TW. Taylor Wimpey Plc

31 July 2024

Taylor Wimpey plc

Half year results for the period ended 30 June 2024

Good first half operating performance, positioned for growth from 2025

Jennie Daly, Chief Executive, commented:

"We have delivered a good financial and operational performance in the first half, against a relatively stable market backdrop, reporting a good sales rate while continuing to protect value. While interest rates and mortgage rates remain high, our teams continue to work extremely hard on the ground to support our customers through the homebuying process, and I would like to thank them for their ongoing commitment. Looking to the second half, our performance to date means we now expect to deliver 2024 full year UK completions towards the upper end of our previous guidance range of 9,500 to 10,000 and Group operating profit in line with current market expectations.¹

Though it is early days for the new Government, we welcome their recognition that planning is a major barrier to economic growth, of which housebuilding is a significant component, and we look forward to working constructively with them to deliver much needed new homes across the UK.

Taylor Wimpey is a strong and agile business with a sharp operational focus. With the benefit of our high-quality landbank and strong financial position, we are well positioned for growth from 2025, assuming supportive market conditions."

       Group financial highlights:

¹As published on 29 July 2024, the Company compiled consensus expectation for full year 2024 Group operating profit including joint ventures and excluding exceptional items is £416 million

Key highlights:                                                                                                                                   

·    Group completions (incl. JVs) of 4,728 homes (H1 2023: 5,120)

·    Group operating profit of £182.3 million which includes £18.6 million of profit generated from land sales (H1 2023: Group operating profit of £235.6 million with £2.7 million of profit generated from land sales)

·    Announced 2024 interim dividend of 4.80 pence per share (H1 2023: 4.79 pence per share) amounting to c.£170 million (H1 2023: £169 million), in line with our stated Ordinary Dividend Policy to return 7.5% of net assets annually

·    Increased cladding fire safety provision by £88.0 million, owing largely to cost inflation on new tenders received and increased project delivery administration costs

·    Full year UK completions excluding JVs anticipated to be towards the upper end of our previous guidance range of 9,500 to 10,000, with full year Group operating profit including JVs expected to be in line with current market expectations¹

·    Ended the period with net cash of £584.0 million (H1 2023: £654.9 million)

First half UK operational highlights:

·    H1 net private sales rate of 0.75 (H1 2023: 0.71), 0.69 excluding bulk deals (H1 2023: 0.62 excluding bulk deals)

·    Total order book representing 7,451 homes, excluding joint ventures, with a value of £2,012 million as at 30 June 2024 (2 July 2023: 7,866 homes with a value of £2,147 million)

·    Total UK average selling price on completions decreased by 0.9% to £317k (H1 2023: £320k) due to both underlying price deflation and mix

·    Operated from an average 224 outlets during the period (H1 2023: 244) and ended the period with 214 outlets (2 July 2023: 235) 

·    Active in the land market with greater than anticipated land approvals of c.5k plots (H1 2023: c.1k plots)

·    Short term landbank as at 30 June 2024 of c.79k plots (31 December 2023: c.80k plots) in high-quality locations where customers want to live

·    Strategic land pipeline as at 30 June 2024 of c.140k potential plots (31 December 2023: c.142k potential plots)

·    Maintained high quality with improved average Construction Quality Review score of 4.92 (H1 2023: 4.90)

·    Taylor Wimpey Manufacturing, our new timber frame facility in Peterborough, successfully delivered its first timber frame kits and the facility received ISO:9001 accreditation

Sustainable, responsible business:

·    Five-star builder with improved customer service score of 96% according to the Home Builders Federation (HBF) 8-week customer satisfaction survey (H1 2023: 90%)

·    Major contributor to the regions in which we operate investing £142 million in local communities via planning obligations (H1 2023: £210 million) and generating economic growth

·    Continued focus on health and safety with rolling 12 months^†*** Injury Incidence Rate (per 100,000 employees and contractors) of 164 (H1 2023: 136), below the HBF Home Builder average

·    Nature and the environment remain key areas of focus as we drive towards net zero by 2045. We were once again included in the S&P Sustainability Yearbook and achieved Route to Net Zero Advancing Level, remain a constituent of the FTSE4Good Index Series and have signed up to the Future Homes Hub Homes for Nature commitment

·    Highly experienced build teams with 62 of our Site Managers winning NHBC Pride in the Job Quality Awards (2023: 51)

Driving operational performance

There was an encouraging start to the year with good demand in the traditionally strong Spring selling season and conditions remained relatively stable in the second quarter. However, it is clear the delay in interest rate cuts and comparatively high mortgage rates continue to have some impact on market transactions. Our highly experienced sales teams continue to work hard to support customers through their homebuying journey, utilising all of the tools available including customised incentives, and are supported by our customer relationship management system (CRM).

Our focus remains on delivering high-quality homes for our customers and we are extremely proud of our Site Managers who, in June, collected 62 NHBC Pride in the Job Quality Awards (2023: 51), which demonstrates the continuing quality and dedication of our teams. We also delivered a strong increase in our 8-week customer satisfaction score to 96% (H1 2023: 90%), which is testament to our concerted efforts to improve our responsiveness to customers.

We continue to drive operational efficiencies to maximise value whilst at the same time investing in areas crucial to the long term efficiency and sustainability of the business, including in our people, IT, timber frame and zero carbon ready homes.

We look forward to working constructively with the new Government to deliver much needed new homes across the UK. It is very early stages, but we welcome recognition from the new administration that planning is a major barrier to economic growth, of which housebuilding is a significant component. The announcement of a new consultation on proposed changes to the National Planning Policy Framework (NPPF) is an important early step by Government to address the negative impact successive changes to the Framework in recent years have had on the delivery of much needed homes. We look forward to continuing positive engagement with Government throughout the consultation period. Though we expect changes to take some time to impact, we see the planning reforms outlined by the new Government as key to unlocking future years land supply and the investment in skills and resources necessary to support future housing need.

UK current trading and outlook

The four weeks ended 28 July 2024, mark the start of the seasonally quieter summer holiday period and our net private sales rate was 0.64 per outlet per week (2023 equivalent period: 0.47), with neither period containing bulk deals. The cancellation rate for the same period was 19% (2023 equivalent period: 24%).

As at the week ended 28 July 2024, our total order book value was £2,102 million (2023 equivalent period: £2,175 million), excluding joint ventures, representing 7,667 homes (2023 equivalent period: 7,900 homes), of which 74% are exchanged (2023 equivalent period: 77%).

Whilst we have seen some benefit from market stability, mortgage costs remain at higher levels than in recent years which continues to impact affordability for some of our customers, particularly first time buyers. However, mortgage availability remains good, with high loan to value products now returning to the levels seen prior to the 2022 mini budget. Overall, we continue to see good levels of interest and stable reservation levels considering the seasonally quieter summer holiday period. Pricing has remained resilient, and the level of down valuations remains low.

Increased borrowing costs and regulatory pressures are negatively impacting the ability of Housing Associations to commit to affordable housing deals as part of Section 106 agreements. 

While this is not expected to impact our 2024 outcome, lack of funding for Housing Associations has the potential to impact sector order books and the overall delivery of affordable housing in coming years.

As previously guided and in line with expectations, underlying margin for the first half was lower, given residual build cost inflation in the order book and weaker pricing, however this was partly offset by higher profit from land sales. Prevailing build costs on new tenders are flat, with our self-help value improvement measures leading to slight cost deflation.

The H2 income statement will see the influence of residual build cost inflation and weaker pricing reduce and the recovery of fixed costs improve as volumes increase. This, together with value improvement initiatives and efficiencies, means that excluding the benefit from land sales, we expect to see an improvement in underlying operating profit margin in H2.

As we look ahead, we continue to focus on building our order book to optimise value and to position us for growth from 2025, assuming a supportive market. We have excellent visibility in terms of sites for 2025 and own and control all land for 2025 completions, almost all of it with detailed planning.

We are well positioned for the medium term and have been actively preparing for planning changes and focused on developing high-quality planning applications from the strategic pipeline. We have c.30k applications in the planning process and additional applications ready to go if we see the proposed grey belt changes come through.

We expect full year UK completions excluding JVs to be towards the upper end of the previous guidance range of 9,500 to 10,000, and to deliver full year Group operating profit including joint ventures, in line with current market expectations¹. Our 2024 year end net cash balance is anticipated to be c.£550 million, depending on land spend in the remainder of the year.

We have operated the business through this cycle to protect value and best position us to capture future market opportunities. Assuming supportive market conditions and based on our strong visibility of next year's consented land, we have positioned the business for growth from 2025, with a strong balance sheet, land pipeline and with all areas of the business facing into this potential.

-  Ends -

A presentation to investors and analysts will be hosted by Chief Executive Jennie Daly and Group Finance Director Chris Carney at 9:00am on Wednesday 31 July 2024. 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 31 July 2024. For further information please contact:

Taylor Wimpey plc                                                               Tel: +44 (0) 1494 885656

Jennie Daly, Chief Executive

Chris Carney, Group Finance Director

Debbie Archibald, Investor Relations

Andrew McGeary, Investor Relations

FGS Global                                                                            TaylorWimpey@fgsglobal.com

Faeth Birch

Anjali Unnikrishnan

James Gray

​

Notes to editors:

Taylor Wimpey plc is a customer-focused homebuilder, operating at a local level from 22 regional businesses across the UK. We also have operations in Spain.

For further information please visit the Group's website: www.taylorwimpey.co.uk

Follow our company page on LinkedIn, Taylor Wimpey plc

Overview: Driving performance and positioning for growth

We continue to successfully navigate the market, driven by a consistent long term strategy to build a stronger more resilient business and deliver superior returns, managing the business through the cycle to the benefit of all stakeholders.

The way we operate our business is to protect value and to allow us to pivot into growth at the appropriate stage by pulling the levers available to us.

As outlined at the start of the year, we will continue our focus on driving increased operating efficiency, cost savings and value improvement, while investing in areas that are key to the long term sustainability of the business and ensuring the business is positioned for growth from 2025, assuming a supportive market.

Our first half performance benefited from relatively stable conditions in the housing market. However, the delay in interest rate cuts and comparatively high mortgage rates continue to mean demand remains below the levels of prior years.

We have maintained strong operational discipline delivering a resilient first half performance with Group completions (excl. JVs) in line with our expectations at 4,654 (H1 2023: 5,082), and total Group revenue of £1,517.7 million (H1 2023: £1,637.1 million). Group operating profit was £182.3 million (H1 2023: £235.6 million) which included £18.6 million (H1 2023: £2.7 million) of profit generated from land sales. As previously flagged, Group operating profit margin of 12.0% (H1 2023: 14.4%) reflected reduced overhead recovery given lower completion levels in the period, the impact of build cost inflation embedded in work in progress and underlying price deflation.

We ended the period with net cash of £584.0 million (H1 2023: £654.9 million), after returning £169.5 million in cash to investors via the payment of the 2023 final ordinary dividend.

We have increased our provision related to cladding fire safety by £88.0 million, due to a reassessment of remediation costs based on tenders received in the first half. This is a complex multi-year project and the increase in projected costs predominantly relates to cost inflation based on recent tenders received and increased administrative and legal costs, with the remainder due to a small number of additional buildings added in the first half. We have a dedicated team in place to manage this workstream, and during the first half we continued to progress work with building owners, management companies and leaseholders and we remain committed to addressing remediation as soon as practicable for leaseholders. We have 211 buildings within the scope of our provision, all of which have been assessed by our specialist team.

We continue our drive to further standardisation and simplification leveraging Taylor Wimpey Logistics (TWL) and we successfully delivered our first kits from our timber frame facility in the first half which was in line with our plans.

Housing delivery has a vital role to play in our society and in unlocking economic growth across the UK through investment, not just into much needed energy-efficient new homes, but in the associated investment in community infrastructure such as schools and amenities, and local transport infrastructure. A decade-long problem of under-resourcing in the planning system and lack of ambition at all political levels has driven a rapid decline in both new housing development and planning consents across the country, and so we welcome the new Government's focus on the reform of planning policy and look forward to working closely with them to enable the delivery of critical new housing.

At a sector level, there are measures aimed at addressing the near term issues and longer term reforms to the planning regime. These changes will take time to translate into an easing of the planning system and new opportunities in the land market. We remain well positioned with a strong landbank and mature strategic land pipeline and have an important role to play in addressing the shortfall in UK housing.

Land market conditions remain competitive, and we have been active and opportunistic in reviewing land opportunities. Where opportunities open up, our strong balance sheet and relationships enable us to take advantage. During the first half of 2024, we acted to take advantage of value accretive opportunities in some regions and approved c.5k plots (H1 2023: c.1k plots). We remain in a strong land position and our landbuying will remain opportunity led and complement the potential of our mature strategic land pipeline.

Land sales are a feature of business as usual as we optimise the benefit of our landbank. In the first half we concluded a significant sale of a land parcel identified for employment purposes in our strategic land pipeline.

Outlet openings of 26 (H1 2023: 13) were in line with our expectations for the period. We operated from an average of 224 outlets during the period (H1 2023: 244), ending the period with 214 outlets (2 July 2023: 235). Our focus remains on getting outlets open as quickly as possible and we continue to expect further progress in outlet openings in the second half. Our teams also remain focused on getting land through the planning system, submitting high-quality applications and working closely with local authorities. As we look forward, we have excellent visibility of next year's land supply for 2025 and own and control all land for 2025 completions, almost all of it with detailed planning.

We continue to prioritise building the order book for 2025. We are focused on ensuring readiness in all areas of the business for volume growth from 2025 assuming a supportive market backdrop. 

We continue to operate our business to create and protect long term value from our strong landbank and to develop the sustainable homes of the future for the benefit of all our stakeholders.

Four cornerstones of strategy

Our purpose, to build great homes and create thriving communities, drives our strategy. As previously stated, our strategy is built on four strategic cornerstones ensuring an agile response to market conditions and investment in the long term sustainability of the business:

1.   Optimising value from our high-quality owned and controlled landbank and strategic land pipeline

2.   Driving operational excellence through our business to improve efficiency, protect value and ensure Taylor Wimpey is fit for the future

3.   Embedding sustainability across the Group for the benefit of all our stakeholders

4.   Delivering reliable investor returns with a clear and disciplined framework, balancing investment for future value creation with returning value to shareholders

Returns to shareholders

We have an established, differentiated Ordinary Dividend Policy aimed at providing investors with visibility of the income stream they can expect throughout the cycle including during a normal downturn, via an ordinary cash dividend. Our Ordinary Dividend Policy is to pay out 7.5% of net assets or at least £250 million annually throughout the cycle. In line with our Ordinary Dividend Policy, we today announce a 2024 interim dividend of 4.80 pence per share payable in November.

Board committee change

Scilla Grimble, an independent Non Executive Director of the Company and a current member of the Audit Committee, will be appointed as Chair of the Audit Committee with effect from 1 September 2024. Scilla will succeed Humphrey Singer, who has chaired the Audit Committee since February 2018 and is approaching nine years as a Non Executive Director of the Company.

Operational review

Our operational review is for the UK only as the majority of metrics do not apply to our Spanish business. A short summary of the Spanish business follows in the Group financial review. The financial analysis is presented at Group level, which includes Spain, unless otherwise indicated.

Joint ventures are excluded from the operational review and Group financial review, unless stated otherwise.

Our key performance indicators (KPIs)

N.B. The 8-week 'would you recommend' score for H1 2024 relates to customers who legally completed between October 2023 and March 2024 with the comparator relating to the same period 12 months prior. The 9-month 'would you recommend' score for H1 2024 relates to customers who legally completed between October 2022 and March 2023, with the comparator relating to the same period 12 months prior.

Resilient first half sales

UK home completions (excluding joint ventures) were 4,512 (H1 2023: 4,854). This included 1,004 affordable homes (H1 2023: 1,111), equating to 22.3% of total completions (H1 2023: 22.9%).

We have delivered a good net private sales rate of 0.75 (H1 2023: 0.71) which continues to reflect our focus on customers, high-quality locations and the hard work of our teams. Excluding bulk deals, our net private sales rate for the first half was 0.69 (H1 2023: 0.62). Our strategy on bulk deals remains consistent, we prioritise a planned approach for larger multi-phase, multi-year sites where such deals improve the metrics of development schemes.

The first half cancellation rate remained at a normalised level of 14% (H1 2023: 16%).

Average selling prices on private completions was £356k (H1 2023: £366k), reflecting both price and mix impacts. Our total average selling price decreased by 0.9% to £317k (H1 2023: £320k).

We have a wide range of products from one-bedroom apartments to five-bedroom homes. First time buyers accounted for 40% of total private reservations in the first half of 2024 (H1 2023: 35%). Investor sales continued to be at a low level at 3% (H1 2023: 3%).

As at H1 2024, our order book represented 7,451 homes (H1 2023: 7,866 homes) with an order book value of £2,012 million (H1 2023: £2,147 million), excluding joint ventures. Our affordable order book stood at 4,038 homes at H1 2024 (H1 2023: 4,190 homes).

During the first half of 2024 we opened 26 new outlets (H1 2023: 13), in line with our expectations.

A strong and differentiated landbank

We have an excellent short term landbank and benefit from a mature strategic land pipeline.

As at 30 June 2024, our short term landbank stood at c.79k plots (31 December 2023: c.80k plots). The average cost of land as a proportion of average selling price within the short term owned landbank remains low at 13.7% (H1 2023: 13.3%). The estimated average selling price in the short term owned landbank in H1 2024 was £330k (H1 2023: £343k).

Our mature strategic land pipeline is a major competitive advantage and a source of future growth potential that lessens reliance on the short term land market.

Our strategic pipeline stood at c.140k potential plots as at 30 June 2024 (31 December 2023: c.142k potential plots). During the first six months of 2024 we converted c.2k plots from the strategic pipeline to the short term landbank (H1 2023: c.6k plots). In the period, 41% of our completions were sourced from the strategic pipeline (H1 2023: 46%).

Land cost as a percentage of average selling price on approvals increased to 15.6% in the period (H1 2023: 12.9%).

As stated, the new Government has outlined a number of mostly supply side reforms aimed at unlocking future years land supply and enabling the investment in skills and resources necessary to support future housing need. We look forward to working constructively with the new Government to deliver much needed new homes across the UK. Whilst it is likely to take time for reform to impact the land market, we are well placed, with c.30k plots in the planning system, when improvements in planning take effect. We have a track record of delivering the right developments in the right locations for our customers and have further potential given the optionality provided by our mature strategic land pipeline.

Customers

We have been recognised as a five-star builder in the 8-week customer satisfaction survey by the HBF in March 2024. A key focus has been to improve our overall customer service and we are pleased we have raised our 8-week recommend score to 96% at the half year compared to 90% for H1 2023. Our responsiveness to customer issues has been a key focus for our teams over the last year, and it is pleasing to see this reflected in our customer score. We encourage customers to leave reviews on Trustpilot and have maintained our 4 out of 5-star status on Trustpilot with a TrustScore of 3.9 out of 5 as at 30 June 2024.

Leveraging our CRM, we are revisiting our processes to increase the amount of customer contact points with our sales teams, aligning these with key build stages, to improve customer experience throughout their homebuying journey. We have also continued to evolve our Sales Academy to ensure our teams are equipped with the right skills needed, particularly in light of the market conditions and as we prepare for growth.

Improving longer term customer service has been a key focus for Taylor Wimpey for some time. While the latest 9-month score was flat in comparison to the 2023 year end we have seen some encouraging improvement in the year to date score. This has been supported by our subcontractor portal 'My tasks', launched last year, which has been key in improving responsiveness and accountability for customer issues, such as snagging. The portal enables us to more efficiently monitor and measure delivery and responsiveness to key customer issues.

In the first half of 2024, we relaunched our online customer service portal, Touchpoint. In addition to direct contact with our customer service teams, Touchpoint allows customers to keep up to date on all areas of their homebuying journey, from reservation through to completion and aftersales and is future-proofed to allow us to easily add new features to enable it to evolve to new requirements over time. The upgraded version looks and feels like a natural extension of the website and has been designed as 'mobile first' to reflect the use profile of our customers. The portal allows users to add photos, includes CGI images of each build stage and is fully linked to our CRM, pulling in real time data, making processes faster and enabling an improved customer journey.

Delivering a consistently high build quality remains key to customer satisfaction and we are pleased to have again improved our average CQR score to 4.92 (H1 2023: 4.90). This is the result of our continued focus on quality throughout the business and is underpinned by our reduction in average reportable items per inspection to 0.18 (H1 2023: 0.28).

Our site teams have continued to perform strongly against a challenging backdrop in recent years and we are proud that in June 2024, 62 of our Site Managers won NHBC Pride in the Job Quality Awards (2023: 51).

Cladding fire safety 

The safety of our customers is of paramount importance, and we have always been guided by this principle. It is our long held view that leaseholders should not have to pay for the cost of fire safety remediation and our priority has always been to ensure that customers in Taylor Wimpey buildings have a solution to cladding remediation. We took early and proactive action, committing significant funding and resources to address fire safety and cladding issues on all affected Taylor Wimpey apartment buildings since 1992.

In 2022, we signed up to the Government's Building Safety Pledge for Developers and the Welsh Government Building Safety Developer Remediation Pact which reaffirmed our commitment that leaseholders should not have to pay for fire safety remediation. In the first half of 2023 we also signed the Scottish Safer Buildings Accord.

Prior to signing these, we had already begun working on affected Taylor Wimpey buildings and since 2022 we have held a provision for fire safety remediation works of £245 million. We have reassessed the remediation costs based on tenders received in the first half; based on this updated information and enhanced cost appraisal, the expected fire safety remediation cost has increased by £88 million, taking the total provision to date to £333 million. The increase is due to escalation of costs based on recent tenders, increased project delivery administration costs, including the funding of the Building Safety Fund pre-tender costs and a small number of new buildings being added. 

During the first half we continued to progress work with building owners, management companies and leaseholders and we remain committed to resolving these issues as soon as practicable for our leaseholders. We have 211 buildings within the scope of our provision, all of which have been assessed by our specialist team.

Employees

The health and safety of individuals on our sites will always be our number one priority. Our Injury Incidence Rate (IIR) for reportable injuries per 100,000 employees and contractors to 30 June 2024 on a rolling 12 month basis increased to 164 (2023 equivalent period: 136) which was a small underlying increase on a strong comparator, but remains below the HBF Home Builder Average IIR of 186. During 2024, we rolled out additional Health and Safety training to all regional businesses. The updated training had a focus on environmental, temporary works, and fire training.  

Our highly engaged and talented employees are key to driving our business forward. We have an excellent culture at Taylor Wimpey and it is our aim to maintain this and to evolve our workplace to ensure it is future fit so we remain the destination of choice for current and future talent. Our industry is facing a skills shortage so attracting and retaining high calibre people is a strategic imperative. 

While we have focused on cost discipline in the weaker market, which is reflected in lower recruitment activity, the skills and development of our workforce have remained a major focus. All of our employees receive a quarterly performance review with their line manager to ensure they are being appropriately supported to reach their potential and that appropriate training and development needs are being catered for.

We are strengthening our in-house development through the launch of our Technical Academy and upcoming changes to our Sales Academy. Our Technical Academy has been designed to support and develop our current technical employees and new starters by providing development and career pathways for each role within the technical functions (technical, design and engineering). The Academy allows our employees to demonstrate their technical competency, which is an emerging legislative requirement, and addresses feedback from our recent employee survey, which highlighted the need for clear career progression pathways.

We continue to work closely with our partners, peer companies, industry associations and educational organisations to identify and address skills gaps, upskill our workforce, and also share best practice within the industry. In 2023, we led a collaboration with five other major housebuilders to identify tangible ways in which we could address the skills shortage facing our sector, leading to the creation of a Sector Skills Plan. As previously flagged, we are stepping up our efforts in early entry recruitment with our schools outreach programme and our ex-armed forces Trainee Assistant Site Manager fast track programme.

The majority of trades on our sites are performed by our subcontractors and Taylor Wimpey has been instrumental in developing a support model with the CITB to provide free support to our subcontractors to enable them to recruit, train, manage and claim grant funding for their apprentices.

Following the release of our second Equality, Diversity and Inclusion (ED&I) report in March, we conducted our sixth annual ED&I conference in May, which was again held virtually to allow all employees to attend. The conference was well attended across the business and we launched the 'enAble' employee network founded to support staff who are disabled, have a long term health condition or are neurodivergent.

We have a number of other projects underway to continue our focus on ED&I, including our reverse mentoring programme and attaining better data to inform our decision making, with our new HR system being a key enabler of this. We continue also to explore the role that AI can play in supporting better understanding of our hiring and promotion data.

Sustainability

Creating thriving communities

Our purpose is to build great homes and create thriving communities. Achieving our purpose means building homes and places that enhance people's quality of life, foster local community relationships and which bring economic growth and skilled employment. The housebuilding sector is a key creator of jobs and economic activity throughout the country. We make a major contribution to the regions in which we operate directly through the employment created on our sites and indirectly through the economic benefit our activities generate for the wider supply chain such as shops, leisure facilities, places of employment and other industries that benefit from our operations.

We prioritise engaging with local communities as part of the planning and construction process and strive to make a positive impact in the wider community. In the first half of 2024, through our planning obligations, we contributed £142 million to the local communities in which we build (H1 2023: £210 million) which provides vital local infrastructure, affordable homes, public transport and education facilities. In H1 2024, we donated and fundraised over £0.6 million for charities and local community causes (H1 2023: £0.6 million).

Nature and the environment

Nature and the environment remain key focus areas for us as we drive toward net zero by 2045, five years ahead of the Government target. We were once again included in the S&P Sustainability Yearbook and Achieved Route to Net Zero Advancing Level. We remain a constituent of the FTSE4Good Index Series and have signed up to the Future Homes Hub Homes for Nature commitment.

The Homes for Nature initiative formalises many of the practices already adopted on Taylor Wimpey sites and for every new home built, a bird nesting brick or box will be installed, hedgehog highways will be created as standard. As an industry wide initiative running until at least 2030, annual reporting will enable the initiative to track results and establish further ways of supporting wildlife on housing developments.

As we press forward, we are constantly evolving our approach to the environment, testing new approaches and concepts such as the Circular Economy. We are pleased that we were awarded two Reconomy 'Think Circular' Awards in May that recognise sustainability practices that advance the circular economy.

Timber frame

Our strategy includes scaling up our in-house timber frame production from our facility in Peterborough and this will be a component of our capacity for growth in the medium term. After launching the facility last year, we delivered our first kits as planned in the first half of this year. The factory has been awarded ISO:9001 by the British Standards Institute (BSi) on top of being awarded the Structural Timber Association (STA) Gold Assure Accreditation, demonstrating the robust nature of our Quality Systems. It remains our intention to scale production up to capacity of 3,000 units in coming years, which, in combination with our external suppliers, will support our goal of increasing timber frame usage to 30% of our production by 2030.

Group financial review

Income statement

Group revenue was £1,517.7 million in the first half of 2024 (H1 2023: £1,637.1 million), with Group completions, excluding JVs, being 8.4% lower at 4,654 (H1 2023: 5,082). The UK average selling price on private completions decreased by 2.7% to £356k (H1 2023: £366k), due to both underlying price deflation and mix. The decrease in the total UK average selling price was 0.9% to £317k (H1 2023: £320k), a smaller reduction compared to the private completions, due to an increase in the UK average selling price on affordable housing to £179k (H1 2023: £166k) and a slightly lower proportion of affordable housing in H1 2024 (22%) than the prior period (H1 2023: 23%).

Group gross profit decreased to £292.2 million (H1 2023: £353.9 million), with build cost inflation and house price deflation partially offset by a higher profit generated from land sales in the period, resulting in a gross margin of 19.3% (H1 2023: 21.6%).

Net operating expenses were £198.7 million (H1 2023: £118.0 million), which includes £88.0 million of exceptional costs relating to the cladding fire safety provision as described in the previous section, with no such amount in the prior period.

Excluding exceptional costs, the net operating expenses were £110.7 million (H1 2023: £118.0 million), which was predominantly made up of administrative costs of £116.7 million (H1 2023: £116.5 million). This resulted in a profit on ordinary activities before financing of £93.5 million (H1 2023: £235.9 million), £181.5 million (H1 2023: £235.9 million) excluding exceptional items.

Completions from joint ventures in the period were 74 (H1 2023: 38). The increase in joint venture completions resulted in the share of joint ventures' profit in the period increasing to £0.8 million (H1 2023: £0.3 million loss). When including this in the profit on ordinary activities before financing, the resulting operating profit was £182.3 million (H1 2023: £235.6 million), delivering an operating profit margin of 12.0% (H1 2023: 14.4%). The total order book value of joint ventures as at 30 June 2024 increased to £32 million (31 December 2023: £6 million), representing 131 homes (31 December 2023: nine).

The net finance income of £5.4 million (H1 2023: £2.1 million) reflects that interest earned on deposits continued to more than offset the imputed interest on land acquired on deferred terms, bank interest and interest on the pension scheme.

Profit on ordinary activities before tax decreased to £99.7 million (H1 2023: £237.7 million). The total tax charge for the period was £26.7 million (H1 2023: £62.0 million), a rate of 26.8% (H1 2023: 26.1%); the current period includes a credit of £25.0 million in respect of the exceptional charge recognised. The pre-exceptional tax charge was £51.7 million (H1 2023: £62.0 million), representing an underlying tax rate of 27.5% (H1 2023: 26.1%).

As a result, profit for the period was £73.0 million (H1 2023: £175.7 million).

Basic earnings per share was 2.1 pence (H1 2023: 5.0 pence). The adjusted basic earnings per share was 3.8 pence (H1 2023: 5.0 pence).

Spain

Our Spanish business primarily sells second homes to European and other international customers, with a small proportion of sales being primary homes for Spanish occupiers. The business completed 142 homes (H1 2023: 228) with the average selling price increasing to €509k (H1 2023: €374k), due to regional mix. The total order book as at 30 June 2024 increased to 657 homes (31 December 2023: 490 homes).

Gross margin decreased to 27.6% (H1 2023: 29.8%), with fixed costs being absorbed across fewer completions, which was partially offset by an improved average selling price; this flowed through to an operating profit of £14.4 million (H1 2023: £19.7 million) and an operating profit margin of 23.4% (H1 2023: 26.6%).

The total plots in the landbank stood at 3,518 (31 December 2023: 2,755), with net operating assets** of £110.6 million (31 December 2023: £94.0 million).

Balance sheet

Net assets at 30 June 2024 decreased to £4,430.5 million (31 December 2023: £4,523.4 million), with net operating assets decreasing marginally by £21.1 million, 0.6%, to £3,802.6 million (31 December 2023: £3,823.7 million). Return on net operating assets** decreased to 10.9% (2 July 2023: 19.7%) due to the reduction in Group operating profit in the preceding twelve month period, and to a lesser extent by the increase in average net operating assets. Group net operating asset turn^†* was 0.89 times (2 July 2023: 1.07), reflecting the decreased revenue in the preceding twelve month period.

Land

Land as at 30 June 2024 decreased by £17.5 million in the period to £3,252.0 million, with land creditors decreasing to £494.4 million (31 December 2023: £516.1 million). Included within the gross land creditor balance is £40.9 million of UK land overage commitments (31 December 2023: £44.9 million). £263.9 million of the land creditors is expected to be paid within 12 months and £230.5 million thereafter (31 December 2023: £301.2 million and £214.9 million).

As at 30 June 2024, the UK short term landbank comprised 78,678 plots (31 December 2023: 80,323), with a net book value of £2.7 billion (31 December 2023: £2.8 billion). Short term owned land had a net book value of £2.7 billion (31 December 2023: £2.7 billion), representing 59,477 plots (31 December 2023: 61,190). The controlled short term landbank represented 19,201 plots (31 December 2023: 19,133).

The value of strategic owned land decreased to £230 million (31 December 2023: £242 million), representing 33,527 plots (31 December 2023: 34,319), with a further total controlled strategic pipeline of 106,102 plots (31 December 2023: 107,676). Total potential revenue in the owned and controlled landbank was £60 billion (31 December 2023: £61 billion).

Work in progress (WIP)

Total WIP investment, excluding part exchange and other, increased to £1,969.2 million (31 December 2023: £1,871.0 million), reflecting the weighting of completions to the second half of the year. Average WIP per UK outlet also increased as a result to £8.8 million (31 December 2023: £7.6 million).

Provisions and deferred tax

Provisions increased to £353.7 million (31 December 2023: £286.7 million) due to the £88.0 million increase in the cladding fire safety provision noted in the previous section, partly offset by utilisation of that provision (£13.6 million) as works have been carried out, as well as utilisation in other provisions which largely relate to remedial works on a limited number of sites around the Group.

The net deferred tax asset of £28.8 million (31 December 2023: £23.4 million) relates to the pension deficit and UK and Spanish provisions that are tax deductible when the expenditure is incurred.

Pensions

During 2023, the Group engaged with the Trustee of the Taylor Wimpey Pension Scheme (TWPS) on the triennial valuation of the Scheme with a reference date of 31 December 2022. The valuation was concluded in March 2024 and showed that the TWPS had a surplus of £55 million on its Technical Provisions funding basis and a funding level of 103%. As a result, no deficit contributions were required to be paid to the TWPS or to the escrow account established following the 2019 valuation. The escrow account will remain in place until 30 June 2028, at which point a funding test will be conducted and funds will either be paid to TWPS or returned to the Group.

In March 2024, the Group also reached agreement with the Trustee to restructure the Group's Pension Funding Partnership (PFP). The restructure retained the existing contributions payable until 2029 but replaced the payment of up to £100 million that may have been due in 2029, with seven annual payments of up to £12.5 million each from 2029 to 2035. These are only payable if the TWPS has a deficit on its Technical Provisions funding basis at the prior 31 December.

The Group continues to provide a contribution for Scheme expenses (£2.0 million per year) and also makes contributions via the Pension Funding Partnership (£5.1 million per year). Total Scheme contributions and expenses in the period were £6.1 million (H1 2023: £6.1 million) with no further amounts paid into the escrow account (H1 2023: nil). At 30 June 2024, the IAS 19 valuation of the Scheme was a surplus of £126.9 million (31 December 2023: £76.7 million). Due to the rules of the TWPS, any surplus cannot be recovered by the Group and therefore a deficit has been recognised on the balance sheet under IFRIC 14. The deficit is equal to the present value of the remaining committed payments and any forecasted distributions from the Pension Funding Partnership.

Retirement benefit obligations of £21.8 million at 30 June 2024 (31 December 2023: £26.5 million) comprise a defined benefit pension liability of £21.5 million (31 December 2023: £26.3 million) and a post-retirement healthcare liability of £0.3 million (31 December 2023: £0.2 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 £584.0 million at 30 June 2024 from £677.9 million at 31 December 2023, due to investment in WIP with completions being weighted to the second half of the year. Average net cash for the period was £582.4 million (2 July 2023: £633.4 million, 31 December 2023: £606.6 million).

Despite the decrease in completions in the period, management of land and WIP spend has resulted in a cash conversion^‡‡ of 90.3% of operating profit for the 12 months ending 30 June 2024 (12 months to 2 July 2023: 70.1%).

Net cash, combined with land creditors, resulted in an adjusted gearing^‡‡‡‡ of (2.0)% (31 December 2023: (3.6)%).

At 30 June 2024, our committed borrowing facilities were £685 million, of which the £600 million revolving credit facility was undrawn throughout the period. The weighted average maturity of the committed borrowing facilities at 30 June 2024 was 5.1 years (31 December 2023: 4.8 years), which has increased following the exercise of the option to extend the revolving credit facility by one year to 2029. The revolving credit facility includes three sustainability-linked performance measures to be assessed and verified annually, which can have a minor impact on the margin. The three performance measures are: reductions in scope 1 and 2 GHG emissions; reductions in waste; and reductions in carbon emissions of the homes we build. These measures align with our environment strategy to build a better world.

Dividends

On 10 May 2024, we returned £169.5 million to shareholders by way of a 2023 final ordinary dividend of 4.79 pence per share. The Board has declared that a 2024 interim dividend of 4.80 pence per share is to be paid on 15 November 2024 to shareholders on the register at the close of business on 11 October 2024. The dividend will be paid as a cash dividend, and shareholders have the option to reinvest all of their dividend under the Dividend Re-Investment Plan (DRIP), details of which are available on our website www.taylorwimpey.co.uk/corporate.

Going concern

The Directors remain of the view that the Group's financing arrangements and balance sheet strength provide both the necessary liquidity and covenant headroom to enable the Group to conduct its business for at least the next 12 months. Accordingly, the financial statements are prepared on a going concern basis. See note 1 of the financial statements for further details of the assessment performed.

Principal risks and uncertainties

As with any business, Taylor Wimpey's operational performance and ability to achieve its strategic objectives are subject to several potential risks and uncertainties. The Board takes a proactive approach to the management of these and regularly reviews both internal and external factors to identify and assess their impact on the business. These risks and uncertainties are then managed through effective mitigating controls and the development of action plans, with the continual monitoring of progress against agreed KPIs as an integral part of the business process and core activities. 

The Board assesses and monitors the Principal Risks of the business regularly. Set out in the Group's Annual Report and Accounts for the year ended 31 December 2023 are details of the Principal Risks and uncertainties for the Group and the key mitigating activities used to address them at that time.

Principal Risks

Whilst market uncertainty and affordability challenges have continued, we note some market stability, supported by good mortgage availability and sustained customer confidence. The housing commitments recently made by the new Government have the potential to create a positive future impact on the sector and on our Principal Risks, and we will closely monitor this over the coming period. Since the year end, we have determined that there has been a small increase in the inherent and residual risk profiles of our 'Mortgage Availability and Housing Demand' Principal Risk, driven by the identified risk on available funding within affordable housing providers, which is linked to this Principal Risk. As part of our risk management process, we continually monitor all relevant factors, to ensure the Principal Risks remain appropriate and to ensure that we implement any additional mitigations deemed necessary in order to effectively manage them within our risk tolerance levels.  

Except as referenced above, no other changes have been made to the Group's Principal Risks as reported at 31 December 2023. Further details of the Principal Risks and the mitigations in place are outlined on pages 74 to 77 of the 2023 Annual Report and Accounts, published in March 2024.

Emerging Risks

The Group faces a number of emerging risks which have the potential to be significant to the achievement of our strategy. Due to their nature, their impact cannot be fully understood but where possible we have put in place or are planning to put in place mitigations to reduce the level of potential risk. Emerging risks are considered as part of our established risk management process and reviewed and approved by the Board on a regular basis.

Cautionary note concerning forward looking statements

This announcement includes statements that are, or may be deemed to be, 'forward-looking statements'. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'plans', 'projects', 'anticipates' or 'expects'. Such statements are based on current expectations and assumptions and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results expressed or implied in these forward-looking statements.

Accordingly, there are or will be important factors that could cause Taylor Wimpey plc's actual results to differ materially from those indicated in these statements. Persons receiving this announcement should not place reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made and, except as required by applicable law or regulation, Taylor Wimpey plc undertakes no obligation to update these forward-looking statements. Nothing in this statement should be construed as a profit forecast.

Definitions

* Operating profit is defined as profit on ordinary activities before financing, exceptional items and tax, after share of results of joint ventures.

*^† Operating profit margin is defined as operating profit divided by revenue.

** Return on net operating assets (RONOA) is defined as rolling 12 months' operating profit divided by the average of the opening and closing net operating assets of the 12-month period, which is defined as net assets less net cash, excluding net taxation balances and accrued dividends.

^† Tangible net assets per share is defined as net assets before any accrued dividends excluding 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 from 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 16 of the financial statements.