Taylor Wimpey Share Discussion Threads

[slytherin] 12/10/2011 17:01

Fair do Imastu. The underlying earnings impact is accepted, on the other hand maybe they kitchen sinked a lot of stuff and the balance sheet is stronger than it appears.

[imastu pidgitaswell] 12/10/2011 15:07

Nah, no adjustment will be made, they'll just continue to report apparently high margins - we must learn to take them with a pinch of salt in absolute terms, or relative to competitors, but the TW margin trend (improving/declining) will be the important element.

And (echoing spenny), as the great Barry Davies said about the Germans, frankly who cares (as long as the share price is rising...)

[spennysimmo] 12/10/2011 14:56

As long as the share price rises, who cares.

[sir rational] 12/10/2011 14:53

Hard to reconcile the theoretically one-off nature of the adjustment with the target of getting to double digit margin by next year. Which they say they are well on target for.

Will they have to do another adjustment?

[imastu pidgitaswell] 12/10/2011 13:42

They are - have read of the posts on the BDEV thread, especially bobsidian's comments (rather than my ramblings).

They wrote off hundreds of millions and labelled it exceptional - throught the income statement, but still ignored for any underlying analysis purpose. Then they took some of the write-offs and wrote them back up - a bit - through regular operating profit. It is detailed in the premable to the actual results, not in the notes to the accounts, hence it's pretty obscure and I certainly missed it until it was pointed out.

stockmuncher - you're right in that the cumulative position (net assets) is correct, but it does mean (imho) that individual years' results are potentially meaningless - they just wrote off too much and the subsequent write-backs are flattering their headline earnings.


(Half Year Results)

bobsidian - 25 Aug'11 - 17:38 - 10142 of 10248

To find reference to the treatment of the uplift in value of the stock of land, you should look in the Group Financial Performance segment preceding the financial statements.

"Gross profit of GBP131.4 million (H1 2010: GBP106.7 million) includes a positive contribution of GBP48.9 million (H1 2010: GBP39.2 million), relating to realisation of written down inventory above its originally estimated net realisable value..."


imastu pidgitaswell - 25 Aug'11 - 17:55 - 10146 of 10248 edit


Yes - they put it in the full year for 2010 as well:

"Gross profit of £363.9 million (2009: £230.2 million) includes a positive
contribution of £122.4 million (2009: £59.6 million), relating to realisation of written down inventory above its originally estimated net realisable value...."

[slytherin] 12/10/2011 13:30

I can only find a net £8.3m profit related to reduction in provisions, visible in the reconciliation of operating profit to operating cashflow (page 21 of Interim statements). Possible that there are further profits on land disposal, but they aren't the result of earlier provisions.

[edsthebusiness] 12/10/2011 13:20

Maybe that 'bigger rocket' was too heavy

[stockmuncherpro] 12/10/2011 13:18

I don't get it, they wrote it down, wrote it back up again, counted it as a profit.

So what?

They counted it as a loss last time?

Am l missing something?

[127tolmers] 12/10/2011 12:31

Here is article:

Buttressed builder

Consistency of accounting treatment is important for shareholders. It reassures them that they are comparing apples with apples, rather than oranges, and facilitates just comparisons with peers. But looking at the reported operating profit margins at Taylor Wimpey and Persimmon, two of the UK's largest housebuilders, is a bit like comparing apples with penguins. This month, Taylor Wimpey delivered a self-proclaimed sector-beating 9.3 per cent first-half operating margin. The 9 per cent figure Persimmon announced on Tuesday looked a bit measly by comparison. There is, however, a special ingredient to Taylor Wimpey's apparent triumph over its more conservative rival. Included in its profits was a £48.9m gain from land sold for more than its estimated value. But during the recession the impairment on the very same land was deducted as an "exceptional" and was not reflected in the operating margin.

The company has done the accounting equivalent of having its cake and eating it. Discount the yo-yoing of its once "exceptional" slice of British turf and Taylor Wimpey's margins look less healthy at 3.3 per cent. A neat piece of financial footwork. But one that has annoyed peers and will be hard to repeat a second time around.

[slytherin] 12/10/2011 11:42

I believe the write-backs of exceptional provisions go straight into reserves, appearing as a note in Statement of comprehensive income, but cannot be reported in the primary income statement. So no distortion in my view.

That aside, come on girl, keep going......

[edsthebusiness] 12/10/2011 11:27

erm .. we need a bigger rocket

[imastu pidgitaswell] 12/10/2011 11:25

Exactly where you draw the upper line is arguable - should include the most points, rather than all - etc etc.

But it's an interesting position coming up:

[sir rational] 12/10/2011 11:02

Could be a good run all the way to the TS in November

[retsius] 12/10/2011 10:20

"I cann`ae hold her captain"

[imastu pidgitaswell] 12/10/2011 09:42

Better. Much better - almost trading like a proper share, instead of a piece of dirt..

Presumably this is still the big wave 3? Until it's not?

[sir rational] 11/10/2011 21:24

cheers - that was it

[imastu pidgitaswell] 11/10/2011 21:03

Yes, as part of reported and retained profit.

the 57p reported last time will increase accordingly, it's just that reporting it as normal operating profit is, I think, quite misleading.

[stockmuncherpro] 11/10/2011 20:44

imastu pidgitaswell - writeback - does that not increase the NAV?

[imastu pidgitaswell] 11/10/2011 20:18

It was on the bdev thread - basically putting the write-backs of some of the costs previously taken as exceptional write-downs through as normal operating profit, thereby flattering margins.

Post 10131 onwards for a few posts.

Anybody can write down too far and then take some back and call it a profit - it really isn't.

[sir rational] 11/10/2011 19:26

Had a look but couldn't find it.

It was dodgy accounting.

[stockmuncherpro] 11/10/2011 19:10

With QE2, there's only one way for this stock....

[sir rational] 11/10/2011 19:00

Go back a few posts to the interims and it's logged

[smurfy2001] 11/10/2011 18:10

Did l miss the financial shenanigans ??