TIDMTW.
RNS Number : 9830H
Taylor Wimpey PLC
02 August 2023
2 August 2023
Taylor Wimpey plc
Half year results for the period ended 2 July 2023
Resilient first half performance with completions slightly ahead
of our expectations
Jennie Daly, Chief Executive, commented:
"The first half of the year has been characterised by variable
market conditions including substantially higher mortgage rates.
While this has inevitably impacted our results, I am pleased that
we have delivered a resilient performance with first half
completions slightly ahead of our expectations. This performance is
testament to the hard work of our teams on the ground and our
strong focus on operational excellence and tight cost
management.
As we move into the second half of the year, our focus remains
on optimising all areas of our operations as we continue to support
our customers during this uncertain period. With a healthy
orderbook and strong underlying interest for our well-located,
high-quality homes, we expect full year UK completions excluding
joint ventures to be in the range of 10,000 to 10,500, the upper
end of our previous guidance.
Taylor Wimpey is a strong, sustainable and agile business
underpinned by a robust balance sheet and an excellent landbank. We
remain well positioned to manage the business through near term
challenges while maximising value in the medium to long term."
Group financial highlights:
H1 2023 H1 2022 Change FY 2022
Revenue GBPm 1,637.1 2,076.8 (21.2)% 4,419.9
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Operating profit* GBPm 235.6 424.6 (44.5)% 923.4
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Operating profit margin
* 14.4% 20.4% (6.0)ppt 20.9%
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Profit before tax and
exceptional items GBPm 237.7 414.5 (42.7)% 907.9
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Profit before tax GBPm 237.7 334.5 (28.9)% 827.9
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Basic earnings per share
pence 5.0 7.2 (30.6)% 18.1
-------- -------- --------- --------
Adjusted basic earnings
per share pence 5.0 9.0 (44.4)% 19.8
-------- -------- --------- --------
Tangible net assets per
share pence 126.7 120.0 5.6% 126.5
-------- -------- --------- --------
Net cash GBPm (++) 654.9 642.4 1.9% 863.8
-------- -------- --------- --------
Return on net operating
assets** 19.7% 24.4% (4.7)ppt 26.1%
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Key highlights:
-- Group completions of 5,120 homes (H1 2022: 6,922)
-- Group operating profit margin of 14.4% (H1 2022: 20.4% ),
reflecting a lower level of completions and the impact of build
cost inflation which was not fully offset by house price inflation
for the period
-- Announced 2023 interim dividend of 4.79 pence per share (H1
2022: 4.62 pence per share) amounting to GBP169 million (H1 2022:
GBP163 million), in line with our stated Ordinary Dividend Policy
to return 7.5% of net assets annually
-- Full year UK completions excluding JVs now expected to be in
the range of 10,000 to 10,500, at the upper end of our previous
guidance with full year Group operating profit including JVs
expected to be between GBP440 million and GBP470 million
-- E nded the period with net cash of GBP654.9 million (H1 2022: GBP642.4 million)
-- Renewed revolving credit facility in July 2023, increasing it
to GBP600 million and extending maturity to July 2028. The new
facility includes sustainability linked performance measures
First half UK operational highlights:
-- Delivered a net private sales rate of 0.71 (H1 2022: 0.90)
for the first half, which was 0.62 excluding bulk deals (H1 2022:
0.88)
-- Total order book representing 7,866 homes, excluding joint
ventures, with a value of GBP2,147 million as at 2 July 2023 (3
July 2022: 10,102 homes with a value of GBP2,800 million)
-- Total UK average selling price increased by 6.7% to GBP320k
(H1 2022: GBP300k), reflecting house price growth and positive mix
impacts
-- Operated from 244 average outlets during the period (H1 2022:
228) and ended the period with 235 outlets (H1 2022: 233)
-- Short term landbank as at 2 July 2023 of c.83k plots (31
December 2022: c.83k plots) in high-quality locations where
customers want to live
-- Strategic land pipeline of c.140k potential plots (31 December 2022: c.144k potential plots)
-- Further improved quality with average Construction Quality
Review score of 4.90 (H1 2022: 4.77)
Sustainable, responsible business:
-- Published our Net Zero Transition Plan in March 2023
outlining the steps we will take to be net zero by 2045, five years
ahead of the Government's target
-- Successfully launched our zero carbon ready homes trial in
Sudbury, the first of its kind on a live development site
-- Continued focus on health and safety with rolling 12 months
(***) Injury Incidence Rate (per 100,000 employees and contractors)
of 136 (H1 2022: 212)
-- Highly experienced build teams with 51 of our Site Managers
winning NHBC Pride in the Job Quality Awards
-- Major contributor to the regions in which we operate
generating employment and investing GBP210 million in local
communities via planning obligations (H1 2022: GBP218 million)
-- Five-star builder and 90% of customers would recommend Taylor
Wimpey according to the Home Builders Federation (HBF) 8-week
customer satisfaction survey (H1 2022: 92%) and retained a 4 out of
5 star rating on Trustpilot
-- Continued to work on fire safety remediation and signed the
Scottish Safer Buildings Accord. Our existing total provision of
GBP245 million remains unchanged
Resilient performance against a variable market backdrop
In the first half, we continued to drive performance across the
business and have delivered completions slightly ahead of our
expectations, against a variable market backdrop. We saw an
encouraging start to the year with demand in the traditionally
strong spring selling season recovering from the low levels of Q4
2022 and with mortgage rates reducing from the highs of late
2022.
However, market conditions weakened in the second quarter as the
Bank of England responded to higher than expected inflation by
increasing the base rate from 4.5% to 5% in June, which drove an
increase in the cost of mortgages towards the end of the half. We
are working to proactively support our customers through changing
market conditions, utilising our Microsoft Dynamics customer
relationship management system (CRM) to drive further enhancements
in the sales process.
Against a challenging market we have delivered a robust sales
rate of 0.71 (H1 2022: 0.90) reflecting our high-quality locations,
the hard work of our teams, and our focus on effective customer
engagement. Excluding bulk deals, our net private sales rate for
the first half was 0.62 (H1 2022: 0.88).
We have maintained our commitment to operational excellence,
tightly controlling costs whilst continuing to invest in the long
term sustainability of the business, for example in developing zero
carbon ready homes.
UK current trading and outlook
For the four weeks ended 30 July 2023, at the start of the
seasonally quieter third quarter, our net private sales rate was
0.47 per outlet per week (2022 equivalent period: 0.57). The
cancellation rate for the same period was 24% (2022 equivalent
period: 19%).
As at the week ended 30 July 2023, our total order book value
was GBP2,175 million (2022 equivalent period: GBP2,893 million),
excluding joint ventures, representing 7,900 homes (2022 equivalent
period: 10,392 homes), of which 77% are exchanged (2022 equivalent
period: 77%).
Whilst increased mortgage costs are impacting affordability for
our customers, we continue to see strong underlying interest.
However, reservations are below the levels we have experienced in
recent years. Pricing has remained resilient, and the level of down
valuations continues to be low. Our focus remains on building as
strong an order book as possible to allow us to optimise price
going into 2024.
In terms of costs, w e have seen some moderation in the rate of
material and labour cost inflation, with prevailing annualised
build cost inflation on new tenders now around 6% compared to
around 9-10% at the start of the year . We expect to continue to
see inflation moderate as the year progresses.
Planning remains extremely challenging and is likely to impact
the future delivery of new homes across our industry. Our
experienced teams continue to work hard to progress our land
through the planning stages.
We expect full year UK completions excluding joint ventures to
be in the range of 10,000 to 10,500, at the upper end of our
previous guidance and we expect Group o perating profit including
joint ventures to be in the range of GBP440 million to GBP470
million . Our 2023 year end net cash balance is anticipated to be
in the range of GBP500 million to GBP650 million.
Looking ahead, we remain well positioned with a strong balance
sheet, high-quality landbank in desirable locations where our
customers want to live, and strong and experienced teams. Our
differentiated Ordinary Dividend Policy based on returning 7.5% of
net asset value is also designed to give investors increased
certainty of a reliable income stream throughout the cycle.
- Ends -
A presentation to investors and analysts will be hosted by Chief
Executive Jennie Daly and Group Finance Director Chris Carney at
8:30am on Wednesday 2 August 2023. This presentation will be
webcast live on our website: www.taylorwimpey.co.uk/corporate
An on-demand version of the webcast will be available on our
website in the afternoon of 2 August 2023.
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 1494 885656
Jennie Daly, Chief Executive
Chris Carney, Group Finance Director
Debbie Archibald, Investor Relations
Andrew McGeary, Investor Relations
FGS Global TaylorWimpey@fgsglobal.com
Faeth Birch
Anjali Unnikrishnan
James Gray
Notes to editors:
Taylor Wimpey plc is a customer-focused homebuilder, operating
at a local level from 22 regional businesses across the UK. We also
have operations in Spain.
For further information please visit the Group's website:
www.taylorwimpey.co.uk
Follow us on Twitter @TaylorWimpeyplc
Overview: optimising performance in a challenging market
The UK housing market experienced changing conditions during the
first half of 2023. In the early months, there were signs of
stabilisation with mortgage rates reducing from the highs of late
2022 and an encouraging improvement in our sales rates compared to
the prior quarter. In the second quarter, higher than expected
inflation led the Bank of England to raise interest rates. Against
this backdrop, lenders raised their mortgage rates impacting the
cost of borrowing for our customers.
Throughout this period, we have maintained a strong operational
focus and delivered a resilient financial performance for the first
half of 2023 with Group completions slightly ahead of our
expectations. Group completions, excluding joint ventures, were
5,082 (H1 2022: 6,790), with total Group revenue of GBP1,637.1
million (H1 2022: GBP2,076.8 million). Group operating profit was
GBP235.6 million (H1 2022: GBP424.6 million), with an operating
profit margin of 14.4% (H1 2022: 20.4%), reflecting lower
completions and the impact of increased build cost inflation which
was not fully offset by house price growth in the period. Profit
for the half year was GBP175.7 million (H1 2022: GBP260.7
million).
We ended the period with net cash of GBP654.9 million (H1 2022:
GBP642.4 million), after returning GBP168.8 million in cash to
investors by way of dividend.
As previously announced, we underwent a change programme at the
start of the year which will reduce annualised overheads by GBP19
million, and we maintain tight control on discretionary spend
across the business.
We continue to work hard to support our customers in these
uncertain times, responding proactively with our customer
proposition and to the change in circumstances for first time
buyers. We have also trained our staff to enable them to operate
more effectively in a challenging landscape which has positioned us
well for the current market.
In particular, our teams have worked closely with our customers
utilising our CRM system to better understand their requirements.
This has enabled higher quality lead generation and greater ability
to respond to customer preferences by our sales teams.
More of our customers are adapting to the challenging backdrop
by extending their mortgage terms. For example, according to data
provided by an independent financial advisor relating to H1 2023,
27% of our first time buyers are taking mortgage terms of over 36
years compared to 7% in 2021. For second time buyers, those taking
out mortgages with durations of over 30 years has increased to 42%,
compared to 28% in 2021.
We are closely monitoring the market and while incentives are at
around 5%, we have maintained pricing discipline.
The planning backdrop remains extremely challenging and is
likely to impact industry delivery of new homes. There continues to
be widespread bottlenecks in an under resourced planning system
leading to a significant backlog of applications. Our experienced
teams continue to work hard to progress our land through the
planning stages.
We remain active in reviewing opportunities, though highly
selective in our land additions and, as a result, approved c.1.4k
plots during the first half of 2023 (H1 2022: c.7k plots).
We operated from an average of 244 outlets during the period (H1
2022: 228), ending the period with 235 outlets (H1 2022: 233).
Going forward, outlet numbers will reflect the planning backdrop,
and our appetite to add new land.
As we look further ahead, we continue to operate our business to
create and protect long term stakeholder value, enhancing and
developing value from our strong landbank and developing the homes
of the future to ensure we are playing our part in tackling climate
change. During the period we have developed the industry's first
research concept testing low carbon technologies through
multi-specification prototype homes on a live development site.
We continued to progress our timber frame factory in
Peterborough during the first half, which is currently being fitted
out, with production due to commence later in the year with first
kits delivered to sites early next year. We also continue to seek
further cost efficiencies in central procurement through our
strategy of standardisation and simplification and by leveraging
Taylor Wimpey Logistics (TWL).
There remains a major supply and demand imbalance in UK housing,
with significant underlying demand for new homes. Taylor Wimpey has
an important role to play in addressing the shortfall in housing
and the medium to long term market opportunity remains highly
attractive. Taylor Wimpey is a strong, sustainable and agile
business with a sharp operational focus, strong balance sheet and
an excellent, well-located landbank. We are well positioned to
manage the business through near term challenges while maximising
value in the medium to long term.
Four cornerstones of strategy
As previously stated, our strategy is built on four strategic
cornerstones ensuring an agile response to market conditions and
investment in the long term sustainability of the business:
1. Optimising value from our high-quality owned and controlled
landbank and strategic land pipeline
2. Driving operational excellence through our business to
improve efficiency, protect value and ensure Taylor Wimpey is fit
for the future
3. Embedding sustainability across the Group for the benefit of all our stakeholders
4. Delivering reliable investor returns with a clear and
disciplined framework, balancing investment for future value
creation with returning value to shareholders
Delivering on our 2023 priorities
In our full year announcement in March, we outlined our
priorities for 2023. These have been communicated to all our
employees by our Chief Executive and members of the senior
management team in a Company-wide roadshow, and are understood
throughout the business:
-- Continue to develop and evolve our customer offering ensuring
an appropriate balance between sales rate and price, whilst further
improving customer service
-- Continue to ensure tight cost management and work in progress
(WIP) control, aligning build to sales rates on a site-by-site
basis
-- Focus on building a strong order book to allow us to optimise price going into 2024
-- Further step up our efforts and focus on implementation and
communication of our Net Zero Transition Plan across our
business
Customers
Delivering build quality consistently remains key to customer
satisfaction and we improved our average CQR score to 4.90 (H1
2022: 4.77) and had the highest compliance score of the volume
housebuilders. Our site teams have continued to perform strongly
against a challenging backdrop in recent years and we are proud
that in June 2023, 51 of our Site Managers won NHBC Pride in the
Job Quality Awards.
We were pleased to have been recognised as a five-star builder
in the latest 8-week customer satisfaction survey by the HBF in
March 2023, covering the 12 months from October 2021 to September
2022. Our average 8-week customer satisfaction survey score for the
first half of 2023 was 90% (H1 2022: 92%). We recognise that there
are areas where we can do better and improving our customer service
continues to be a key area of focus for us this year, in particular
targeting improvements in our responsiveness to customer
issues.
We encourage customers to leave reviews on Trustpilot and have
maintained our 4 out of 5-star status on Trustpilot with a
TrustScore of 3.9 out of 5 as at 30 June 2023.
Our continuous improvement initiative for our sales and customer
service activities, includes optimising the use of our CRM system
to target benefits for sales and customer service such as improved
monitoring and responsiveness as well as enhanced management
information in relation to our customer service.
In the interests of improved delivery for our customers we have
also agreed new scope of work contracts with all our subcontractors
that establish higher standard service level agreements (SLAs).
This will ensure that there is greater clarity and consistency of
service levels from our subcontractors that aligns with our values
and should result in a better level of service and responsiveness
for our customers. This will free up time for our site teams,
improve quality assurance and cost savings, along with providing
greater certainty of budgets, enabling our teams to focus on the
absorption of additional workload associated with legislative
changes and transition of early customer care responsibility.
Through the first half we proactively engaged with the
Competition and Markets Authority (CMA) on its housing market
study.
Operational discipline and cost management
Since last year we have tightened the thresholds for the release
of working capital to ensure that we are aligning our investment to
current levels of demand in order to protect value. This has been
communicated throughout the business and all our employees
understand the need to minimise costs in the current
environment.
Our focus on operational excellence and cost efficiency spans
all areas of our operations, including design, procurement,
production, and sales. We have worked to continually improve
management information for our teams to ensure we are benchmarking
costs across the business and have a consistent approach and
guidance on price negotiations. This includes increased checks and
automatic notifications at various stages of our processes.
We continue to target savings in procurement through
standardisation to help offset build cost increases as well as the
consolidation of stock keeping units, resulting in savings from
stock efficiency, benefits in installation, and increasing
economies of scale and are working hard with our partner suppliers
on value improvement initiatives. This includes driving synergies
with our internal logistics business, TWL.
We launched our suburban standard apartment range at the
beginning of May 2023 that will drive savings over the next three
to four years. These will also result in improved quality, a more
consistent customer offering, more efficient use of land and better
planning outcomes.
Taken together, small incremental changes in our operations are
driving meaningful efficiencies throughout the business and we are
constantly assessing new products and ways of working across our
sites. For example, we now use a proprietary reusable stairwell
system (which covers the gap in the stairwell to safely allow work
to be completed on upper floors at early build stages) which
reduces timber waste and delivers efficiencies.
Building a strong order book
Our focus remains on building as strong an order book as
possible to allow us to optimise price going into 2024. While our
teams are focused on optimising sales, they understand the
importance that price discipline and building our forward order
book play in protecting value.
Net zero
For Taylor Wimpey, sustainability is a business imperative. In
March, we delivered our Net Zero Transition Plan and this year we
are prioritising its communication and implementation across the
business. The plan will see us become net zero in our operations by
2035 and across our value chain by 2045, five years ahead of the
Government's target.
A key stage of this plan is delivering zero carbon ready homes
in time to meet Future Homes Standard regulation due in 2025. The
regulation will see us delivering a 75-80% carbon reduction from
homes in use, compared to the previous standard.
We recently launched our pilot homes testing possible solutions
for the Future Homes Standard on a site in Sudbury. This is the
industry's first research concept testing low carbon technologies
through multi-specification prototype homes on a live development
site. The prototypes are helping identify new ways to increase the
energy efficiency of our homes as well as identifying and
overcoming the challenges to achieve this at scale. The homes were
completed by Taylor Wimpey employees and our subcontract partners
to allow us to best capture the lessons learned in making our homes
net zero ready. These homes are providing invaluable insights into
the best methods for incorporating the requirements of the Future
Homes Standard well ahead of its implementation.
In June 2023, we were pleased to host investors and analysts on
a site visit to the Sudbury trial plots and a series of further
stakeholder visits are taking place over the coming weeks. There
will then be a period of assessment and testing before the homes
are marketed for sale to customers later this year. The performance
of the homes will continue to be monitored following sale, allowing
us to collate valuable data and customer feedback.
We will continue to innovate and work with our supply chain
partners, trialling new low carbon products and fabrics as part of
our coordinated R&D approach to preparing our business for the
2025 Future Homes Standard.
Returns to shareholders
We have an established, differentiated Ordinary Dividend Policy
aimed at providing investors with visibility of the income stream
they can expect throughout the cycle including during a normal
downturn, via an ordinary cash dividend. Our Ordinary Dividend
Policy is to pay out 7.5% of net assets or at least GBP250 million
annually throughout the cycle. This policy has been stress tested
to withstand conditions beyond what we would consider a normal
downturn, including up to a 20% fall in house prices and 30%
decline in volumes. In line with our Ordinary Dividend Policy, we
today announce a 2023 interim dividend of 4.79 pence per share
payable in November.
Operational review
Our operational review is for the UK only as the majority of
metrics do not apply to our Spanish business. A short summary of
the Spanish business follows in the Group financial review. The
financial analysis is presented at Group level, which includes
Spain, unless otherwise indicated.
Joint ventures are excluded from the operational review and
Group financial review, unless stated otherwise.
Our key performance indicators (KPIs)
UK H1 2023 H1 2022 Change FY 2022
----------------------------------------- -------- -------- --------- --------
Land
----------------------------------------- -------- -------- --------- --------
Land cost as % of ASP on approvals 12.9% 20.8% (7.9)ppt 19.0%
-------- -------- --------- --------
Landbank years c.7.0 c.6.5 7.7% c.6.0
-------- -------- --------- --------
% of completions from strategically
sourced land 46% 47% (1)ppt 52%
----------------------------------------- -------- -------- --------- --------
Operational excellence
----------------------------------------- -------- -------- --------- --------
Construction Quality Review (average
score / 6) 4.90 4.77 2.7% 4.81
-------- -------- --------- --------
Average reportable items per inspection 0.28 0.28 - 0.32
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Health and Safety Injury Incidence
Rate (per 100,000 employees and
contractors) rolling 12 months 136 212 (35.8)% 166
-------- -------- --------- --------
Employee engagement (annual survey) - - - 93%
----------------------------------------- -------- -------- --------- --------
Sustainability
----------------------------------------- -------- -------- --------- --------
Customer satisfaction 8-week score
'Would you recommend?' 90% 92% (2)ppt 90%
-------- -------- --------- --------
Customer satisfaction 9-month score
'Would you recommend?' 79% 78% 1ppt 78%
-------- -------- --------- --------
Reduction in operational carbon
emissions intensity (measured at
end of year) - - - 15%
-------- -------- --------- --------
N.B. The 8-week 'would you recommend' score for H1 2023 relates
to customers who legally completed between October 2022 and March
2023 with the comparator relating to the same period 12 months
prior. The 9-month 'would you recommend' score for H1 2023 relates
to customers who legally completed between October 2021 and March
2022, with the comparator relating to the same period 12 months
prior.
Resilient first half operational performance against mixed
backdrop
Total home completions (excluding joint ventures) were 4,854 (H1
2022: 6,587). This included 1,111 affordable homes (H1 2022:
1,450), equating to 22.9% of total completions (H1 2022:
22.0%).
Our net private sales rate for the first half of the year was
0.71 homes per outlet per week (H1 2022: 0.90). The cancellation
rate in the first half was 16% (H1 2022: 15%). Average selling
prices on private completions increased by 8.6% to GBP366k (H1
2022: GBP337k), reflecting house price inflation and positive mix
impacts. Our total average selling price increased by 6.7% to
GBP320k (H1 2022: GBP300k), reflecting a slightly higher proportion
of affordable sales in the total than the comparable period.
We have a wide range of products from one-bedroom apartments to
five-bedroom homes. First time buyers accounted for 35% of total
private reservations in the first half of 2023 (H1 2022: 43%).
Investor sales continued to be at a low level at 3% (H1 2022:
6%).
As at H1 2023, our order book represented 7,866 homes (H1 2022:
10,102 homes) with an order book value of GBP2,147 million (H1
2022: GBP2,800 million), excluding joint ventures. Our affordable
order book stood at 4,190 homes at H1 2023 (H1 2022: 4,528
homes).
During the first half of 2023 we opened 13 new outlets (H1 2022:
50), reflecting our reduced land buying and owing to the
difficulties in the planning system.
A strong and differentiated landbank
We have an excellent short term landbank and strategic land
pipeline.
Land market conditions remain challenging, and we continue to be
cautious in our approach.
As at 2 July 2023 our short term landbank stood at c.83k plots
(H1 2022: c.88k plots). The average cost of land as a proportion of
average selling price within the short term owned landbank remains
low at 13.3% (H1 2022: 14.3%). The estimated average selling price
in the short term owned landbank in H1 2023 was GBP343k (H1 2022:
GBP311k).
Our strategic pipeline stood at c.140k potential plots as at 2
July 2023 (31 December 2022: c.144k potential plots). During the
first six months of 2023 we converted a further c.6k plots from the
strategic pipeline to the short term landbank (H1 2022: 847 plots).
In the period, 46% of our completions were sourced from the
strategic pipeline (H1 2022: 47%).
Land cost as a percentage of average selling price on approvals
decreased to 12.9% in the period (H1 2022: 20.8%) reflecting our
highly selective approach to land acquisition.
Planning remains extremely challenging and is likely to impact
industry delivery of new homes. There continue to be widespread
bottlenecks in an under resourced planning system leading to a
significant backlog of applications.
Our teams continue to work hard to progress our land through the
planning stages. We are in a strong position to navigate these
challenges given the strength and depth of our landbank and high
visibility of our future pipeline .
Employees
The health and safety of individuals on our sites will always be
our number one priority. Our Injury Incidence Rate (IIR) for
reportable injuries per 100,000 employees and contractors to 2 July
2023 on a rolling 12 month basis was 136 (2022 equivalent period:
212). We continue to seek ways to further improve our safety
performance across all sites and functions.
Our highly engaged and talented employees are key to driving our
business forward. Our industry is facing a skills shortage so
attracting and retaining high calibre people is a strategic
imperative.
We have continued to focus on good communication throughout the
business, a priority identified by our employees in the latest
employee survey, building on our culture and making sure all teams
are fully up to date on our progress and aligned on our goals. In
May, our Chief Executive conducted an all-employee roadshow to
update on progress against the business priorities and focus areas
to improve operational and financial performance.
We continue to improve the accessibility of our learning and
development (L&D) resources for all employees and actively
encourage their development. The L&D resources are available to
all employees on our Intranet alongside details of the
opportunities and resources that are available for different career
pathways, and how to access them. We have launched a Line Manager
Development Programme, offering a wider range of development
pathways, for various career stages.
Following the release of our first Equality Diversity and
Inclusion (EDI) report in March, we conducted our fourth annual EDI
conference in July, which was held virtually to allow all employees
to attend. The theme of the conference was 'Action Changes Things'
and internal and external presenters covered a wide range of topics
to provide real and practical information that employees could take
away and action.
Creating thriving communities
Our purpose is to build great homes and create thriving
communities. Achieving our purpose means building homes and places
that enhance people's quality of life, foster local community
relationships and which bring economic growth and skilled
employment. The housebuilding sector is a key creator of jobs and
economic activity throughout the country. We make a major
contribution to the regions in which we operate directly through
the employment created on our sites and indirectly through the
economic benefit our activities generate for the wider supply chain
such as shops, leisure, places of employment and other industries
that benefit from our operations.
We prioritise engaging with local communities as part of the
planning and construction process and strive to make a positive
impact in the wider community. In the first half of 2023, through
our planning obligations, we have contributed GBP210 million to the
local communities in which we build (H1 2022: GBP218 million) which
provides vital local infrastructure, affordable homes, public
transport and education facilities. In H1 2023 we donated and
fundraised over GBP0.6 million for charities and local community
causes.
Fire safety
The safety of our customers is of paramount importance, and we
have always been guided by this principle. It is our long held view
that leaseholders should not have to pay for the cost of fire
safety remediation and our priority has always been to ensure that
customers in Taylor Wimpey buildings have a solution to cladding
remediation. We took early and proactive action, committing
significant funding and resources to address fire safety and
cladding issues on all affected Taylor Wimpey apartment
buildings.
In 2022, we signed up to the Government's Building Safety Pledge
for Developers and the Welsh Government Building Safety Developer
Remediation Pact which reaffirmed our commitment that leaseholders
should not have to pay for fire safety remediation. In the first
half of 2023 we also signed the Scottish Safer Buildings
Accord.
Prior to signing these, we had already begun working on affected
Taylor Wimpey buildings and we have provided a total of GBP245
million for fire safety remediation works on buildings constructed
by Taylor Wimpey since 1992.
During the first half we continued to progress work with
building owners, management companies and leaseholders and we
remain committed to resolving these issues as soon as practicable
for our customers.
Group financial review
Income statement
Group revenue was GBP1,637.1 million in the first half of 2023
(H1 2022: GBP2,076.8 million), with Group completions, excluding
JVs, being 25.2% lower at 5,082 (H1 2022: 6,790) following a slow
down in the UK housing market during the latter half of 2022. UK
average selling price on private completions increased by 8.6% to
GBP366k (H1 2022: GBP337k), due to both house price inflation and
positive mix. The increase in total UK average selling price was
6.7% to GBP320k (H1 2022: GBP300k) as a result of the greater
proportion of affordable housing in H1 2023 (23%) than the prior
period (H1 2022: 22%), and a decrease in the UK average selling
price on affordable housing to GBP166k (H1 2022: 169k).
Group gross profit decreased to GBP353.9 million (H1 2022:
GBP524.5 million), representing a gross margin of 21.6% (H1 2022:
25.3%) with fixed build and selling costs being absorbed across
fewer completions.
Net operating expenses were GBP118.0 million (H1 2022: GBP189.9
million), the comparative including GBP80.0 million of exceptional
costs relating to the cladding fire safety provision following the
signing of the Government's Building Safety Pledge for Developers
in April 2022, with no such amount in the current half. Excluding
exceptional costs the net operating expenses were GBP118.0 million
(H1 2022: GBP109.9 million), which was predominantly made up of
administrative costs of GBP116.5 million (H1 2022: GBP111.3
million). The increase in administrative costs over the comparative
period was driven mainly by the non-recurring costs associated with
the change programme announced earlier in the year, which totalled
GBP8 million, and the annual pay review process, partially offset
by a portion of the savings associated with the change programme.
This resulted in a profit on ordinary activities before financing
of GBP235.9 million (H1 2022: GBP334.6 million), GBP235.9 million
(H1 2022: GBP414.6 million) excluding exceptional items.
During the period, completions from joint ventures were 38 (H1
2022: 132). The lower level was a result of both the current market
and the status of the joint ventures' developments. As a result of
the decreased joint venture completions our share of joint
ventures' results in the period was a GBP0.3 million loss (H1 2022:
GBP10.0 million profit). When including this in the profit on
ordinary activities before financing the resulting operating profit
was GBP235.6 million (H1 2022: GBP424.6 million), delivering an
operating profit margin of 14.4% (H1 2022: 20.4%). The total order
book value of joint ventures as at 2 July 2023 decreased to GBP22
million (31 December 2022: GBP26 million), representing 40 homes
(31 December 2022: 56).
The net finance income of GBP2.1 million (H1 2022: GBP10.1
million expense) principally includes imputed interest on land
acquired on deferred terms, bank interest and interest on the
pension scheme, all being more than offset by interest earned on
deposits following the increase in interest rates.
Profit on ordinary activities before tax decreased to GBP237.7
million (H1 2022: GBP334.5 million). The total tax charge for the
period was GBP62.0 million (H1 2022: GBP73.8 million), a rate of
26.1% (H1 2022: 22.1%), the prior period included a credit of
GBP17.6 million in respect of the exceptional charge recognised in
that period and a GBP1.7 million credit arising from the
remeasurement of the Group's UK deferred tax assets following the
introduction of the new Residential Property Developer Tax. The
pre-exceptional tax charge was GBP62.0 million (H1 2022: GBP91.4
million) representing an underlying tax rate of 26.1% (H1 2022:
22.1%).
As a result, profit for the period was GBP175.7 million (H1
2022: GBP260.7 million).
Basic earnings per share was 5.0 pence (H1 2022: 7.2 pence). The
adjusted basic earnings per share was 5.0 pence (H1 2022: 9.0
pence).
Spain
Our Spanish business primarily sells second homes to European
and other international customers, with a small proportion of sales
being primary homes for Spanish occupiers. The business completed
228 homes (H1 2022: 203) with average selling price reducing to
EUR374k (H1 2022: EUR391k), due to regional mix. The total order
book as at 2 July 2023 increased marginally to 451 homes (31
December 2022: 448 homes).
Gross margin was flat at 29.8% (H1 2022: 29.7%), this flowed
through to an operating profit of GBP19.7 million (H1 2022: GBP18.0
million) and an operating profit margin of 26.6% (H1 2022:
26.7%).
The total plots in the landbank stood at 2,350 (31 December
2022: 2,544), with net operating assets** at GBP80.7 million (31
December 2022: GBP89.8 million).
Balance sheet
Net assets at 2 July 2023 increased marginally to GBP4,509.2
million (31 December 2022: GBP4,502.1 million), with net operating
assets increasing by GBP223.2 million (6.2%) to GBP3,842.7 million
(31 December 2022: GBP3,619.5 million). Return on net operating
assets decreased to 19.7% (3 July 2022: 24.4%) following the
reduction in Group operating profit in the period coupled with the
increase in average net operating assets over the 12 month period
ended 2 July 2023, compared with the prior 12 month period. Group
net operating asset turn (*) was 1.07 times (3 July 2022:
1.23).
Land
Land as at 2 July 2023 decreased by GBP66.2 million in the
period to GBP3,362.1 million as the cautious and opportunistic
approach to acquiring new land continued throughout the period
resulting in land creditors decreasing to GBP588.0 million (31
December 2022: GBP725.6 million). Included within the gross land
creditor balance is GBP44.0 million of UK land overage commitments
(31 December 2022: GBP43.0 million). GBP356.1 million of the land
creditors is expected to be paid within 12 months and GBP231.9
million thereafter.
As at 2 July 2023 the UK short term landbank comprised 83,411
plots (31 December 2022: 82,830), with a net book value of GBP2.9
billion (31 December 2022: GBP2.9 billion). Short term owned land
comprised GBP2.9 billion (31 December 2022: GBP2.8 billion),
representing 62,726 plots (31 December 2022: 63,088). The
controlled short term landbank represented 20,685 plots (31
December 2022: 19,742).
The value of long term owned land decreased to GBP245 million
(31 December 2022: GBP311 million), representing 34,344 plots (31
December 2022: 36,646), with a further total controlled strategic
pipeline of 105,990 plots (31 December 2022: 107,739). Total
potential revenue in the short and long term owned and controlled
landbank increased to GBP62 billion in the period (31 December
2022: GBP61 billion).
Work in progress (WIP)
Total WIP investment, excluding part exchange and other,
increased to GBP1,906.6 million (31 December 2022: GBP1,725.9
million) due to build cost inflation and completions weighted to
the second half of the year. This also resulted in average WIP per
UK outlet to increase to GBP7.8 million (31 December 2022: GBP6.4
million).
Provisions and deferred tax
Provisions decreased to GBP288.0 million (31 December 2022:
GBP290.3 million) following utilisation of the cladding fire safety
provision (GBP6.9 million) as works have been carried out as well
as utilisation of the Ground Rent Review Assistance Scheme
('GRRAS') provision (GBP1.1 million). Provision utilisation was
partially offset by increases in other provisions which largely
relate to remedial works on a limited number of sites around the
Group.
Our net deferred tax asset of GBP22.6 million (31 December 2022:
GBP26.0 million) relates to our pension deficit, UK provisions that
are tax deductible when the expenditure is incurred, and the
temporary differences of our Spanish business, including brought
forward trading losses.
Pensions
As a result of the 31 December 2019 triennial valuation, a
funding arrangement was agreed with the Trustee of the Taylor
Wimpey Pension Scheme ('TWPS') that committed the Group to paying
up to GBP20.0 million per annum into an escrow account between
April 2021 and March 2024. Following an initial contribution
totalling GBP10.0 million all further payments into the escrow
account are subject to a quarterly funding test, effective from 30
September 2021. Should the TWPS Technical Provisions funding
position at any quarter end be 100% or more, payments into the
escrow account are suspended and would only restart should the
funding subsequently fall below 98%. The funding test at 30
September 2021 showed a funding level of 103% and has remained
above 100% since then and therefore escrow payments were suspended
on, and from, 1 October 2021.
The Group continues to provide a contribution for Scheme
expenses (GBP2.0 million per year) and also makes contributions via
the Pension Funding Partnership (GBP5.1 million per year). Total
Scheme contributions and expenses in the period were GBP6.1 million
(H1 2022: GBP6.1 million) with no further amounts paid into the
escrow account (H1 2022: nil). Further payments into escrow are
subject to quarter-end funding tests and would amount to an
additional GBP5.0 million being paid into escrow each quarter if
the funding test is not met at the respective quarter end. The most
recent funding test at 30 June 2023 showed a surplus of GBP51
million and a funding level of 103% and as a result no payment into
escrow is due in the third quarter of 2023.
At 2 July 2023, the IAS 19 valuation of the Scheme was a surplus
of GBP95.6 million (31 December 2022: GBP76.6 million). Due to the
rules of the TWPS, any surplus cannot be recovered by the Group and
therefore a deficit has been recognised on the balance sheet under
IFRIC 14. The deficit is equal to the present value of the
remaining committed payments under the 2019 triennial valuation.
Retirement benefit obligations of GBP25.3 million at 2 July 2023
(31 December 2022: GBP29.9 million) comprise a defined benefit
pension liability of GBP25.1 million (31 December 2022: GBP29.6
million) and a post-retirement healthcare liability of GBP0.2
million (31 December 2022: GBP0.3 million).
The Group continues to work closely with the Trustee in managing
pension risks, including management of interest rate, inflation and
longevity risks. The triennial valuation of the TWPS with a
reference date of 31 December 2022 is in progress.
Net cash and financing position
Net cash decreased to GBP654.9 million at 2 July 2023 from
GBP863.8 million at 31 December 2022, due to the reduction in land
creditors and payment of the 2022 final dividend. Average net cash
for the period was GBP633.4 million (3 July 2022: GBP660.0 million,
31 December 2022: GBP595.7 million).
Whilst cash generated from operations decreased in the period, a
strong second half of 2022 resulted in a cash conversion (++++) of
70.1% of operating profit for the 12 months ending 2 July 2023 (12
months to 3 July 2022: 45.2%).
Net cash, combined with land creditors, resulted in an adjusted
gearing (++++++++) of (1.5)% (31 December 2022: (3.1)%).
At 2 July 2023 our committed borrowing facilities were GBP636
million of which GBP550 million was undrawn throughout the period.
In December 2022 the Group entered into an agreement to refinance
the EUR100 million 2.02% senior loan notes due June 2023 with
EUR100 million 5.08% senior loan notes due June 2030. In July 2023
the Group renewed its revolving credit facility, increasing it to
GBP600 million with a maturity of July 2028 and the option to
request an extension for two further years. The weighted average
maturity of the committed borrowing facilities at 2 July 2023 was
2.3 years (31 December 2022: 1.9 years), taking into account the
new facility this increases to 5.3 years. The new revolving credit
facility includes three sustainability linked performance measures,
which only have an impact on finance costs. The three performance
measures are: (1) science-based target aligned scope 1 & 2
emissions reductions; (2) waste intensity reduction; and, (3)
improving the sustainability of our homes.
Dividends
On 12 May 2023, we returned GBP168.8 million to shareholders by
way of a 2022 final ordinary dividend of 4.78 pence per share. The
Board has declared that a 2023 interim dividend of 4.79 pence per
share is to be paid on 17 November 2023 to shareholders on the
register at the close of business on 13 October 2023. The dividend
will be paid as a cash dividend, and shareholders have the option
to reinvest all of their dividend under the Dividend Re-Investment
Plan (DRIP), details of which are available on our website
www.taylorwimpey.co.uk/corporate .
Going concern
The Directors remain of the view that the Group's financing
arrangements and balance sheet strength provide both the necessary
liquidity and covenant headroom to enable the Group to conduct its
business for at least the next 12 months. Accordingly, the
financial statements are prepared on a going concern basis, see
note 1 of the financial statements for further details of the
assessment performed.
Principal risks and uncertainties
As with any business, Taylor Wimpey's operational performance
and ability to achieve its strategic objectives are subject to
several potential risks and uncertainties. The Board takes a
proactive approach to the management of these and regularly reviews
both internal and external factors to identify and assess their
impact on the business. These risks and uncertainties are then
managed through effective mitigating controls and the development
of action plans, with the continual monitoring of progress against
agreed KPIs as an integral part of the business process and core
activities.
The Board assesses and monitors the Principal Risks of the
business regularly. Set out in the Group's Annual Report and
Accounts for the year ended 31 December 2022 are details of the
Principal Risks and uncertainties for the Group and the key
mitigating activities used to address them at that time.
Principal Risks
Whilst a degree of stability has returned during the past six
months, the current climate continues to present challenges, with
increasing regulatory focus and ongoing political and economic
uncertainty. We continue to assess all relevant factors as part of
our risk management process and have determined that there have
been small increases in the inherent and residual risk profiles of
three of our Principal Risks; 'Mortgage Availability and Housing
Demand', 'Quality and Reputation' and 'Cyber Security'. As with all
our Principal Risks, we continually monitor them to ensure they
remain appropriate, and to ensure that we implement any additional
mitigations deemed necessary in order to effectively manage them
within our risk tolerance levels.
Except for those referenced above, no other changes have been
made to the Group's Principal Risks as reported at 31 December
2022. Further details of the Principal Risks and the mitigations in
place are outlined on pages 75 to 79 of the 2022 Annual Report and
Accounts, published in March 2023, which is available at 2022 in
review -- Taylor Wimpey
Emerging Risks
The Group faces a number of emerging risks which have the
potential to be significant to the achievement of our strategy. Due
to their nature, their impact cannot be fully understood but where
possible we have put in place or are planning to put in place
mitigations to reduce the level of potential risk. Emerging risks
are considered as part of our established risk management process
and reviewed and approved by the Board on a regular basis.
Cautionary note concerning forward looking statements
This announcement includes statements that are, or may be deemed
to be, 'forward-looking statements'. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms 'believes', 'estimates', 'plans',
'projects', 'anticipates' or 'expects'. Such statements are based
on current expectations and assumptions and are subject to a number
of risks and uncertainties that could cause actual events or
results to differ materially from any expected future events or
results expressed or implied in these forward-looking
statements.
Accordingly, there are or will be important factors that could
cause Taylor Wimpey Plc's actual results to differ materially from
those indicated in these statements. Persons receiving this
announcement should not place reliance on forward-looking
statements. Forward-looking statements speak only as of the date
they are made and, except as required by applicable law or
regulation, Taylor Wimpey Plc undertakes no obligation to update
these forward-looking statements. Nothing in this statement should
be construed as a profit forecast.
Definitions
* Operating profit is defined as profit on ordinary activities
before financing, exceptional items and tax, after share of results
of joint ventures.
* Operating profit margin is defined as operating profit divided
by revenue.
** Return on net operating assets (RONOA) is defined as rolling
12 months operating profit divided by the average of the opening
and closing net operating assets of the 12 month period, which is
defined as net assets less net cash, excluding net taxation
balances and accrued dividends.
Tangible net assets per share is defined as net assets before
any accrued dividends excluding goodwill and intangible assets
divided by the number of ordinary shares in issue at the end of the
period.
Adjusted basic earnings per share represents earnings attributed
to the shareholders of the parent, excluding exceptional items and
tax on exceptional items, divided by the weighted average number of
shares in issue during the period.
* Net operating asset turn is defined as 12 months rolling total
revenue divided by the average of opening and closing net operating
assets of the 12 month period.
(***) The Injury Incidence Rate (AIIR) is defined as the number
of incidents per 100,000 employees and contractors, calculated on a
rolling 12 month basis, where the number of employees and
contractors is calculated using a monthly average over the same
period.
(++) Net cash is defined as total cash less total
borrowings.
(++++) Cash conversion is defined as operating cash flow divided
by operating profit on a rolling 12 month basis, with operating
cash flow defined as cash generated by operations (which is before
income taxes paid, interest paid and payments related to
exceptional charges).
(++++++++) Adjusted gearing is defined as adjusted net debt
divided by net assets. Adjusted net debt is defined as net cash
less land creditors.
A reconciliation of alternative performance measures to
statutory measures is disclosed in note 17 of the financial
statements.
Taylor Wimpey plc
Condensed consolidated income statement
For the half year ended 2 July 2023
(Reviewed) (Reviewed) (Audited)
Half Half year Half Half Half Half Year Year Year
year ended year year year year ended ended ended
ended 2 July ended ended ended ended 31 December 31 December 31
2 July 2023 2 July 3 July 3 July 3 July 2022 2022 December
2023 2023 2022 2022 2022 2022
---------------- ----------- --------- ---------------- ----------- --------- ---------------- ----------- ---------
Before Exceptional Before Exceptional Before Exceptional
GBP million Note exceptionalitems items Total exceptionalitems items Total exceptionalitems items Total
---------------- ---- ---------------- ----------- --------- ---------------- ----------- --------- ---------------- ----------- ---------
Continuing
operations
Revenue 2 1,637.1 - 1,637.1 2,076.8 - 2,076.8 4,419.9 - 4,419.9
Cost of sales (1,283.2) - (1,283.2) (1,552.3) - (1,552.3) (3,287.5) - (3,287.5)
================ ==== ================ =========== ========= ================ =========== ========= ================ =========== =========
Gross profit 353.9 - 353.9 524.5 - 524.5 1,132.4 - 1,132.4
Net operating
expenses 4 (118.0) - (118.0) (109.9) (80.0) (189.9) (224.9) (80.0) (304.9)
Profit on
ordinary
activities
before
financing 235.9 - 235.9 414.6 (80.0) 334.6 907.5 (80.0) 827.5
Finance income 5 13.2 - 13.2 2.1 - 2.1 8.6 - 8.6
Finance costs 5 (11.1) - (11.1) (12.2) - (12.2) (24.1) - (24.1)
Share of results
of joint
ventures (0.3) - (0.3) 10.0 - 10.0 15.9 - 15.9
---------------- ---- ---------------- ----------- --------- ---------------- ----------- --------- ================ =========== =========
Profit before
taxation 237.7 - 237.7 414.5 (80.0) 334.5 907.9 (80.0) 827.9
Taxation
(charge)/credit 6 (62.0) - (62.0) (91.4) 17.6 (73.8) (201.9) 17.6 (184.3)
---------------- ---- ---------------- ----------- --------- ---------------- ----------- --------- ================ =========== =========
Profit for the
period 175.7 - 175.7 323.1 (62.4) 260.7 706.0 (62.4) 643.6
---------------- ---- ---------------- ----------- --------- ---------------- ----------- --------- ---------------- ----------- ---------
Basic earnings
per
share 7 5.0p 7.2p 18.1p
Diluted earnings
per share 7 5.0p 7.2p 18.0p
Adjusted basic
earnings
per share 7 5.0p 9.0p 19.8p
Adjusted diluted
earnings per
share 7 5.0p 8.9p 19.7p
---------------- ---- ---------------- ----------- --------- ---------------- ----------- --------- ---------------- ----------- ---------
All of the profit for the period is attributable to the equity
holders of the parent company.
Taylor Wimpey plc
Condensed consolidated statement of comprehensive income
For the half year ended 2 July 2023
Half year ended 2 July 2023 Half year ended 3 July 2022 Year ended 31 December 2022
GBP million (Reviewed) (Reviewed) (Audited)
---------------------------- --------------------------- --------------------------- ---------------------------
Items that may be
reclassified subsequently to
profit or loss:
Exchange differences on
translation of foreign
operations (5.0) 4.1 6.6
Movement in fair value of
hedging instruments 2.4 (2.3) (3.5)
Items that will not be
reclassified subsequently to
profit or loss:
Actuarial gain on defined
benefit pension schemes 0.8 2.1 3.2
Tax (charge)/credit on items
taken directly to other
comprehensive income (0.2) 1.0 0.7
----------------------------- --------------------------- --------------------------- ---------------------------
Other comprehensive
(expense)/income for the
period (2.0) 4.9 7.0
Profit for the period 175.7 260.7 643.6
----------------------------- --------------------------- --------------------------- ---------------------------
Total comprehensive income
for the period 173.7 265.6 650.6
----------------------------- --------------------------- --------------------------- ---------------------------
All of the comprehensive income for the period is attributable
to the equity holders of the parent company.
Taylor Wimpey plc
Condensed consolidated balance sheet
As at 2 July 2023
2 July 3 July 31 December 2022 (Audited)
GBP million Note 2023 (Reviewed) 2022 (Reviewed)
------------------------------- ---- ---------------- ---------------- --------------------------
Non-current assets
Intangible assets 3.2 5.0 4.2
Property, plant and equipment 16.6 20.3 17.3
Right-of-use assets 26.8 25.9 26.3
Interests in joint ventures 73.1 83.0 74.0
Trade and other receivables 12.7 24.2 12.2
Other financial assets 9 10.1 10.0 10.0
Deferred tax assets 22.6 24.2 26.0
------------------------------- ---- ---------------- ---------------- ==========================
165.1 192.6 170.0
------------------------------- ---- ---------------- ---------------- ==========================
Current assets
Inventories 5,288.1 5,309.7 5,169.6
Trade and other receivables 164.4 178.2 191.2
Tax receivables - 14.4 -
Cash and cash equivalents 8 740.4 729.4 952.3
==========================
6,192.9 6,231.7 6,313.1
------------------------------- ---- ---------------- ---------------- ==========================
Total assets 6,358.0 6,424.3 6,483.1
------------------------------- ---- ---------------- ---------------- ==========================
Current liabilities
Trade and other payables (1,083.5) (1,080.2) (1,130.8)
Lease liabilities (8.4) (8.2) (7.3)
Bank and other loans 8 - (87.0) (88.5)
Tax payables (11.0) (3.2) (7.2)
Provisions 11 (125.3) (119.0) (106.7)
(1,228.2) (1,297.6) (1,340.5)
------------------------------- ---- ---------------- ---------------- --------------------------
Net current assets 4,964.7 4,934.1 4,972.6
------------------------------- ---- ---------------- ---------------- --------------------------
Non-current liabilities
Trade and other payables (327.7) (594.5) (407.3)
Lease liabilities (19.4) (18.6) (19.7)
Bank and other loans 8 (85.5) - -
Retirement benefit obligations 9 (25.3) (30.4) (29.9)
Provisions 11 (162.7) (208.6) (183.6)
------------------------------- ---- ---------------- ---------------- ==========================
(620.6) (852.1) (640.5)
------------------------------- ---- ---------------- ---------------- ==========================
Total liabilities (1,848.8) (2,149.7) (1,981.0)
------------------------------- ---- ---------------- ---------------- ==========================
Net assets 4,509.2 4,274.6 4,502.1
------------------------------- ---- ---------------- ---------------- --------------------------
Equity
Share capital 291.3 291.3 291.3
Share premium 777.9 777.9 777.9
Own shares 12 (35.3) (43.3) (43.1)
Other reserves 543.0 544.3 545.6
Retained earnings 2,932.3 2,704.4 2,930.4
------------------------------- ---- ---------------- ---------------- ==========================
Total equity 4,509.2 4,274.6 4,502.1
------------------------------- ---- ---------------- ---------------- --------------------------
Taylor Wimpey plc
Condensed consolidated statement of changes in equity
For the half year ended 2 July 2023
Reviewed half year ended Total
2 July 2023
GBP million Note Share capital Share premium Own shares Other reserves Retained earnings
------------------------ ---- -------------- ------------- ----------- -------------- ----------------- -------
Balance as at 1 January
2023 291.3 777.9 (43.1) 545.6 2,930.4 4,502.1
Other comprehensive
(expense)/income for the
period - - - (2.6) 0.6 (2.0)
Profit for the period - - - - 175.7 175.7
------------------------ ---- -------------- ------------- ----------- -------------- ----------------- -------
Total comprehensive
(expense)/income for
the period - - - (2.6) 176.3 173.7
Utilisation of own
shares - - 7.8 - - 7.8
Cash cost of satisfying
share options - - - - (10.0) (10.0)
Share-based payment
credit 15 - - - - 4.4 4.4
Dividends approved and
paid 14 - - - - (168.8) (168.8)
Total equity at 2 July
2023 291.3 777.9 (35.3) 543.0 2,932.3 4,509.2
------------------------ ---- -------------- ------------- ----------- -------------- ----------------- -------
Reviewed half year ended Total
3 July 2022
GBP million Note Share capital Share premium Own shares Other reserves Retained earnings
------------------------- ---- -------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January
2022 292.2 777.5 (14.6) 541.6 2,717.3 4,314.0
Other comprehensive income for
the period - - - 1.8 3.1 4.9
Profit for the period - - - - 260.7 260.7
------------------------- ---- -------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive
income for the period - - - 1.8 263.8 265.6
New share capital
subscribed - 0.4 - - - 0.4
Own shares acquired and
cancelled 12 (0.9) - (33.8) 0.9 (117.5) (151.3)
Utilisation of own shares - - 5.1 - - 5.1
Cash cost of satisfying
share options - - - - (4.2) (4.2)
Share-based payment
credit 15 - - - - 7.5 7.5
Tax charge on items taken
directly to statement of
changes in equity - - - - (1.6) (1.6)
Dividends approved and
paid 14 - - - - (160.9) (160.9)
Total equity at 3 July
2022 291.3 777.9 (43.3) 544.3 2,704.4 4,274.6
------------------------- ---- -------------- ------------- ---------- -------------- ----------------- -------
Audited year ended 31 Total
December 2022
GBP million Note Share capital Share premium Own shares Other reserves Retained earnings
-------------------------- ---- ------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January
2022 292.2 777.5 (14.6) 541.6 2,717.3 4,314.0
Other comprehensive income for
the year - - - 3.1 3.9 7.0
Profit for the year - - - - 643.6 643.6
-------------------------- ---- ------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive income
for the year - - - 3.1 647.5 650.6
New share capital
subscribed - 0.4 - - - 0.4
Own shares acquired and
cancelled 12 (0.9) - (33.8) 0.9 (117.5) (151.3)
Utilisation of own shares - - 5.3 - - 5.3
Cash cost of satisfying
share options - - - - (5.5) (5.5)
Share-based payment credit 15 - - - - 14.0 14.0
Tax charge on items taken
directly to statement of
changes in equity - - - - (1.6) (1.6)
Dividends approved and
paid 14 - - - - (323.8) (323.8)
Total equity at 31
December 2022 291.3 777.9 (43.1) 545.6 2,930.4 4,502.1
-------------------------- ---- ------------- ------------- ---------- -------------- ----------------- -------
Taylor Wimpey plc
Condensed consolidated cash flow statement
For the half year ended 2 July 2023
Half year ended 2 Half year ended 3 July 2022 Year ended 31 December 2022
July 2023
GBP million Note (Reviewed) (Reviewed) (Audited)
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Operating activities:
Profit on ordinary activities
before financing 235.9 334.6 827.5
Adjustments for:
Depreciation and amortisation 6.0 7.5 14.5
Pension contributions in
excess of charge to the
income statement (4.4) (5.1) (4.8)
Share-based payment charge 4.4 7.5 14.0
Loss on disposal of property,
plant and equipment 0.3 - 0.3
Net increase in provisions
excluding exceptional
payments 5.9 94.2 90.9
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Operating cash flows before
movements in working capital 248.1 438.7 942.4
Increase in inventories (232.9) (317.7) (280.4)
Decrease/(increase) in receivables 23.7 (7.0) (9.9)
(Decrease)/increase in payables (23.3) 91.7 52.9
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Cash generated by operations 15.6 205.7 705.0
Payments relating to exceptional
charges (8.0) (11.7) (45.9)
Income taxes paid (55.2) (83.3) (176.9)
Interest paid (2.7) (2.4) (4.7)
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Net cash (used in)/from operating
activities (50.3) 108.3 477.5
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Investing activities:
Interest received 12.4 1.9 6.9
Dividends received from joint
ventures 8.2 1.4 3.1
Proceeds on disposal of property,
plant and equipment - - 1.5
Purchase of property, plant and
equipment (0.3) (0.7) (1.7)
Purchase of software - (0.1) (0.4)
Amounts (invested in)/repaid by
joint ventures (6.6) 11.0 24.2
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Net cash generated from investing
activities 13.7 13.5 33.6
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Financing activities:
Lease capital repayments (3.9) (3.7) (7.6)
Cash received on exercise of share
options 0.1 1.3 0.3
Purchase of own shares - (151.3) (151.3)
Repayment of borrowings (87.0) - -
Proceeds from borrowings 87.0 - -
Dividends paid (168.8) (160.9) (323.8)
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Net cash used in financing
activities (172.6) (314.6) (482.4)
----------------------------------- ---- ----------------- --------------------------- ---------------------------
Net (decrease)/increase in cash and
cash equivalents (209.2) (192.8) 28.7
Cash and cash equivalents at
beginning of period 952.3 921.0 921.0
Effect of foreign exchange rate
changes (2.7) 1.2 2.6
----------------------------------- ---- ----------------- --------------------------- ===========================
Cash and cash equivalents at end of
period 8 740.4 729.4 952.3
----------------------------------- ---- ----------------- --------------------------- ===========================
Taylor Wimpey plc
Notes to the condensed consolidated interim financial
statements
For the half year ended 2 July 2023
1. Accounting policies
Basis of preparation
The condensed set of consolidated interim financial statements
has been prepared in accordance with IAS 34 'Interim Financial
Reporting', as adopted by the United Kingdom, and the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority.
These should be read in conjunction with the Group's annual
financial statements for the year ended 31 December 2022, which
have been prepared in accordance with applicable IFRSs.
The information contained in this report does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. The condensed consolidated interim financial statements are
unaudited but have been reviewed by the Group's auditor
PricewaterhouseCoopers LLP. A copy of the statutory accounts for
year ended 31 December 2022 has been delivered to the Registrar of
Companies. The auditor reported on those accounts, their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under sections 498 (2) or
(3) of the Companies Act 2006.
The accounting policies and method of computations adopted in
the preparation of these condensed consolidated interim financial
statements are consistent with those followed in the preparation of
the Group's annual financial statements for the year ended 31
December 2022.
Going concern
Group forecasts have been prepared that have considered the
Group's current financial position and current market
circumstances. The forecasts were subject to sensitivity analysis
including severe but plausible scenarios together with the likely
effectiveness of mitigating actions.
The assessment considered sensitivity analysis based on a number
of realistically possible, but severe and prolonged, changes to
principal assumptions. In determining these, the Group included
macro-economic and industry wide projections, as well as matters
specific to the Group. To arrive at the sensitivity analysis, the
Group has also drawn on experience gained managing the business
through previous economic downturns and stress tested the business
against a number of scenarios including:
- Volume - a decline in total volumes of 30% from 2022 levels
- Price - a reduction to current selling prices of 10% for un-reserved homes
- Costs - a one-off exceptional charge and cash cost of GBP150
million for an unanticipated event, change in Government
regulations or financial penalty has been included in 2024
Mitigations to this sensitivity analysis include a reduction in
land investment, a reduction in the level of production and work in
progress held and optimising the overhead base to ensure it is
aligned with the scale of the operations through the cycle. We also
have a range of additional options to maintain our financial
strength, including: a more severe reduction in land spend and work
in progress, the sale of assets, reducing the dividend, and or
raising debt.
At 2 July 2023, the Group had a cash balance of GBP740 million
and had access to GBP550 million from a fully undrawn revolving
credit facility, which was replaced in July 2023 with a GBP600
million revolving credit facility, together totalling GBP1,340
million. The combination of both of these is sufficient to absorb
the financial impact of each of the risks modelled in the stress
and sensitivity analysis, individually and in aggregate.
Based on these forecasts, it is considered that there are
sufficient resources available for the Group to conduct its
business, and meet its liabilities as they fall due, for at least
the next 12 months from the date of these condensed consolidated
interim financial statements. Consequently the condensed
consolidated interim financial statements have been prepared on a
going concern basis.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
1. Accounting policies (continued)
Estimates and judgements
The preparation of a condensed set of consolidated interim
financial statements requires management to make significant
judgements and estimates. Management have considered whether there
are any such sources of estimation or accounting judgements in
preparing the condensed consolidated interim financial statements.
In identifying these areas management have considered the size of
the associated balance and the potential likelihood of changes due
to macro-economic factors.
In preparing these condensed consolidated interim financial
statements, the critical judgements made by management in applying
the Group's accounting policies and the key sources of estimation
uncertainty were principally the same as those applied to the
Group's consolidated financial statements for the year ended 31
December 2022.
2. Revenue
An analysis of the Group's revenue is as follows:
Half year Half year Year ended
ended 2 ended 3 31 December
GBP million July 2023 July 2022 2022
-------------------- ---------- ---------- ------------
Private sales 1,443.0 1,797.2 3,886.1
Partnership housing 184.3 245.0 476.4
Land and other 9.8 34.6 57.4
-------------------- ---------- ---------- ------------
Total revenue 1,637.1 2,076.8 4,419.9
-------------------- ---------- ---------- ------------
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
3. Operating segments
The Group operates in two countries, being the United Kingdom
and Spain.
The United Kingdom is split into five geographical operating
segments, each managed by a Divisional Chair who sits on the Group
Management Team; there are also central operations covering the
corporate functions and Strategic Land. All the UK operating
segments share similar economic characteristics. In making this
assessment the Group has considered the key metrics that are used
to monitor the performance of the segments; these have been
considered over a long term period and have included historic and
forecast results. The metrics focus on profitability, return on
capital and other asset related measures. In addition each Division
builds and delivers residential homes, uses consistent methods of
construction, sells homes to both private customers and local
housing associations, follows a single UK sales process and
operating framework, is subject to the same macro-economic factors
including mortgage availability and has the same cost of capital
arising from the utilisation of central banking and debt
facilities. As a result, the disclosure reflects the two reportable
segments of the UK and Spain. Revenue in Spain arises entirely on
private sales.
Half year ended Half year ended 3 Year ended 31 December
2 July 2023 July 2022 2022
----------------------------- ----------------------------- -----------------------------
GBP million UK Spain Total UK Spain Total UK Spain Total
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
Revenue
External sales 1,563.0 74.1 1,637.1 2,009.4 67.4 2,076.8 4,295.5 124.4 4,419.9
Result
Profit before joint
ventures,finance
income/(costs)
and exceptional items 216.2 19.7 235.9 396.6 18.0 414.6 874.9 32.6 907.5
Share of results of
joint ventures (0.3) - (0.3) 10.0 - 10.0 15.9 - 15.9
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
Operating profit (Note
17) 215.9 19.7 235.6 406.6 18.0 424.6 890.8 32.6 923.4
Exceptional items (Note
4) - - - (80.0) - (80.0) (80.0) - (80.0)
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
Profit before net
finance
income/(costs) 215.9 19.7 235.6 326.6 18.0 344.6 810.8 32.6 843.4
Net finance
income/(costs)
(Note 5) 2.1 (10.1) (15.5)
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
Profit before taxation 237.7 334.5 827.9
Taxation charge (Note
6) (62.0) (73.8) (184.3)
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
Profit for the period 175.7 260.7 643.6
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
2 July 2023 3 July 2022 31 December 2022
----------------------------- ----------------------------- -----------------------------
GBP million UK Spain Total UK Spain Total UK Spain Total
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- ---------
Assets and liabilities
Segment operating
assets 5,319.3 202.6 5,521.9 5,368.3 205.0 5,573.3 5,222.9 207.9 5,430.8
Joint ventures 73.1 - 73.1 83.0 - 83.0 74.0 - 74.0
Segment operating
liabilities (1,630.4) (121.9) (1,752.3) (1,934.6) (124.9) (2,059.5) (1,767.2) (118.1) (1,885.3)
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- -----------
Net operating assets 3,762.0 80.7 3,842.7 3,516.7 80.1 3,596.8 3,529.7 89.8 3,619.5
Net current taxation (11.0) 11.2 (7.2)
Net deferred taxation 22.6 24.2 26.0
Net cash (Note 8) 654.9 642.4 863.8
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- -----------
Net assets 4,509.2 4,274.6 4,502.1
----------------------- --------- ------- --------- --------- ------- --------- --------- ------- -----------
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
4. Net operating expenses and profit on ordinary activities before financing
Profit on ordinary activities before financing has been arrived
at after charging/(crediting):
Half year Half year Year ended
ended 2 ended 3 31 December
GBP million July 2023 July 2022 2022
------------------------ ---------- ---------- ------------
Administration expenses 116.5 111.3 220.7
Other expenses 37.5 27.0 70.1
Other income (36.0) (28.4) (65.9)
Exceptional items - 80.0 80.0
------------------------ ---------- ---------- ------------
Net operating expenses 118.0 189.9 304.9
------------------------ ---------- ---------- ------------
The majority of the other income and other expenses shown above
relates to the income and associated costs arising on the sale of
part exchange properties. These are shown gross with the
comparatives updated to be disclosed on the same basis (grossing up
each by GBP22.3 million for the period ended 3 July 2022). Also
included in other income and other expenses are profit/loss on the
sale of property, plant and equipment, the revaluation of certain
shared equity mortgage receivables and abortive land acquisition
costs.
Half year
ended Half year Year ended
Exceptional items: 2 July ended 3 31 December
GBP million 2023 July 2022 2022
------------------------------------------------------ ---------- ---------- ------------
Provision in relation to cladding fire safety - 80.0 80.0
- 80.0 80.0
----------------------------------------------------------------- ---------- ------------
Tax credit - (17.6) (17.6)
------------------------------------------------------ ---------- ---------- ------------
Net exceptional items charged to the income statement - 62.4 62.4
------------------------------------------------------ ---------- ---------- ------------
Cladding fire safety
In 2018 the Group established an exceptional provision for the
cost of replacing ACM on a small number of legacy developments,
which was increased in 2020 to reflect the latest estimate of costs
to complete the planned works. Following the guidance issued by
RICS in 2021 the Group announced an additional GBP125.0 million
provision to fund cladding fire safety improvements and, in line
with Group policy, recognised it as an exceptional item.
In April 2022 the Group signed up to the Government's Building
Safety Pledge for Developers, extending the period covered to all
buildings constructed by the Group since 1992, as well as
committing to reimburse any funds allocated or used for Taylor
Wimpey buildings over 18 metres from the Building Safety Fund. In
the year to 31 December 2022 the Group recognised an increase in
the provision of GBP80.0 million, as an exceptional expense; no
further amounts were recognised in the period to 2 July 2023.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
5. Finance income and finance costs
Half
year Half year
Finance income: ended ended Year ended
2 July 3 July 31 December
GBP million 2023 2022 2022
-------------------- ------- --------- ------------
Interest receivable 13.2 2.1 8.6
13.2 2.1 8.6
-------------------- ------- --------- ------------
Half
year Half year
Finance costs: ended ended Year ended
2 July 3 July 31 December
GBP million 2023 2022 2022
-------------------------------------------------- ------- --------- ------------
Interest on bank and other loans (2.7) (2.4) (4.8)
Foreign exchange movements (0.3) (0.3) -
-------------------------------------------------- ------- --------- ------------
(3.0) (2.7) (4.8)
Unwinding of discount on land creditors and other
items (7.1) (9.0) (18.3)
Interest on lease liabilities (0.3) (0.2) (0.4)
Net interest on pension liability (0.7) (0.3) (0.6)
-------------------------------------------------- ------- --------- ------------
(11.1) (12.2) (24.1)
-------------------------------------------------- ------- --------- ------------
6. Taxation
Tax charged in the income statement is analysed as follows:
Year ended
31 December
GBP million Half year ended 2 July 2023 Half year ended 3July 2022 2022
------------ --------------------------------- --------------------------- -------------------------- ------------
Current
tax:
UK: Current year (56.1) (69.1) (179.3)
Adjustment in respect of prior years 0.3 - 0.5
Overseas: Current year (3.6) (2.6) (5.4)
Adjustment in respect of prior years 0.4 (0.5) (0.5)
---------------------------------------------- --------------------------- -------------------------- ------------
(59.0) (72.2) (184.7)
---------------------------------------------- --------------------------- -------------------------- ------------
Deferred
tax:
UK: Current year (1.6) (2.4) 0.4
Adjustment in respect of prior years (0.1) - (0.1)
Overseas: Current year (1.3) (1.0) (1.7)
Adjustment in respect of prior years - 1.8 1.8
---------------------------------------------- --------------------------- -------------------------- ------------
(3.0) (1.6) 0.4
---------------------------------------------- --------------------------- -------------------------- ------------
(62.0) (73.8) (184.3)
---------------------------------------------- --------------------------- -------------------------- ------------
The effective tax rate for the period is 26.1% (3 July 2022
effective tax rate: 22.1%).
Closing deferred tax on temporary differences has been
calculated at the tax rates that are expected to apply for the
period when the asset is realised or liability is settled. On 1
April 2022 a new 4% Residential Property Developer Tax, chargeable
on residential development profits, came into effect. Accordingly
deferred tax on UK temporary differences has been calculated at 29%
(3 July 2022: between 23% and 29%). Deferred tax on Spanish
temporary differences has been calculated at 25% (3 July 2022:
25%).
The primary components of the deferred tax asset at 2 July 2023
are in relation to retirement benefit obligations, UK provisions
that are tax deductible when the expenditure is incurred, and the
temporary differences of our Spanish business, including brought
forward trading losses.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
7. Earnings per share
Half year ended 2 July 2023 Half year ended 3 July 2022 Year ended 31 December 2022
------------------------------- --------------------------- --------------------------- ---------------------------
Basic earnings per share 5.0p 7.2p 18.1p
Diluted earnings per share 5.0p 7.2p 18.0p
Adjusted basic earnings per
share 5.0p 9.0p 19.8p
Adjusted diluted earnings per
share 5.0p 8.9p 19.7p
Weighted average number of
shares for basic earnings per
share - million 3,528.8 3,603.5 3,564.8
Weighted average number of
shares for diluted earnings
per share - million 3,536.8 3,613.9 3,576.5
------------------------------- --------------------------- --------------------------- ---------------------------
Adjusted basic and adjusted diluted earnings per share, which
exclude the impact of exceptional items and the associated net tax
charges, are shown to provide clarity on the underlying performance
of the Group.
A reconciliation from profit from operations attributable to
equity shareholders used for basic and diluted earnings per share
to that used for adjusted earnings per share is shown below:
GBP million Half year ended 2 July 2023 Half year ended 3 July 2022 Year ended 31 December 2022
------------------------------- --------------------------- --------------------------- ---------------------------
Earnings for basic and diluted
earnings per share 175.7 260.7 643.6
Adjust for exceptional items - 80.0 80.0
Adjust for tax on exceptional
items - (17.6) (17.6)
------------------------------- --------------------------- --------------------------- ---------------------------
Earnings for adjusted basic and
adjusted diluted earnings per
share 175.7 323.1 706.0
------------------------------- --------------------------- --------------------------- ---------------------------
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
8. Notes to the cash flow statement
Cash and cash equivalents comprise cash at bank and other short
term highly liquid investments with an original maturity of three
months or less.
Movement in net cash:
Cash and cash equivalents Bank and other loans Total
GBP million net cash
------------------ ------------------------- -------------------- ---------
At 1 January 2023 952.3 (88.5) 863.8
Net cash flow (209.2) - (209.2)
Foreign exchange (2.7) 3.0 0.3
------------------ ------------------------- -------------------- ---------
At 2 July 2023 740.4 (85.5) 654.9
------------------ ------------------------- -------------------- ---------
Cash and cash equivalents Bank and other loans Total
GBP million net cash
------------------ ------------------------- -------------------- ---------
At 1 January 2022 921.0 (84.0) 837.0
Net cash flow (192.8) - (192.8)
Foreign exchange 1.2 (3.0) (1.8)
------------------ ------------------------- -------------------- ---------
At 3 July 2022 729.4 (87.0) 642.4
------------------ ------------------------- -------------------- ---------
GBP million Cash and cash equivalents Bank and other loans Total net cash
-------------------- ------------------------- -------------------- --------------
At 1 January 2022 921.0 (84.0) 837.0
Net cash flow 28.7 - 28.7
Foreign exchange 2.6 (4.5) (1.9)
-------------------- ------------------------- -------------------- --------------
At 31 December 2022 952.3 (88.5) 863.8
-------------------- ------------------------- -------------------- --------------
In December 2022 the Group entered into an agreement to
refinance the EUR100 million loan notes maturing in June 2023, the
new loan notes were issued in June 2023, maturing June 2030. The
committed borrowing facilities at period end were GBP635.5 million
(31 December 2022: GBP638.5 million) with a weighted average
maturity of 2.3 years (31 December 2022: 1.9 years). Subsequent to
period end the revolving credit facility was renewed, increasing
the total facility to GBP600 million and with a maturity of July
2028, this increases the weighted average maturity of facilities to
5.3 years. The Group's financing facilities contain the usual
financial covenants including minimum interest cover and maximum
gearing. The Group met these requirements throughout the period and
up to the date of the approval of these condensed consolidated
interim financial statements.
9. Pensions
During 2020, the Group engaged with the Taylor Wimpey Pension
Scheme ('TWPS') Trustee on the triennial valuation of the pension
scheme with a reference date of 31 December 2019. In March 2021, a
new funding arrangement was agreed with the Trustee that committed
the Group to paying up to GBP20.0 million per annum into an escrow
account between April 2021 and March 2024. The first six months of
contributions between 1 April 2021 and 30 September 2021 were
guaranteed (GBP10.0 million). From 1 October 2021, payments into
the escrow account are subject to a quarterly funding test with the
first funding test having an effective date of 30 September 2021.
Payments to the escrow are suspended should the TWPS Technical
Provisions deficit position at any quarter-end be 100% or more and
would restart should the deficit subsequently fall below 98%. The
funding test at 30 September 2021 showed a funding level of 103%
and has remained above 100% since then and therefore escrow
payments were suspended on, and from, 1 October 2021.
The Group continues to provide a contribution for Scheme
expenses (GBP2.0 million per annum) and also makes contributions
via the Pension Funding Partnership (GBP5.1 million per annum).
At 2 July 2023 the IAS19 surplus was GBP95.6 million (31
December 2022: GBP76.6 million). An IFRIC 14 deficit has been
recognised at 2 July 2023, which represents the present value of
future contributions under the funding plan together with
distributions from the Pension Funding Partnership. This results in
an IFRIC 14 deficit recognised on the balance sheet of GBP25.1
million (31 December 2022: GBP29.6 million). In addition, there is
as a post-retirement healthcare liability of GBP0.2 million (31
December 2022: GBP0.3 million).
Amounts in other financial assets are held in an escrow account
for the benefit of the TWPS and the Trustee of the TWPS holds a
charge over the escrow account. Transfers out of the escrow account
(either to the TWPS or the Group) are subject to the 2019 triennial
funding arrangement entered into between the Group and the Trustee
and as such the funds are restricted from use by the Group for
other purposes and are therefore not classified as cash or cash
equivalents. At 2 July 2023 there was GBP10.1 million held in the
escrow account (31 December 2022: GBP10.0 million) with interest
earned by the escrow account being retained within the escrow
account.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
10. Financial assets and liabilities
Carrying amount Fair value
--------------------------- ---------------------------
2 July 3 July 31 December 2 July 3 July 31 December
GBP million 2023 2022 2022 2023 2022 2022
---------------------------- ------ ------ ----------- ------ ------ -----------
Financial assets
Cash and cash equivalents a 740.4 729.4 952.3 740.4 729.4 952.3
Land receivables a 14.7 18.7 16.3 14.7 18.7 16.3
Other financial assets a 10.1 10.0 10.0 10.1 10.0 10.0
Trade and other receivables a 112.9 120.3 136.4 112.9 120.3 136.4
Mortgage receivables b 8.1 14.0 10.2 8.1 14.0 10.2
---------------------------- ------ ------ ----------- ------ ------ -----------
Financial liabilities
Bank and other loans c 85.5 87.0 88.5 82.6 85.5 87.2
Land creditors a 588.0 843.7 725.6 588.0 843.7 725.6
Trade and other payables a 643.0 622.4 639.9 643.0 622.4 639.9
Lease liabilities a 27.8 26.8 27.0 27.8 26.8 27.0
---------------------------- ------ ------ ----------- ------ ------ -----------
(a) The Directors consider the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
condensed consolidated interim financial statements approximate
their fair values.
(b) Mortgage receivables relate to sales incentives including
shared equity loans and are measured at fair value through profit
or loss. The fair value is established based on a publicly
available national house price index, being significant other
observable inputs (level 2).
(c) The fair value of the EUR100 million fixed rate loan notes
has been determined by reference to external interest rates and the
Directors' assessment of the margin for credit risk (level 2).
Land receivables, mortgage receivables and trade and other
receivables are included in the balance sheet as trade and other
receivables for current and non-current amounts and include GBP41.4
million (31 December 2022: GBP40.5 million) of non-financial
assets.
Land creditors and trade and other payables are included in the
balance sheet as trade and other payables for current and
non-current amounts and include GBP180.2 million (31 December 2022:
GBP172.6 million) of non-financial liabilities.
The Group has designated a financial liability in the sum of
EUR79.0 million (31 December 2022: EUR79.0 million) as a net
investment hedge, equating to GBP67.5 million (31 December 2022:
GBP69.9 million). The Group had no financial instruments with fair
values that are determined by reference to significant unobservable
inputs (level 3), nor have there been any transfers of assets or
liabilities between levels of the fair value hierarchy. There are
no non-recurring fair value measurements.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
11. Provisions
Cladding
GBP million fire safety Leasehold Other Total
------------------------ ------------ --------- ----- ------
At 31 December 2022 208.7 23.5 58.1 290.3
Additions in the period - - 8.0 8.0
Utilised (6.9) (1.1) (2.2) (10.2)
Foreign exchange - - (0.1) (0.1)
At 2 July 2023 201.8 22.4 63.8 288.0
------------------------ ------------ --------- ----- ------
2 July 3 July 31 December
GBP million 2023 2022 2022
------------ ------ ------ -----------
Current 125.3 119.0 106.7
Non-current 162.7 208.6 183.6
------------ ------ ------ -----------
288.0 327.6 290.3
------------ ------ ------ -----------
In 2018 the Group established an exceptional provision for the
cost of replacing ACM on a small number of legacy developments,
which was increased by GBP10.0 million in 2020 to reflect the
latest estimate of costs to complete the planned works. Following
the guidance issued by RICS the Group announced an additional
GBP125.0 million provision to fund cladding fire safety
improvements and in 2022 recognised a further GBP80.0 million (see
Note 4). It is expected that up to a third of the remaining
provision will be utilised over the next 12 months.
In 2017 the Group launched an assistance scheme to help certain
customers restructure their ground rent agreements with their
freeholder and established an associated provision of GBP130.0
million to fund this. Following the agreement of voluntary
undertakings with the CMA the Group expects that the majority of
the remaining provision will be utilised within the next 12
months.
Other provisions consist of a remedial work provision covering
various obligations on a limited number of sites across the Group.
Other provisions also includes amounts for legal claims and other
contract-related costs associated with various matters arising
across the Group, the majority of which are anticipated to be
settled within a three year period; however, there is some
uncertainty regarding the timing of these outflows due to the
nature of the claims and the length of time it can take to reach
settlement.
12. Own shares
During the prior period the Group purchased 116,942,362 of its
own ordinary shares, of which 25,000,000 were transferred to be
held in treasury and the remainder cancelled. The average share
price of the purchased shares was 128.27 pence for a total cost,
including expenses, of GBP151.3 million.
13. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed within the financial statements or related notes. There
have been no material changes in the nature of transactions with
joint ventures, which are also related parties, since the last
annual financial statements as at, and for
the year ended, 31 December 2022.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
14. Dividends
Half Half year Year ended
year ended ended 31 December
2 July 3 July 2022
GBP million 2023 2022
===================== =========== ========= ============
Approved and paid 168.8 160.9 323.8
Approved and accrued - - -
Approved 169.0 163.0 -
Proposed - - 169.0
===================== =========== ========= ============
The Directors have assessed the Company's performance in the
current period and approved an interim dividend of 4.79
pence per share in line with the Group's dividend policy. The
dividend will be paid on 17 November 2023 to all shareholders
registered at the close of business on 13 October 2023. This is
expected to result in a payment of c.GBP169 million.
In accordance with IAS 10 'Events after the Reporting Period'
the approved interim dividend has not been accrued in the
2 July 2023 balance sheet.
15. Share based payments
The Group recognised a share based payment expense of GBP5.5
million to 2 July 2023 (3 July 2022: GBP7.6 million), which was
composed of GBP4.4 million in relation to equity settled schemes
and GBP1.1 million in relation to cash settled elements (3 July
2022: GBP7.5 million and GBP0.1 million).
16. Seasonality
Weekly sales rates in some of the Group's key markets
historically experience significant seasonal variation, with the
highest levels of reservations usually occurring in the spring and
autumn in the UK. As such, economic weakness which affects these
peak selling seasons can have a disproportionate impact on the
results for the year.
This pattern of reservations tends to result in higher levels of
home completions towards the end of the financial year. As a
result, the Group's work in progress and debt profile exhibits
peaks and troughs over the course of the financial year.
17. Alternative performance measures
The Group uses a number of Alternative Performance Measures
(APMs) which are not defined within IFRS. The Directors use these
measures in order to assess the underlying operational performance
of the Group and, as such, these measures should be considered
alongside the IFRS measures. The following APMs are referred to
throughout the half year results.
Profit before taxation and exceptional items and profit for the
period before exceptional items
The Directors consider the removal of exceptional items from the
reported results provides more clarity on the performance of the
Group. They are reconciled to profit before taxation and profit for
the period respectively, on the face of the condensed consolidated
income statement.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
17. Alternative performance measures (continued)
Operating profit and operating margin
Throughout the report operating profit is used as one of the
main measures of performance. Operating profit is defined as profit
on ordinary activities before financing, exceptional items and tax,
after share of results of joint ventures. The Directors consider
this to be an important measure of underlying performance of the
Group. Operating margin is calculated as operating profit divided
by total revenue.
Half Half year
year ended ended Year ended
2 July 3 July 31 December
2023 2022 2022
------------------------------------------------------ ----------- --------- ------------
Profit on ordinary activities before financing (GBPm) 235.9 334.6 827.5
Adjusted for:
Share of results of joint ventures (GBPm) (0.3) 10.0 15.9
Exceptional items (GBPm) (Note 4) - 80.0 80.0
------------------------------------------------------ ----------- --------- ------------
Operating profit (GBPm) 235.6 424.6 923.4
====================================================== =========== ========= ============
Revenue (GBPm) (Note 2) 1,637.1 2,076.8 4,419.9
====================================================== =========== ========= ============
Operating margin 14.4% 20.4% 20.9%
====================================================== =========== ========= ============
Rolling 12-month operating profit* (GBPm) 734.4 829.2 923.4
====================================================== =========== ========= ============
* Operating profit for the 6-month period ended 31 December
2021: Profit before interest and tax: GBP400.5m; Share of results
of joint ventures: GBP4.1m; Exceptional items: nil.
Net operating assets
Net operating assets is defined as basic net assets less net
cash, excluding net taxation balances and accrued dividends.
Average net operating assets is the average of the opening and
closing net operating assets of the 12-month period. With return on
net operating assets, the Directors consider this to be an
important measure of the underlying operating efficiency and
performance of the Group .
2 July 3 July 31 December 31 December 4 July
GBPmillion 2023 2022 2022 2021 2021
--------------------------------- -------- -------- ------------ ------------ ----------
Basic net assets (GBPm) 4,509.2 4,274.6 4,502.1 4,314.0 4,140.2
Adjusted for:
Cash (GBPm) (740.4) (729.4) (952.3) (921.0) (1,005.6)
Borrowings (GBPm) 85.5 87.0 88.5 84.0 99.1
Net taxation (GBPm) (11.6) (35.4) (18.8) (26.4) (35.2)
Accrued dividends (GBPm) - - - - -
--------------------------------- -------- -------- ------------ ------------ ----------
Net operating assets (GBPm) 3,842.7 3,596.8 3,619.5 3,450.6 3,198.5
--------------------------------- -------- -------- ------------ ------------ ----------
Average basic net assets (GBPm) 4,391.9 4,207.4 4,408.1
--------------------------------- -------- -------- ------------ ------------ ----------
Average net operating assets
(GBPm) 3,719.8 3,397.7 3,535.1
--------------------------------- -------- -------- ------------ ------------ ----------
Return on net operating assets
Return on net operating assets is defined as rolling 12-month
operating profit divided by average net operating assets. The
Directors consider this to be an important measure of the
underlying operating efficiency and performance of the Group.
31 December
2 July 2023 3 July 2022 2022
----------------------------------------- ----------- ----------- -----------
Rolling 12-month operating profit (GBPm) 734.4 829.2 923.4
Average net operating assets (GBPm) 3,719.8 3,397.7 3,535.1
----------------------------------------- ----------- ----------- -----------
Return on net operating assets 19.7% 24.4% 26.1%
========================================= =========== =========== ===========
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
17. Alternative performance measures (continued)
Net operating asset turn
This is defined as total revenue divided by the average of
opening and closing net operating assets, based on a rolling
12-month period. The Directors consider this to be good indicator
of how efficiently the Group is utilising its assets to generate
value for the shareholders.
31 December
2 July 2023 3 July 2022 2022
--------------------------------------- ----------- ----------- -----------
Rolling 12-month revenue* (GBPm) (Note
2) 3,980.2 4,165.4 4,419.9
Average net operating assets (GBPm) 3,719.8 3,397.7 3,535.1
--------------------------------------- ----------- ----------- -----------
Net operating asset turn 1.07 1.23 1.25
======================================= =========== =========== ===========
* Revenue for the 6-month period ended 31 December 2021:
GBP2,088.6 million
Tangible net assets per share
This is calculated as net assets before any accrued dividends
excluding goodwill and intangible assets divided by the number of
ordinary shares in issue at the end of the period. The Directors
consider this to be a good measure of the value intrinsic within
each ordinary share.
31 December
2 July 2023 3 July 2022 2022
-------------------------------------- ----------- ----------- -----------
Basic net assets (GBPm) 4,509.2 4,274.6 4,502.1
Adjusted for:
Intangible assets (GBPm) (3.2) (5.0) (4.2)
-------------------------------------- ----------- ----------- -----------
Tangible net assets (GBPm) 4,506.0 4,269.6 4,497.9
Ordinary shares in issue (millions) 3,557.0 3,557.0 3,557.0
====================================== =========== =========== ===========
Tangible net assets per share (pence) 126.7 120.0 126.5
====================================== =========== =========== ===========
Net cash
Net cash is defined as total cash less total borrowings. This is
considered by the Directors to be the best indicator of the
financing position of the Group and is reconciled in Note 8.
Cash conversion
This is defined as cash generated by operations divided by
operating profit, based on a rolling 12-month period. The Directors
consider this measure to be a good indication of how efficiently
the Group is turning profit into cash.
31 December
2 July 2023 3 July 2022 2022
----------------------------------------------- ----------- ----------- -----------
Rolling 12-month cash generated by operations*
(GBPm) 514.9 375.1 705.0
Rolling 12-month operating profit (GBPm) 734.4 829.2 923.4
----------------------------------------------- ----------- ----------- -----------
Cash conversion 70.1% 45.2% 76.3%
=============================================== =========== =========== ===========
* Cash generated by operations for the 6-month period ended 31
December 2021: GBP169.4m.
Adjusted gearing
This is defined as adjusted net debt divided by basic net
assets. The Directors consider this to be a more representative
measure of the Group's gearing levels. Adjusted net debt is defined
as net cash less land creditors.
31 December
2 July 2023 3 July 2022 2022
-------------------------------- ----------- ----------- -----------
Cash (GBPm) 740.4 729.4 952.3
Loans (GBPm) (85.5) (87.0) (88.5)
-------------------------------- ----------- ----------- -----------
Net cash (GBPm) 654.9 642.4 863.8
Land creditors (GBPm) (588.0) (843.7) (725.6)
-------------------------------- ----------- ----------- -----------
Adjusted net cash/(debt) (GBPm) 66.9 (201.3) 138.2
-------------------------------- ----------- ----------- -----------
Basic net assets (GBPm) 4,509.2 4,274.6 4,502.1
-------------------------------- ----------- ----------- -----------
Adjusted gearing (1.5)% 4.7% (3.1)%
================================ =========== =========== ===========
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 2 July 2023
17. Alternative performance measures (continued)
Adjusted basic earnings per share
This is calculated as earnings attributed to the shareholders,
excluding exceptional items and tax on exceptional items, divided
by the weighted average number of shares. The Directors consider
this provides an important measure of the underlying earnings
capacity of the Group. Note 7 shows a reconciliation from basic
earnings per share to adjusted basic earnings per share.
18. Post balance sheet events
Other than the renewal of the revolving credit facility in July
2023 (see Note 8), there were no material subsequent events
affecting the Group between 2 July 2023 and the date of this
announcement.
Taylor Wimpey plc
Statement of Directors' responsibility
For the half year ended 2 July 2023
The Directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and that the half year results include a fair review of
the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
By order of the Board
Robert Noel, Chair
Jennie Daly, Chief Executive
1 August 2023
Independent review report to Taylor Wimpey plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Taylor Wimpey plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the Half year results of Taylor Wimpey plc for the half year
ended 2 July 2023 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed consolidated balance sheet as at 2 July 2023;
-- the Condensed consolidated income statement and the Condensed
consolidated statement of comprehensive income for the period then
ended;
-- the Condensed consolidated cash flow statement for the period then ended;
-- the Condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half year
results of Taylor Wimpey plc have been prepared in accordance with
UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements (UK) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity' issued by the Financial Reporting Council for use in the
United Kingdom ("ISRE (UK) 2410"). A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half year
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the Directors have inappropriately
adopted the going concern basis of accounting or that the Directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed in accordance with ISRE (UK) 2410.
However, future events or conditions may cause the Group to cease
to continue as a going concern.
Independent review report to Taylor Wimpey plc
Report on the condensed consolidated interim financial
statements (continued)
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The Half year results, including the interim financial
statements, is the responsibility of, and has been approved by the
Directors. The Directors are responsible for preparing the Half
year results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Half year results, including
the interim financial statements, the Directors are responsible for
assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors
either intend to liquidate the Group or to cease operations, or
have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half year results based on our review.
Our conclusion, including our Conclusions relating to going
concern, is based on procedures that are less extensive than audit
procedures, as described in the Basis for conclusion paragraph of
this report. This report, including the conclusion, has been
prepared for and only for the Company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other
purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
1 August 2023
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END
IR EAEPFEDFDEAA
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August 02, 2023 02:00 ET (06:00 GMT)
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