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RNS Number : 6215L
Taylor Wimpey PLC
14 January 2021
14 January 2021
Taylor Wimpey plc
Trading statement for the year ended 31 December 2020
Taylor Wimpey is issuing the following update on trading ahead
of its full year results for the year ended 31 December 2020, which
will be announced on 2 March 2021.
Overview
Pete Redfern, Chief Executive, commented:
"Our focus remains on the continuing safety of our colleagues,
customers, suppliers and subcontractors as the country continues to
deal with the COVID-19 pandemic.
Our 2020 results will be in line with market expectations. While
operations were impacted by the shutdown period in the second
quarter, the subsequent return to near normal construction capacity
and continuing resilience of the UK housing market enabled sales
and production to recover strongly towards the end of the year. We
increased new investment in land in the second half of the year as
high quality land became available at attractive margins.
We start the year with an excellent order book and ongoing focus
on strengthening the business and improving margins. This will
position Taylor Wimpey well to deliver strong and reliable returns
for our stakeholders over the medium term."
2020 performance
We entered 2020 with a healthy sales rate underpinned by strong
demand for our homes and with a focus on driving margin
performance. Our operations were inevitably significantly impacted
by the shutdown period in the second quarter of 2020, when we acted
quickly to put in place the safety measures necessary to operate in
a COVID-secure manner. However, the UK housing market has remained
resilient and our production and sales have recovered strongly
since the shutdown. We expect to report full year 2020 results in
line with market expectations(1) .
Total UK home completions (including joint ventures) decreased
by c.39% to 9,609 in 2020, due primarily to the impact on
production capacity during the second quarter shutdown (2019:
15,719), and we delivered 1,904 affordable homes (2019: 3,548),
including joint ventures, equating to 20% of total completions
(2019: 23%). Our net private reservation rate for 2020 was 0.76
homes per outlet per week (2019: 0.96). Cancellation rates for the
full year were above normal levels at 20% (2019: 15%), but
normalised in the final quarter, at 16%, (2019: 16%). Average
selling prices on private completions increased by 6% to GBP323k
(2019: GBP305k), with the overall average selling price increasing
to GBP288k (2019: GBP269k), driven mostly by change in mix.
(1.) The current Company compiled average consensus expectation
for 2020 is for operating profit, which includes share of results
of joint ventures, of GBP293 million. Operating profit is defined
as profit on ordinary activities before net finance costs,
exceptional items and tax, after share of results of joint
ventures.
We returned to near normal levels of production capacity towards
the end of 2020 and continue to operate effectively in a
COVID-secure way.
With demand for our homes remaining strong, we ended the year
with a total order book valued at GBP2,684 million (31 December
2019: GBP2,176 million), excluding joint ventures, which represents
10,685 homes (31 December 2019: 9,725 homes). We traded from an
average of 240 outlets in 2020 (2019: 250) and enter 2021 with 239
outlets (31 December 2019: 240). From 16 December, we began taking
reservations under the new phase of the Help to Buy scheme and, up
to 31 December, made 650 reservations under the new scheme for
completions from the second quarter of 2021.
We have a clear focus to return the business to 21-22% operating
margin* and we continue to target a number of areas to achieve
this: cost, process simplification and enhancing the core drivers
of value for our business. In November, we announced that we had
undertaken a detailed review of our organisational and cost
structure in addition to cost reduction and management programmes
already in place. We have delivered the planned savings outlined in
November, which will be realised from the beginning of 2021. These
changes will not affect the ability of the business to generate
future growth or to deliver a high quality product and service to
our customers.
We have retained our focus on build quality where we lead the
volume industry and on customer service where we expect to return
to a five-star builder rating in the upcoming Home Builders
Federation survey.
Build cost inflation has remained lower than in recent years. At
this stage, we have not experienced any significant supply chain
issues associated with Brexit.
Land
As at 31 December 2020, our short term landbank stood at c.77k
plots (2019: c.76k plots). Our industry leading strategic land
pipeline was c.139k potential plots (2019: c.140k plots), after the
successful conversion of c.4k plots into the short term landbank
(2019: c.8k plots).
We continue to approve land acquisitions following our June 2020
equity raise and have now agreed terms on and authorised c.GBP1.3
billion of gross land purchases, comprising 93 sites and c.22,600
plots, significantly ahead of our normal rate of acquisition. These
sites have been secured at attractive returns in line with our
medium term operating margin target of 21-22% and with an average
return on capital employed** of c.34%. This investment provides us
with a route to high quality growth in the medium term from our
strong landbank, with new land expected to deliver outlet growth
during late 2022 and volume growth from 2023.
Spain current trading
The Spanish second-homes market has been impacted by travel
restrictions as a result of COVID-19. We completed 190 homes in
2020 (2019: 323) at an average selling price of EUR375k (2019:
EUR429k). The total order book as at 31 December 2020 stood at 126
homes (31 December 2019: 217 homes). We expect the business to
begin to normalise when foreign travel returns to more normal
levels.
Group cash position and dividend
We ended the year with strong net cash(++) of c.GBP719 million
(31 December 2019: GBP545.7 million net cash). We expect net cash
to reduce through 2021 as we progress the new land acquisitions
over the next 18 months.
As previously stated, we expect to recommence ordinary dividend
payments in 2021, starting with the payment of the 2020 final
dividend . We will review the special dividend in 2021 for payment
in 2022.
Outlook
Recognising the importance of the industry, the Government has
confirmed that the housing market will remain open during the
current lockdowns in England, Scotland and Wales and all Taylor
Wimpey construction sites will remain open. We will continue to
operate our sites under strict COVID-secure guidelines and our
sales centres and show homes will remain open for appointments with
the exception of Wales, where our sales centres are closed and show
homes are open on an appointment only basis.
Throughout 2020 we were encouraged by the continued resilience
of the UK housing market, underpinned by low interest rates and
strong customer demand, and despite the further lockdown in January
2021, interest levels remain good. We enter the year more than 50%
forward sold for 2021 private completions.
Whilst there remains some economic uncertainty given the
COVID-19 pandemic and Brexit, the outlook for the UK housing market
remains robust. We start 2021 in an excellent financial position,
with a strong order book and a clear focus on cost and efficiency.
We remain confident of achieving our medium term operating margin
target of 21-22% and are well placed to deliver strong and reliable
returns for our stakeholders.
-Ends-
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7826 874461
Chris Carney, Group Finance Director
Debbie Archibald, Investor Relations
Andrew McGeary, Investor Relations
Finsbury TaylorWimpey@Finsbury.com
Faeth Birch
Anjali Unnikrishnan
* Operating margin is defined as operating profit or loss
divided by revenue. With operating profit defined as profit on
ordinary activities before net finance costs, exceptional items and
tax, after share of results of joint ventures.
** Return on capital employed is defined as rolling 12 months
operating profit or loss divided by the average capital employed
calculated on a monthly basis over the period.
(++) Net cash is defined as total cash less total
borrowings.
Notes to editors:
Taylor Wimpey plc is a customer-focused homebuilder, operating
at a local level from 23 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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