TIDMTW.
RNS Number : 6661Z
Taylor Wimpey PLC
14 January 2020
14 January 2020
Taylor Wimpey plc
Trading statement for the year ended 31 December 2019
Taylor Wimpey is issuing the following update on trading ahead
of its full year results for the year ended 31 December 2019, which
will be announced on 26 February 2020.
Overview
Pete Redfern, Chief Executive, commented:
"Our results for the year to 31 December 2019 will be in line
with our expectations. Despite an uncertain political and economic
backdrop in 2019, we have continued to experience a good level of
demand for our homes and trading in the second half of the year was
as anticipated. The Group has again delivered a record sales rate
and we increased home completions by c.5% in the year.
In 2019, our focus was on strengthening the long term
sustainability of the business, further improving our build quality
and customer offering, as well as increasing operating capacity and
flexibility. In 2020, we will continue with these initiatives and
will also prioritise a renewed cost focus and process
simplification improvements."
UK current trading
Despite ongoing economic and political uncertainty, the housing
market remained stable throughout 2019, albeit with more
challenging conditions in London and the South East and at higher
price points.
In 2019, total home completions increased by c.5% to 15,719,
including joint ventures (2018: 14,933). During 2019, we delivered
3,548 affordable homes (2018: 3,416), including joint ventures,
equating to 23% of total completions (2018: 23%). Our net private
reservation rate for 2019 was 0.96 homes per outlet per week (2018:
0.80). Cancellation rates remained low at 15% (2018: 14%). Average
selling prices on private completions increased by 1% to GBP305k
(2018: GBP302k), with the overall average selling price increasing
to GBP269k (2018: GBP264k).
We ended 2019 with a record total order book valued at GBP2,176
million as at 31 December 2019 (31 December 2018: GBP1,782
million), excluding joint ventures, which represents 9,725 homes
(31 December 2018: 8,304 homes). We traded from an average of 250
outlets in 2019 (2018: 273) and enter 2020 with 240 outlets (31
December 2018: 256). As previously guided, we expect 2020 outlet
numbers to be broadly similar to 2019.
Build cost inflation in 2019 was c.4.5%. As stated in November,
over recent months we have seen a softening in the cost pressures
experienced in 2019.
During 2019, we invested in new programmes specifically focused
on enhancing build quality and increasing our production capacity
and followed through on our 2017 and 2018 investments in customer
service and process. We are pleased that the National
House-Building Council (NHBC) Construction Quality Review* measure
indicates we are an industry leader in terms of build quality.
We continue to see the 'would you recommend' score in the Home
Builders Federation survey as an important measure of initial
customer satisfaction, alongside other key metrics, and whilst
disappointed that we dipped just below 90%, we are pleased that
recent performance is back at a five-star level.
Land
The land market remained stable in 2019 and as at the end of
December, our short term landbank stood at c.76k plots (2018: c.76k
plots). We are operating a broadly replacement approach to our
landbank which currently represents c.4.8 years of supply at our
current rate of completions (2018: c.5.1 years). Our strategic land
pipeline was c.140k potential plots (2018: c.127k plots), after the
successful conversion of c.8k plots into the short term landbank
(2018: c.8k). Our strong strategic land pipeline remains a key
strength of our business, reducing the need to compete in the short
term land market and helping underpin future growth and forward
planning, in a very capital efficient manner.
Spain current trading
The Spanish market remained healthy throughout the year. We
completed 323 homes in 2019 (2018: 342) at an average selling price
of EUR429k (2018: EUR344k). The total order book as at 31 December
2019 stood at 217 homes (31 December 2018: 284 homes).
Group financial performance and dividend
We will report full year 2019 results in line with our
expectations, delivering an operating profit** margin of c.19.6%
(2018: 21.6%), as previously guided, and a return on net operating
assets*** of c.31% (2018: 33.4%).
We ended the year with a strong net cash balance of c.GBP546
million (31 December 2018: GBP644.1 million net cash), ahead of
expectations, due to the timing of certain land investments. This
is after the payment of c.GBP600 million of dividends to
shareholders in 2019 (2018: GBP499.5 million).
We remain a very cash generative business and, as previously
announced, intend to return GBP610 million to shareholders by way
of total dividend in 2020, subject to shareholder approval.
2020 priorities and outlook
We made good progress throughout 2019 in improving our build
quality and investing to further improve our customer offering and
underpin our future production capacity. This includes a
significant increase in the number of apprentices.
While 2020 will continue to be a year of change for the UK, we
welcome the increased political stability following the general
election. We start the year with a strong order book and continue
to target a smoother profile of completions throughout the year but
expect 2020 to continue to be second half weighted.
We will continue to embed the improvements we are making across
the business and will focus on cost discipline and process
simplification.
-Ends-
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7826 874461
Pete Redfern, Chief Executive
Chris Carney, Group Finance Director
Debbie Archibald, Investor Relations
Finsbury Tel: +44 (0) 20 7251 3801
Faeth Birch
Anjali Unnikrishnan
* The NHBC Construction Quality Review is an average score, out
of six, achieved during an in-depth annual review of construction
quality on a site-specific basis.
** 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 (RONOA) is defined as rolling
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, excluding net taxation balances and accrued
dividends.
Notes to editors:
Taylor Wimpey plc is a customer-focused homebuilder, operating
at a local level from 24 regional businesses across the UK. We also
have operations in Spain.
For further information, please visit the Group's website:
www.taylorwimpey.co.uk
Follow us on Twitter via @TaylorWimpeyplc
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END
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