REG-Taylor Wimpey PLC Interim Management Statement

     com:20091104:RnsD9063B
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RNS Number : 9063B  
  
Taylor Wimpey PLC  
  
04 November 2009  
  
4 November 2009  
  
Taylor Wimpey plc  
  
Interim Management Statement  
  
This Interim Management Statement covers the period from 1 July 2009 to 4 
November 2009.  
  
UK Housing  
  
UK housing market conditions continue to be significantly better than the 
equivalent period of 2008. The main house price indices are showing increases 
over recent months, with a gradual improvement in mortgage availability and a 
recent increase in industry housing starts also contributingto positive 
sentiment.  
  
Our own performance has remained encouraging since the half year.  We did not 
experience the usual industry seasonal slowdown over the summer and sales rates 
have remained solid into the autumn.  We are now fully sold for 2009 and our 
sales focus remains on achieving price increases as we build our 2010 order 
book.  Our net private reservation rate for the second half to date is 0.56 
homes per site per week (H1 2009: 0.65, H2 2008: 0.40).  These reservation rates 
include the effect of cancellations, which remain low at 16% for the second half 
to date (H1 2009: 19%, H2 2008: 46%).   
  
The average selling price for private homes in the order book is currently c9% 
higher than the £163k achieved on private completions during the first half.  
This is a result of planned improvements in our mix towards housing rather than 
apartments, as well as price increases achieved over the last three months. As 
indicated at our half year results, we expect to deliver a higher average 
selling price on private completions in the second half than that achieved in 
the first half. The total order book value is £1.00 billion (week 43 2008: £1.06 
billion).  
  
In response to the improved market conditions, we have steadily increased our 
build rates and we continue to open new outlets where we have maximised the 
benefits of revised planning consents and cost reductions. We have opened 22 
outlets in the second half to date and now have 317 active outlets, with further 
openings planned for the balance of the year.  
  
Having started to brand new outlets as Taylor Wimpey in July, the roll out of 
the brand to existing outlets is underway. A wide range of prototypes for our 
new house type range are under construction and these house types will be 
available to buy from early 2010. This range will enable us to achieve further 
operational efficiencies and has been designed to allow future regulatory 
requirements, relating mainly to sustainability initiatives, to be met at the 
lowest possible additional cost.  
  
We have also made good progress in reducing build costs.  Regular benchmarking 
exercises across our business have identified considerable opportunities for 
reductions in the cost of building our homes on current sites, with no 
compromise on quality. There are also opportunities to reduce the costs 
associated with infrastructure and other development costs. The enhancement to 
profits arising from these actions will accelerate as we open new outlets for 
future completions.  
  
Transaction volumes in the land market continue to be well below normal levels 
and we remain cautious on large scale land purchases. However, we have approved 
new land purchase commitments for 1,011 plots at 8 new sites since the half 
year, all of which have been on very favourable terms.  With a strong consented 
landbank and ongoing opportunities to bring plots through from our strategic 
landbank, we will continue to be highly selective with regard to open market 
land transactions.  
  
The continuation of improved market conditions into the autumn selling season 
has been reassuring, although sustaining the current recovery will be dependent 
on improvements in mortgage availability and the wider economy. Our operational 
focus remains on build cost reduction and achieving sales price increases as we 
build our order book for 2010.  
  
North America Housing  
  
The US housing market has shown continued stability in the second half to date, 
giving cause for cautious optimism.  Although foreclosures remain an issue, they 
have not had an incremental negative effect in recent months. The number of 
months of supply of both new and existing homes are reducing and affordability 
levels in many markets are very good.  In Canada, the more stable economic 
climate has been reflected in a more robust housing market and our business 
continues to perform well.  
  
We have 153 active outlets in North America (30 June 2009: 168).  Sales rates 
net of cancellations have remained consistent with the first half of the year, 
averaging 0.6 sales per site per week (H1 2009: 0.6, H2 2008: 0.3). Cancellation 
rates remain encouragingly low at c17% in the second half to date (H1 2009: 18%, 
H2 2008: 27%).  
  
Taking into account completions already achieved, our order book for the 
remainder of 2009 is in line to deliver our expectations for full year 
completions. Pricing has remained broadly flat against the first half average of 
US$275k. Our current order book stands at US$0.95 billion (week 43 2008: US$1.21 
billion).  
  
We have already achieved significant reductions in both build and overhead costs 
and inventory levels remain under tight control.  Our focus in North America is 
on ensuring that our landbank is well positioned to benefit from recovery.  To 
this end, we have traded out of some of our existing holdings and have acquired 
land selectively in high quality locations totalling 2,240 plots in the second 
half to date.    
  
Whilst we continue to expect geographical variations in the timing and profile 
of recovery, we have experienced an encouraging period of prolonged stability in 
our North American markets.  With affordability at extremely good levels there 
is the potential for significant price rises once economic conditions fully 
stabilise.  
  
Spain & Gibraltar Housing  
  
Our business in Spain is performing well in challenging market conditions and 
our plans to exit from our small business in Gibraltar remain on course.  
  
 Group  
  
Net debt currently stands at c£860 million, a significant reduction against the 
£1.87 billion at the same point last year. We now expect year end net debt to be 
below £800 million despite our decision to accelerate significant cash 
commitments forward from early 2010. This represents an improvement of £100 
million against previous guidance.  
  
As indicated at the half year, in the absence of a further material adverse 
change in our main markets, we would not anticipate further reductions in the 
carrying value of our landbank.  
  
The Group remains well positioned for market recovery, with a strong landbank 
and efficient operations in both the UK and North America.  Cash generation 
remains a focus for the Group, but our primary focus is on returning to normal 
levels of profitability as quickly as market conditions allow.  
  
Taylor Wimpey is holding a site visit for analysts and investors later today, 
where current trading and UK operational strategy will be discussed. Slides from 
the presentations given will be published on our website 
(www.taylorwimpeyplc.com).  
  
-ends-  
  
For further information please contact:  
  
Taylor Wimpey plc                                    Tel: +44 (0)7816 517 039  
  
Pete Redfern, Group Chief Executive  
  
Chris Rickard, Group Finance Director  
  
Jonathan Drake, Investor Relations  
  
Finsbury                                                 Tel: +44 (0)20 7251 
3801  
  
Faeth Birch  
  
Clare Hunt  
  
Notes to editors:  
  
Taylor Wimpey plc builds homes in the UK, North America, Spain and Gibraltar. It 
aims to be the homebuilder of choice for customers, employees, shareholders and 
communities.  
  
For further information please visit the Group's website:  
  
www.taylorwimpeyplc.com  
  
 
This information is provided by RNS  
  
The company news service from the London Stock Exchange  
  
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