Taylor Wimpey sees 2017 in line; expects further improvement this year
Company still expects to pay out up to £130m for ground rent scandal
House builder Taylor Wimpey said 2017 results would be in line with forecasts, and expected to achieve further growth and performance improvement in 2018, despite political and economic uncertainty
The company, which was caught in the new build ground rent scandal where customers were trapped in contracts that rendered their properties almost worthless, said it still expected to pay out up to £130m to resolve the issue.
It added that it had now secured agreements with 90% of freeholders to allow those with a 10-year doubling ground rent lease to convert to an RPI-based structure “should they elect to participate in our assistance scheme”.
“We continue to make good progress towards securing agreements with the other freeholders,” Taylor said.
Taylor said it should report a full year operating profit margin of around 21.2%, up from 20.8% and a return on net operating assets of more than 32% against 30.7%.
Overall, Taylor said it continued to see good demand and trading throughout the year against the backdrop of a positive housing market.
“Customers continued to benefit from a wide range of mortgage products, low interest rates and the government's help to buy scheme,” Taylor said.
“Employment trends continue to be healthy and customer confidence remains robust.”
Total home completions increased by 5% to 14,541, including joint ventures. The company said it would pay a total dividend in full year 2018 of around £500m, subject to shareholder approvals, and reiterated its intention to make further material capital returns in 2019 and beyond.
The net private reservation rate for 2017 was 0.77 homes per outlet per week, up from 0.72 in 2016, and cancellation rates remained steady at 13%.
Average selling prices on private completions increased by 3% to £296,000 with the overall average selling price up 4% to £264,000.
The Spanish market remained strong in 2017 with 301 homes completed in 2017, up from 304 at an average selling price of €352,000, against €358,000.
“We expect to report a significantly improved operating profit for the Spanish business in 2017. The business is well positioned for further growth in 2018,” Taylor said.
Net cash was £512m, up from £365m after £450m in dividend payments.