HousebuilderTaylor Wimpey PLC does not see a recovery in the market anytime soon and is continuing in its effort to conserve cash, notably by cutting its land spend and slashing its build rates.
In a trading statement covering the year to end-December 2008, the company said cash payments in respect of UK land totalled around £540 million during 2008, a significant reduction against the land spend in 2007. It expects a further reduction in land spend during 2009 to less than £400 million.
The number of plots in the short term landbank - representing owned or controlled land with planning, or a resolution to grant planning - now stands at less than 73,000 plots, down from 86,155 plots at the end of December 2007.
Taylor Wimpey continues to operate with build rates below the current sales rates and its monthly cash spend on work in progress is running at approximately 50 percent of the equivalent figure for 2007.
It said it will need to make further provisions against its land and work in progress in its 2008 year end accounts in the absence of any improvement to market conditions. A review of the carrying value of these assets is underway and the level of any additional provisions required will be announced with its preliminary full-year results.
The UK year-end order book stood at 4,231 homes, down from 5,109 a year earlier.
Whilst there were signs of increasing stability in the US housing market during the second quarter of 2008, events in the world financial markets during the second half of the year had a detrimental impact. In contrast, its Canadian business continued to benefit from a robust operating environment throughout most of 2008, although it experienced some softening in the fourth quarter.
The year-end order book stands at 2,789 homes in North America compared with 3,137 homes previously.
The housing market in Spain remains weak and plans to exit Gibraltar are on course.
Taylor Wimpey said: “Discussions with our debt providers relating to the refinancing of our existing debt facilities continue on a constructive basis. We remain confident that a robust, stable medium term financing solution for the group, which takes into account the requirements of all relevant stakeholders, will be achieved prior to the end of this deferral period (relating to the testing date of certain of its financial covenants)”.