Taylor Wimpey reports first-half loss of £1.5bn

Taylor Wimpey made a staggering loss of more than £1.5bn in the first six months of the year.

The housebuilder’s latest figure bears little relation to the profit figure of £18m achieved in the comparable period in 2007.

Exceptional items weighed down heavily on Taylor Wimpey, running to a total of £1.5bn in all.

Without that unwelcome burden it would otherwise have reported a profit of £4m.

Taylor Wimpey lists the various elements making up the thumping hit as:

• £816m – the result of the writing-off the goodwill and assets of the George Wimpey brand;
• £586m – the cost of the write-down in the value of land and work-in-progress in the UK;
• £71m – the size of the provision against the value of assets of the group’s Californian housebuilding operation;
• £40m – the size of the one-off restructuring cost of UK Housing division;
• £33m – provision against valuation of assets in Spanish operation.

The group states that its liquidity position is strong but concedes that its banking covenants are set to be breached.

Deloitte & Touche, who audited Taylor Wimpey’s latest figures, provided an insight into the wobbliness of the current situation, stating: “If such a covenant breach were to occur, the lenders would be able to request early repaying of all outstanding borrowings and cancel their commitments.

“As a result the group has entered into discussions with the lenders to agree amended terms which would assume sufficient financing based on projected trading will continue to be provided.

“This position indicates the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern”.

TaylorWimpey’s financial results presented on the Stock Exchange this morning cover the six months to 30 June 2008.

Turnover was £1.9bn (figure in comparable period last year: £1.4bn)

The present company was only formed on 3 July 2007 when two rival housebuilders, Taylor Woodrow and George Wimpey agreed to merge.

Gearing (i.e. the ratio of borrowings to assets) has jumped from a figure of 34% to a less comfortable 77%.

Separate figures for Taylor Wimpey’s UK Housing division show turnover at £1.2bn with operating profit standing at £63m. But this before being pulled into the red by an exceptional item of £1.4bn.

Completions ran to 6,300 with the proportion of social housing properties within the total rising to 24%, up from 17% in the previous year.

The average selling price of a private home was £202,000 which is £22,000 down on the previous year’s figure of £224,000.

The average selling price for social housing was £108,000, a fall of £8,000.

Within the UK, Taylor Wimpey is:

• still on track to achieve £70m of savings resulting from last year’s merger;
• closing 13 of the 39 regional offices;
• cutting job numbers by 900.