Taylor Wimpey to widen refinancing talks

Housebuilder Taylor Wimpey is to talk to other banks to secure a refinancing deal to allow it to grow in the current market, it said today.

Publishing half year results showing pre-tax profits of £19.6m on revenue up 8% to £1.22bn, the firm said it was planning to widen its current refinancing discussions to “other lender groups” in the coming months.

Taylor Wimpey is widely viewed as the housebuilder with the most restrictions on its ability to invest in land and other assets for the future because of the nature of its agreements with its main banking group. It said today that “while the group’s current debt facilities do not expire until July 2012, an earlier refinancing is preferable to provide additional operational flexibility for the business.”

It added: “We have had good early discussions with our main banking group and expect to widen the discussions to other lender groups in the coming months.”

The comments are the firm’s first public statements on the subject since it was reported it was looking to refinance in July. The comments came as it reported an overall profit of £7.5m for the six months to July 4, compared to a £682m loss in the same period last year. The number of homes sold rose marginally, to 6,730, up from 6,707, with build cost reductions of 9% from the market peak.

First half results were surprisingly strong

Charlie Campbell, analyst

The markets reacted well to the announcement, sending shares up 4% in early trading. However, the firm said the number of sites it has open in the UK declined from 322 to 295, and land acquisitions in the UK remained “selective”.

The firm said it “remained concerned about the potential adverse impacts of proposed changes in planning policy,” and noted “wider economic uncertainty” in the UK.

Pete Redfern, group chief executive, said: “We have performed well in the first half of the year and I’m pleased with the progress we’ve made in reducing costs, improving the margin and developing the landbank.  We have significantly strengthened our business and we are well-positioned to grow shareholder value.”

Analyst Charlie Campbell, of Liberum Capital, said: “[The] first half results were surprisingly strong, making £20m profit before tax against expected loss of £16m, driven by much better than expected UK margin. Its outlook statement… bodes well for the UK housebuilders’ results season.”