Taylor Wimpey’s building sites and sales centres were shut down on 23rd March and did not start opening until May. It operated at reduced capacity between 4th May and 29th May. Sales centres reopened between 22nd May and 29th June.
As a result, the business incurred £39.2m of costs directly relating to the Covid-19 pandemic. These include £29.9m of non-productive site overhead costs during the lockdown would normally be capitalised to work in progress and expensed as plots legally complete. There were also £4.7m of additional costs incurred due to extended site durations resulting from reduced productivity levels; and £4.6m of incremental costs to meet government guidelines on safe operating procedures.
This resulted in a pre-tax loss for the six months to 30th June 2020 of £39.8m, compared to a profit of £299.8m before tax in the first half of 2019.
Revenue for the six months was down 56% to £754.6m (2019 H1: £1,732.7m).
Cashflow was also impacted by site closure, as completions were held back but bills still had to be paid.
A £510m call on shareholders in June enabled Taylor Wimpey to end the first half with net cash of £497.3m. The revolving credit facility was drawn in full as a precaution at the start of lockdown but has now been fully repaid and remains undrawn.
In the nine weeks since sales centres reopened in England, the sales rate has increased from 0.30 during shutdown to 0.70. There has been a 206% increase in appointments booked and a 50% increase in website visits, year on year.
Despite all the wider economic uncertainty, Taylor Wimpey retains a degree of confidence.
“Demand has remained robust and our customers have continued to want to progress their home purchases,” it says. “Despite the uncertainty, mortgage finance has continued to be available and we welcome the positive lending signals from the banks. The decrease in the Bank of England base rate to a new historic low in March continues to support affordability.”
However, construction has fallen behind due to lockdown and reduced production capacity (it is currently operating at 80%), which means there are going to be fewer new homes available for buyers until construction catches up.
Chief executive Pete Redfern said: “I am pleased with Taylor Wimpey’s performance during a very challenging time and am proud of the resilience, principled approach and agility that our teams have shown.
“Our performance for the first half of 2020 has been impacted by the closing of our sites and sales centres but we have now reopened all sites successfully and safely and have returned to a sustainable level of sales and build.”