Interim Management Statement

RNS Number : 9885S

Taylor Wimpey PLC

14 November 2013

 



14 November 2013

Taylor Wimpey plc

Interim management statement covering the period from 1 July 2013 to the date of this announcement

Well positioned in an improving market  

Overview

In an improving market, we are continuing to benefit from our disciplined and value focused strategy and we will report improvements across all of our key financial metrics for the second half of 2013 against the comparable period.

Pete Redfern, Chief Executive, commented:

"The UK housing market has remained healthy in the second half of the year, with better mortgage availability and consistent demand for our homes, leading to an increase in sales rates against the same period last year. Help to Buy continues to prove popular and we are seeing our customers from Edinburgh to Exeter using the scheme to get onto or move up the housing ladder. In this improved environment, we remain focused on the longer term; increasing our investment in the training of the next generation of homebuilders and delivering on our commitments to local communities."

UK current trading

Consumer confidence has continued to improve, underpinned by a more available and accessible mortgage finance environment and the recent Government measures. Whilst timing has varied, we have seen a similar level of improvement across most of our regional markets in the UK.

The healthy level of demand experienced during the spring selling season continued through the summer and we have seen the normal up-tick in autumn demand. Sales rates in the second half of 2013 are ahead of the equivalent period of 2012, with an average net private reservation rate of 0.65 sales per outlet per week in 2013 to date (2012 equivalent period: 0.57 to date). Cancellation rates remain very low at 13% for the year to date (2012 equivalent period: 15%).

During 2013 to date, we have been selling from an average of 315 outlets including joint ventures (2012 equivalent period: 313).

We will see a natural increase in completions in 2013 and 2014 as a result of a better trading environment and our increased investment. In the last six months, we have seen some selling price increases in line with general inflation and have continued to see some early but manageable build cost increases. In this environment, we are now confident of driving an improvement of 200 to 300 basis points in 2014 operating margin.

We are fully sold for our targeted 2013 completions and are building our order book for 2014 with over 30% forward sold for 2014 completions. The current total order book represents 7,557 homes (week ended 11 November 2012: 6,662) and stands at £1.5 billion (week ended 11 November 2012: £1.1 billion).

Help to Buy continues to prove popular amongst our customers across the country. To date, we have worked with 2,403 households to reserve homes, with a further 207 currently going through the qualification process with their Home Buy Agents. We welcome the introduction of the scheme in Scotland where we have seen a similar level of increased customer interest in the first few weeks after launch.

Whilst it has less of a direct impact on our business, we welcome Help to Buy Phase 2 and believe that this will also have a positive impact on the wider housing market.

Land portfolio, planning and outlets

We have been able to use our strong balance sheet and landbuying expertise to benefit from the benign land market, securing attractive opportunities at a higher margin than those achieved in 2012. We have approved the purchase of 12,386 plots for the 10 months to 31 October 2013.

We continue to monitor the land market carefully and, looking forward, we are starting to see early indications of increased competition in some regions. Whilst we do not anticipate a significant contraction in attractive land opportunities over the next few months, the quality and scale of both our short term and strategic landbank gives us the ability to be very selective when the more competitive dynamic returns to the land market. This underpins our confidence in delivering more sustainable returns through the cycle. We continue to invest in strategic land and are well positioned to meet our stated aim to increase completions from strategic land to at least 30% a year ahead of schedule in 2015.

We strongly believe in the importance and value of community engagement through building local relationships and enhancing our reputation within the communities in which we operate. We were particularly pleased to be named as a UK National Champion for corporate and environmental sustainability by the 2013/2014 European Business Awards, which recognise success, innovation and ethics in the European business community.

As one of the UK's largest homebuilders, we have a responsibility to invest in the training and development of the next generation of homebuilders. We are delighted, therefore, to be the lead sponsor for Buckinghamshire University Technical College (BUTC), a Government funded college for students aged 14 to 19, specialising in IT and Construction (with focus on heritage skills and sustainability in construction), which opened in September 2013.  We are working with BUTC to shape the construction course specific curriculum, ensuring the programmes of study are relevant, current and progressive.

Spain

Despite a more positive market backdrop in Spain, consumer confidence remains subdued on the whole. We have, however, seen a significant increase in sales on new sites acquired during 2013 and an increase in the order book. These sites are anticipated to contribute positively to 2014 performance.

Group financial position

Given the continuing market improvement and subject to any change in market conditions, we anticipate that our regular full year inventory net realisable value review will result in the further write back of some of the impairment against UK inventory as an exceptional gain. We will provide further details with our full year results.

We expect net debt at the end of 2013 to be broadly in line with the prior year (31 December 2012: £59 million), subject to the timing of land payments.

The completion of the pension scheme merger during the period, together with the introduction of a pension funding partnership, has resulted in a simplified pension management structure and will lower administration costs from 2014 while, at the same time, providing a way of managing future deficit repair contributions.

As previously highlighted, we intend to redeem the outstanding 10.375% Senior Notes due 2015 which are callable on 31 December 2013, reducing interest cost significantly from 2014.  

Outlook

Whilst the UK housing market has seen a marked improvement during the second half of the year, we remain disciplined and continue to capture shareholder value in every aspect of the business while remaining focused on the long term health of the business. We are confident of delivering on our full year expectations, and demonstrating further improvement in the quality of our returns, which remains our key focus.

-     Ends  -

For further information please contact:

Taylor Wimpey plc Tel: [phone]

Pete Redfern, Chief Executive

Ryan Mangold, Group Finance Director

Debbie Sempie, Investor Relations

RLM Finsbury Tel: [phone]

Faeth Birch

Sarah Heald

Notes to editors:

Taylor Wimpey plc is a UK-focused residential developer which also has operations in Spain. Our vision is to become the UK's leading residential developer for creating value and delivering quality.

For further information, please visit the Group's website:

www.taylorwimpey.co.uk

 

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