Taylor Wimpey says 2016 starting strongly after final results hit target

Final results from Taylor Wimpey were strong and in line with City expectations, with the housebuilder confirming that the market had strengthened into 2016.

Prices were said to be continuing to grow thanks to "very good" sales rates in most parts of the UK, including central London returning to stability, with "flat prices and sales rates returning to a more normal level".

Last year, Taylor Wimpey built 13,219 houses, an increase of 7.5% to record levels, with the average selling prices of a home creeping up 8% to £230,000.

Adding the effect of joint ventures, revenues rose 17% to £3.14bn as a result, with a 2.4 percentage point widening of operating margins helping deliver a 34% gain in profits before tax and exceptionals to £603.8m.

Adjusted earnings per share grew 33% to 14.9p, with cash conversion improving to 67% and year end net cash of £223m.

Directors said that on top of a final maintenance dividend of 1.18p per share, they would return around £300m, or 9.2p per share, in July as a special dividend.

All these numbers were in line with guidance and market forecasts, though analysts at Shore Capital said after Persimmon and Berkeley stepped up their returns, expectations were heightened that the ‘special’ element of the dividend would be increased now that the group has stopped making net additional investment in land.

This was shown by the plot count in the landbank only rising by 0.8%.

The short-term landbank stood at close to 76,000 plots at the year end, with a massive strategic land pipelines of roughly 107,000 potential plots.

A record year end order book stood at 7,484 homes, with a total value of £1,779m.

Strong trading in 2016 has seen sales rates in the at 0.77 per site per week, up from 0.68 in the equivalent period of 2015, and the forward order book ahead by almost a quarter to £2.03bn, with the group currently 50% sold for the current year's planned completions.

Shore Capital added: "The year looks to have started well, in line with the peer group, but as elsewhere TW looks to be selling at a much higher rate than it is able to build. Given the limited lifespans of mortgages, this cannot go on indefinitely without a material increase in production. Planning and labour bottlenecks still make this difficult."