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4 July 2013
Taylor Wimpey plc
Trading update for the period ended 30 June 2013
Strong H1 trading performance
Trading update ahead of half year results for the period ended 30 June 2013, which will be announced on 31 July 2013.
We traded at the upper end of our expectations for the period and we will report improvements across all of our key financial metrics at the time of our half year results on 31 July. We expect to report a UK operating profit margin for the first half of 2013 of over 13% (H1 2012: 11.2%*).
Pete Redfern, Chief Executive, commented:
"We have welcomed signs of significant improvement in the housing market in the first six months of 2013 where we have seen increased consumer confidence, underpinned by both generally improved access to and affordability of mortgage finance and by the recent Government measures. This has enabled us to continue our investment in local communities across the UK and play a leading role in the creation of new homes, employment opportunities and infrastructure."
UK current trading
We are seeing improvements across most of our markets in the UK, with our businesses in the South East and Midlands regions performing particularly well in the first half of the year. We have also seen a return to the more traditional seasonal patterns, with a strong spring selling season, driven by increased customer confidence and buoyed in the second quarter by the Government measures.
During the first half of 2013, we achieved an average private net reservation rate of 0.67 per outlet per week (H1 2012: 0.60) and we completed 5,192 homes (H1 2012: 5,083). Of this, 4,229 were private completions (H1 2012: 4,137), 930 were affordable (H1 2012: 893) and 33 were joint venture completions (H1 2012: 53). The average selling price of completions also increased to circa £187k (H1 2012: £176k). The average selling price on private completions increased by 8% to £205k (H1 2012: £189k) reflecting both the higher quality of our locations and the improving market. Cancellation rates remain low at 14% (H1 2012: 15%). The total order book, excluding completions to date and joint ventures, stands at £1.3 billion as at 30 June 2013 (1 July 2012: £960 million), up 35%, and reflects the continued strong private order book. The total order book represents 7,101 homes (1 July 2012: 5,720 homes).
Help to Buy is available on 98% of our outlets across England and continues to help to drive increased visitors to our developments. We reacted swiftly to its introduction, and so far the scheme has helped over 1,000 households to reserve to date, with a further 232 currently going through the qualification process with the Home Buy agents. We were particularly pleased to be able to announce the first Help to Buy completion in the sector just five weeks after the scheme came into effect. Our customers also continue to make positive use of the MI New Home scheme in Scotland and the NewBuy scheme in England.
Land portfolio, planning and outlets
We have not yet seen any material changes to the land market. Whilst the improving housing market is bringing new competitors into some regional markets, we are also seeing a healthy supply of new opportunities. Therefore, at present, we are still able to source and secure attractive opportunities at a similar margin to acquisitions in 2012. We will continue to monitor this carefully throughout the second half of the year.
During the first half of 2013, we have approved the purchase of circa 6,800 plots. Our strong balance sheet and local market expertise gives us excellent access to land opportunities, whilst our proactive approach to community engagement has become the way we do business and has enhanced our reputation at a local level and increased our planning success.
We maintain our focus on our strategic land portfolio and aim to increase completions from strategic land to around 30% over the next three years, underpinning our confidence in delivering sustainable margins through the cycle.
We are currently operating from 322 outlets including joint ventures (1 July 2012: 314).
Although the Spanish housing market continues to be challenging, our cautious acquisition of new outlets in outstanding locations, where clear value can be demonstrated, has led to a significant increase in sales in H1, and is anticipated to contribute positively to 2014 performance. We completed 27 homes in Spain during the first half of 2013 (H1 2012: 13) at an average selling price of €215.8k (H1 2012: €212.9k).The order book value was £37 million at 30 June 2013 (1 July 2012: £20 million), representing 174 homes (1 July 2012: 97 homes).
Group financial position
Net debt at 30 June 2013 is circa £70 million (1 July 2012: £135.2 million).
Following the wider market improvement, including the implementation of Help to Buy in April 2013, we consider that the downside market risk in the short to medium term has reduced. Based on this more stable to improving market, we anticipate that our regular half year review will result in the write back of some of the impairment against UK inventory as an exceptional gain. We will provide further detail in our half year results.
During the first half of 2013, we have been operating in a UK housing market that has shown measurable improvement for the first time since the downturn of 2007/2008. We consider this to be down to a general economic improvement, better mortgage availability and the direct impact of the Government schemes. In this improved environment, we remain committed to our strategy which we believe will deliver both improved and more sustainable returns for our shareholders and will make a significant contribution to local communities and help meet the housing need.
We are confident of delivering our full year expectations, and demonstrating further steps in our goal of margin improvement, which remains our primary focus. In this improved market, our strong order book and outlet position is likely to lead to continued volume growth in the second half.
* 2012 has been restated to reflect the change in presentation of certain costs relating to the defined benefit pensions in accordance with IAS19R 'Employee benefits'.
- Ends -
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 1494 885656
Pete Redfern, Chief Executive
Ryan Mangold, Group Finance Director
Debbie Sempie, Investor Relations
RLM Finsbury Tel: +44 (0) 20 7251 3801
Notes to editors:
Taylor Wimpey plc is a residential developer with operations in the UK and Spain. We aim to be the leading developer for creating value and delivering quality.
For further information, please visit the Group's website:
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