TIDMTW.
RNS Number : 2404W
Taylor Wimpey PLC
13 November 2017
13 November 2017
Taylor Wimpey plc
Trading statement
Overview
Pete Redfern, Chief Executive, commented:
"Taylor Wimpey has performed strongly during the second half of
2017, delivering excellent sales rates and making further good
progress against our operational targets. While we are alert to
potential political and economic risks, demand for new housing
remains high across the UK and market conditions are favourable.
Notwithstanding the recent small increase in the base rate, we have
continued to see stability in trading patterns.
Looking ahead, we are on track to meet our full year
expectations and deliver further growth and performance improvement
in 2018. With a strong balance sheet in place and a high-quality
landbank, our business is very well positioned to deliver
sustainable growth".
UK current trading
The UK housing market has remained positive through the second
half of 2017. Customer demand continued to be robust supported by
healthy employment trends, a competitive mortgage market and the
Government's Help to Buy scheme. We have experienced favorable
trading patterns across our businesses, while in Central London
market conditions remain stable.
Sales rates for the year to date have continued to be strong at
0.81 sales per outlet per week (2016 equivalent period: 0.75). For
the second half of the year to date, sales rates are 0.71 (2016
equivalent period: 0.70), with a sales rate of 0.73 over the last 8
weeks (2016 equivalent period: 0.73). Cancellation rates for the
year remain low at 13% (2016 equivalent period: 13%). For the year
to date we have operated on an average of 290 outlets (2016
equivalent period: 291). Current outlets stand at 285, slightly
higher than the equivalent period last year.
The current total order book, excluding joint ventures, of 8,751
homes, is slightly below last year (2016 equivalent period: 8,981),
and stands at c.GBP2.2 billion (2016 equivalent period: c.GBP2.3
billion).
Build costs are expected to increase 3-4% this year, as
previously indicated, with the greater pressure coming from labour
costs and a more modest level of cost inflation in building
materials.
Land
The land market remains very attractive and we continued to
acquire land on compelling financial metrics. With our short term
landbank at broadly optimal scale we are operating on a replacement
basis, and therefore remain disciplined in our approach, only
pursuing opportunities that meet our investment and location
criteria. Having added c.13,700 plots to the short term landbank in
the year to the end of October, the short term landbank has grown
slightly to c.80k plots, with the strategic landbank at c.107k
plots.
In August, as previously announced, the Group acquired part of
the Mount Pleasant estate, in Central London, from the Royal Mail
for a total cash consideration of GBP190 million. The development
represents an excellent multi-year development opportunity in a
high-quality location, with attractive financial metrics that meet
all the Group's key investment criteria. Separately, our Major
Developments business has recently announced a joint venture
agreement with Wandsworth London Borough Council for the
regeneration of Winstanley and York Road estates that will provide
more than 2,200 new homes, in addition to significant new amenities
and facilities for the local community.
Spain current trading
The Spanish housing market has remained strong throughout 2017.
The order book for our Spanish business stands at 388 homes as of 5
November 2017 (2016 equivalent period: 342 homes). We expect the
business to report another year of growth in operating profit* in
2017 (FY 2016: GBP20.6 million operating profit*).
Group financial position
We expect net cash at the end of 2017 to be around GBP500
million (31 December 2016: GBP365 million), subject to the timing
of conditional land purchases, and after the payment of GBP450
million of dividends to shareholders in 2017.
Leasehold
At the conclusion of our leasehold review we made a provision in
the first half accounts, before tax, of GBP130 million, which we
continue to believe is an appropriate estimate. Following the
launch of our Ground Rent Review Assistance Scheme in April, we
were pleased to reach agreements with freeholders to enable the
substantial majority of our customers with a ten-year doubling
lease to convert ground rent terms to an RPI based structure,
should they elect to participate. Converting to an RPI based
structure addresses concerns about the mortgageability and
saleability of these properties. We continue to make good progress
towards securing agreements with other freeholders to also enable
the conversion of the remaining doubling ground rent leases. We
expect a modest cash impact in 2017 with the majority of the
outflow to be spread over approximately the next two years.
Outlook
We are on track to deliver FY17 results in line with our
expectations, and we expect to achieve further growth and
performance improvement in 2018. In FY17 we expect to deliver an
increase in the operating profit* margin (FY 2016: 20.8%), a return
on net operating assets** of over 30% and we also confirm the FY18
total dividend of c.GBP500 million, subject to relevant shareholder
approvals. We reiterate our intent to make further material capital
returns in 2019 and beyond, and we will provide further details at
our Strategy Day next year. We remain highly focused on driving
improvements in all our operational disciplines and are pleased
with the continued progress being made with both our customer and
product offerings.
Whilst underlying market conditions remain healthy and we have
seen no evidence of a change in trading patterns we are
nevertheless alert to the potential risks from heightened political
and economic uncertainty. Our strategy, based on a robust balance
sheet, a high quality landbank and a strong order book, provides
the flexibility and resilience to enable us to manage any change in
market conditions, if required.
* Operating profit is defined as profit on ordinary activities
before net finance costs, exceptional items and tax, after share of
results of joint ventures.
** Return on net operating assets is defined as 12 month
operating profit divided by the average of the opening and closing
net operating assets, which is defined as net assets less net cash
less deferred tax balances, less any accrued dividends.
-Ends-
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7823 419 000
Pete Redfern, Chief Executive
Ryan Mangold, Group Finance Director
Harry Goad, Investor Relations
Finsbury Tel: +44 (0) 20 7251 3801
Faeth Birch
Anjali Unnikrishnan
Notes to editors:
Taylor Wimpey plc is a UK-focused residential developer which
also has operations in Spain.
For further information, please visit the Group's website
www.taylorwimpey.com
Follow us on Twitter via @TaylorWimpeyplc
This information is provided by RNS
The company news service from the London Stock Exchange
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