27th Jun 2007 07:03
Wimpey(George) PLC27 June 2007 27 June 2007 George Wimpey Plc Pre-close Trading Statement George Wimpey Plc is issuing the following pre-close trading statement prior toits half year period end on 1 July 2007 and ahead of the expected completion ofthe Company's proposed merger with Taylor Woodrow plc on 3 July 2007. Merger of George Wimpey Plc and Taylor Woodrow plc The merger of George Wimpey Plc and Taylor Woodrow plc is an outstandingopportunity to create the UK's largest housebuilding company. The Board ofGeorge Wimpey is delighted that shareholders of both companies have given theproposal their overwhelming support. Since the announcement of the merger on 26 March 2007, detailed integration workhas been carried out across all divisions. As a result the new management teamsand reporting structures for the combined business are agreed and will takeeffect immediately upon completion. UK Housing The UK housing market has remained stable during the first half of the year,with good buyer demand and customer confidence. Margin improvement continues tobe a priority and margins in the first half will show good progress on thoseachieved in the first half of 2006. In current market conditions we remainconfident of achieving operating margins for the George Wimpey UK business inexcess of 14% for 2007 as a whole. This objective excludes the effect of the previously announced land option profit. We expect completions in the first half to be at very similar levels to 2006. The short term landbank is expected to be around 60,000 plots at the end of thefirst half, showing steady improvement on the end of 2006 and a 10% increase onthe end of the first half of 2006. Compared with the same period in 2006, the total forward order book is around 5%ahead in volume terms with gross margins showing good progress. In all areas thebusiness has made excellent progress and has created a sound base for thefuture. US Housing The US housing market has remained very challenging. Buyer confidence is low dueto continuing concern about interest rates and the high level of housing stock. Volumes for the first half have been impacted by reduced order books coming into2007 and weaker than normal sales and are expected to be around 20% below thehigh levels achieved in the first half of 2006. Due to market conditions,average sales prices on first half completions are expected to be significantlydown on 2006 which will impact directly on margins. The US business hascontinued to focus on its cost reduction initiatives and remains confident ofachieving its target of $20 million in 2007. We have continued to retain a cautious approach to land acquisition and expectthe landbank at the end of the period to be slightly below that at the year end. As a result of the market conditions, the total forward order book at week 25 is41% below the same period in 2006, with significant reductions in margins andselling prices. Outlook In the UK, we currently anticipate less buoyant market conditions in the secondhalf of the year due to the impact of recent interest rate changes and theeffect of these on customer confidence. We are confident that progress on our£25 million cost reduction programmes and margin improvement plans in the UKwill continue to improve underlying performance. In the US short term market conditions remain difficult to predict. The focus ofthe business remains on managing costs and maintaining a steady sales rate. The Board remains confident that the continuing improvement in our UKperformance, as well as our ability to recover strongly from the difficult UStrading conditions over the next two to three years, will deliver significantvalue to our shareholders. This value will be further enhanced by the strengthof the combined Taylor Wimpey business in both key markets. Enquiries George Wimpey PlcPeter Redfern - Group Chief Executive 020 7963 6352 MaitlandLiz Morley 020 7379 5151Charlotte Walsh This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Taylor Wimpey