REG - Taylor Wimpey PLC - Half year results 2022
03/08/2022 07:15
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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 £m 2,076.8 2,196.3 (5.4)% 4,284.9
Operating profit* £m 424.6 424.0 0.1% 828.6
Operating profit margin*(†) 20.4% 19.3% 1.1ppt 19.3%
Profit before tax and exceptional items £m 414.5 412.5 0.5% 804.6
Profit before tax £m 334.5 287.5 16.3% 679.6
Basic earnings per share pence 7.2 6.5 10.8% 15.3
Adjusted basic earnings per share pence(††) 9.0 9.3 (3.2)% 18.0
Tangible net asset value per share pence(†) 120.0 113.3 5.9% 118.1
Net cash £m (‡) 642.4 906.5 (29.1)% 837.0
Return on net operating assets** 24.4% 23.0% 1.4ppt 24.7%
(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.£905 million, with a range of £873 million
to £924 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
£163 million
· Completed a £150 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 £2,800 million as at 3 July 2022 (4 July 2021:
10,344 homes with a value of £2,608 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 £80 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 £218 million in local communities via planning obligations
(H1 2021: £184 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 £2,893 million (2021 equivalent period: £2,712
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%, however 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 £600 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
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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
(mailto: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
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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 £250 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
Land cost as % of ASP on approvals 20.8% 14.4% 6.4ppt 16.1%
Landbank years c.6.5 c.5.8 12.1% c.6.1
% of completions from strategically sourced land 47% 55% (8)ppt 50%
Operational excellence
Construction Quality Review (average score / 6) 4.77 4.65 2.6% 4.67
Average reportable items per inspection 0.28 0.25 0.03 0.26
Health and Safety Injury Incidence Rate (per 100,000 employees and 212 193 9.8% 214
contractors) rolling 12 months(†***)
Employee engagement (annual survey) - - - 91%
Sustainability
Customer satisfaction 8-week score 92% 92% - 92%
'Would you recommend?'
Customer satisfaction 9-month score 78% 80% (2)ppt 79%
'Would you recommend?'
Reduction in operational carbon emissions intensity (measured at end of year) - - - 13%
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 £337k (H1 2021:
£327k). Our total average selling price increased by 0.3% to £300k (H1 2021:
£299k), 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 £2,800 million (H1 2021: £2,608 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 £311k (H1 2021: £300k).
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
£245 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 £1,000 for employees
receiving an annual salary of up to £70,000.
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 £218 million to the local communities in which we build (H1
2021: £184 million) that provides vital local infrastructure, affordable
homes, public transport and education facilities. In addition, in H1 2022 we
donated and fundraised over £600,000 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 €391k (H1
2021: €415k), 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 £18.0
million (H1 2021: £4.4 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 £80.1 million (31 December 2021: £108.9 million).
Group financial review of operations
Income statement
Group revenue was £2,076.8 million in the first half of 2022 (H1 2021:
£2,196.3 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 £337k (H1 2021: £327k), 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 £300k (H1 2021: £299k) 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 £524.5 million (H1 2021: £522.3 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 £189.9 million (H1 2021: £224.6 million) includes
£80.0 million (H1 2021: £125.0 million) of exceptional costs relating to the
cladding fire safety provision, which is detailed below. Excluding these
exceptional costs the net operating expenses were £109.9 million (H1 2021:
£99.6 million), which was predominantly made up of administrative costs of
£111.3 million (H1 2021: £102.1 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
£334.6 million (H1 2021: £ 297.7 million), £414.6 million (H1 2021: £422.7
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 £46
million (4 July 2021: £88 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 £10.0 million (H1 2021: £1.3 million). When
including this in the profit on ordinary activities before net finance costs
the resulting operating profit was £424.6 million (H1 2021: £424.0 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 £125.0 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 £80.0 million being recorded as
an exceptional charge.
The net finance expense of £10.1 million (H1 2021: £11.5 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 £334.5 million (H1
2021: £287.5 million). The pre-exceptional tax charge was £91.4 million (H1
2021: £75.5 million). This represents an underlying tax rate of 22.1% (H1
2021: 18.3%) which includes a £1.7 million credit (H1 2021: £2.7 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 £17.6 million was recognised in respect of the exceptional
charge (H1 2021: £23.8 million). This resulted in a total tax charge of
£73.8 million (H1 2021: £51.7 million), a rate of 22.1% (H1 2021: 18.0%).
As a result, profit for the period was £260.7 million (H1 2021: £235.8
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 £39.4 million (0.9%) to £4,274.6
million (31 December 2021: £4,314.0 million), with net operating assets**
increasing by £146.2 million (4.2%) to £3,596.8 million (31 December 2021:
£3,450.6 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 £250.6 million in the period to £3,636.3
million as the Group continued to selectively purchase land across all
geographies. As a result, land creditors also increased to £843.7 million (31
December 2021: £806.4 million). Included within the gross land creditor
balance is £50.9 million of UK land overage commitments (31 December 2021:
£59.0 million). £377.4 million of the land creditors is expected to be paid
within 12 months and £466.3 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 £3.1 billion (31 December 2021: £2.9
billion). Short term owned land comprised £3.0 billion (31 December 2021:
£2.8 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 £299 million (31 December
2021: £298 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 £61 billion in the period (31 December 2021: £59
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 £6.9 million (31 December 2021: £6.5 million).
Provisions and deferred tax
Provisions increased to £327.6 million (31 December 2021: £245.1 million)
due primarily to the £80.0 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 £24.2 million (31 December 2021: £26.2
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 £20.0 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 £10.0 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 (£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 2021: £16.4 million) with no further
amounts paid into the escrow account (H1 2021: £5.0 million). Further
payments into escrow are subject to quarter-end funding tests and would amount
to an additional £5.0 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 £70 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 £211.6
million (31 December 2021: £149.9 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 £30.4 million at 3 July 2022 (31
December 2021: £37.3 million) comprise a defined benefit pension liability of
£30.1 million (31 December 2021: £37.0 million) and a post-retirement
healthcare liability of £0.3 million (31 December 2021: £0.3 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 £642.4 million at 3 July 2022 from £837.0 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 £660.0 million (4 July 2021: £709.9 million, 31 December
2021: £788.1 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 £637 million of which
£550 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 £160.9 million to shareholders by way of a 2021
final ordinary dividend of 4.44 pence per share. In addition, the Group
returned £150.0 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 year ended Half year ended Half year ended Half year ended Half year ended Half year ended Year Year Year
3 July
3 July
3 July 2022
4 July
4 July
4 July
2022
2022
2021
2021
2021 ended 31 December 2021 ended 31 December 2021 ended 31 December 2021
£ million Note Before Exceptional Total Before Exceptional Total Before Exceptional items Total
exceptional
exceptional
exceptional
items items
items items
items
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 7 9.0p 9.3p 18.0p
per share
Adjusted diluted earnings 7 8.9p 9.2p 18.0p
per share
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
£ 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
£ million Note 3 July 4 July 31 December 2021
(Audited)
2022 (Reviewed) 2021 (Reviewed)
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 July 2022 Share capital Share premium Own shares Other reserves Retained earnings Total
£ million
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 July 2021 Share capital Share premium Own shares Other reserves Retained earnings Total
£ million
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 December 2021 Share capital Share premium Own shares Other reserves Retained earnings Total
£ million
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
31 December 2021
July 2022
£ 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 £150 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
£1,279 million at 3 July 2022. The undrawn facilities of £550 million mature
in February 2025 with the drawn facilities of €100 million (£87m) 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 £80
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:
£ million Half year Half year Year ended 31 December 2021
ended 3 ended 4
July 2022
July 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 3 July 2022 Half year ended 4 July 2021 Year ended 31 December 2021
£ 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 396.6 18.0 414.6 418.3 4.4 422.7 808.6 14.6 823.2
finance costs and exceptional items
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
£ 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):
£ million Half year Half year Year ended 31 December 2021
ended 3 ended 4
July 2022
July 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.
Exceptional items: Half year Half year Year ended 31 December 2021
£ million ended 3 ended 4
July 2022
July 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 £125.0 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 £80.0 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 Year ended 31 December 2021
Finance income: ended 3 ended 4
July 2022
July 2021
£ million
Interest receivable 2.1 1.2 2.4
2.1 1.2 2.4
Finance costs: Half year Half year Year ended 31 December 2021
ended 3 ended 4
July 2022
July 2021
£ million
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:
£ million Half year Half year Year ended
ended 3
ended 4
31 December 2021
July 2022
July 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 Year ended
ended 3
ended 4
31 December 2021
July 2022
July 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:
£ million Half year Half year Year ended
ended 3
ended 4
31 December 2021
July 2022
July 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:
£ million Cash and cash equivalents Bank and Total
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
£ million Cash and cash equivalents Bank and Total
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
£ million Cash and cash equivalents Bank and Total
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 £637.0 million (31 December
2021: £634.0 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 £20.0 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
(£10.0 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 (£2.0
million per annum) and also makes contributions via the Pension Funding
Partnership (£5.1 million per annum).
At 3 July 2022 the IAS19 surplus was £211.6 million (31 December 2021:
£149.9 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 £30.1
million (31 December 2021: £37.0 million). In addition, there is as a
post-retirement healthcare liability of £0.3 million (31 December 2021: £0.3
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 £10.0 million held in the escrow
account (31 December 2021: £10.0 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
£ million 3 July 4 July 31 December 2021 3 July 4 July 31 December 2021
2022 2021 2022 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 €100 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 £49.4 million (31 December 2021: £54.1
million) of non-financial assets.
Current and non-current trade and other payables includes non-financial
liabilities of £208.6 million (31 December 2021: £181.5 million).
The Group has designated a financial liability in the sum of €79.0 million
(31 December 2021: €79.0 million) as a net investment hedge, equating to
£68.7 million (31 December 2021: £66.4 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
£ million Cladding 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
£ million 3 July 4 July 31 December 2021
2022
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
£10.0 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 £125.0 million provision to fund cladding fire
safety improvements and in 2022 recognised a further £80.0 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 £130.0 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 £151.3 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
£ million Half year ended 3 July 2022 Half year ended 4 Year ended 31 December 2021
July 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.£163 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 £7.6 million to 3 July
2022 (4 July 2021: £6.3 million), which was composed of £7.5 million in
relation to equity settled schemes and £0.1 million in relation to cash
settled elements (4 July 2021: £6.2 million and £0.1 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 Year ended
ended 3
ended 4
31 December 2021
July 2022
July 2021
Profit on ordinary activities before net finance costs (£m) 334.6 297.7 698.2
Adjusted for:
Share of results of joint ventures (£m) 10.0 1.3 5.4
Exceptional items (£m) 80.0 125.0 125.0
Operating profit (£m) 424.6 424.0 828.6
Revenue (£m) 2,076.8 2,196.3 4,284.9
Operating margin 20.4% 19.3% 19.3%
Rolling 12-month operating profit* (£m) 829.2 740.4 828.6
* Operating profit for the 6-month period ended 31 December 2020: Profit
before interest and tax: £306.7m; Share of results of joint ventures: £9.7m;
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.
£million 3 July 4 July 31 December 2021 31 December 2020
2022 2021 28 June
2020
Basic net assets (£m) 4,274.6 4,140.2 4,314.0 4,016.8 3,755.2
Adjusted for:
Cash (£m) (729.4) (1,005.6) (921.0) (823.0) (601.8)
Borrowings (£m) 87.0 99.1 84.0 103.6 104.5
Net taxation (£m) (35.4) (35.2) (26.4) (32.6) (14.1)
Accrued dividends (£m) - - - - -
Net operating assets (£m) 3,596.8 3,198.5 3,450.6 3,264.8 3,243.8
Average basic net assets (£m) 4,207.4 3,947.7 4,165.4
Average net operating assets (£m) 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.
3 July 2022 4 July 2021 31 December 2021
Rolling 12-month operating profit (£m) 829.2 740.4 828.6
Average net operating assets (£m) 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.
3 July 2022 4 July 2021 31 December 2021
Rolling 12-month revenue* (£m) 4,165.4 4,231.9 4,284.9
Average net operating assets (£m) 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: £2,035.6 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.
3 July 2022 4 July 2021 31 December 2021
Basic net assets (£m) 4,274.6 4,140.2 4,314.0
Adjusted for:
Accrued dividends (£m) - - -
Intangible assets (£m) (5.0) (7.8) (6.6)
Tangible net assets (£m) 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.
3 July 2022 4 July 2021 31 December 2021
Rolling 12-month cash generated by operations* (£m) 375.1 715.6 574.7
Rolling 12-month operating profit (£m) 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:
£310.3m.
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.
3 July 2022 4 July 2021 31 December 2021
Cash (£m) 729.4 1,005.6 921.0
Loans (£m) (87.0) (99.1) (84.0)
Net cash (£m) 642.4 906.5 837.0
Land creditors (£m) (843.7) (843.1) (806.4)
Adjusted net (debt)/cash (£m) (201.3) 63.4 30.6
Basic net assets (£m) 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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