UK Housing key performance indicators
Private sales rate
0.55
UK Housing
Page turn
Order book as a percentage of revenue
35%
Average outlet numbers
337
Customer satisfaction
87%
Percentage of customers who would recommend Bryant Homes and George Wimpey to their friends and family
Health and safety
0.315
Injury incident rate per 100,000 hours worked
Financial review
UK housing revenue increased by 73.6% to £3,053.8 million (2006: £1,759.2 million), primarily reflecting the inclusion of the legacy George Wimpey business for the second half of 2007.
Operating profit* was £418.2 million, an increase of 86.7% against the previous year (2006: £224.0 million).
The operating margin* for 2007 was 13.7% (2006: 12.7%).
Exceptional items of £47.9 million were charged during the year. These related to one time restructuring costs associated with delivering synergy benefits (£37.9 million) and the write down of the Laing brand (£10.0 million).
Sales, completions and pricing
Whilst sales and cancellation rates were steady year on year for the first half of 2007, second half sales levels were around 15% lower than the equivalent period in 2006.
Cancellation rates in the second half of 2007 were running above 30%, compared to a long run average of around 20%.
This reflected the more subdued market conditions being experienced across the UK, particularly in the fourth quarter of 2007.
We completed 14,862 homes in 2007, an increase of 79.2% on the prior year (2006: 8,294).
The average selling price of our homes in 2007 was £191,000 (2006: £193,000). The average selling price of a private home was £208,000 (2006: £210,000), whilst the average selling price of an affordable home was £105,000 (2006: £100,000).
The estimated underlying cost inflation of labour and materials has been running at around 3% per annum during 2007. The initiatives underway as a result of the merger are expected to more than offset inflationary increases.
Our year end order book stood at £1,064 million (2006: £534 million).
Product range and branding
Following the merger, we are operating with two core brands in the UK, Bryant Homes and George Wimpey. We have identified a number of ways to differentiate our brands to offer customers more choice on our sites, whilst retaining a shared set of 'core values'. Some of these differentiating factors, such as the range of optional extras that can be purchased, are already being rolled out. Other factors, such as changes to the design of the housetype portfolio, will take time to come into effect.
In addition, we are continuing to develop the G2 brand, with a product and price range specifically targeted at first time buyers. We built our second G2 development during 2007 and 70% of the homes were sold within one day.
We offer a wide range of products from apartments to five bedroom houses, with prices ranging from under £100,000 to over £500,000. During 2007, the majority of our homes were priced within a range from £100,000 to £200,000.
Quality and customers
We remain committed to delivering high quality homes for all of our customers.
Our key performance indicator for customer satisfaction during 2007 was the percentage of customers who would recommend us. Both Bryant Homes and George Wimpey recorded scores of 87%, although different methodologies had been used by the legacy businesses. Going forward, we will be using a new measurement system administered by the National House-Building Council (NHBC).
We have once again been well represented in the NHBC Pride in the Job awards, looking at build quality, with our UK site managers winning 65 Quality Awards, 20 Seals of Excellence and four Regional Awards.
Landbank
Combining Taylor Woodrow's strong strategic landbank and George Wimpey's short term land has delivered a well balanced portfolio that puts Taylor Wimpey in an excellent position for future home completions. At the year end, all plots required for forecast 2008 completions had detailed planning consents in place and 90% of forecast completions were on sites which were already actively selling.
We have undertaken a number of land sales in the second half of 2007, following our review of the combined landbank. For the year as a whole, land sales have generated £130.9 million of revenue (2006: £194.6 million) and contributed £40.1 million of operating profit after allocation of overheads (2006: £25.6 million).
As part of the review of landbank, we have reviewed in detail our disclosure and, as a result, have provided more information on the structure of the landbank. This includes both the actual stage of planning and a greater breakdown of the way in which the land is held. Our UK short term landbank, representing owned or controlled land with planning, or a resolution to grant planning, stood at 86,155 plots at 31 December 2007 (2006: 39,077 plots).
As a result of the strength of our landbank, and given an uncertain UK market, we have been able to be increasingly selective in our land purchasing since the start of October 2007 and we expect to continue with this policy into 2008.
| UK Housing landbank | ||||||
| 2007 | 2006 | |||||
| Plots | Owned | Controlled | Pipeline | Total | Total | |
| Detailed planning | 42,459 | 2,435 | 267 | 45,161 | 19,369 | |
| Outline planning | 26,148 | 5,123 | 881 | 32,152 | 16,897 | |
| Resolution to grant | 4,109 | 5,881 | 3,756 | 13,746 | 7,432 | |
| Sub total | 72,716 | 13,439 | 4,904 | 91,059 | 43,698 | |
| Allocated strategic | 3,717 | 8,477 | 301 | 12,495 | 7,300 | |
| Non allocated strategic | 25,514 | 64,347 | 536 | 90,397 | 64,650 | |
| Total | 101,947 | 86,263 | 5,741 | 193,951 | 115,648 | |
Going forward
Although sales and cancellation rates have improved in the early part of 2008, they remain weaker than seasonal norms.
We anticipate that the current subdued conditions will continue, with interest rates and mortgage availability being key determinants of customer confidence.
Our focus is on preserving value through maintaining a steady, but reduced, sales rate and controlling land and work in progress spend tightly. We anticipate that these actions will result in significant cash generation, particularly in the second half of 2008.
*Profit on ordinary activities before finance costs, exceptional items and amortisation of brands.