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Taylor Wimpey expects further growth in margins

7 Nov 11 Taylor Wimpey expects to deliver its target of a double-digit operating margin in the UK next year, with “further margin improvement” beyond 2012.

In a trading statement, the house builder said this would be achieved “through the development of our extensive strategic land portfolio in combination with targeted short term land acquisitions”.

Taylor Wimpey said: “Housing market conditions in the UK have remained robust despite the ongoing uncertainty in the wider economy. Although mortgage availability remains restricted, we have seen an ongoing incremental improvement since the half year results.”

The firm described the trading pattern over the autumn as “encouraging” and said it had “achieved an average private net reservation rate of 0.55 sales per outlet per week for the second half to date (2010 equivalent period: 0.47). Cancellation rates remain at low levels and sales prices have been stable since the half year results.”

It added: “Our focus continues to be on optimising planning consents and value-engineering sites prior to opening new outlets. We are currently operating from 307 outlets, compared to 283 this time last year.

“Maximising the value achieved from each home completion remains a higher priority than volume growth and we have achieved further improvement in the margin on sales in our order book. We are now fully sold for our targeted 2011 completions and are building our order book for completions in the first quarter of 2012. The current order book for future completions is 6,265 homes (week 43, 2010: 5,496 homes).”

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Taylor Wimpey has approved the purchase of 3,793 new plots on 36 new sites since the half year.

The firm said: “We are seeing an increasing number of attractive opportunities in the land market, however we will maintain our consistent, disciplined approach to land acquisition going forward in order to maximise the quality of our land portfolio.

“The strength of our strategic land portfolio is demonstrated by our ongoing success in obtaining planning consents. Successes since the half year include: detailed planning consent for 285 homes at Keynsham, near Bath; outline planning permission for 650 homes at Coppenhall East, near Crewe; and resolution to grant outline planning permission for 233 plots at West Durrington, Worthing.

“We support the underlying principle in the proposed new planning system of ensuring that planning decisions involve the local communities that they affect. We have rolled out a number of initiatives on community engagement and continue to work towards aligning our business with the new requirements.”

Taylor Wimpey's net debt at 30 September was £261 million and it expects this to reduce by the year end in line with the normal seasonal pattern of home completions in the UK.

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