2013.
•	 IAS 1 (amendment) ‘Presentation of financial 
statements’ is applicable to the Group from  
1 April 2013.
•	 IAS 12 (amendment) ‘Income taxes’ is applicable 
to the Group from 1 April 2012.
•	 IAS 19 (amendment) ‘Employee benefits’ is 
applicable to the Group from 1 April 2013.
•	 IAS 27 (revised) ‘Separate financial statements’  
is applicable to the Group from 1 April 2013. Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 56
Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
1 o perating profit
 
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
o perating profit is stated after charging (crediting):
Depreciation
– owned assets 175 161
– hire purchase assets 21 14
Operating lease rentals
– property 132 161
– motor vehicles 478 397
Profit on sale of tangible assets (13) (49)
Exceptional item – (511)
The exceptional item for the year ended 31 March 2011 of £0.5 million was a ‘bargain gain’ arising as a result 
of the purchase of 50% of the ordinary shares in Telford h omes (Creekside) Limited in the period.
Year ended
31 march 2012 
£000
Year ended
31 march 2011
 £000
t he following has been charged in respect of auditors’ remuneration:
Audit and related services (pricewaterhousec oopers llp )
Statutory audit of the Parent Company and Group financial statements 70 66
o ther services including non-audit services (pricewaterhousec oopers llp )
The audit of joint arrangement and subsidiary accounts  
pursuant to legislation
29 27
Audit related assurance services 3 –
Tax compliance services 39 40
All other non-audit services 19 45
Amounts payable to the Company’s auditors and their associates in respect of services to the Company, 
other than the audit of the Company’s financial statements have not been disclosed as the information is 
required instead to be disclosed on a consolidated basis.
Grant income
The Group has a total grant allocation from the Greater London Authority (formerly the h omes and 
Communities Agency) of £72.9 million from their 2008–2011 programme. Grant income is recognised as 
revenue in the income statement on a percentage of completion basis to match with the costs it is intended 
to compensate. The total grant allocation is made up of individual site by site allocations the receipt of which 
is dependent upon constructing the planned affordable housing on each site. The Group had received a total 
of £70.8 million by 31 March 2012 (2011: £49.5 million). Financial Statements
www.telfordhomes.plc.uk 57
2 employee benefit expense
The average monthly number of persons employed by the Group and Company, including executive directors, 
during the year analysed by activity was as follows:
Year ended
31 march 2012
Number
Year ended
31 march 2011
Number
Construction 94 87
Administration 83 70
177 157
The employment costs of all employees included above were:
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
Wages and salaries 9,257 7,874
Social security costs 1,095 926
Other pension costs – group personal pension arrangements 441 350
Share-based payments (note 17) 286 402
 11,079 9,552
The Company operates a group personal pension scheme for its employees. At 31 March 2012 payments of 
£nil were due to the scheme (2011: £45,000).
Seven current directors are accruing benefits under group personal pension arrangements (2011: Six).
Key management remuneration 
Key management personnel, as defined under IAS 24 (Related Party Disclosures), have been identified as 
the directors as all key decisions are reserved for the Board. These figures include the full remuneration of 
directors appointed to the Board during the period as they were considered to be key management personnel 
prior to their appointment.
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
Wages and salaries (including bonuses) 1,503 1,393
Social security costs 178 145
Other pension costs 95 84
Share-based payments 9 6
1,785 1,628
Detailed disclosures of directors’ individual remuneration, pension entitlement and share options for those 
directors who served in the year are given in the directors’ remuneration report on pages 40 to 41.  Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 58
3 f inance income and costs
 
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
f inance income 
Interest income on short-term bank deposits 127 249
f inance costs
Interest payable on bank loans and overdrafts (1,305) (1,106)
Movement on interest rate derivatives (293) –
Amortisation of facility fees (232) –
hire purchase finance charges (2) (2)
(1,832) (1,108)
Net finance costs (1,705) (859)
4 t axation
 
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
United Kingdom corporation tax on profits for the year 810 675
Adjustment in respect of prior periods – 20
Total current taxation 810 695
Deferred taxation (note 9) (51) 47
income tax expense 759 742
In addition to the amount credited to the income statement, deferred tax of £54,000 relating to share-based 
payments was credited directly to equity (2011: £12,000 charged).
Reconciliation of effective tax rate
The tax assessed for the year is lower (2011: lower) than the theoretical amount that would arise using the 
weighted average tax rate applicable to profits of the consolidated entities. The differences are explained below:
Profit before income tax 3,045 3,034
Profit on ordinary activities before taxation at the weighted  
average rate of corporation tax
792 830
Effects of:
Losses not recognised 47 –
Income not subject to taxation – (143)
Brought forward losses utilised (14) –
Adjustment in respect of prior periods – 20
Expenses not deductible for tax purposes including  
movements in deferred tax
(16) 101
Tax relief on land remediation costs (50) (66)
income tax expense 759 742
The weighted average applicable tax rate was 26.0% (2011: 27.4%). Financial Statements
www.telfordhomes.plc.uk 59
The Group has tax losses of £196,000 in relation to its joint venture Telford h omes (Stratford) Limited for 
which no deferred tax asset has been recognised as it is uncertain that sufficient taxable profits will be 
earned in future years to utilise the deferred tax asset. 
During the year, as a result of the change in the United Kingdom corporation tax rate from 26% to 24% that 
was substantively enacted and will be effective from 1 April 2012, the relevant deferred tax balances have 
been re-measured. Deferred tax expected to reverse in the year to 31 March 2013 has been measured using 
the effective rate that will apply in the United Kingdom for the period (24%).
Further reductions to the United Kingdom corporation tax rate have been announced and are expected to be 
included in future finance bills to reduce the rate by 1% per annum to 22% by 1 April 2014. The changes had 
not been substantively enacted at the balance sheet date and therefore are not recognised in these financial 
statements. The impact of the proposed changes are not expected to be material to the Group.
5 dividend paid
 
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
Prior year final dividend paid in July 2011 of 1.25p (July 2010: 1.25p) 613 621
Interim dividend in January 2012 of 1.5p (January 2011: 1.25p) 735 606
1,348 1,227
The final dividend proposed for the year ended 31 March 2012 is 1.5 pence per ordinary share. This dividend 
was declared after 31 March 2012 and as such the liability of £742,500 has not been recognised at that date.
6 earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the 
weighted average number of ordinary shares outstanding during the year, excluding those held in the Share 
Incentive Plan. For diluted earnings per share, the weighted average number of ordinary shares in issue is 
adjusted to assume conversion of all dilutive potential ordinary shares.
Earnings per share have been calculated using the following figures: 
Year ended
31 march 2012
Year ended
31 march 2011
Weighted average number of shares in issue 48,563,906 47,886,813
Dilution – effect of share schemes 858,163 675,778
Diluted weighted average number of shares in issue 49,422,069 48,562,591
Profit on ordinary activities after taxation £2,286,000 £2,292,000
earnings per share:
Basic 4.7p 4.8p
Diluted 4.6p 4.7p Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 60
7 investments
 
Investments in subsidiary undertakings
2012 
£000
2011 
£000
c ost
At 1 April 637 637
Additions – –
Disposals – –
At 31 march 637 637
Investments in jointly controlled entities
2012 
£000
2011 
£000
c ost
At 1 April 1 1
Additions – –
Disposals – –
At 31 march 1 1
Investments in subsidiary undertakings
The subsidiary undertakings which principally affect profits and net assets of the Group comprise:
share of 
ordinary 
capital held 
by the Group
c ountry of 
registration
Accounting 
date
principal 
activity
Telford homes (Romford) Limited 100% England 31 March Property
development
Telford homes (Properties) Limited 100% England 31 March Property
development
Telford homes (Investments) Limited 100% England 31 March Property
development
Telford homes (Creekside) Limited 100% Scotland 31 March Property
development
Telford homes Contracting Limited 100% England 31 March Contracting
A full list of subsidiary undertakings is available on request from the Group’s registered office.
Investments in jointly controlled entities
The Group’s investments in jointly controlled entities comprise:
share of 
ordinary 
capital held 
by the Group
c ountry of 
registration
Accounting 
date
principal 
activity
Telford homes (Stratford) Limited 50% Scotland 31 March Property
development
Bishopsgate Apartments LLP 50% England 31 March Property
development
Mulatel LLP 50% England 31 March Property
development
Investments in jointly controlled entities are accounted for using proportional consolidation. Financial Statements
www.telfordhomes.plc.uk 61
The Group’s share of the assets and liabilities and the income and expenses of jointly controlled entities 
is as follows:
31 march 2012
£000
31 march 2011
£000
Current assets 20,712 18,981
Current liabilities (19,359) (17,213)
Net assets of jointly controlled entities 1,353 1,768
Year ended
31 march 2012
£000
Year ended
31 march 2011
£000
Income 5,941 2,722
Expenses (6,356) (2,052)
share of results of jointly controlled entities (415) 670
8 property, plant and equipment
 
Group and c ompany
l easehold
improvements
£000
plant and
machinery
£000
motor
vehicles
£000
total
£000
c ost
At 1 April 2010 262 1,149 260 1,671
Additions – 100 56 156
Disposals – (20) (183) (203)
At 31 March 2011 262 1,229 133 1,624
Additions 95 125 – 220
Disposals – (62) (61) (123)
At 31 march 2012 357 1,292 72 1,721
depreciation
At 1 April 2010 110 923 258 1,291
Charge 27 134 14 175
Disposals – (17) (183) (200)
At 31 March 2011 137 1,040 89 1,266
Charge 33 142 21 196
Disposals – (61) (61) (122)
At 31 march 2012 170 1,121 49 1,340
Net book value
At 31 March 2011 125 189 44 358
At 31 march 2012 187 171 23 381
Motor vehicles with a net book value of £23,000 are held under hire purchase arrangements (2011: £44,000).
Depreciation of £21,000 was charged during the year on these assets (2011: £14,000). 
Authorised future capital expenditure that was contracted, but not provided for, in these financial  
statements amounted to £nil (2011: £nil). Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 62
9 deferred income tax
 
Group and c ompany
31 march 2012
£000
31 march 2011
£000
Deferred tax assets 194 92
Deferred tax liabilities (39) (42)
deferred tax assets 155 50
As permitted by IAS 12 (Income Taxes), certain deferred tax assets and liabilities have been offset as they 
arise in the same tax jurisdiction and are settled on a net basis. 
The movement on the deferred income tax account is as follows:
31 march 2012
£000
31 march 2011
£000
Brought forward 50 109
Credited (charged) to the income statement 51 (47)
Credited (charged) directly to equity 54 (12)
155 50
The movement in deferred tax assets and liabilities during the year is as follows:
c apital 
allowances
£000
share-based
transactions
£000
l and 
remediation
timing 
differences
£000
total
£000
At 1 April 2010 112 (1) (2) 109
(Charged) credited to the income statement (55) 6 2 (47)
Charged directly to equity – (12) – (12)
At 31 March 2011 57 (7) – 50
(Charged) credited to the income statement (16) 67 – 51
Credited directly to equity – 54 – 54
At 31 march 2012 41 114 – 155
The cumulative deferred tax credited directly to equity amounts to £56,000 (2011: £2,000).
10 inventories
 
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011
£000
development properties 135,810  125,181  74,325  58,300 
All inventories are considered to be current in nature. The operating cycle is such that a proportion of 
inventories will not be realised within twelve months. It is not possible to determine with accuracy when 
specific inventory will be realised as this will be subject to a number of issues such as consumer demand  
and planning permission delays.
Included within development properties for the Group are freehold interests held for future sale of 
£6,247,000 (2011: £5,916,000). Included within development properties for the Company are freehold 
interests held for future sale of £5,558,000 (2011: £5,688,000). Financial Statements
www.telfordhomes.plc.uk 63
The value of inventories expensed in cost of sales by the Group in 2012 was £103,541,000 (2011: £104,243,000). 
Costs capitalised by the Group during the year include interest of £3,177,000 (2011: £1,554,000), which is 
capitalised based on the cost of the site specific borrowings.
During the year the Group conducted a review of the net realisable value of its inventories. Where the 
estimated net realisable value was less than its carrying value within the balance sheet the Group has written 
down the value of inventories. The total amount recognised as an expense was £1,068,000 (2011: £84,000).
11 t rade and other receivables
 
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011
£000
current receivables
Amounts recoverable on contracts 4,912 11,105 4,171 11,037
Amounts owed by Group undertakings – – 17,428 17,514
Amounts owed by jointly  
controlled entities
1,109 244 5,975 7,862
Trade receivables 168 108 168 108
Other receivables 758 559 587 389
Prepayments and accrued income 1,044 2,195 688 3,208
Land prepayment 8,870 – 8,870 –
16,861 14,211 37,887 40,118
The land prepayment was amounts lodged with solicitors in advance of the completion of a site purchase 
scheduled to take place on 30 March 2012 that actually completed on 3 April 2012.
Amounts recoverable on contracts
Contract revenue of £41,805,000 (2011: £46,152,000) has been recognised by the Group in the year.
In relation to contracts in progress at the balance sheet date:
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011
£000
Contracts where costs incurred plus 
recognised profits exceed receipts to 
date included in receivables
4,912 11,105 4,171 11,037
Contracts where receipts to date 
exceed costs incurred plus recognised 
profits included in payables
(370) (5,786) (370) (4,529)
4,542 5,319 3,801 6,508
Total costs incurred plus recognised 
profit on contracts
217,984 183,247 181,433 148,298
Receipts to date (213,442) (177,928) (177,632) (141,790)
4,542 5,319 3,801 6,508
At 31 March 2012 retentions held by customers for contract work performed by the Group included within 
amounts recoverable on contracts amounted to £1,823,000 (2011: £1,977,000). Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 64
12 c ash and cash equivalents
 
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011
£000
c ash at bank and in hand 12,419 18,837 11,939 17,575
13 hire purchase liabilities
 
Group and c ompany
31 march 2012
£000
31 march 2011
£000
Gross hire purchase liabilities:
Due within one year 17 17
Due in more than one year and less than five years 3 20
20 37
Less future interest (1) (2)
Net hire purchase liabilities 19 35
Net hire purchase liabilities are repayable as follows:
Due within one year 16 16
Due in more than one year and less than five years 3 19
19 35
14 t rade and other payables
 
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011 
£000
Trade payables 9,265 7,610 8,793 7,201
Amounts due to jointly controlled 
entities
3 – 6 –
Amounts due to subsidiaries – – 676 706
Amounts recoverable on contracts 
(note 11)
370 5,786 370 4,529
Deposits received in advance 13,244 6,854 6,466 4,623
Social security and other taxes 456 351 376 351
Accrued expenses 8,599 7,953 6,952 7,090
 31,937  28,554  23,639  24,500
15 Borrowings 
 
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011 
£000
Bank loans 67,563 64,877 39,900 30,786
Transaction costs (580) – (536) –
66,983 64,877 39,364 30,786
Further information on borrowings is given in note 20. Financial Statements
www.telfordhomes.plc.uk 65
16 share capital
 
Group and c ompany
31 march 2012
£000
31 march 2011
£000
Authorised
100,000,000 ordinary shares of 10p each 10,000 10,000
Allotted, called up and fully paid
49,500,000 ordinary shares of 10p each (2011: 49,000,000) 4,950 4,900
On 29 March 2012, 500,000 ordinary shares were issued at 95.5p to Telford h omes Trustees Limited to 
satisfy the requirements of the Share Incentive Plan (note 17).
Ordinary shares may be issued in the future to satisfy the exercise of outstanding share options (note 17).
Details of own shares held within employee benefit trusts are disclosed in note 17.
All shares rank equally in respect of shareholder rights.
17 employee share schemes
Telford homes Plc Employee Share Option Scheme
The Group operates both an approved share option scheme and an unapproved share option scheme. Awards 
under each scheme are made periodically to new employees. All schemes are equity-settled and options can 
normally be exercised three years after the grant date.
A charge is made to the income statement to reflect the calculated fair value of employee share options. This 
charge is calculated at the date of grant of the options and is charged equally over the vesting period. The 
corresponding adjustment to equity is made directly to the profit and loss reserve. In accordance with IFRS 2 
(Share-based payments), only costs relating to options issued after 7 November 2002 have been charged to 
the income statement.
The Group has used the Black-Scholes-Merton formula to calculate the fair value of outstanding options. 
Individual calculations have been performed for groups of share options with differing exercise prices and 
dates. The assumptions applied to the Black-Scholes-Merton formula for share options issued in the year 
ended 31 March 2012 and the fair value per option are set out below. There were no share options granted in 
the year ended 31 March 2011.
2012 2011
Expected life of options based on options exercised to date 4 years –
Volatility of share price based on three year share price history 24% – 30% –
Dividend yield 2.7% – 3.4% –
Risk free interest rate 0.5% –
Weighted average share price at date of grant 87p –
Weighted average exercise price 87p –
Weighted average fair value per option £0.15 –
Expected volatility was determined by considering the volatility levels historically for the Group. Volatility in 
more recent years is considered to have more relevance than earlier years for the period reviewed.
The charge calculated for the year ended 31 March 2012 is £157,000 (2011: £264,000). Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 66
17 employee share schemes continued
A reconciliation of option movements during each period is shown below:
2012 2011
Number
000’s
weighted 
average
exercise 
price
Number
000’s
weighted 
average
exercise 
price
Outstanding at 1 April 2,330 74p 2,404 74p
Granted in the year 1,122 87p – –
Forfeited in the year (177) 142p (74) 92p
Exercised in the year – – – –
o utstanding at 31 march 3,275 74p 2,330 74p
exercisable at 31 march 439 82p 458 100p
The aggregate fair value of options granted in the year was £981,000 (2011: £nil).
No share options were exercised in the year ended 31 March 2012 or the year ended 31 March 2011.
In the year ended 31 March 2012 128,406 of the forfeited options were replaced with 265,000 new options 
with an incremental fair value of £45,050.
At 31 March 2012 outstanding options granted over 10p ordinary shares were as follows:
share option scheme o ption price Number date exercisable
Group approved 110p 109,088 12 June 2011 to 12 June 2018
64p 1,714,000 20 July 2012 to 20 July 2019
79p 75,948 23 May 2014 to 23 May 2021
90.5p 557,000 9 Feb 2015 to 9 Feb 2022
Group unapproved 60.5p 50,414 5 Mar 2005 to 5 Mar 2015
75p 220,000 1 Oct 2005 to 1 Oct 2015
74.5p 59,732 20 Feb 2006 to 20 Feb 2013
79p 222,026 23 May 2014 to 23 May 2021
90.5p 267,000 9 Feb 2015 to 9 Feb 2022
During the year, the last exercisable date was amended on two tranches of unapproved share options. 
Options previously due to lapse on 5 March 2012 and 1 October 2012 have been amended to lapse on  
5 March 2015 and 1 October 2015 respectively. Financial Statements
www.telfordhomes.plc.uk 67
Telford homes Plc Share Incentive Plan
During the year ended 31 March 2004 Telford h omes Plc set up a Share Incentive Plan (SIP) for the benefit 
of all of the employees of the Group. This SIP has been approved by the Inland Revenue and confers certain 
tax advantages for participating employees.
The SIP provides for employees to purchase shares up to a value of £1,500 in each tax year. These shares 
are known as ‘Partnership shares’. Partnership shares are matched on a one for one basis by ‘Matching 
shares’ provided by the Group subject to the shares remaining in the SIP for a period not less than three 
years. Dividends are paid on both Partnership and Matching shares and these are allocated to employees as 
‘Dividend shares’.
The Group has set up a trust to administer the SIP and to hold shares on behalf of individual employees. 
This trust is an entirely separate entity to the Group and is managed by a corporate trustee, Telford h omes 
Trustees Limited. The costs associated with the trust are paid for by the Group and the Group finances all 
share purchases.
The trust has distributed shares as Partnership shares and Dividend shares to employees participating in the 
scheme. These shares remain in the trust until such time as an employee withdraws from the SIP. Further 
shares have been allocated to employees as Matching shares and the cost of these shares is being written off 
over the three year holding period. The charge in the year ended 31 March 2012 is £129,000 (2011: £138,000).
During the year ended 31 March 2012 the trust acquired 500,000 shares at 95.5p in March 2012. At 
31 March 2012 the trust remains interested in 167,872 shares (2011: 52,176) which have not been allocated 
to employees and a further 573,990 (2011: 967,861) that have been allocated to employees as Matching 
shares but have not yet vested. Shares in which the trust remains interested do not rank for dividends and 
all shares that have not yet vested do not count in the calculation of the weighted average numbers of shares 
used to calculate earnings per share.
Shares held by the SIP are recognised as a deduction from shareholders’ funds. The value of these shares at 
31 March 2012 was £849,414 (2011: £680,758). Movements in the profit and loss reserve relating to the SIP 
are shown in the statement of changes in equity.
Telford homes Plc 2006 Deferred Payment Share Purchase Plan
During the year ended 31 March 2007 Telford h omes Plc set up a Deferred Payment Share Purchase Plan 
(DPSPP) for the benefit of selected senior employees. An employee benefit trust (the Telford h omes Plc 
2006 Employee Benefit Trust) was set up with Abacus Corporate Trustee Limited acting as trustee.
Participants in the DPSPP are offered a loan by the trustee to enable them to subscribe for a specified 
number of shares in the Group at market value. This loan is interest free repayable on or before the 
repayment date which is normally 20 years from the date of the loan or on leaving employment or disposing 
of the shares. The loan has a limited recourse such that repayment is limited to the value of the shares on 
the repayment date. The Group will lend the trustee sufficient funds to enable the trustee to provide the loans 
to individual participants. All shares acquired under the DPSPP will be subject to a three year vesting period 
and are held by the trustee for the benefit of the participants. Offers to participants will be made periodically 
at the discretion of the directors of Telford homes Plc.
In September 2006 selected employees were offered, and subscribed for, a total of 550,000 shares at the 
market value of 260p. These shares were issued on 9 November 2006. On this date the Group provided a 
loan to the trustee of £1,430,000 to enable the trustee to provide a loan to each of the participants. This loan 
is repayable at the earlier of the sale of the vested shares and November 2026 and has been recognised as a 
deduction from shareholders’ funds in the statement of changes in equity. In the year ended 31 March 2012, 
£2,000 of this loan has been repaid leaving an outstanding balance of £1,428,000.
In December 2007 selected employees were offered, and subscribed for, a total of 160,000 shares at the 
market value of 244p. These shares were issued on 14 December 2007. On this date the Group provided a 
loan to the trustee of £390,400 to enable the trustee to provide a loan to each of the participants. This loan 
is repayable at the earlier of the sale of the vested shares and December 2027 and has been recognised as a 
deduction from shareholders’ funds in the statement of changes in equity. Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 68
18 c ommitments and contingent liabilities
Commitments
At 31 March, the Group and Company had outstanding commitments for future minimum lease payments 
under non-cancellable operating leases which fall due as follows:
property leases o ther leases
2012
£000
2011
£000
2012
£000
2011
£000
Within one year 135 184 533 310
Between one and five years 988 660 528 387
Over five years 1,124 – – –
2,247 844 1,061 697
Operating lease payments represent rentals payable by the Company for its office premises and motor 
vehicles. The Group signed a new 10 year lease in June 2011 for its head office premises.
Contingent liabilities
On 23rd August 2005 the Company entered an agreement to purchase the site of the former halls of 
residence of Queen Mary and Westfield College in South Woodford. At 31 March 2012 £37.3 million 
(2011: £31.6 million) had been paid for the site. Further payments are contingent on future sales at the 
development and are estimated to be approximately £0.4 million (2011: £6.3 million).
19 r elated party transactions
The Board and certain members of senior management are related parties within the definition of IAS 24 
(Related Party Disclosures). 
There have been no transactions between key management personnel and the Group other than 
remuneration in the year ended 31 March 2012.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated 
on consolidation. The amounts outstanding from subsidiaries to the Company at 31 March 2012 totalled 
£17,428,000 (2011: £17,514,000) and the Company owed subsidiaries £676,000 (2011: £706,000).
The Company has invoiced jointly controlled entities and subsidiaries £35,418,000 in the year to 31 March 2012 
for construction services (2011: £26,638,000). The Company has been invoiced £27,000 in the year to  
31 March 2012 by subsidiaries for construction services (2011: £1,907,000). Jointly controlled entities and 
subsidiaries do not transact with each other.
The amounts outstanding from jointly controlled entities to the Company at 31 March 2012 totalled £2,218,000 
(2011: £489,000) in respect of construction services and the Company owed jointly controlled entities £6,000 
in relation to deposits received on their behalf (2011: £nil). A total of £3,757,000 was owed to the Company at 
31 March 2012 from jointly controlled entities in respect of shareholder loans (2011: £7,373,000).
Shareholder loans to jointly controlled entities and balances between the Company and its subsidiaries are non-
interest bearing and are repayable when the counterparty has sufficient cash to repay the loans.
After proportional consolidation of the jointly controlled entities the Group has net amounts outstanding from 
jointly controlled entities totalling £1,106,000 at 31 March 2012 (2011: £244,000). Financial Statements
www.telfordhomes.plc.uk 69
20 financial instruments
Categories of financial assets and financial liabilities are as follows:
Group c ompany
31 march 2012
£000
31 march 2011
£000
31 march 2012
£000
31 march 2011
£000
financial assets
Loans and receivables:
Amounts owed by Group undertakings –  – 17,428 17,514
Amounts owed by jointly controlled 
entities
1,109 244 5,975 7,862
Trade receivables 168 108 168 108
Other receivables 758 559 587 389
Cash and cash equivalents 12,419 18,837 11,939 17,575
14,454 19,748 36,097 43,448
f inancial liabilities
Amortised cost:
Trade payables 9,265 7,610 8,793 7,201
Amounts due to jointly controlled 
entities
3 – 6 –
Amounts due to subsidiaries – – 676 706
Bank loans 67,563 64,877 39,900 30,786
hire purchase liabilities 19 35 19 35
76,850 72,522 49,394 38,728
The Group does not enter into any significant derivative transactions and has no direct exposure to exchange 
rate movements as its trade takes place entirely within the United Kingdom.
Trade and other receivables, trade payables and hire purchase liabilities
The fair value of trade and other receivables, trade payables and hire purchase liabilities at 31 March 2012 
is equal to the carrying value stated in the balance sheet at that date. There are no amounts included within 
trade and other receivables currently overdue (2011: £nil). hire purchase liabilities include £3,000 (2011: 
£19,000) due after more than one year. All other trade and other receivables and trade payables are due 
within one year. 
Land creditors
Land purchases made on deferred payment terms are recorded at fair value using the effective interest 
method in accordance with IAS 39 (Financial instruments - recognition and measurement). The difference 
between the fair value and nominal value is amortised over the deferment period as financing costs, 
increasing the land creditor to its full cash settlement value on the payment date. The interest rate used  
in the year to 31 March 2012 was 3% (2011: 3%).  Notes to the fi NANci Al st Ateme Nts 31 MARCh 2012
Financial Statements
telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 70
20 financial instruments continued
Borrowings
The Group uses loan finance, all of which is denominated in sterling, to acquire development land and 
undertake site construction. On 31 March 2011 the Group signed a £70 million loan facility which extends 
to 30 September 2014 with a club of three banks being The Royal Bank of Scotland, hSBC and Santander. 
The debt drawn under this facility is secured against a portfolio of land and development sites owned by the 
Group. At 31 March 2012 the Group had utilised £46.2 million of this facility leaving an unutilised balance  
of £23.8 million. Interest is being charged on this facility at LIBOR plus a margin of 3.5%.
Telford h omes (Creekside) Limited, a wholly owned subsidiary has a loan facility with The Royal Bank of 
Scotland in relation to its Greenwich Creekside development. The development is now complete in terms 
of construction and at 31 March 2012, £14.6 million of the original £57.7 million facility was outstanding 
following significant repayments in the year from completion proceeds. The remaining £14.6 million is 
repayable in phases by 30 June 2012, 31 December 2012 and 31 December 2013. Included within the  
£14.6 million outstanding is a mezzanine loan facility of £8.0 million and interest on this loan is charged 
at LIBOR plus a margin of 5%. Interest is charged on the remainder of the debt at LIBOR plus a margin 
of 2.25%.
The Group’s jointly controlled entity, Bishopsgate Apartments LLP has a £43.1 million development loan 
facility with hSBC which extends to the earlier of practical completion of the development in Bethnal Green 
Road or September 2014. The debt drawn under this facility is secured against the land and development 
site owned by the partnership. At 31 March 2012, Bishopsgate Apartments LLP had utilised £19.8 million of 
this facility leaving an unutilised balance of £23.3 million. Interest is being charged on this facility at LIBOR 
plus a margin of 3.5%.
All borrowings are treated as current even though these may be due for settlement after twelve months  
from the balance sheet date as they are expected to be settled in the Group’s normal operating cycle.  
All borrowings are stated at fair value which is materially equivalent to the original book value.
Market risk
The Group is exposed to the financial risk of changes in interest rates both in terms of changes in the base 
rate and LIBOR and in terms of individual banks attitude to market risk and their application of either base 
rate or LIBOR to new facilities and the margin applied to each new facility.
In order to assess the risk interest costs are forecast on a monthly basis over a five year period using 
estimates of likely changes in rates and actual costs are compared to this forecast. Volatility of interest 
costs remained at an acceptable level in the year ended 31 March 2012 as LIBOR remains at a historically 
low level. Interest on all facilities currently held is charged at floating interest rates and the Group 
assesses the requirement for fixing interest rates on a regular basis. The Group has purchased two interest 
rate caps in the period. The interest rate caps are individually fair valued at each period end with any 
movement in the value being charged or credited to the income statement. The fair value of the caps at  
31 March 2012 was £31,000 and hedging costs of £293,000 have been charged to the income statement 
in the year ended 31 March 2012.  
The effect on the income statement of a 1% rise and a 1% fall in interest rates has been calculated to assess 
interest rate sensitivity. Based on average monthly borrowings in the year, a 1% rise in interest rates would 
have a negative effect of £684,000 before tax (2011: £504,000), a 1% fall in interest rates gives the same 
but opposite effect.
Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going 
concern in order to provide returns for shareholders and meet its liabilities as they fall due whilst maintaining 
an appropriate capital structure to reduce the costs of capital. The Group considers its capital to be all of the 
components of equity and long term liabilities.
The Group ensures that there are appropriate controls over the purchase of land and levels of work in 
progress in the business in order to appropriately manage its capital. In addition, the other methods by 
which the Group can manage its short-term and long-term capital structure include adjusting the level of 
ordinary dividends paid to shareholders, issuing new share capital and arranging debt. Financial Statements
www.telfordhomes.plc.uk 71
Credit risk
Credit risk is the risk of financial loss where counterparties are not able to meet their obligations.
Trade and other receivables includes amounts recoverable on contracts which are due from housing 
associations and balances due from other Group undertakings. The Group considers the credit quality 
of the various debtors to be good in respect of the amounts outstanding and therefore credit risk is 
considered to be low.
Surplus cash is held in secure bank deposit accounts with The Royal Bank of Scotland, hSBC and Santander.
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations  
as they fall due.
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows over a five 
year period and performing sensitivity analysis on these forecasts. The forecasts are necessarily subject 
to a number of assumptions and judgements and these are tested on a reasonable basis by the sensitivity 
analysis. These forecasts and the related sensitivity analysis are reviewed by the directors in detail on a 
monthly basis. In addition all of the forecasts and supporting calculations are made available to each bank 
funding the Group on a monthly basis. The current forecasts show positive cash balances beyond the next 
twelve months even where this is subjected to sensitivity testing.
The Group utilises bank facilities to ensure that adequate funding is available to cover working capital 
requirements and the directors consider that existing facilities are sufficient to cover funding requirements 
in the foreseeable future both where these have already been utilised and where they are currently unutilised. 
Where facilities are due to expire within one year this is due to the timing of the relevant developments and 
therefore the expected repayment dates. In all of these cases the directors are satisfied that the loans are 
expected to be repaid by the date the facility expires.
The Group’s bank facilities are subject to a number of general and financial covenants which are tested 
periodically by each bank. In all cases the directors have assessed whether the Group will remain in 
compliance with the covenants for at least twelve months after signing the financial statements and are 
satisfied that there will be no breach of the covenants.
The maturity profile of the anticipated future cash flows based on the earliest date on which the Group can 
be required to pay financial liabilities on an undiscounted basis (including future interest payments using  
the latest applicable rates) is as follows:
trade
payables
£000
Borrowings
£000
hire purchase
liabilities
£000
total
£000
Within one year 9,265 6,699 16 15,980
More than one year  
and less than two years
– 8,840 3 8,843
More than two years  
and less than five years
– 58,983 – 58,983
31 march 2012 9,265 74,522 19 83,806
trade
payables
£000
Borrowings
£000
hire purchase
liabilities
£000
total
£000
Within one year 7,610 20,311 16 27,937
More than one year  
and less than two years
– 6,147 19 6,166
More than two years  
and less than five years
– 45,615 – 45,615
31 march 2011 7,610 72,073 35 79,718 telford homes p lc  
Annual Report & Accounts for the year ended 31 March 2012 72
c omp ANY iNform Atio N
c ompany secretary
sara debenham
r egistered Number
4118370
r egistered o ffice
First Floor 
Stuart house 
Queensgate 
Britannia Road 
Waltham Cross 
h ertfordshire EN8 7TF
Auditors
pricewaterhousec oopers llp 
10 Bricket Road 
St Albans 
h ertfordshire AL1 3JX
Bankers
t he royal Bank of s cotland 
280 Bishopsgate 
London EC2M 4RB
santander c orporate Banking 
1 Dover Street 
London W1S 4LA
hs Bc Bank p lc 
70 Pall Mall 
London SW1Y 5EZ
solicitors
s J Berwin 
10 Queen Street Place 
London EC4R 1BE
Nominated Broker
shore c apital stockbrokers l imited 
Bond Street house 
14 Clifford Street 
London W1S 4JU
f inancial and Nominated Advisor
shore c apital and c orporate l imited 
Bond Street house 
14 Clifford Street 
London W1S 4JU
registrars
c apita r egisters 
Northern house 
Woodsome Park 
Fenay Bridge 
huddersfield 
West Yorkshire hD8 0GA
financial public relations
Abchurch c ommunications l imited 
125 Old Broad Street 
London EC2N 1AR Company Information
www.telfordhomes.plc.uk 73 Annu Al Repo Rt 
& Accounts 2012
building
gRowth
t elford homes p lc
First Floor
stuart house
Queensgate
b ritannia Road
w altham cross
h ertfordshire en 8 7t F
Annu Al Repo Rt & Accounts 2012 t elford homes p lc