Taylor Wimpey reports £2bn loss for 2008

Taylor Wimpey (TW) has reported a staggering pre-tax loss of £2bn. 

The actual trading loss of £74m fades to insignificance when exceptional items enter into the equation as they run to a total of £1.9bn and comprise five elements:

• £1bn - write-down of land and work-in-progress
• £700m - goodwill impairment
• £120m – other intangible impairments
• £35m - restructuring costs
• £20m – refinancing costs

Pete Redfern, chief executive, said: “The underlying strength of our business was severely tested in 2008.”

The latest figures cover the 12 months to 21 December 2008

Details of changes show:

• 13,400 completions (previous figure: 14,900)
• £171,000 average selling price (£191,000)

During 2008 TW closed 13 of its 39 regional offices and since that time three more have been boarded up.

For new and existing sites, TW says it is “building in cost reduction targets to ensure that new plots released to construction contribute an enhanced level of cash generation once the sale is completed.”

TW has completed its exit from construction having sold Taylor Woodrow Construction to Vinci for £74m, a deal that triggered a profit-on-disposal of £56m.

TW had a cash in-flow during the year of £150m from operating activities.

Net debt rose from £1.4bn to £1.5bn during the 12-month period.

A revised financing deal has been signed off. It does not require TW to raise new equity capital, however its weak negotiating position has resulted in lenders forcing it to pay out an additional 4.6% on the money is it borrowing.

TW comments: “The difficult environment during 2008 has resulted in the failure of some sub-contractors’ businesses.” It adds that some skilled tradesman have left the industry to take jobs in other sectors.

The group has two main pension schemes:

• Taylor Woodrow Group Pension Scheme
• George Wimpey Staff Pension Scheme

The deficits in both have ballooned.

The first’s shortfall has jumped from £65m to £163m while the latter’s deficit how stands at £215m, up from a figure of £148m a year ago.

TW is pumping £20m a year into the Taylor Wimpey scheme.

After putting £15m into the George Wimpey scheme in the first half of 2008, a further £25m was added in the second half plus a £5m one-off payment.