Taylor Wimpey’s chief executive has dismissed its decision to pay £250m in shareholder returns as “irrelevant” to its future growth as it posted 11,696 home completions in the year to 31 December 2013.
The group said it would pay £250m to its shareholders over the next two years, £50m in 2014 and £200m in 2015, with significant further annual pay outs from 2016.
But asked whether the paybacks signalled a cap on future land investments, chief executive Pete Redfern told Construction News that it was “irrelevant”.
The chief executive said the business currently had land in place to build up to 14,000 homes a year and said there was scope here to increase the group’s profits.
In 2011, the business placed a soft cap on volumes of 14,000 completions a year, which Mr Redfern maintained was adequate for 2014/2015.
He added that Taylor Wimpey would not be looking to massively grow its land position in the near future.
Mr Redfern insisted that a “disciplined” approach within the business would deliver sustained growth through the housing market cycle.
He added: “We want to be focused on choice [within] individual land markets and focus on quality in every sense, including financial returns, quality for customers, location and health and safety in the business.”
He stressed that Taylor Wimpey’s strategy was “sharper and clearer” than some housebuilders but added overall the industry realised it had made mistakes in the past by focusing on short-term performance rather than long-term value.
Mr Redfern said that the group would look to grow slightly faster in London than in the rest of the UK, since it was the region where Taylor Wimpey saw the most opportunities.
Completions for London alone in 2013 stood at 830, representing 7 per cent of the whole business. Mr Redfern said there was room for this to grow to represent 12 to 13 per cent of the overall business over the next five to six years.
The group posted a 48 per cent jump in its pre-tax profits in the year to 31 December 2013.
Group pre-tax profit was £268.4m for 2013, compared to £181.8m for the same period in 2012.
With exceptional items taken into account, pre-tax profit stood at £306.2m, up 50 per cent from £204.2m.
Mr Redfern highlighted a tightening on planning opportunities in some local markets, which he anticipates to impact margins for securing land during 2014 and 2015.
He explained that while this was not currently impacting the margins at which it was able to secure land, the group anticipates that during 2014 and 2015 the number of value-creating opportunities would “naturally reduce”.
During 2013, the company had a total land spend, including creditors, of £566m, compared to £427m in 2012.
Its short term owned and controlled land bank as at 31 December 2013, comprised 70,628 plots across its 24 regional businesses, including joint ventures, compared to 65,409 for the same period in 2012.
Group operating profits stood at £312.9m in 2013, compared to £226.1m for the same period in 2012, representing a 38.4 per cent increase.
Group revenue in 2013 increased by £276.5m to £2,29bn, compared to £2,012bn for the same period in 2012.
Revenues were boosted by completions of 11,814 in 2013 (2012: 11,042), including joint ventures, against a backdrop of an improving housing market in the UK, the group said.