TIDMTW.
RNS Number : 6902U
Taylor Wimpey PLC
03 August 2022
3 August 2022
Taylor Wimpey plc
Half year results for the period ended 3 July 2022
Excellent first half performance: full year results now expected
to be around top end of consensus range
Jennie Daly, CEO, commented:
"I am pleased to report an excellent financial and operational
performance with completions in the first half slightly ahead of
expectations . This was a very good performance against a strong
comparator and only possible due to the hard work of our
outstanding teams across the business, and I would like to thank
them for their continued commitment and efforts.
While we recognise and are closely monitoring wider
macro-economic and political uncertainty, housing market
fundamentals remain positive, supported by an enduring supply and
demand imbalance and good availability of attractively priced
mortgages. Demand for our homes remains strong and we now expect
full year Group operating profit to be around the top end of the
current market consensus range (1) .
As I set out in our Investor and Analyst Update in May, Taylor
Wimpey is an outstanding business with significant potential. With
a clear strategy, a renewed focus on operational excellence, and
our sector leading landbank we are well positioned to build a
stronger and more resilient business capable of achieving superior
returns."
Group financial performance:
H1 2022 H1 2021 Change FY 2021
Revenue GBPm 2,076.8 2,196.3 (5.4)% 4,284.9
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Operating profit* GBPm 424.6 424.0 0.1% 828.6
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Operating profit margin
* 20.4% 19.3% 1.1ppt 19.3%
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Profit before tax and
exceptional items GBPm 414.5 412.5 0.5% 804.6
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Profit before tax GBPm 334.5 287.5 16.3% 679.6
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Basic earnings per share
pence 7.2 6.5 10.8% 15.3
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Adjusted basic earnings
per share pence 9.0 9.3 (3.2)% 18.0
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Tangible net asset value
per share pence 120.0 113.3 5.9% 118.1
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Net cash GBPm (++) 642.4 906.5 (29.1)% 837.0
-------- -------- -------- --------
Return on net operating
assets** 24.4% 23.0% 1.4ppt 24.7%
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(1) As published on 2 August 2022, the Company compiled
consensus expectation for full year 2022 Group operating profit
including joint ventures and excluding exceptional items is
c.GBP905 million, with a range of GBP873 million to GBP924
million
Key highlights:
-- Group completions excluding joint ventures: 6,790 homes (H1
2021: 7,303) slightly ahead of guidance
-- Group operating profit margin increased to 20.4% (H1 2021:
19.3% ), including some benefit from planned land sales and a
strong performance from joint ventures
-- On track to deliver 2022 outlet openings for further growth in 2023
-- Announced 2022 interim dividend of 4.62 pence per share amounting to GBP163 million
-- Completed a GBP150 million share buyback in H1 2022
-- Full year Group operating profit now expected to be around
the top end of the current market consensus range(1)
UK operating highlights:
-- Excellent first half performance against strong comparator:
o 50 new outlets opened in the period (H1 2021: 37), growing
outlet numbers to 233 (H1 2021: 227)
o H1 2022 net private sales rate of 0.90 (H1 2021: 0.97)
o Growth in private average selling price (ASP) on completions
of 3.1% (H1 2021: 6.5%)
-- Strong total order book representing 10,102 homes, excluding
joint ventures, with a value of GBP2,800 million as at 3 July 2022
(4 July 2021: 10,344 homes with a value of GBP2,608 million)
-- 89% forward sold for 2022 for private completions (H1 2021: 97%) as at 3 July 2022
-- Strong growth in short term landbank by c.6k plots to c.88k plots (H1 2021: c.82k)
-- Continue to lead industry in average Construction Quality
Review score of 4.77 (H1 2021: 4.65), highest of the volume
housebuilders
-- In April 2022, signed the Government's Fire Safety Pledge for
Developers reaffirming our commitment that leaseholders should not
have to pay for the cost of remediation and made an additional
GBP80 million provision
Continued progress in sustainability:
-- Continued strong performance by our highly experienced build
teams with 62 of our Site Managers winning NHBC 'Pride in the Job'
awards
-- Detailed work underway to develop a net zero carbon plan to
submit to the Science Based Targets initiative (SBTi) ahead of
launch in 2023
-- Invested GBP218 million in local communities via planning
obligations (H1 2021: GBP184 million)
-- Rated 4 star on TheJobCrowd and won 'Best Apprentice Company
of the Year' award and top in both graduate and apprentice
categories for House Building for 2022/23
-- In H1 2022 we retained a 4 out of 5-star rating on Trustpilot
and 92% of customers would recommend Taylor Wimpey according to the
Home Builders Federation (HBF) 8-week customer survey (H1 2021:
92%)
UK current trading and outlook
The housing market continues to be resilient despite
inflationary pressures in the wider economy and recent rises in the
Bank of England base rate. There remains good availability of
attractively priced mortgages, and we continue to see a healthy
level of demand for Taylor Wimpey homes reflecting the quality of
our homes and locations nationwide.
We enter the second half in a strong position. As at 31 July
2022, our total order book value was GBP2,893 million (2021
equivalent period: GBP2,712 million), excluding joint ventures,
representing 10,392 homes (2021 equivalent period: 10,589 homes),
of which 77% are exchanged (2021 equivalent period: 70%). As at 31
July 2022, we were c.92% forward sold for private completions for
2022 (2021 equivalent period: c.99%).
For the four weeks ended 31 July 2022 our net private sales rate
is 0.57 per outlet per week. This reflects our strong order book
position as we entered the second half, which has constrained
availability, as well as the proactive steps we are taking to
manage our order book length to deliver on pricing. Customer
interest has remained strong and cancellation numbers remain at
normal levels. Our forward indicators also remain positive, with
appointments and enquiries continuing to be at good levels .
The sector has seen increased material and labour costs, with
prevailing build cost inflation around 9-10%, h owever this is
being fully offset by house price growth. Whilst market
fundamentals remain robust, we are conscious of wider economic
uncertainty and will remain agile in our approach across the
business to optimise performance.
Looking ahead, we expect full year Group operating profit to be
around the top end of the current market consensus range driven by
strong average selling prices on completions that are expected to
be 4-5% higher than last year. We continue to expect low single
digit year on year growth in UK completions for 2022 and our margin
guidance remains unchanged, with underlying year on year
progression towards the 21-22% target range. Our 2022 year end net
cash balance is anticipated to be around GBP600 million, subject to
the timing of land transactions.
The land market continues to be very competitive and despite
bottlenecks in the planning system we remain on track to increase
our outlet numbers at the end of the year to support further growth
in 2023 in line with our strategy, assuming market conditions
remain stable.
We are committed to delivering outstanding homes in quality
locations and excellent service to all our customers. We will
continue to prioritise margin over volume growth and with our
strong financial position, strength of landbank and sharp
operational focus we remain well positioned to deliver superior
returns and enhanced value for all our stakeholders.
- Ends -
A presentation to investors and analysts will be hosted by CEO
Jennie Daly and Group Finance Director Chris Carney at 9am on
Wednesday 3 August 2022. 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 3 August 2022.
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7826 874 461
Jennie Daly, CEO
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 23 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
A clear strategy to build a stronger and more resilient
business
Our purpose is to build great homes and create thriving
communities. The renewed focus of the business is doing this in a
way that creates, enhances, and protects value through our sector
leading landbank and efficient operations.
We have a clear strategy, outlined at the Investor and Analyst
Update on 25 May 2022 to build a stronger and more resilient
business and deliver superior returns, by focusing on four
cornerstones of value:
1. Land: optimising value from our owned and controlled landbank
and our sector leading strategic land pipeline
2. Operational excellence: building greater discipline through
our business model to improve efficiency, protect value and ensure
Taylor Wimpey is fit for the future
3. Sustainability: continuing to evolve and embed ESG throughout
the business for the benefit of all our stakeholders
4. Capital allocation: reinforcing our clear and disciplined
framework that balances investment for future value creation with
sustainable annual dividends and excess cash returns for investors
as appropriate through the cycle
We are also focused on delivering against our recently confirmed
financial targets of:
Operating profit margin of 21-22%; and
Return on net operating assets of 30%
Investment case
Taylor Wimpey aims to deliver attractive long term returns for
our shareholders through delivery of a strong operating margin and
returns while continuing to manage risk across the economic
cycle.
We are a sustainable, responsible business, differentiated by a
sector leading short term landbank and strategic land pipeline with
the capacity to deliver further outlet led volume growth, increased
profitability and returns to shareholders.
As a highly cash generative business Taylor Wimpey is committed
to paying an annual ordinary dividend of c.7.5% of net assets,
complemented by additional returns of surplus capital at the
appropriate time. Our Ordinary Dividend Policy has been stress
tested to withstand a normal market downturn, providing
shareholders with a reliable income stream.
Returns to shareholders
We intend to pay a 2022 interim dividend of 4.62 pence per share
in November, in line with our Ordinary Dividend Policy to return
c.7.5% of net assets annually, which will be at least GBP250
million per annum, in two equal instalments. As we look forward, it
remains our intention to return excess capital to shareholders in
line with our policy.
We will review the potential level of excess capital for the
2022 financial year at the time of our 2022 full year results in
March 2023, for payment in 2023.
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. 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)
We have simplified our key performance indicators and aligned
them to the key strategic cornerstones of future value.
UK H1 2022 H1 2021 Change FY 2021
----------------------------------------- -------- -------- ------- --------
Land
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Land cost as % of ASP on approvals 20.8% 14.4% 6.4ppt 16.1%
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Landbank years c.6.5 c.5.8 12.1% c.6.1
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% of completions from strategically
sourced land 47% 55% (8)ppt 50%
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Operational excellence
----------------------------------------- -------- -------- ------- --------
Construction Quality Review (average
score / 6) 4.77 4.65 2.6% 4.67
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Average reportable items per inspection 0.28 0.25 0.03 0.26
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Health and Safety Injury Incidence
Rate (per 100,000 employees and
contractors) rolling 12 months
(***) 212 193 9.8% 214
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Employee engagement (annual survey) - - - 91%
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Sustainability
----------------------------------------- -------- -------- ------- --------
Customer satisfaction 8-week score
'Would you recommend?' 92% 92% - 92%
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Customer satisfaction 9-month score
'Would you recommend?' 78% 80% (2)ppt 79%
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Reduction in operational carbon
emissions intensity (measured at
end of year) - - - 13%
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N.B. The 8-week 'would you recommend' score for H1 2022 relates
to customers who legally completed between October 2021 and March
2022 with the comparator relating to the same period 12 months
prior. The 9-month 'would you recommend' score for H1 2022 relates
to customers who legally completed between October 2020 and March
2021, with the comparator relating to the same period 12 months
prior.
An excellent first half operational performance
Total home completions (excluding joint ventures) were 6,587 (H1
2021: 7,219) against a strong comparator which benefited from
completions carried over from Q4 2020 due to delays as a result of
COVID-19. This included 1,450 affordable homes (H1 2021: 1,158),
equating to 22.0% of total completions (H1 2021: 16.0%).
Our net private sales rate for the first half of the year was
0.90 homes per outlet per week (H1 2021: 0.97). Cancellation
numbers have remained at normal levels in the first half of 2022,
at a rate of 15% (H1 2021: 14%). Average selling prices on private
completions increased by 3.1% to GBP337k (H1 2021: GBP327k). Our
total average selling price increased by 0.3% to GBP300k (H1 2021:
GBP299k), with house price growth offset by mix impacts,
principally a greater proportion of affordable housing in H1 2022
(22.0%) than the prior period (H1 2021: 16.0%).
We have a wide range of products from one-bedroom apartments to
five-bedroom homes. First time buyers accounted for 43% of total
sales in the first half of 2022 (H1 2021: 46%). Investor sales
continued to be at a low level at 6% (H1 2021: 4%).
Help to Buy usage continued to reduce, during the first half of
2022 approximately 20% of private reservations used the Help to Buy
scheme (H1 2021: c.27%). We will stop taking reservations under the
scheme by the end of October and are well progressed to deliver
build completions by the year end and legal completions by 31 March
2023, meeting the government deadlines.
As at H1 2022, our order book represented 10,102 homes (H1 2021:
10,344 homes) with an order book value of GBP2,800 million (H1
2021: GBP2,608 million), excluding joint ventures. Our affordable
order book stood at 4,528 homes at H1 2022 (H1 2021: 4,428
homes).
During the first half of 2022 we opened 50 new outlets (H1 2021:
37).
A strong and differentiated landbank
We have an excellent short term landbank on all measures of
length, weight, shape, efficiency and quality and the largest
strategic land position in the sector. We have grown our short term
landbank by c.6k plots over the past 12 months to c.88k plots (H1
2021: c.82k). The average cost of land as a proportion of average
selling price within the short term owned landbank remains low at
14.3% (H1 2021: 14.8%). The estimated average selling price in the
short term owned landbank in H1 2022 was GBP311k (H1 2021:
GBP300k).
We approved c.7k plots during the first half of 2022 (H1 2021:
c.14.5k plots).
Our strategic pipeline stood at c.145k potential plots as at 3
July 2022 (31 December 2021: c.145k potential plots). During the
first six months of 2022 we converted a further 847 plots from the
strategic pipeline to the short term landbank (H1 2021: 3,232
plots). In the period, 47% of our completions were sourced from the
strategic pipeline (H1 2021: 55%).
Land cost as a percentage of average selling price on approvals
rose to 20.8% in the period (H1 2021: 14.4%) reflecting more
competitive market conditions as well as locational quality, and a
higher proportion of smaller site sizes with more advanced planning
provenance.
While we will remain active in the land market, an agile land
strategy is necessary to drive and deliver the most value from our
assets and we are able to be selective in our new approvals without
sacrificing our focus on profitable growth , given our strong
landbank position.
The land market continues to be very competitive. The planning
system has encountered bottlenecks with a backlog and shortage of
resources and our teams are working hard to progress our land
through the planning stages in order to continue our momentum.
In addition, the sector has also seen an increase in the number
of planning authorities impacted by nutrient neutrality following
the Natural England announcement in March of this year which,
according to the HBF, affects more than 74 local authorities and up
to 120,000 new homes across England and is beginning to impact land
availability in affected areas. This has the potential to cause
delays to site starts and could affect up to 1,500 owned Taylor
Wimpey plots expected for completion over the next five years. We
are actively engaged with government, local authorities and other
stakeholders seeking a resolution.
We are in a strong position to navigate these challenges given
the strength and depth of our landbank and high visibility of
future pipeline .
Fit for the future
We are focused on driving value from all areas of the business
through sharper operational focus on key areas including increasing
production efficiency and enhanced cost discipline. The
housebuilding industry faces an unprecedented level of change in
the next few years, through increased and far-reaching regulation
including the introduction of the New Homes Ombudsman and the
Future Homes Standard.
Our homes already perform much better than the average
comparative second hand stock. Our current houses generally have an
EPC B rating compared to an average of D for UK housing stock,
which translates to significant energy savings and lower costs for
our customers in running their homes as well as a lower carbon
footprint. The next two phases of regulation will see us reduce
carbon emissions from our homes in use by a further 31% from June
2023 and 75% from 2025.
Our new house type range was developed with the new regulations
in mind and will help ease this transition. We have sold the first
of our new house types this year and these are available for
plotting and will be on the majority of our sites by 2025.
The Standard Assessment Procedure (SAP) is the methodology
provided by the government to assess and compare the energy and
environmental performance of homes. Its purpose is to provide
accurate and reliable assessments of a dwelling's energy
performance to enable us to meet the requirements of Part L of the
building regulations. The new Part L regulations came into force on
15 June 2022, however we continue to experience issues with the new
SAP software and we remain unable to conclude our future
specifications until these are resolved - it is increasingly
important that these issues are corrected and the complete and
accurate SAP modelling software is published to ensure that the
sector is prepared prior to the end of the one year transition
period for existing sites in June 2023 and to enable the industry
to model new sites from today. We continue to support the Future
Homes Hub and engage with government to address these ongoing
issues.
Looking further ahead, we will begin construction later this
year on pilot homes testing solutions for the Future Homes Standard
on a site in Sudbury. These homes will provide invaluable insights
into the best methods for incorporating the requirements of the
Future Homes Standard well ahead of its implementation in 2024 in
Scotland and 2025 in England and Wales.
Customer focus
Our customer research has shown there remains a strong desire
for home ownership. There are some indications that rising energy
prices are causing a revaluation of energy efficiency and
maintenance costs which could favour new build. There is also the
continuation of the trend for greater proximity to green space and
community which emerged during the pandemic, attributes that are
reflected in our developments.
We were pleased to have been recognised as a five-star builder
in the latest customer satisfaction survey by the HBF in March
2022, covering the 12 months from October 2020 to September 2021.
Our average survey score for the first half of 2022 was 92%.
We continue to focus on offering excellent service with targeted
improvements in our responsiveness to customer issues and encourage
customers to leave reviews on Trustpilot. We maintained our 4 out
of 5-star status on Trustpilot with a TrustScore of 4 out of 5 as
at 3 July 2022.
We expect to benefit further from the recent roll out of the
Dynamics platform, which is providing valuable customer insights
and improving the ease of doing business for both our customers and
our sales and customer service teams.
Delivering build quality consistently has been key to customer
satisfaction and will be key with the upcoming introduction of the
New Homes Ombudsman. In evaluating our progress, we continue to
assess a broad range of measures of quality and service. Since its
introduction we have led the volume housebuilders in build quality
in the independently measured NHBC Construction Quality Review
score. Thanks to the continued dedication of our teams, in H1 2022,
we led both in terms of compliance and in terms of our average
score of 4.77 (H1 2021: 4.65) from a possible score of 6, which was
once again the highest of the volume housebuilders. We continue to
work to ensure our quality assurance processes are embedded at
every stage of build.
Our site teams have continued to perform strongly against a
challenging backdrop in recent years and we are proud that in June
2022, 62 of our Site Managers won NHBC 'Pride in the Job'
awards.
Fire safety
The safety of our customers is of paramount importance, and we
have always been guided by this principle. Taylor Wimpey moved
quickly to identify buildings affected by cladding and fire safety
concerns, committing significant funding. In April 2022, we signed
up to the Government's Fire Safety Pledge for Developers which
reaffirmed our commitment that leaseholders should not have to pay
for remediation. We have recorded total provisions of GBP245
million for fire safety remediation works on buildings constructed
by Taylor Wimpey since 1992.
During the first half we have continued to progress work with
building owners, management companies and leaseholders and remain
committed to resolving these issues as soon as practicable for our
customers.
Environmental, social and governance (ESG)
For Taylor Wimpey, ESG is a business imperative. Whilst positive
to have been featured in the Financial Times inaugural Climate
Leaders list this year, we recognise there is further work to do to
play our part in helping to avert the worst effects of climate
change. We are currently advancing the work streams necessary to
deliver our science-based net zero carbon plan next year. This is a
company-wide project with input from stakeholders across the
business and which involves internal evaluation and external
research to understand and quantify the risks and establish
mitigations. When we have established our internal plan we will
submit this to the Science Based Targets initiative for independent
appraisal ahead of publication.
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 increased
slightly to 212 on a rolling 12 months basis to 3 July 2022 (2021
equivalent period: 193). Whilst this remains much lower than the
sector average, 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 continue to work to attract and retain the very best
talent, offering an attractive workplace, with opportunities for
training and advancement.
In advance of our annual salary review process, we recently
concluded a benchmarking exercise to ensure competitive levels of
pay, alongside our excellent benefits package. We have been closely
monitoring the impact of rising inflation and the predicted
increase in fuel bills this winter on the cost of living for our
employees. In addition to the benchmarking and pay review, we will
make a cost of living payment of up to GBP1,000 for employees
receiving an annual salary of up to GBP70,000.
We are rated 4-star on TheJobCrowd winning 'Best Apprentice
Company of the Year' award and coming top in both the graduate and
the apprentice categories for House Building for 2022/23.
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 2022, through
our planning obligations, we have contributed GBP218 million to the
local communities in which we build (H1 2021: GBP184 million) that
provides vital local infrastructure, affordable homes, public
transport and education facilities. In addition, in H1 2022 we
donated and fundraised over GBP600,000 for charities and local
community causes.
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 had a
strong first half, completing 203 homes in the period (H1 2021: 84)
at an average selling price of EUR391k (H1 2021: EUR415k), with our
total order book as at 3 July 2022 increasing to 419 homes (4 July
2021: 188 homes).
Gross margin increased to 29.7% (H1 2021: 21.1%), primarily due
to the increased level of completions and timing variances on the
recognition of sales commissions. This flowed through to an
operating profit of GBP18.0 million (H1 2021: GBP4.4 million) and
an operating profit margin of 26.7% (H1 2021: 14.6%).
The total plots in the landbank stood at 2,734 (31 December
2021: 2,779), with net operating assets at GBP80.1 million (31
December 2021: GBP108.9 million).
Group financial review of operations
Income statement
Group revenue was GBP2,076.8 million in the first half of 2022
(H1 2021: GBP2,196.3 million), reflecting the lower level of
completions in the UK (excluding joint ventures) of 6,587 (H1 2021:
7,219), following the record levels in the prior period. UK average
selling prices on private completions increased by 3.1% to GBP337k
(H1 2021: GBP327k), primarily due to house price inflation partly
offset by changes to product mix, with the increase in total UK
average selling prices of 0.3% to GBP300k (H1 2021: GBP299k) being
a result of the greater proportion of affordable housing in H1 2022
(22.0%) than the prior period (H1 2021: 16.0%).
Group gross profit increased to GBP524.5 million (H1 2021:
GBP522.3 million), representing a gross margin of 25.3% (H1 2021:
23.8%). The increase in margin over the prior period was driven by
mix of completions across the Group, an increase in land sales, and
house price inflation which more than offset build cost
inflation.
Net operating expenses of GBP189.9 million (H1 2021: GBP224.6
million) includes GBP80.0 million (H1 2021: GBP125.0 million) of
exceptional costs relating to the cladding fire safety provision,
which is detailed below. Excluding these exceptional costs the net
operating expenses were GBP109.9 million (H1 2021: GBP99.6
million), which was predominantly made up of administrative costs
of GBP111.3 million (H1 2021: GBP102.1 million). The increase in
administrative costs over the comparative period being driven
predominantly by the pay benchmarking exercise undertaken in the
prior year, and associated on-costs, being in place for the full
period as well as greater insurance premiums. This resulted in a
profit on ordinary activities before net finance costs of GBP334.6
million (H1 2021: GBP 297.7 million), GBP414.6 million (H1 2021:
GBP422.7 million) excluding exceptional items.
During the period, completions from joint ventures were 132 (H1
2021: 70). The total order book value of joint ventures as at 3
July 2022 decreased to GBP46 million (4 July 2021: GBP88 million),
representing 113 homes (4 July 2021: 188), following the increase
in completions in the period.
As a result of the increased joint venture completions, at a
greater average selling price and gross margin than H1 2021, our
share of joint ventures' profits in the period was GBP10.0 million
(H1 2021: GBP1.3 million). When including this in the profit on
ordinary activities before net finance costs the resulting
operating profit was GBP424.6 million (H1 2021: GBP424.0 million),
delivering an operating profit margin of 20.4% (H1 2021:
19.3%).
In March 2021, we announced that we would cover the costs to
bring all Taylor Wimpey apartment buildings going back 20 years
from 1 January 2021, irrespective of height or whether we retain a
legal interest, in line with EWS1 guidance. These costs cover
cladding and the whole of the external wall systems, including
balconies, and as a result of this the Group recorded an additional
GBP125.0 million provision to fund cladding fire safety improvement
works which was charged to exceptional items in line with our
policy. In April 2022, we signed the Government's Fire Safety
Pledge, extending this period to cover all buildings constructed by
Taylor Wimpey 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. An increase in the provision was
recognised in the period, with GBP80.0 million being recorded as an
exceptional charge.
The net finance expense of GBP10.1 million (H1 2021: GBP11.5
million) principally includes imputed interest on land acquired on
deferred terms, bank interest and interest on the pension
scheme.
Profit on ordinary activities before tax increased to GBP334.5
million (H1 2021: GBP287.5 million). The pre-exceptional tax charge
was GBP91.4 million (H1 2021: GBP75.5 million). This represents an
underlying tax rate of 22.1% (H1 2021: 18.3%) which includes a
GBP1.7 million credit (H1 2021: GBP2.7 million credit) arising from
the remeasurement of the Group's UK deferred tax assets following
the introduction of the new Residential Property Developer Tax. A
tax credit of GBP17.6 million was recognised in respect of the
exceptional charge (H1 2021: GBP23.8 million). This resulted in a
total tax charge of GBP73.8 million (H1 2021: GBP51.7 million), a
rate of 22.1% (H1 2021: 18.0%).
As a result, profit for the period was GBP260.7 million (H1
2021: GBP235.8 million).
Basic earnings per share was 7.2 pence (H1 2021: 6.5 pence). The
adjusted basic earnings per share was 9.0 pence (H1 2021: 9.3
pence).
Balance sheet
Net assets at 3 July 2022 decreased by GBP39.4 million (0.9%) to
GBP4,274.6 million (31 December 2021: GBP4,314.0 million), with net
operating assets** increasing by GBP146.2 million (4.2%) to
GBP3,596.8 million (31 December 2021: GBP3,450.6 million). Return
on net operating assets increased to 24.4% (H1 2021: 23.0%)
following the increase in operating profit over the twelve month
period ended 3 July 2022, compared with the prior twelve month
period. Group net operating asset turn (*) was 1.23 times (H1 2021:
1.31).
Land
Land at 3 July 2022 increased by GBP250.6 million in the period
to GBP3,636.3 million as the Group continued to selectively
purchase land across all geographies. As a result, land creditors
also increased to GBP843.7 million (31 December 2021: GBP806.4
million). Included within the gross land creditor balance is
GBP50.9 million of UK land overage commitments (31 December 2021:
GBP59.0 million). GBP377.4 million of the land creditors is
expected to be paid within 12 months and GBP466.3 million
thereafter.
At 3 July 2022 the UK short term landbank comprised 87,644 plots
(31 December 2021: 85,376), with a net book value of GBP3.1 billion
(31 December 2021: GBP2.9 billion). Short term owned land comprised
GBP3.0 billion (31 December 2021: GBP2.8 billion), representing
66,574 plots (31 December 2021: 62,660). The controlled short term
landbank represented 21,070 plots (31 December 2021: 22,716).
The value of long term owned land increased to GBP299 million
(31 December 2021: GBP298 million), representing 37,448 plots (31
December 2021: 37,425), with a further total controlled strategic
pipeline of 107,343 plots (31 December 2021: 107,809). Total
potential revenue in the owned and controlled landbank increased to
GBP61 billion in the period (31 December 2021: GBP59 billion).
Work in progress (WIP)
Investment in WIP has continued with total WIP increasing as 50
new outlets were opened in the UK in the first half (H1 2021: 37)
and the total number of outlets increased compared with 4 July
2021. The average WIP per UK outlet also increased to GBP6.9
million (31 December 2021: GBP6.5 million).
Provisions and deferred tax
Provisions increased to GBP327.6 million (31 December 2021:
GBP245.1 million) due primarily to the GBP80.0 million additional
cladding fire safety provision recognised in the period. There was
continued utilisation of the existing provision as works have been
carried out. In addition, utilisation of the Ground Rent Review
Assistance Scheme ('GRRAS') provision has continued as claims have
been received and processed, and payments made following the
agreement of voluntary undertakings with the CMA in December
2021.
Our net deferred tax asset of GBP24.2 million (31 December 2021:
GBP26.2 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
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 commits
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, totalling GBP10.0 million. From 1 October 2021, further
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 funding position at any quarter end be
100% or more 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 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 2021: GBP16.4 million) with no further amounts paid into the
escrow account (H1 2021: GBP5.0 million). 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 June 2022 showed a surplus of GBP70 million
and a funding level of 103.5% and as a result no payment into
escrow is due in the third quarter of 2022.
At 3 July 2022, the IAS 19 valuation of the Scheme was a surplus
of GBP211.6 million (31 December 2021: GBP149.9 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 IFRIC14. The deficit being equal to the present value of the
remaining committed payments under the 2019 triennial valuation.
Retirement benefit obligations of GBP30.4 million at 3 July 2022
(31 December 2021: GBP37.3 million) comprise a defined benefit
pension liability of GBP30.1 million (31 December 2021: GBP37.0
million) and a post-retirement healthcare liability of GBP0.3
million (31 December 2021: 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.
Net cash and financing position
Net cash decreased to GBP642.4 million at 3 July 2022 from
GBP837.0 million at 31 December 2021, due to investment in land and
WIP, the payment of the 2021 final dividend and the share buyback
completed in the period. Average net cash for the period was
GBP660.0 million (4 July 2021: GBP709.9 million, 31 December 2021:
GBP788.1 million).
In the twelve months to 3 July 2022, the investment in land and
WIP reduced cash generated by operations and as a result led to
cash conversion (++++) of 45.2% of operating profit (12 months to 4
July 2021: 96.7%).
Net cash, combined with land creditors, resulted in an adjusted
gearing (++++++++) of 4.7% (31 December 2021: (0.7)%).
At 3 July 2022 our committed borrowing facilities were GBP637
million of which GBP550 million was undrawn. The average maturity
of the committed borrowing facilities at 3 July 2022 was 2.4 years
(31 December 2021: 2.9 years).
Dividends
On 13 May 2022, we returned GBP160.9 million to shareholders by
way of a 2021 final ordinary dividend of 4.44 pence per share. In
addition, the Group returned GBP150.0 million in capital by way of
a share buyback in the period, buying back 116,942,362 ordinary
shares, of which 25,000,000 have been retained in Treasury with the
remainder cancelled.
The Board has declared that a 2022 interim dividend of 4.62
pence per share is to be paid on 18 November 2022 to shareholders
on the register at the close of business on 14 October 2022. The
2022 interim 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.
Our intention remains to return cash generated by the business
in excess of that needed by the Group to fund land investment, all
working capital, taxation and other cash requirements of the
business, and once the ordinary dividend has been met. We will
review the level of excess capital and potential return in respect
of 2022 at the time of the 2022 full year results in March 2023,
for payment in 2023.
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, and meet its liabilities as they fall due, 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 2021 are details of the
Principal Risks and uncertainties for the Group and the key
mitigating activities used to address them at that time.
COVID-19
Although we have seen a significant reduction in the impact of
COVID-19 on our business operations following the successful
UK-wide vaccination programme, it is still very much to the fore.
The Group continues to prioritise the health and safety of our
employees, customers and subcontractors and we believe the COVID-19
working practices and protocols embedded across the organisation,
in line with the latest guidance from the Government and Public
Health Authorities, enable us to conduct our business effectively
and safely.
Principal Risks
During the past six months we have seen increases in the risk
profile of five of our Principal Risks, with brief details provided
below against each of those impacted.
Government policies, regulations and planning
Our industry is facing an unprecedented level of change ranging
from far-reaching regulation such as the Future Homes Standard and
the New Homes Ombudsman to short-term political uncertainty over
potential governmental and party leadership changes. Whilst we
continue to consult with government agencies and invest in R&D
to help us prepare for regulation, the current level of uncertainty
is recognised through an increase in both the inherent and residual
profile of this risk.
Mortgage availability and housing demand
We are currently experiencing increasing economic and political
uncertainty driven by multiple factors, for example energy price
volatility, the ongoing geopolitical situation in Ukraine and post
Brexit effects, which cumulatively have resulted in a 'cost of
living crisis', fuelled by inflationary risks and increases in
interest rates. This is putting a strain on the housebuilding
industry, resulting in an increase in both the inherent and
residual profile of this risk.
Availability and costs of materials and subcontractors &
Attract and retain high-calibre employees
Our expectations are that supply chain and labour challenges
will continue for the foreseeable future. We continue to live with
the effects of COVID-19 and the potential for new variants to
develop remains. Coupled with supply chain issues driven by the
geopolitical instability, continuing demand imbalance and
logistical challenges, as well as increasing skilled labour
shortages, the inherent and residual profile of both these risks
have increased. We will continue to monitor, in particular, the
situation in Ukraine for any further impact on our risk
landscape.
Land availability
We remain committed to our environmental strategy, focussing on
climate change, nature, resources and waste and unreservedly
support all measures which have been implemented to achieve net
zero. As an industry, however, we are facing increasing
environmental challenges, for example, 'nutrient neutrality' which,
coupled with the current economic and political uncertainty, could
impact the availability of quality, affordable land in the right
location. We continue to implement appropriate actions to
effectively mitigate this risk, but we have seen an increase in
both the inherent and residual profile of this risk over the last
few months.
Except for the changes referenced above, no other changes have
been made to the Group's Principal Risks as reported at 31 December
2021. Further details of the Principal Risks and the mitigations in
place are outlined on pages 61 to 65 of the 2021 Annual Report and
Accounts, published in March 2022.
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 are 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
Alternative performance measures and other key performance
indicators
* Operating profit is defined as profit on ordinary activities
before net finance costs, exceptional items and tax, after share of
results of joint ventures.
* Operating 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 (IIR) 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 or loss 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 3 July 2022
(Reviewed) (Reviewed) (Audited)
Half Half year Half Half Half Half Year Year Year
year ended year year year year ended ended ended
ended 3 July ended ended ended ended 31 December 31 December 31
3 July 2022 3 July 4 July 4 July 4 July 2021 2021 December
2022 2022 2021 2021 2021 2021
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
GBP million Note items items Total items items Total items items Total
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Continuing
operations
Revenue 2 2,076.8 - 2,076.8 2,196.3 - 2,196.3 4,284.9 - 4,284.9
Cost of sales (1,552.3) - (1,552.3) (1,674.0) - (1,674.0) (3,257.9) - (3,257.9)
================ ==== =========== =========== ========= =========== =========== ========= =========== =========== =========
Gross profit 524.5 - 524.5 522.3 - 522.3 1,027.0 - 1,027.0
Net operating
expenses 4 (109.9) (80.0) (189.9) (99.6) (125.0) (224.6) (203.8) (125.0) (328.8)
Profit on
ordinary
activities
before
net finance
costs 414.6 (80.0) 334.6 422.7 (125.0) 297.7 823.2 (125.0) 698.2
Finance income 5 2.1 - 2.1 1.2 - 1.2 2.4 - 2.4
Finance costs 5 (12.2) - (12.2) (12.7) - (12.7) (26.4) - (26.4)
Share of results
of joint
ventures 10.0 - 10.0 1.3 - 1.3 5.4 - 5.4
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- =========== =========== =========
Profit before
taxation 414.5 (80.0) 334.5 412.5 (125.0) 287.5 804.6 (125.0) 679.6
Taxation
(charge)/credit 6 (91.4) 17.6 (73.8) (75.5) 23.8 (51.7) (147.9) 23.8 (124.1)
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- =========== =========== =========
Profit for the
period 323.1 (62.4) 260.7 337.0 (101.2) 235.8 656.7 (101.2) 555.5
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Basic earnings
per
share 7 7.2p 6.5p 15.3p
Diluted earnings
per share 7 7.2p 6.5p 15.2p
Adjusted basic
earnings
per share 7 9.0p 9.3p 18.0p
Adjusted diluted
earnings
per share 7 8.9p 9.2p 18.0p
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
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 3 July 2022
Half year ended 3 Half year ended 4 Year ended
July 2022 July 2021 31 December 2021
GBP million (Reviewed) (Reviewed) (Audited)
---------------------------------------------------------- ----------------- ----------------- -----------------
Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translation of foreign operations 4.1 (4.3) (6.9)
Movement in fair value of hedging instruments (2.3) 3.1 4.8
Items that will not be reclassified subsequently to profit
or loss:
Actuarial gain on defined benefit pension schemes 2.1 37.6 37.9
Tax credit/(charge) on items taken directly to other
comprehensive income 1.0 (5.4) (5.4)
----------------------------------------------------------- ----------------- ----------------- -----------------
Other comprehensive income for the period 4.9 31.0 30.4
Profit for the period 260.7 235.8 555.5
----------------------------------------------------------- ----------------- ----------------- -----------------
Total comprehensive income for the period 265.6 266.8 585.9
----------------------------------------------------------- ----------------- ----------------- -----------------
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 3 July 2022
3 July 4 July 31 December 2021
GBP million Note 2022 (Reviewed) 2021 (Reviewed) (Audited)
------------------------------- ---- ---------------- ----------------- ----------------
Non-current assets
Intangible assets 5.0 7.8 6.6
Property, plant and equipment 20.3 23.3 21.7
Right-of-use assets 25.9 28.6 26.5
Interests in joint ventures 83.0 75.7 85.4
Trade and other receivables 24.2 28.3 27.5
Other financial assets 9 10.0 5.0 10.0
Deferred tax assets 24.2 26.9 26.2
------------------------------- ---- ---------------- ----------------- ================
192.6 195.6 203.9
------------------------------- ---- ---------------- ----------------- ================
Current assets
Inventories 5,309.7 4,801.6 4,945.7
Trade and other receivables 178.2 145.6 168.2
Tax receivables 14.4 9.2 1.0
Cash and cash equivalents 8 729.4 1,005.6 921.0
================
6,231.7 5,962.0 6,035.9
------------------------------- ---- ---------------- ----------------- ================
Total assets 6,424.3 6,157.6 6,239.8
------------------------------- ---- ---------------- ----------------- ================
Current liabilities
Trade and other payables (1,080.2) (1,004.8) (901.9)
Lease liabilities (8.2) (7.0) (7.0)
Bank and other loans 8 (87.0) (12.9) -
Tax payables (3.2) (0.9) (0.8)
Provisions 11 (119.0) (96.3) (125.4)
(1,297.6) (1,121.9) (1,035.1)
------------------------------- ---- ---------------- ----------------- ----------------
Net current assets 4,934.1 4,840.1 5,000.8
------------------------------- ---- ---------------- ----------------- ----------------
Non-current liabilities
Trade and other payables (594.5) (596.8) (629.3)
Lease liabilities (18.6) (22.5) (20.4)
Bank and other loans 8 - (86.2) (84.0)
Retirement benefit obligations 9 (30.4) (37.0) (37.3)
Provisions 11 (208.6) (153.0) (119.7)
------------------------------- ---- ---------------- ----------------- ================
(852.1) (895.5) (890.7)
------------------------------- ---- ---------------- ----------------- ================
Total liabilities (2,149.7) (2,017.4) (1,925.8)
------------------------------- ---- ---------------- ----------------- ================
Net assets 4,274.6 4,140.2 4,314.0
------------------------------- ---- ---------------- ----------------- ----------------
Equity
Share capital 291.3 292.2 292.2
Share premium 777.9 774.7 777.5
Own shares 12 (43.3) (10.4) (14.6)
Other reserves 544.3 542.5 541.6
Retained earnings 2,704.4 2,541.2 2,717.3
------------------------------- ---- ---------------- ----------------- ================
Total equity 4,274.6 4,140.2 4,314.0
------------------------------- ---- ---------------- ----------------- ----------------
Taylor Wimpey plc
Condensed consolidated statement of changes in equity
For the half year ended 3 July 2022
Reviewed half year ended 3 Total
July 2022
GBP million 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 (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 - - - - 7.5 7.5
Tax charge on items taken
directly to statement of
changes in equity - - - - (1.6) (1.6)
Dividends approved and paid - - - - (160.9) (160.9)
Total equity at 3 July 2022 291.3 777.9 (43.3) 544.3 2,704.4 4,274.6
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Reviewed half year ended 4 Total
July 2021
GBP million Share capital Share premium Own shares Other reserves Retained earnings
----------------------------- ------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January 2021 292.2 773.1 (11.5) 543.7 2,419.3 4,016.8
Other comprehensive
(expense)/income for the
period - - - (1.2) 32.2 31.0
Profit for the period - - - - 235.8 235.8
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive
(expense)/income for the
period - - - (1.2) 268.0 266.8
New share capital subscribed - 1.6 - - - 1.6
Utilisation of own shares - - 1.1 - - 1.1
Cash cost of satisfying share
options - - - - (1.4) (1.4)
Share-based payment credit - - - - 6.2 6.2
Tax charge on items taken
directly to statement of
changes in equity - - - - (0.2) (0.2)
Dividends approved and paid - - - - (150.7) (150.7)
Total equity at 4 July 2021 292.2 774.7 (10.4) 542.5 2,541.2 4,140.2
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Audited year ended 31 Total
December 2021
GBP million Share capital Share premium Own shares Other reserves Retained earnings
----------------------------- ------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January 2021 292.2 773.1 (11.5) 543.7 2,419.3 4,016.8
Other comprehensive
(expense)/income for the year - - - (2.1) 32.5 30.4
Profit for the year - - - - 555.5 555.5
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive
(expense)/income for the year - - - (2.1) 588.0 585.9
New share capital subscribed - 4.4 - - - 4.4
Own shares acquired - - (4.2) - - (4.2)
Utilisation of own shares - - 1.1 - - 1.1
Cash cost of satisfying share
options - - - - (1.9) (1.9)
Share-based payment credit - - - - 13.2 13.2
Tax credit on items taken
directly to statement of
changes in equity - - - - 0.2 0.2
Dividends approved and paid - - - - (301.5) (301.5)
Total equity at 31 December
2021 292.2 777.5 (14.6) 541.6 2,717.3 4,314.0
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Taylor Wimpey plc
Condensed consolidated cash flow statement
For the half year ended 3 July 2022
Half year ended 3 Half year ended 4 July 2021 Year ended
July 2022 31 December 2021
GBP million Note (Reviewed) (Reviewed) (Audited)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Operating activities:
Profit on ordinary activities before finance
costs 334.6 297.7 698.2
Adjustments for:
Depreciation and amortisation 7.5 7.7 15.6
Pension contributions in excess of
charge to the income statement (5.1) (15.5) (15.2)
Share-based payment charge 7.5 6.2 13.2
Net increase in provisions excluding
exceptional payments 94.2 126.3 130.0
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Operating cash flows before movements in
working capital 438.7 422.4 841.8
Increase in inventories (317.7) (108.3) (293.2)
(Increase)/decrease in receivables (7.0) 50.6 32.1
Increase/(decrease) in payables 91.7 40.6 (6.0)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Cash generated by operations 205.7 405.3 574.7
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Payments relating to exceptional charges (11.7) (7.3) (15.1)
Income taxes paid (83.3) (60.0) (123.0)
Interest paid (2.4) (2.5) (4.7)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Net cash from operating activities 108.3 335.5 431.9
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Investing activities:
Interest received 1.9 1.1 2.1
Dividends received from joint ventures 1.4 6.9 8.1
Purchase of property, plant and equipment (0.7) (1.5) (2.5)
Purchase of software (0.1) (1.5) (2.1)
Investment in pension scheme escrow - (5.0) (10.0)
Amounts repaid by/(invested in) joint
ventures 11.0 0.9 (5.9)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Net cash generated from/(used in) investing
activities 13.5 0.9 (10.3)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Financing activities:
Lease capital repayments (3.7) (3.3) (6.9)
Cash received on exercise of share options 1.3 1.4 3.6
Purchase of own shares (151.3) - (4.2)
Repayment of borrowings - - (12.7)
Dividends paid (160.9) (150.7) (301.5)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Net cash used in financing activities (314.6) (152.6) (321.7)
--------------------------------------------- ---- ----------------- --------------------------- -----------------
Net (decrease)/increase in cash and cash
equivalents (192.8) 183.8 99.9
Cash and cash equivalents at beginning of
period 921.0 823.0 823.0
Effect of foreign exchange rate changes 1.2 (1.2) (1.9)
--------------------------------------------- ---- ----------------- --------------------------- =================
Cash and cash equivalents at end of period 8 729.4 1,005.6 921.0
--------------------------------------------- ---- ----------------- --------------------------- =================
Taylor Wimpey plc
Notes to the condensed consolidated interim financial
statements
For the half year ended 3 July 2022
1. Accounting policies
Basis of preparation
The condensed set of 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 2021, 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 2021 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 2021.
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 c.30%, followed by a gradual recovery
- Price - a reduction in current selling prices of 20%
- Costs - a one-off exceptional charge and cash cost of GBP150
million for an unanticipated event, change in Government
regulations or financial penalty (e.g. from a cyber security
breach)
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.
The Group's liquidity (defined as cash and undrawn committed
facilities) was GBP1,279 million at 3 July 2022. The undrawn
facilities of GBP550 million mature in February 2025 with the drawn
facilities of EUR100 million (GBP87m) due in June 2023. This is
sufficient to absorb the financial impact of each of the risks
modelled in the stress and sensitivity analysis.
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 3 July 2022
1. Accounting policies (continued)
Estimates and judgements
The preparation of a condensed set of 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, including the GBP80 million increase in the cladding
fire safety provision in the period, were principally the same as
those applied to the Group's consolidated financial statements for
the year ended 31 December 2021.
2. Revenue
An analysis of the Group's revenue is as follows:
Half year Half year Year ended
ended 3 ended 4 31 December
GBP million July 2022 July 2021 2021
-------------------- ---------- ---------- ------------
Private sales 1,797.2 2,012.3 3,890.3
Partnership housing 245.0 173.5 363.1
Land and other 34.6 10.5 31.5
-------------------- ---------- ---------- ------------
Total revenue 2,076.8 2,196.3 4,284.9
-------------------- ---------- ---------- ------------
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
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 4 Year ended 31 December
3 July 2022 July 2021 2021
----------------------------- ---------------------------- ----------------------------
GBP million UK Spain Total UK Spain Total UK Spain Total
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
Revenue
External sales 2,009.4 67.4 2,076.8 2,166.1 30.2 2,196.3 4,208.1 76.8 4,284.9
Result
Profit before joint
ventures, net
finance costs and
exceptional
items 396.6 18.0 414.6 418.3 4.4 422.7 808.6 14.6 823.2
Share of results of
joint ventures 10.0 - 10.0 1.3 - 1.3 5.4 - 5.4
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
Operating profit (Note
17) 406.6 18.0 424.6 419.6 4.4 424.0 814.0 14.6 828.6
Exceptional items (Note
4) (80.0) - (80.0) (125.0) - (125.0) (125.0) - (125.0)
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
Profit before net finance
costs 326.6 18.0 344.6 294.6 4.4 299.0 689.0 14.6 703.6
Net finance costs (10.1) (11.5) (24.0)
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
Profit before taxation 334.5 287.5 679.6
Taxation charge (73.8) (51.7) (124.1)
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
Profit for the period 260.7 235.8 555.5
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
3 July 2022 4 July 2021 31 December 2021
----------------------------- ---------------------------- ----------------------------
GBP million UK Spain Total UK Spain Total UK Spain Total
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ ---------
Assets and liabilities
Segment operating assets 5,368.3 205.0 5,573.3 4,870.1 170.1 5,040.2 5,013.6 192.6 5,206.2
Joint ventures 83.0 - 83.0 75.7 - 75.7 85.4 - 85.4
Segment operating
liabilities (1,934.6) (124.9) (2,059.5) (1,849.5) (67.9) (1,917.4) (1,757.3) (83.7) (1,841.0)
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ -----------
Net operating assets 3,516.7 80.1 3,596.8 3,096.3 102.2 3,198.5 3,341.7 108.9 3,450.6
Net current taxation 11.2 8.3 0.2
Net deferred taxation 24.2 26.9 26.2
Net cash 642.4 906.5 837.0
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ -----------
Net assets 4,274.6 4,140.2 4,314.0
------------------------- --------- ------- --------- --------- ------ --------- --------- ------ -----------
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
4. Net operating expenses and profit on ordinary activities before net finance costs
Profit on ordinary activities before net finance costs has been
arrived at after charging/(crediting):
Half year Half year Year ended
ended 3 ended 4 31 December
GBP million July 2022 July 2021 2021
------------------------ ---------- ---------- ------------
Administration expenses 111.3 102.1 211.0
Other expenses 4.7 6.1 13.1
Other income (6.1) (8.6) (20.3)
Exceptional items 80.0 125.0 125.0
------------------------ ---------- ---------- ------------
Other income and expenses include profits on the sale of
property, plant and equipment, revaluation of certain shared equity
mortgage receivables, pre-acquisition and abortive costs, and
profit/loss on the sale of part exchange properties.
Half year
ended Half year Year ended
Exceptional items: 3 ended 4 31 December
GBP million July 2022 July 2021 2021
------------------------------------------------------ ---------- ---------- ------------
Provision in relation to cladding fire safety 80.0 125.0 125.0
80.0 125.0 125.0
------------------------------------------------------ ---------- ---------- ------------
Tax credit (17.6) (23.8) (23.8)
------------------------------------------------------ ---------- ---------- ------------
Net exceptional items charged to the income statement 62.4 101.2 101.2
------------------------------------------------------ ---------- ---------- ------------
Cladding fire safety
In 2018 the Group established an exceptional provision for the
cost of replacing ACM on a small number of legacy developments.
During 2021 the Group announced its intention to support building
owners and leaseholders with investment to ensure their apartment
buildings were safe and met current EWS1 (External Wall Fire
Review) requirements. This applied to Taylor Wimpey apartment
buildings constructed going back 20 years from January 2021,
including apartment buildings below 18 metres. As a result the
Group recognised an additional GBP125.0 million provision in 2021
and, in line with Group policy, recognised it as an exceptional
item.
In April 2022 the Group signed up to the Government's fire
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 period to 3 July 2022 the Group recognised an increase in the
provision of GBP80.0 million, as an exceptional expense.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
5. Finance income and finance costs
Half
year Half year
ended ended
Finance income: 3 4 Year ended
July July 31 December
GBP million 2022 2021 2021
-------------------- ------ --------- ------------
Interest receivable 2.1 1.2 2.4
2.1 1.2 2.4
-------------------- ------ --------- ------------
Half
year Half year
ended ended
Finance costs: 3 4 Year ended
July July 31 December
GBP million 2022 2021 2021
-------------------------------------------------- ------ --------- ------------
Interest on bank and other loans (2.4) (2.5) (5.0)
Foreign exchange movements (0.3) (0.5) (0.8)
-------------------------------------------------- ------ --------- ------------
(2.7) (3.0) (5.8)
Unwinding of discount on land creditors and other
items (9.0) (9.0) (19.2)
Interest on lease liabilities (0.2) (0.2) (0.4)
Net interest on pension liability (0.3) (0.5) (1.0)
-------------------------------------------------- ------ --------- ------------
(12.2) (12.7) (26.4)
-------------------------------------------------- ------ --------- ------------
6. Taxation
Tax charged in the income statement is analysed as follows:
Half
year Half year
ended ended
3 4 Year ended
July July 31 December
GBP million 2022 2021 2021
------------ ------------------------------------- ------ --------- ------------
Current
tax:
UK: Current year (69.1) (49.8) (122.0)
Adjustment in respect of prior years - - 2.3
Overseas: Current year (2.6) (0.6) (2.5)
Adjustment in respect of prior years (0.5) (0.1) (0.1)
-------------------------------------------------- ------ --------- ------------
(72.2) (50.5) (122.3)
-------------------------------------------------- ------ --------- ------------
Deferred
tax:
UK: Current year (2.4) (0.3) (2.7)
Adjustment in respect of prior years - (0.8) (0.3)
Overseas: Current year (1.0) (0.1) 1.2
Adjustment in respect of prior years 1.8 - -
-------------------------------------------------- ------ --------- ------------
(1.6) (1.2) (1.8)
-------------------------------------------------- ------ --------- ------------
(73.8) (51.7) (124.1)
-------------------------------------------------- ------ --------- ------------
The effective tax rate for the period is 22.1% (4 July 2021
effective tax rate: 18.0%).
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
the temporary differences have been calculated at between 23% and
29% (4 July 2021: between 19% and 25%).
The primary components of the deferred tax asset at 3 July 2022
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 3 July 2022
7. Earnings per share
Half year Half year
ended 3 ended 4 Year ended
July 2022 July 2021 31 December 2021
--------------------------------------------------------------------------- ---------- ---------- -----------------
Basic earnings per share 7.2p 6.5p 15.3p
Diluted earnings per share 7.2p 6.5p 15.2p
Adjusted basic earnings per share 9.0p 9.3p 18.0p
Adjusted diluted earnings per share 8.9p 9.2p 18.0p
Weighted average number of shares for basic earnings per share - million 3,603.5 3,639.2 3,639.3
Weighted average number of shares for diluted earnings per share - million 3,613.9 3,648.0 3,649.0
--------------------------------------------------------------------------- ---------- ---------- -----------------
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:
Half year Half year
ended 3 ended 4 Year ended
GBP million July 2022 July 2021 31 December 2021
-------------------------------------------------------------------- ---------- ---------- -----------------
Earnings for basic and diluted earnings per share 260.7 235.8 555.5
Adjust for exceptional items 80.0 125.0 125.0
Adjust for tax on exceptional items (17.6) (23.8) (23.8)
-------------------------------------------------------------------- ---------- ---------- -----------------
Earnings for adjusted basic and adjusted diluted earnings per share 323.1 337.0 656.7
-------------------------------------------------------------------- ---------- ---------- -----------------
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
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 Total
GBP million other loans 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
------------------ ------------------------- ------------ ---------
Cash and cash equivalents Bank and Total
GBP million other loans net cash
------------------ ------------------------- ------------ ---------
At 1 January 2021 823.0 (103.6) 719.4
Net cash flow 183.8 - 183.8
Foreign exchange (1.2) 4.5 3.3
------------------ ------------------------- ------------ ---------
At 4 July 2021 1,005.6 (99.1) 906.5
------------------ ------------------------- ------------ ---------
Cash and cash equivalents Bank and Total
GBP million other loans net cash
-------------------- ------------------------- ------------ ---------
At 1 January 2021 823.0 (103.6) 719.4
Net cash flow 99.9 12.7 112.6
Foreign exchange (1.9) 6.9 5.0
-------------------- ------------------------- ------------ ---------
At 31 December 2021 921.0 (84.0) 837.0
-------------------- ------------------------- ------------ ---------
The committed borrowing facilities are currently GBP637.0
million (31 December 2021: GBP634.0 million) with an average
maturity of 2.4 years (31 December 2021: 2.9 years).
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 therefore payments into escrow 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 3 July 2022 the IAS19 surplus was GBP211.6 million (31
December 2021: GBP149.9 million). An IFRIC 14 deficit has been
recognised at 3 July 2022, 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 GBP30.1
million (31 December 2021: GBP37.0 million). In addition, there is
as a post-retirement healthcare liability of GBP0.3 million (31
December 2021: 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 3 July 2022 there was GBP10.0 million held in the
escrow account (31 December 2021: GBP10.0 million). Interest earned
by the escrow account is retained within the escrow account.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
10. Financial assets and liabilities
Carrying amount Fair value
---------------------------- ----------------------------
3 July 4 July 31 December 3 July 4 July 31 December
GBP million 2022 2021 2021 2022 2021 2021
---------------------------- ------ ------- ----------- ------ ------- -----------
Financial assets
Cash and cash equivalents a 729.4 1,005.6 921.0 729.4 1,005.6 921.0
Land receivables a 18.7 14.4 18.7 18.7 14.4 18.7
Other financial assets a 10.0 5.0 10.0 10.0 5.0 10.0
Trade and other receivables a 120.3 95.6 105.0 120.3 95.6 105.0
Mortgage receivables b 14.0 21.8 17.9 14.0 21.8 17.9
---------------------------- ------ ------- ----------- ------ ------- -----------
Financial liabilities
Bank and other loans c 87.0 99.1 84.0 85.5 100.8 84.8
Land creditors a 843.7 843.1 806.4 843.7 843.1 806.4
Trade and other payables a 622.4 593.1 543.3 622.4 593.1 543.3
Lease liabilities a 26.8 29.5 27.4 26.8 29.5 27.4
---------------------------- ------ ------- ----------- ------ ------- -----------
(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 GBP49.4
million (31 December 2021: GBP54.1 million) of non-financial
assets.
Current and non-current trade and other payables includes
non-financial liabilities of GBP208.6 million (31 December 2021:
GBP181.5 million).
The Group has designated a financial liability in the sum of
EUR79.0 million (31 December 2021: EUR79.0 million) as a net
investment hedge, equating to GBP68.7 million (31 December 2021:
GBP66.4 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 3 July 2022
11. Provisions
Cladding
GBP million fire safety Leasehold Other Total
------------------------ ------------ --------- ----- ------
At 31 December 2021 144.5 53.6 47.0 245.1
Additions in the period 80.0 - 16.9 96.9
Utilised (6.4) (5.3) (2.8) (14.5)
Released - - - -
Foreign exchange - - 0.1 0.1
------------------------ ------------ --------- ----- ------
At 3 July 2022 218.1 48.3 61.2 327.6
------------------------ ------------ --------- ----- ------
3 July 4 July 31 December
GBP million 2022 2021 2021
------------ ------ ------ -----------
Current 119.0 96.3 125.4
Non-current 208.6 153.0 119.7
------------ ------ ------ -----------
327.6 249.3 245.1
------------ ------ ------ -----------
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 in the prior year 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 around a fifth 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 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 2021.
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
14. Dividends
Half year Year ended
Half ended 31 December
year ended 4 2021
3 July July
GBP million 2022 2021
===================== =========== ========= ============
Approved and paid 160.9 150.7 301.5
Approved and accrued - - -
Approved 163.0 151.0 -
Proposed - - 162.0
===================== =========== ========= ============
The Directors have assessed the Company's performance in the
current period and approved an interim dividend of 4.62
pence per share in line with the Group's dividend policy. The
dividend will be paid on 18 November 2022 to all shareholders
registered at the close of business on 14 October 2022. This is
expected to result in a payment of c.GBP163 million.
In accordance with IAS 10 'Events after the Reporting Period'
the approved interim dividend has not been accrued in the 3 July
2022 balance sheet.
15. Share based payments
The Group recognised a share based payment expense of GBP7.6
million to 3 July 2022 (4 July 2021: GBP6.3 million), which was
composed of GBP7.5 million in relation to equity settled schemes
and GBP0.1 million in relation to cash settled elements (4 July
2021: GBP6.2 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 3 July 2022
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 net finance costs, 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
year Half year
ended ended
3 4 Year ended
July July 31 December
2022 2021 2021
------------------------------------------------------- ------- --------- ------------
Profit on ordinary activities before net finance costs
(GBPm) 334.6 297.7 698.2
Adjusted for:
Share of results of joint ventures (GBPm) 10.0 1.3 5.4
Exceptional items (GBPm) 80.0 125.0 125.0
------------------------------------------------------- ------- --------- ------------
Operating profit (GBPm) 424.6 424.0 828.6
======================================================= ======= ========= ============
Revenue (GBPm) 2,076.8 2,196.3 4,284.9
======================================================= ======= ========= ============
Operating margin 20.4% 19.3% 19.3%
======================================================= ======= ========= ============
Rolling 12-month operating profit* (GBPm) 829.2 740.4 828.6
======================================================= ======= ========= ============
* Operating profit for the 6-month period ended 31 December
2020: Profit before interest and tax: GBP306.7m; Share of results
of joint ventures: GBP9.7m; 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 .
3 July 4 July 31 December 31 December 28 June
GBPmillion 2022 2021 2021 2020 2020
--------------------------------- -------- ---------- ------------ ------------ ----------
Basic net assets (GBPm) 4,274.6 4,140.2 4,314.0 4,016.8 3,755.2
Adjusted for:
Cash (GBPm) (729.4) (1,005.6) (921.0) (823.0) (601.8)
Borrowings (GBPm) 87.0 99.1 84.0 103.6 104.5
Net taxation (GBPm) (35.4) (35.2) (26.4) (32.6) (14.1)
Accrued dividends (GBPm) - - - - -
--------------------------------- -------- ---------- ------------ ------------ ----------
Net operating assets (GBPm) 3,596.8 3,198.5 3,450.6 3,264.8 3,243.8
--------------------------------- -------- ---------- ------------ ------------ ----------
Average basic net assets (GBPm) 4,207.4 3,947.7 4,165.4
--------------------------------- -------- ---------- ------------ ------------ ----------
Average net operating assets
(GBPm) 3,397.7 3,221.2 3,357.7
--------------------------------- -------- ---------- ------------ ------------ ----------
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
3 July 2022 4 July 2021 2021
----------------------------------------- ----------- ----------- -----------
Rolling 12-month operating profit (GBPm) 829.2 740.4 828.6
Average net operating assets (GBPm) 3,397.7 3,221.2 3,357.7
----------------------------------------- ----------- ----------- -----------
Return on net operating assets 24.4% 23.0% 24.7%
========================================= =========== =========== ===========
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
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
3 July 2022 4 July 2021 2021
------------------------------------ ----------- ----------- -----------
Rolling 12-month revenue* (GBPm) 4,165.4 4,231.9 4,284.9
Average net operating assets (GBPm) 3,397.7 3,221.2 3,357.7
------------------------------------ ----------- ----------- -----------
Net operating asset turn 1.23 1.31 1.28
==================================== =========== =========== ===========
* Revenue for the 6-month period ended 31 December 2020:
GBP2,035.6 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
3 July 2022 4 July 2021 2021
-------------------------------------- ----------- ----------- -----------
Basic net assets (GBPm) 4,274.6 4,140.2 4,314.0
Adjusted for:
Accrued dividends (GBPm) - - -
Intangible assets (GBPm) (5.0) (7.8) (6.6)
-------------------------------------- ----------- ----------- -----------
Tangible net assets (GBPm) 4,269.6 4,132.4 4,307.4
Ordinary shares in issue (millions) 3,557.0 3,646.5 3,648.6
====================================== =========== =========== ===========
Tangible net assets per share (pence) 120.0 113.3 118.1
====================================== =========== =========== ===========
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
3 July 2022 4 July 2021 2021
----------------------------------------------- ----------- ----------- -----------
Rolling 12-month cash generated by operations*
(GBPm) 375.1 715.6 574.7
Rolling 12-month operating profit (GBPm) 829.2 740.4 828.6
----------------------------------------------- ----------- ----------- -----------
Cash conversion 45.2% 96.7% 69.4%
=============================================== =========== =========== ===========
* Cash generated by operations for the 6-month period ended 31
December 2020: GBP310.3m.
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
3 July 2022 4 July 2021 2021
-------------------------------- ----------- ----------- -----------
Cash (GBPm) 729.4 1,005.6 921.0
Loans (GBPm) (87.0) (99.1) (84.0)
-------------------------------- ----------- ----------- -----------
Net cash (GBPm) 642.4 906.5 837.0
Land creditors (GBPm) (843.7) (843.1) (806.4)
-------------------------------- ----------- ----------- -----------
Adjusted net (debt)/cash (GBPm) (201.3) 63.4 30.6
-------------------------------- ----------- ----------- -----------
Basic net assets (GBPm) 4,274.6 4,140.2 4,314.0
-------------------------------- ----------- ----------- -----------
Adjusted gearing 4.7% (1.5)% (0.7)%
================================ =========== =========== ===========
Taylor Wimpey plc
Notes to the condensed consolidated interim financial statements
(continued)
For the half year ended 3 July 2022
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
There were no material subsequent events affecting the Group
between 3 July 2022 and the date of this announcement that need to
be disclosed.
Taylor Wimpey plc
Statement of Directors' responsibility
For the half year ended 3 July 2022
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
Irene Dorner, Chairman
Jennie Daly, Chief Executive
2 August 2022
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 3 July 2022 (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 3 July 2022;
-- 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. 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 this ISRE.
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
2 August 2022
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