Housebuilder Taylor Wimpey axed 900 jobs as they revealed a massive slump in business. Two of their Scottish Companies - George Wimpey North Scotland and Bryant West Scotland have also been closed, as their share price plummeted by £300M. Overall, the company is in debt to the tune of £1.8 Billion, mainly representing overpriced land and property that now has no obvious market.

The turn in the market might yet benefit the deer of Cavalry Park - and the local people who enjoy the peace and quiet of the Colzium.

Write-offs push Taylor Wimpey to a massive £1.5bn loss

By Cliff Feltham
Thursday, 28 August 2008
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The collapse in the housing market has left Taylor Wimpey, the country's largest builder, £1.5bn in the red.

The colossal deficit, after slashing jobs, closing offices and writing down the value of its building land, mirrors the drastic retrenchment carried out by other leading housebuilders.

But doubts still remain about prospects for Taylor Wimpey, which is locked in meetings with its bankers to hammer out a new finance package and to avoid breaching loan terms.

The company was confident of reaching a deal but one analyst said there were too "many negatives" surrounding the shares even though they have lost two-thirds of their value in the last year. The company, created out of the £4.3bn merger between Taylor Woodrow and George Wimpey a year ago, is now worth £548m.

Taylor Wimpey built 8,494 homes in the first half to the end of June, compared with 12,228 a year ago. The average selling price plunged by 9.8 per cent to £202,000. At the pre-tax level, the group earned a profit of just £4.3m, compared with £119.8m last year. But tough and uncertain conditions have forced the company to write down the value of its land bank by £690m, much worse than feared, with a further £816m written off the value of other assets, including the George Wimpey brand. A further £40m is set aside to cover restructuring costs in the UK, after the loss of 900 jobs and closure of 13 offices, leaving an eye watering overall deficit of £1.5bn. The company has also scrapped payment of its interim dividend.

"The current operating environment in the UK housing market remains very challenging and we do not anticipate any recovery in the short term," said the company's statement.

However, the immediate focus for the stock market is the progress of negotiations with its bankers to secure new facilities aimed at avoiding a breach of the present arrangements. The group has £1.7bn of debts. Last month, the company failed to raise funds from various backers in order to reach new terms with its banks, triggering a sharp fall in the share price.

The chief executive, Pete Redfern, said: "The process is going fine and we would hope to complete in the next few weeks. It is a detailed process but there are no roadblocks."

But the market remains cautious. Mark Hughes at broker Panmure Gordon said: "In our view, the key thing is that no conclusions have been reached yet. We believe that there are too many negatives surrounding the Taylor Wimpey statement at the current time." He sees the shares falling to 30p compared with a closing price last night of 48.25p.

The group has taken a mauling in all three main markets: the UK, United States and Spain. Mr Redfern said that the experience of the downturn in the US helped it recognise the early signs of weakness in the UK and impose swift measures to minimise the effects. UK profits fell 39 per cent as the credit crunch cut off flows of mortgage finance in what has been the worst crisis in the industry for more than 30 years.

Cutting jobs and closing offices should save about £45m a year. In the meantime, the group, like many of its competitors, is aggressively cutting prices of its new homes in what remains of the buying season. US profits collapsed by 63 per cent, although the company says it has seen "pockets of stabilisation" and the business is "fighting fit". Even so, it still sees no prospect of recovery until "2009 at the earliest".

In Spain, the situation is even worse. Profits fell by 85 per cent and there are plans to pull out of Gibraltar. There is speculation it would be keen to get out of Spain but the prospect of finding any buyers seems remote.

http://www.independent.co.uk/news/business/news/writeoffs-push-taylor-wimpey-to-a-massive-16315bn-loss-910845.html

The relentlessly downbeat news from the housing market continues to undermine Taylor Wimpey.

http://www.guardian.co.uk/business/taylorwimpey>

The company is currently renegotiating banking covenants but expects no resolution before early next year, at which time it is in danger of breaching one of the agreements.

Despite the recent cut in interest rates, the mood of the housing sector is still grim, as evidenced by results from Bellway yesterday and mortgage approvals for first time buyers reaching a 30 year low.

Hedge fund Toscafund has recently cut its stake in Taylor Wimpey from 10% to below 3%, and it seems other investors are following suit.

Analyst Kevin Cammack at Kaupthing (yes, the Icelandic bank's research department is still operating) said:"It looks like one or two holders of the shares, who had thought they would sit this thing through, may now have decided to give up."

Yesterday the company, now down 1.25p at 15.25p, appointed Christopher Rickard - ex-Whatman, VT Group, Weir and Meggitt - as its new finance director.

Cammack said: "This is impressive experience in the PLC arena and something of a coup for Taylor Wimpey giving the precarious nature of the group. Obviously his priority is to help the company secure its refinancing which is becoming ever more essential as it lurches towards covenant breach in the first quarter of 2009."

Could Revel in thousands of Job Losses and the meltdown in the economy.

Get a grip - It's a field..

Of course it's only a field.... that's the whole point!
But no, of course the credit crunch is very bad news for just about everyone ... it's just that every cloud has a silver lining.

I agree with you on the every cloud has a silver lining repsonse, perhaps putting that message across would make people more sympathetic to your cause..

I wish you well in your bid of a buyout.

I've been thinking about this quite a lot. Should we rejoice - or be sad - when the era of rapid house price inflation has come to such a rapid and inevitable end?

Of course fortunes have been made, and lost on the back of the boom. But I think in our hearts we knew that it was unsustainable - houses and even flats were selling at prices that meant that young people - our kids - were unable to get a foothold on the housing ladder without taking on horrendous debt. Many of them will now be struggling with negative equity for a decade or so - it happened to my sister in the late 1980s. I'm glad that my stepdaughter - a qualified nurse, opted to go and work in New Zealand for a year or two rather than take on a mortgage here in Scotland - I wonder how many other bright young people left to work abroad?

Where do we go now? Well, it looks like belt tightening will be the order of the day for some time to come. How severe this recession will be we do not know. But it will certainly contribute to much of our remaining manufacturing industry closing down - possibly for ever. Business bankruptcies are at a high level, and rising, and unemployment is sure to follow.

For the housebuilders, there will be no shortage of brownfield sites to choose from, and hopefully in future they will focus on affordable, eco-friendly houses that cost far less to heat and use less precious fossil fuels.

For the past ten or more years, local campaigners have tried to prevent housebuilding at Cavalry Park by Kilsyth. Apart from ruining the unspoiled views across the Kelvin valley, these expensive detached homes will consume valuable greenfield land and destroy the raised peat bogs that protect Kilsyth from flash flooding.

In the latest twist of the saga, the Ombudsman has rejected my complaint against the NLC planning process, so the way ahead is now almost clear for Wimpey Homes to build 160 houses here in the Green Belt at Cavalry Park right by the sensitive Colzium Lennox Memorial Estate.

Since the planning application was approved, the housing market has crashed. Wimpey shares have dropped from a high of £5.00 to a low of £0.05p in the space of 18 months and their future is deeply uncertain. The profit margin for builders has vanished in the credit crunch, with many thousands of homes left unsold. If they - or anyone else - did build here in this difficult area of raised peat bog they would be unlikely to recoup the expense of building the homes. What looked to be a sure-fire return on investment has suddenly become a marginal and risky project.

So it is likely that the existing plans will be put on ice. The site may even be sold on to another builder at some point, waiting for a favourable turn in the market. A brand new planning application will probably have to be submitted then - creating new opportunities for objections.

Protestors have twice obtained favourable Reporters Inquiry results. To defeat these, NLC used a crude non-statutory planning instrument to over-ride the wishes of the community, the "Interim Housing Land Strategy" (IHLS) on the basis of a deeply flawed argument that new homes were urgently needed to meet regional targets . Housing is indeed needed - affordable social housing, built on brownfield sites, using sustainable green technology. But Cavalry Park will not contribute to that need. There has not been a review of the Green belt, as promised in the local plan. Virtually all of the arguments put forward by NLC in the IHLS have now been shown to be deeply flawed, whilst many of those of the protestors (such as the flooding risk) have been subsequently justified, with more frequent flooding events aggravated by climate change. And yet the juggernaut of NLC continues to resolutely point in the wrong direction, a hugely expensive bureaucratic planning machine that is now out of control and grossly out of date.

Now that the site is effectively worthless for housing, a truly visionary local authority would make Wimpey a sensible offer and return the site to public ownership as an integral part of the Colzium Estate for the benefit of future generations.