North America Housing key performance indicators
Sales rate
0.78
North America Housing
Page turn
Taylor Morrison inventory against US total inventory
Financial review
North America Housing revenue decreased by 15.7% to £986.8 million (2006: £1,170.2 million), as the weaker market conditions outweighed the inclusion of the legacy Morrison Homes business for the second half of 2007.
Operating profit* was £67.5 million (2006: £222.6 million). Exceptional items were £321.3 million (2006: £ nil).
The operating margin* for 2007 was 6.8% (2006: 19.0%).
Due to the ongoing weakness in market conditions experienced during the year, we have conducted regular reviews of the carrying value of our land holdings. As a result of these reviews, we have taken land and work in progress write downs totalling £283.4 million during 2007.
Sales, completions and pricing
The business operated with an average of 183 outlets during 2007 (2006: 108).
Total home completions were 5,197 (2006: 4,492).
The average selling price of our North American homes in 2007 was £182,000 (2006: £233,000), reflecting the weaker market conditions and also a shift in sales away from higher priced products in Florida and California.
Our year end order book stood at £529 million (2006: £436 million).
Product range
We offer a wide range of homes to our customers in North America, ranging from entry level to luxury homes. Our product range includes high rise apartments, single family homes, townhomes and full service country club properties. At present our only upcoming high rise projects are in the Canadian market.
Our US homebuilding operations are now trading under the Taylor Morrison brand, with land development branded Taylor Woodrow Communities, whilst our Canadian business continues to operate as Monarch.
Quality and customers
Quality is a key focus for all of our operations and we are particularly proud of our Canadian business, which was rated as the number one in Ottawa in the JD Power & Associates customer satisfaction survey for 2007.
Similar to our UK business, our key performance indicator for customer satisfaction was the percentage of customers who would recommend us. Both legacy businesses recorded scores exceeding 80% during 2007, although different survey methodologies had been used. Going forward, we will be using a new measurement system administered by an independent, third party organisation.
We are running a series of best practice conferences to learn from the customer care experience of our legacy businesses. This consultation process will inform the development of core practices and guidelines.
Landbank
We remain extremely cautious with regard to land purchases in the US, although we have continued to invest in land for our Canadian operations and renegotiate existing terms on option contracts in Florida, California and Arizona.
At the year end, we had a landbank of 40,603 plots (2006: 31,353 plots).
Net operating assets in the US stood at £574.3 million at 31 December 2007.
Going forward
We do not expect market conditions in the US to improve significantly during 2008. In the short term, our strategy remains to focus on managing out existing sites and reducing the cost base.
We are well placed to take advantage of land acquisition opportunities as they arise in the future.
Order book as a percentage of revenue
53.6%
Average outlet numbers
183
Customer satisfaction
93%
Morrison Homes
82%
Taylor Woodrow
Customers who would recommend
us to friends and family
Health and safety
0.212
Injury frequency rate per 100,000 hours worked
* Profit on ordinary activities before finance costs, exceptional items and amortisation of brands.