28 February 2024
Taylor Wimpey plc
Full year results for the year ended 31 December
2023
Delivering on expectations and well positioned for future
growth
Jennie Daly, Chief Executive,
commented:
"We delivered a good full year
performance in line with expectations despite a challenging market,
benefiting from our sharp operational focus, the quality of our
homes and locations and a continued proactive sales effort. I would
like to thank all our teams and supply chain partners for their
ongoing hard work and commitment.
It is still early in the year and
the macroeconomic backdrop remains uncertain, however it is
encouraging to see some signs of improvement in the market, with
reduced mortgage rates positively impacting affordability and
customer confidence.
While the planning environment
remains challenging, we have a high-quality, well-invested landbank
and a strong financial position which underpins our ability to
provide investors with a reliable income stream via our
differentiated Ordinary Dividend Policy. Looking ahead we are
well-positioned in an attractive market, with significant
underlying demand for our quality homes and are poised for growth
from 2025, assuming supportive market conditions."
Group financial highlights:
|
2023
|
2022
|
Change
|
Revenue £m
|
3,514.5
|
4,419.9
|
(20.5)%
|
Operating profit* £m
|
470.2
|
923.4
|
(49.1)%
|
Operating profit
margin*† %
|
13.4%
|
20.9%
|
(7.5)ppt
|
Profit before tax £m
|
473.8
|
827.9
|
(42.8)%
|
Profit before tax and exceptional
items £m
|
473.8
|
907.9
|
(47.8)%
|
Profit for the year £m
|
349.0
|
643.6
|
(45.8)%
|
Basic earnings per share
pence
|
9.9
|
18.1
|
(45.3)%
|
Adjusted basic earnings per share
pence††
|
9.9
|
19.8
|
(50.0)%
|
Ordinary dividend per share
pence1
|
9.58
|
9.40
|
1.9%
|
Tangible net assets value per
share pence†
|
127.1
|
126.5
|
0.5%
|
Net cash ‡ £m
|
677.9
|
863.8
|
(21.5)%
|
1.
2023 Final ordinary dividend of 4.79 pence per
share, subject to shareholder approval and 2023 Interim dividend of
4.79 pence per share.
N.B. Definitions can be found at
the end of the Group financial review
Operational highlights:
·
Group completions (including JVs) of 10,848
(2022: 14,154)
·
UK net private sales rate for the year of 0.62
homes per outlet per week (2022: 0.68)
·
UK average selling prices on private completions
up 5.1% to £370k (2022: £352k) with the overall average selling
price up 3.5% to £324k (2022: £313k)
·
Aligned build rates to demand changes and
delivered annualised cost savings of £19 million, as announced in
January 2023 to improve operating efficiency
·
Opened 47 new outlets and ended the year with 237
UK outlets (31 December 2022: 259)
·
Established a new timber frame facility in
Peterborough to drive efficiencies and enhance security of
supply
Responsible business and a leader in
sustainability:
·
Rated five-star for customer service in the Home
Builders Federation (HBF) survey
·
Continued to improve build quality with a
Construction Quality Review score of 4.89 (2022: 4.81)
·
Continued focus on health and safety with Annual
Injury Incidence Rate (AIIR) per 100,000 employees and contractors
reducing to 151 (2022: 166)
·
Delivered the UK's first zero carbon ready homes
scheme on a live development site in Sudbury
·
Overall employee engagement score of 93% (2022:
93%), with a 69% response rate
·
Contributed £405 million to our local communities
across the UK (2022: £455 million)
·
Reduced absolute operational carbon emissions by
35% from a 2019 baseline
·
Published a Net Zero Transition Plan and our net
zero targets have been independently validated by the Science Based
Targets initiative
·
Recognition of ESG progress: included in the Dow
Jones Sustainability Europe Index and S&P Sustainability
Yearbook, The Financial Times Europe's Climate Leaders list, rated
A- by CDP Climate Change, AAA rating from MSCI
Current trading and
outlook
Whilst still early in the year and
at the beginning of the Spring selling season, current trading
shows some encouraging signs of improvement with reduced mortgage
rates positively impacting affordability and confidence in our
customer base.
The year-to-date net private sales
rate (w/e 25 February 2024) is 0.67 per outlet per week (2023
equivalent period: 0.62). The cancellation rate is 12% (2023
equivalent period: 17%) and the level of down valuations remains
low.
Appointments and overall customer
interest in our homes remain at good levels, supported by our
quality product, site locations and focused sales and marketing
efforts. However, conversions from enquiry to reservation continue
to take longer when compared to pre Q2 2023.
As previously noted, we came into
2024 with a lower order book against a strong comparator. As at 25
February 2024, our total order book excluding joint ventures was
£1,949 million (2023 equivalent period: £2,154 million), comprising
7,402 homes (2023 equivalent period: 8,078 homes).
Accordingly, and given prevailing
market conditions, we remain focused on optimising value and
currently expect 2024 UK completions (excluding JVs) to be in the
range of 9.5k to 10k homes, with completions weighted 45 / 55% in
favour of the second half of the year. First half operating profit
margin will reflect slightly lower pricing in the order book, build
cost inflation embedded in work in progress of around 4% and
investment in IT and timber frame to drive operational
efficiencies.
The prevailing underlying
annualised build cost inflation on new tenders is c.1% and reduces
to zero when taking into account the savings arising from our value
improvement programme.
Despite significantly reduced land
approvals over the last 18 months, our landbank as at 31 December
2023, remains very strong at c.80k plots (2022: c.83k plots) and is
underpinned by the supply of our industry leading strategic land
pipeline. We will remain selective in our approach to land but will
be active where we see opportunities that balance risk, reward and
returns to create shareholder value. We have approved an additional
c.1k plots in the year-to-date as we have crystallised deals that
our teams have been working on for some time.
While the constraining impact of
planning on site openings is unlikely to abate in the near-term for
the sector, our strong landbank and highly experienced teams who
take a proactive approach to generating high-quality planning
applications, ensure we are well positioned for growth from 2025,
assuming supportive market conditions. As a business in a strong
financial position, we also continue to provide a reliable income
stream to our investors via our differentiated Ordinary Dividend
Policy to return 7.5% of net assets per annum, or at least £250
million annually, throughout the cycle.
Looking ahead, Taylor Wimpey is a
strong and resilient business with a strategy to manage the cycle
over the longer term. We operate in an attractive market, with a
significant underlying demand for the quality homes we build. We
have a clear strategy focused on driving value and operational
excellence while investing in the long term success and
sustainability of the business.
-Ends-
A presentation to analysts will be
hosted by Chief Executive Jennie Daly and Group Finance Director
Chris Carney, at 9am on Wednesday 28 February 2024. This
presentation will be webcast live on our website:
www.taylorwimpey.co.uk/corporate
An on-demand version of the
webcast will be available on our website in the afternoon of 28
February 2024.
For further information please
contact:
Taylor Wimpey plc
Tel: +44 (0) 1494 885656
Jennie Daly, Chief
Executive
Chris Carney, Group Finance
Director
Debbie Archibald, Investor
Relations
Andrew McGeary, Investor
Relations
FGS Global
TaylorWimpey@fgsglobal.com
Faeth Birch
Anjali Unnikrishnan
James Gray
Notes to editors:
Taylor Wimpey plc is a
customer-focused homebuilder operating at a local level from 22
regional businesses across the UK. We also have operations in
Spain. Our purpose is to deliver great homes and create thriving
communities.
For further information please
visit the Group's website: www.taylorwimpey.co.uk/corporate
Follow our company page on LinkedIn,
Taylor Wimpey plc
2023 performance overview
2023 saw UK total housing
transactions reduce substantially due to higher mortgage costs,
cost of living pressures and lower consumer confidence. Trading in
the first quarter of 2023 was encouraging as mortgage rates eased
back from the peak of 2022. However, higher than expected inflation
in the second quarter led to rate increases culminating in the base
rate rising to 5.25%, well above initial market expectations.
Whilst remaining high compared to recent years, mortgage rates
started to fall towards the end of the year.
During 2023, we maintained strong
operational focus and delivered a good financial performance
against a challenging backdrop. Total Group completions (incl. JVs)
were 10,848 (2022: 14,154). UK home completions (incl. JVs) were
10,438 (2022: 13,773), which included 2,388 affordable homes (2022:
2,920) equating to 23% of total completions (2022: 21%). UK average
selling prices on private completions increased by 5.1% to £370k
(2022: £352k) with the overall average selling price increasing by
3.5% to £324k (2022: £313k).
Group operating profit of £470.2
million, was at the top end of our guidance range. Operating profit
margin of 13.4% (2022: 20.9%), reflects the pressure from rising
build costs, at 8.5% year on year, that were not fully offset by
price growth, as well as the impact of overhead costs being
recovered across fewer completions.
Profit for the year was £349.0
million (2022: £643.6 million). We continue to be highly cash
generative with year end net cash of £677.9 million (2022: £863.8
million), after returning £337.9 million to investors by way of
dividend.
We opened 47 new outlets in 2023
and ended the year with 237 UK outlets (31 December 2022:
259).
Competition and Markets Authority (CMA) housebuilding market
study
Taylor Wimpey welcomes the CMA's
final report, published on 26 February 2024, from its housebuilding
market study with its focus on improving the planning system,
adoption of amenities and outcomes for house buyers. Taylor
Wimpey notes the new investigation opened by the CMA under the
Competition Act 1998, and we will cooperate fully in relation to
this.
Our purpose
Our purpose is to build great
homes and create thriving communities. We believe having a shared
purpose across our whole business and value chain is critical and
you can see this in action every day on our sites and in our local
businesses. Our purpose is not only vital for our customers but
also has far reaching societal impacts of which we are extremely
proud.
We build much needed homes and
infrastructure, create new and enhance existing communities and
strive to make a significant social and economic contribution to
local economies across the UK. New housing can contribute to
improved economic and social mobility, community cohesion, better
health outcomes and increased educational attainment.
As a national builder operating at
a local level throughout the UK, we strive to be a valuable partner
to the communities we work in and welcome the responsibility that
goes with this. We work hand in hand with local residents and other
businesses to demonstrate the value of what we bring, hear their
aspirations and concerns and, where we can, fulfil and address
these. A key part of this is a commitment to deliver on our
promises and to address the things that have not gone as hoped,
promptly and in the right way.
Our strategy: Building for the future
We operate in a cyclical industry,
therefore the ability to navigate changing economic conditions is
central to our success and we are pleased that we have been able to
perform strongly in a weaker market. Our strategy is to build a
stronger and more resilient business and deliver superior returns.
This has been a consistent strategy for the Group over several
years as we seek to manage the business through the cycle for the
benefit of all stakeholders. Our strategy is centred on four
strategic cornerstones: land, operational excellence,
sustainability and capital allocation. These strategic cornerstones
guide our principles of working but allow us to be flexible and
agile even during challenging and volatile market
conditions.
This approach enables us to
optimise value for our stakeholders and, through our differentiated
Ordinary Dividend Policy, to provide a reliable income stream for
our investors through the cycle.
Given challenging market
conditions in 2023, our highly experienced teams focused on driving
value through all the levers available to us. Cost discipline was a
core focus given the inflationary environment, and we took
appropriate actions across all areas of our operations. In
particular, we tightened controls across our work in progress and
restricted all discretionary spend, including
recruitment.
In early 2023, we delivered
annualised cost savings of £19 million with a one off cost to
achieve these of £8 million. We conducted a detailed review to
ensure our customer offering remains competitive which targeted
cost savings. We also significantly reduced land approvals in 2023.
However, with our sector leading strategic land pipeline and the
expertise of our teams, we benefitted from a high level of
strategic conversion in the year at c.8k plots (2022: c.4k plots).
Our strategic land pipeline is a key competitive advantage in a
challenging planning environment and, accordingly, our short term
landbank remains strong at c.80k plots (2022: c.83k
plots).
While much of our focus in 2023
was on protecting value, we have continued to invest in areas that
matter for the long term success and sustainability of the
business.
During 2023, we opened our own
timber frame facility located adjacent to our logistics function in
Peterborough, to drive efficiencies, environmental benefits and
enhance security of supply. In combination with our existing
suppliers, our own facility will help us in our goal to increase
timber frame usage to 30% of our production by 2030.
In addition, we launched our zero
carbon ready prototype homes trial in Sudbury, the first trial of
its kind on a live development site testing low carbon
technologies.
Continuous business improvement
remains fundamental to how we protect stakeholder value against a
backdrop of increasing regulatory and economic demands. This
includes componentisation, standardisation and modern methods of
construction such as timber frame.
We are also ensuring a
positive approach to continued innovation and R&D and we are
pushing ourselves to be more ambitious than we have
been historically in some areas, such as IT which will benefit
the business in the longer term.
As we look forward in 2024 and
beyond, we will continue to prioritise value over volume. Driving
increased operating efficiency, cost savings and value improvement
will remain a key focus for our business, but we will also continue
to invest in areas that matter for the long term success and
sustainability of the business to ensure we are poised for growth
from 2025, assuming a supportive market.
Commitment to sustainability
Environment and net zero by 2045
We published our Net Zero
Transition Plan in early 2023, with our goal to be net zero aligned
in our operations by 2035 and to reach net zero carbon emissions
across our value chain by 2045, ahead of the UK Government's
target. Since then our net zero targets have been independently
validated by the Science Based Targets initiative (SBTi), only the
second housebuilder to achieve this.
We have achieved certification to
the Carbon Trust's Route to Net Zero Standard, Advancing level, one
of the first organisations to gain this new standard and the only
housebuilder. A scope 1 and 2 carbon reduction measure was included
in the incentive plans for senior leadership and regional
management in 2023 to support progress on our near term carbon
reduction targets.
We have been included in the Dow
Jones Sustainability Europe Index and the S&P Sustainability
Yearbook 2024, rated A- by CDP Climate Change and received a AAA
rating from MSCI. We are a member of Next
Generation, the sustainability benchmark for UK housebuilders, and
received a gold rating in 2023.
Cladding fire safety
It is our long held view that
leaseholders should not have to pay for the cost of remediation and
our programme started several years prior to signing the Government
Building Safety pledge. We voluntarily signed the Government's
Building Safety Pledge for Developers in April 2022, the Welsh
Government's Pact in September 2022, and the commitment letter to
the Scottish Accord in June 2023.
In total, we have made provisions
amounting to £245 million, which remains our best estimate of the
cost of our commitments to bring affected buildings in line with
the standards as set out in the agreements reached with the
governments.
We have identified 214 buildings
that are within the scope of our provisions, around half of which
we have either remediated, started work on or expect to commence
work on this year. To date, we have fully completed 38 buildings
with another nine remediated and awaiting paperwork. A further 19
buildings had works underway at the end of 2023.
We have a dedicated team in place
to manage our remediation programme, progress our work on these
buildings as quickly as possible and to ensure high-quality
delivery. It is expected, given the size and nature of the
projects, the multiple stakeholders involved and the availability
of appropriately qualified consultants and contractors, that work
will take around five years to complete in its entirety.
Capital allocation
framework
Our priority is to maintain a
strong balance sheet with low adjusted gearing. We use cash
generated by the business to fund our investment in land and work
in progress to support and drive future growth. Thereafter, our aim
is to provide an attractive and reliable income stream to our
shareholders throughout the cycle, including during a normal
downturn, via an ordinary cash dividend linked to group net
assets.
In line with our Ordinary Dividend
Policy to return 7.5% of net assets, or at least £250 million
annually, we have today announced a final ordinary dividend payment
of 4.79 pence per share, which is subject to shareholder approval
at the Annual General Meeting. With the 2023 interim dividend
payment of 4.79 pence per share, the total ordinary dividend for
the year is 9.58 pence per share or approximately £339
million.
Operational
review
Our operational review
focuses on the UK (unless stated otherwise) as
the majority of metrics are not comparable in our Spanish business.
There is a short summary of the Spanish business in the
Group financial review. The financial review is presented at
Group level, which includes Spain, unless otherwise indicated.
Joint ventures are excluded from the operational review and are
separated out in the Group financial review, unless stated
otherwise.
Our Key Performance Indicators (KPIs)
Our key performance indicators
align to our strategic cornerstones.
UK
|
2023
|
2022
|
|
Change
|
Land
|
|
|
|
|
Land cost as % of ASP on
approvals
|
15.2%
|
19.0%
|
|
(3.8)ppt
|
Landbank years
|
c.7.7
|
c.6.0
|
|
28.3%
|
% of completions from
strategically sourced land
|
45%
|
52%
|
|
(7.0)
ppt
|
Operational excellence
|
|
|
|
|
Construction Quality Review
(average score / 6)
|
4.89
|
4.81
|
|
1.7%
|
Average reportable items per
inspection
|
0.28
|
0.32
|
|
(0.04)
|
Health and Safety Injury Incidence
Rate (per 100,000 employees and contractors) rolling 12
months†***
|
151
|
166
|
|
(9.0)%
|
Employee engagement (annual
survey)
|
93%
|
93%
|
|
-
|
Sustainability
|
|
|
|
|
Customer satisfaction 8-week
score
'Would you recommend?'
|
92%
|
90%
|
|
2.0
ppt
|
Customer satisfaction 9-month
score
'Would you recommend?'
|
77%
|
78%
|
|
(1.0)
ppt
|
Reduction in operational carbon
emissions intensity against our 2019 baseline
|
5%
|
15%
|
|
(10.0)
ppt
|
N.B. The 8-week 'would you
recommend' score for 2023 relates to customers who legally
completed between October 2022 and September 2023, with the
comparator relating to the same period 12 months prior. The 9-month
'would you recommend' score for 2023 relates to customers who
legally completed between October 2021 and September 2022, with the
comparator relating to the same period 12 months prior.
2023 sales, completions and pricing
Total Group completions (including
joint ventures) were 10,848 (2022: 14,154). UK home completions
(including joint ventures) were 10,438 (2022: 13,773), which
included 2,388 affordable homes (2022: 2,920) equating to 23% of
total completions (2022: 21%). Completions from joint ventures in
the year were 82 (2022: 222). Our net private reservation rate for
2023 was 0.62 homes per outlet per week (2022: 0.68). The
cancellation rate for the full year was 18% (2022: 18%).
UK average selling prices on
private completions increased by 5.1% to £370k (2022: £352k) with
the overall average selling price increasing by 3.5% to £324k
(2022: £313k).
We estimate that market-led house
price growth for our regional mix was c.1% for completions in the
12 months to 31 December 2023 (2022: c.8%).
Underlying build cost inflation in
2023 was c.8.5% (2022: c.8%). At the start of 2024, prevailing
build cost inflation is running at around 1% and reduces to zero
when taking into account the savings arising from our value
improvement programme.
During 2023, we continued to focus
on using the levers within our control to reduce cost including
retendering of site phases and a full review of specification to
identify savings without impacting health and safety, quality or
customer satisfaction.
We ended the year with an order
book valued at £1,772 million (31 December 2022: £1,941 million),
excluding joint ventures, which represents 6,999 homes (31 December
2022: 7,499 homes). In the UK, we traded from an average of 238
outlets in 2023 (2022: 232). We ended the year with 237 outlets (31
December 2022: 259).
Land
We have a strong short term
landbank of c.80k plots as at 31 December 2023 (31 December 2022:
c.83k). During 2023 we acquired 1,572 plots (2022: 7,716) for the
short term landbank. The average cost of land as a proportion of
average selling price within the short term owned landbank remains
low at 13.7% (2022: 14.0%).
The average selling price in the
short term owned landbank in 2023 increased by 1.6% to £327k (2022:
£322k). Our focus is on progressing planning in our short term
landbank to open new outlets and secure delivery from our strategic
land pipeline, transferring assets to the operational
business.
As at 31 December 2023, we were
building on, or due to start in the first quarter of 2024, on 99.6%
of sites with implementable planning.
Our strong land position has
benefitted from conversions from our strategic pipeline. We saw
fewer opportunities to buy land at attractive valuations in 2023
and accordingly were highly selective in land acquisition with
approvals at c.3k plots (2022: c.7k). The quality of our strategic
pipeline of c.142k potential plots (31 December 2022: c.144k),
continues to provide differentiation offering optionality and
flexibility for the foreseeable future.
Our success in developing our
strong strategic pipeline means that 54% of our short term landbank
has originated from this source (2022: 50%). In the year, 45% of
our completions were sourced from the strategic pipeline (2022:
52%).
During 2023, we converted a
further c.8k plots from the strategic pipeline to the short term
landbank (2022: c.4k plots) and added a net c.6k new potential
plots to the strategic pipeline (2022: c.3k).
Despite continuing delays in
plan-making across the country, our high-quality strategic land
pipeline remains a key strength, both as an important input to the
short term landbank and in providing an enhanced supply of land
with greater control over the planning permissions we
receive.
Central and local government
During 2024, the UK will be
holding local and mayoral elections across the country, in addition
to a General Election expected in the second half of the year. We
welcome the recognition from both main political parties of the
importance of housebuilding to economic growth and prosperity in
the UK and continue to engage with the full range of political
stakeholders at every level of the business.
The planning environment continues
to be very challenging with delays and resource pressures impacting
housing land supply. Amendments to the National Planning Policy
Framework (NPPF) announced by the Government in December include
positive measures to support improved quality of design and
placemaking. However, other changes, including softening of the
requirement to meet local planning targets, the relaxation of the
soundness test for plan-making and the removal of the need for
planning authorities to maintain a five-year supply of deliverable
housing sites, could result in further delays and a shortfall in
the supply of sites.
We continue to engage with
industry, water authorities and central and local government on the
issue of Nutrient Neutrality. We have established our internal
Nutrient Working Group to help our regional businesses develop
effective responses to this issue.
During 2023, Biodiversity Net Gain
(BNG) requirements in England were published and came into effect
in February 2024. We have published guidance and have held training
sessions for our regional businesses to support them to manage the
risks, costs and opportunities associated with the requirements.
BNG was effectively introduced via changes to the NPPF in 2018 so
we have factored the associated costs into our land acquisition
since that time.
Customers
Customer service was a major focus
for 2023 and we are delighted to have increased our Home Builders
Federation (HBF) 8-week 'would you recommend?' score to 92% (2022:
90%) and retained our five star rating. However, we have not yet
seen the same increase in our 9-month score which gives us insight
into how customers feel about the homes and places we build over
the longer term. Our score for 2023 was 77% (2022: 78%) and we will
be prioritising improvements in this area in 2024.
We encourage customers to leave
reviews on Trustpilot. At the end of 2023, with 8,950 reviews,
we had a 4 out of 5 star rating (end of 2022: 4 out of 5) with
a trust score of 3.9 out of 5 (2022: 3.9 out of 5).
We have prioritised
working with all our partners to deliver
excellent customer service and leverage our customer database
capabilities, in order to build a strong order book. In a more challenging market, understanding our customers is
more important than ever.
We are using the data insights
provided by our fully integrated customer relationship management
system to better support our customers and align our marketing
strategy. Our systems enable us to identify potential new leads and
be proactive with our current customers, with visibility of key
customer and plot dates as well as enabling us to pre-empt
potential issues.
Build quality
We continue to see improvements in
our build quality as measured by the NHBC CQR score, which measures
build quality at key build stages. In 2023, we scored an average of
4.89 (2022: 4.81) from a possible score of six. This compares with
an industry benchmark group average score of 4.67.
We aim to further improve this by
ensuring our quality assurance processes are embedded at every
stage of the build. We clearly communicate our quality standards to
subcontractors and invest in training, process improvements and
regular inspections throughout the build process to ensure
consistently high standards and prevent quality issues from
occurring.
Placemaking
Good placemaking ensures our teams
plan, design and deliver schemes that become successful and
sustainable new communities, where our customers can enjoy a good
quality of life.
Access to transport and local
infrastructure and facilities contributes to the success of our
schemes. In 2023, we contributed £405 million to local communities
in which we build across the UK via planning obligations (2022:
£455 million). This funded a range of infrastructure and facilities including affordable housing,
green space, community facilities, commercial and leisure
facilities, transport infrastructure, heritage buildings and public
art. We aim to install infrastructure at an early stage of the
build process to enhance our schemes and help the new community
become established quickly. We also invest
in public and community transport, walkways and cycle paths. In
2023, 70% of our UK completions were within 500 metres of a public
transport node and 90% were within 1,000 metres.
Employees
Health and safety
Health and safety remains our
number one priority in all markets and it is the first topic
covered in every Board, Group Management Team (GMT) and regional
management team meeting across the country. Building sites are
inherently dangerous places and so it is essential that strict
safety protocols are identified, embedded, monitored and enforced
and a clear, consistent and disciplined approach to safety is
paramount throughout the organisation. 98% of our employees agree
that we take health and safety seriously (2022: 98%).
Our Annual Injury Incidence Rate
(AIIR) for reportable injuries per 100,000 employees and
contractors was 151 in 2023 (2022: 166), remaining well below both
the HBF Home Builder Average AIIR of 241 and the Health and Safety
Executive construction industry average AIIR of 296.
However, our commitment goes
beyond industry benchmarks and we will continue to seek to improve
this. Around 37% of accidents are slips, trips and falls. Our AIIR
for major injuries per 100,000 employees and contractors was 65 in
2023 (2022: 68).
Culture and people
We have a strong culture at Taylor
Wimpey which we and our employees are proud of. This is
demonstrated in our latest employee survey with an overall employee
engagement score of 93% (2022: 93%), with a 69% response rate. Our
overarching value is 'do the right thing'. Our Taylor Wimpey
Inspire Awards recognise our employees who go above and
beyond.
We are proud of how committed our
employees are to the long term success of the Company and we seek
feedback from and engagement with all employees. This includes
regular email updates from the Chief Executive as well as updates
from the GMT and other senior management.
It is important that management is
accessible and visible so in addition to regular visits to the
regional businesses we operate a National Employee Forum, National
Young Person's Forum and Local Employee Forums in our regional
businesses, where employee representatives are able to feedback to
and ask questions of members of the Board and other senior
management directly.
During 2023, our voluntary
employee turnover rate was 14.2% (2022: 17.7%).
We are pleased to report that
Taylor Wimpey was once again recognised in the NHBC Pride in the
Job Awards, achieving a total of 51 Quality Awards (2022: 62) and
13 Seal of Excellence Awards (2022: 15).
Skills
During 2023, we directly employed,
on average, 4,618 people across the UK (2022: 5,140) and provided
opportunities for, on average, a further 9.3k operatives
(2022:11.1k) on our sites.
We recognise that building the
skills of our current and future workforce is essential to address
current and potential future skills gaps in our industry and
subcontractor base. We continue to work closely with our partners,
peer companies, industry associations and educational organisations
to identify and address skills gaps and upskill our workforce and
also share best practice within the industry bodies.
In 2023, we led a collaboration
with five other major housebuilders to identify tangible ways in
which we could address the skills shortage facing our sector,
leading to the creation of a Sector Skills Plan.
We are proud of our approach to
talent development at Taylor Wimpey. 45% of our regional management
teams have been promoted internally and 62% of Site Managers were
promoted from within the business.
We support our regional businesses
to develop local links with colleges, universities and schools and
encourage a diverse range of candidates to consider careers in
housebuilding. In 2023, we strengthened our schools outreach
programme working with a specialist company and developed our
career convertors programme for ex-service personnel.
Equality, diversity and inclusion
(ED&I)
We remain committed to creating a
more diverse workforce and will publish our second Diversity and
Inclusion Report in 2024. We have set quantitative targets to
improve gender balance at all levels and to increase ethnic
minority representation. Our targets are aspirational, but we
believe that it is important to be ambitious and hold ourselves to
account.
Our aim is to create a workplace
where colleagues feel championed and supported regardless of their
background and identity. By truly embracing our colleagues'
diverse perspectives we can deepen our understanding of our
customers and stakeholders, enhance innovation and creative
thinking and continue to drive the business forward and achieve
success.
Investment in ED&I is a long
term commitment for Taylor Wimpey, supported by our Board, and all
levels of our leadership. Alongside our successes, we remain
focused on the areas we still need to progress.
Our workforce is not yet
reflective of the UK's ethnic diversity. As at 31 December 2023,
5.7% of our employees were from a Black, Asian or other
minority ethnic background (2022: 5.0%) and 3.7% at regional
business management level (2022: 2.5%).
We had a gender mix of 66%
male (2022: 67%) and 34% female (2022: 33%) across the Company. Our
GMT was 33% female (2022: 38%) and our Board of Directors was 44%
female (2022: 44%). Women in the GMT and direct reports to GMT rose
to 28% (2022: 21%). The proportion of women in management roles
across the Group rose to 38% from 30% in 2022.
We have more work to do in our
regional business management teams to address gender balance. Women
made up 27% of these roles in 2023 (2022: 31%). Whilst the
employment freeze impacted our efforts in terms of graduate and
trainee manager recruitment, our pipeline is strong, with females
accounting for 62% of our graduate programme
(2022: 64%).
In line with the Gender Pay Gap
regulations, we calculated our 2023 gender pay gap based on
data at the 'snapshot date' of 5 April 2023 and bonuses paid over
the preceding 12 months. The calculations cover all staff
employed by Taylor Wimpey UK Limited as at 5 April
2023. Our latest data shows that our mean gender pay gap
was 6% in favour of men (2022: 2% in favour of women) and
median pay gap 2% in favour of men (2022: 1% in favour of
men).
The shift in our pay gap this year
reflects a number of factors, including a reduction in the overall
size of our workforce, more highly paid women than men leaving the
business, and a reduction in commission due to market conditions
which affects our sales function, which is 83% women. We will
continue to focus on our programmes to increase female
representation across different functions and levels of the
business which will reduce the pay gap over time. More information
is available online in our Diversity and Inclusion
Report.
Charity partnerships
During 2023, we continued our
partnership with our national charities as well as local charity
partners across the UK. Our national partners are Youth Adventure
Trust, Every Youth (previously End Youth Homelessness), Crisis,
Magic Breakfast, and St Mungo's. In total, during 2023, we donated
and fundraised c.£1 million for registered charities (2022: c.£1
million). This included supporting St Mungo's Construction Skills
Training Centres to help people recovering from homelessness to
gain new skills and find employment in the construction
industry.
Sustainability
We recognise the importance of
sustainability which is integrated throughout our business and has
been incorporated as one of our four key cornerstones of strategy.
Our approach encompasses environmental, social, economic and
governance aspects.
Our Environment Strategy, Building
a Better World, is our response to the environmental crisis and the
physical and transitional risks posed by climate change. It sets
out how we will play our part in creating a greener, healthier
future for our customers, colleagues and communities, with
ambitious targets up to 2030 focusing on climate change, increasing
nature on our developments, cutting waste and improving resource
efficiency.
Environment Strategy performance update
Our strategic objectives
|
Performance update
|
Climate change
Achieve our science-based carbon
reduction target:
- Reduce operational carbon
emissions intensity by 36% by 2025 from a 2019 baseline
- Reduce scope 3 emissions by
52.8% per 100 sqm of completed floor area from a 2019 base year
(based on a reduction of 46.2% in absolute emissions against the
base year). (New Target)
|
Since 2019, our operational
emissions intensity has decreased by 5% and absolute operational
emissions have fallen by 35%.
We need to re-baseline our scope 3
footprint to reflect improvements to our measurement methodology.
Once this is complete we will report progress against our scope 3
target. We were not able to complete this
process in 2023 but plan to do so in 2024.
|
Nature
Increase natural habitats by 10%
on new sites from 2023 and include our priority wildlife
enhancements from 2021.
|
We have prepared our teams for the
Biodiversity Net Gain (BNG) requirements which came into force in
England in February 2024 with training and guidance for our land
and planning, technical and strategic land teams. Some of our sites
had already integrated a BNG approach ahead of 2024.
We integrate nature enhancements
on all suitable new sites and have started with hedgehog highways,
bee bricks and bug hotels, bird and bat boxes. Since 2021, we have
installed c.3.5k wildlife enhancements such as bee bricks, bug
hotels, bird and bat boxes, to support native species and 279 sites
included hedgehog highways.
|
Resources and waste
Cut our waste intensity by 15% by
2025 and use more recycled materials.
By 2022, publish a 'Towards Zero
Waste' strategy for our sites.
|
The volume of waste produced in
2023 was 28% lower than in 2019, however our waste intensity
increased by 9.8% against our 2019 baseline. We have launched our
Towards Zero Waste Strategy and Action Plan to guide our approach
to reducing waste.
|
N.B. At the time of publication,
our waste data was undergoing audit by the Carbon Trust. We will
publish the final audited figures on our website on completion of
this process which could differ from those reported
A full summary of our
Environmental Strategy and progress against targets will be
published in our Annual Report and Accounts 2023 and Sustainability
Summary and Data document 2023.
Climate change and net zero
Our approach to climate change
aims to reduce emissions from our business and value chain,
to manage the business risk, and to prepare for
the impacts of climate change on our business, supply chain and
customers. We take a science-based approach and aim to continually
review and improve performance.
Our Net Zero Transition Plan
commits us to reduce our climate footprint ahead of the UK's 2050
target. The two key commitments in our strategy are:
- Net zero aligned in our
operations by 2035 (scope 1 and 2).
- Net zero emissions across our
value chain by 2045 (scope 1, 2 and 3) (comprising at least a 90%
absolute reduction and neutralising residual emissions).
Our target was developed with the
Carbon Trust in line with the requirements of the SBTi Corporate
Net Zero Standard. Our net zero target for 2045 has been validated
by the SBTi confirming that it is aligned with the SBTi's 1.5°C
mitigation pathways for reaching net zero by 2050 or sooner. This
is currently the most ambitious designation available through the
SBTi process. Our near term targets have also been validated by the
SBTi. We have achieved certification to
the Carbon Trust's Route to Net Zero Standard, Advancing level, and
are one of the first organisations to gain this new standard and
the first housebuilder.
Our Net Zero Transition Plan
comprises a four-stage roadmap detailing the actions we will take
to achieve our overall commitment and supporting targets,
incorporating both new and existing workstreams such as the
construction of low and zero carbon ready homes, increasing the use
of construction materials with lower embodied carbon including
timber frame, transitioning to 100% renewable electricity, reducing
or replacing fossil fuels and decarbonising our fleet.
In 2023, we reduced absolute
operational emissions (scope 1 and 2) by 35% against our 2019
baseline, with operational emissions intensity falling by 5% over
the same period. The reduction in absolute emissions is due to a
reduction in the number of completions in 2023 as well as carbon
reduction measures including our use of green electricity and
hybrid generators, and decarbonisation of the UK's national grid.
Our emissions intensity increased by 12% year on year. While we
completed fewer homes, there was only a small reduction in the
number of outlets which meant we continued to use energy for site
compounds, street lighting and pumping stations as well as our
fixed facilities such as IT systems, offices and our logistics
warehouse. We added a carbon reduction measure to
the incentive schemes for our senior and regional leadership to
help drive further progress.
We report against the
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD) in our Annual Report and Accounts.
We also publish a Sustainability Summary and Data
document with additional data including the Sustainability
Accounting Standards Board (SASB) recommended disclosures for our
sector.
Nature and resource efficiency
Our Environment Strategy targets
include Biodiversity Net Gain requirements and go beyond regulation
to deliver priority wildlife enhancements and wildlife friendly
planting. Since 2021, we have installed c.3.5k wildlife
enhancements such as bee bricks, bug hotels, bird boxes and bat
boxes to support native species, and 279 sites included hedgehog
highways.
Our Towards Zero Waste Strategy
and action plan sets out a three year programme of action and
capacity building in relation to resource use and waste across all
stages of development. We are working with our suppliers to reduce
waste from packaging, increase recycling and identify opportunities
to increase use of sustainable and recycled materials.
ESG credentials
We participate in several global
and sectoral benchmarks. We are a constituent of the Dow Jones
Sustainability Europe Index and included in the S&P
Sustainability Yearbook 2024. We are a part of FTSE4Good, have an
AAA rating from MSCI and have received an ESG Risk Rating of Low
from Sustainalytics and been included in its 2023 Top-Rated ESG
Companies List. We are a member of Next Generation, the
sustainability benchmark for UK housebuilders, and received a gold
rating in 2023. We disclose our performance to CDP and received the
following scores: CDP Climate Change A- (2022: A-), CDP Water B
(2022: B), and CDP Forests C for deforestation and forest risk
commodities (2022: B-).
Opportunities in green building
Over the next five years there
will be significant changes to new build homes in the UK reflecting
the UK's climate change targets. Our target is to reduce emissions
from customer homes in use by 75% by 2030, and we are testing a
range of technologies and enhanced fabric standards to achieve
this.
Following the phasing in of the
new Parts L, F & O of the Building Regulations
in England from June 2022, Parts L & F from
November 2022 for Wales and Section 6 in Scotland from February
2023, our homes have enhanced fabric standards with additional
features that include wastewater heat recovery systems, triple
glazing and PV panels. Collectively, this will achieve a 31%
reduction in carbon emissions compared with our previous
specification.
We are also preparing for the
phase-out of gas central heating systems from 2025 in England and
Wales, and 2024 in Scotland. In 2023, at
our future homes trial in Sudbury, Suffolk, we built five zero
carbon ready and fully electric homes, fitted with a range of
energy efficient and low carbon technologies. We believe this is
the first trial of its type in a live construction site setting.
The trial also produced industry leading interactive models which
will help communicate the benefits of the new technology to
customers.
Over 450 stakeholders have visited
the site and we have shared best practice and our lessons learnt
with SMEs. Feedback from the visits and a customer focus group
showed that 81% of visitors felt that the use of low carbon
technologies enhances the value of new homes.
Developing our own timber frame production
A key part of our strategy is to
increase the use of timber frame in our construction to 30% of our
production by 2030. Alongside efficiency benefits, use of timber
frame can reduce embodied carbon in materials by around 15%,
compared to traditional brick and block building techniques,
supporting progress towards our net zero target.
In establishing our own facility,
we aim to improve the visibility and reliability of our supply and
to hold our own buffer stock which can mitigate future supply chain
challenges. This year the facility will produce several hundred
kits and, at full capacity will be expected to produce around 3,000
kits per year.
Taylor Wimpey Logistics (TWL)
TWL provides value added services
to our regional businesses primarily by providing pre-kitted build
packs of products when they are needed at each build-stage of
production on site. This aids production, improves speed of build
and significantly reduces site traffic. The benefits of TWL can be
seen in our site deliveries. TWL supplies our regional businesses
99% on time in full (OTIF), compared to receiving its supplies 87%
OTIF.
Group financial
review
Income statement
Group revenue was £3,514.5 million
in 2023 (2022: £4,419.9 million), with Group completions, excluding
JVs, being 22.7% lower at 10,766 (2022: 13,932). The UK average
selling price on private completions increased by 5.1% to £370k
(2022: £352k), due to both house price inflation and positive mix.
The increase in the total UK average selling price was 3.5% to
£324k (2022: £313k) as a result of the greater proportion of
affordable housing in 2023 (23%) than the prior year (2022: 21%),
and a small increase in the UK average selling price on affordable
housing to £168k (2022: £166k).
Group gross profit decreased to
£716.5 million (2022: £1,132.4 million), the impact of build cost
inflation and fixed build and selling costs being absorbed over
fewer completions, resulting in a gross margin of 20.4% (2022:
25.6%).
Net operating expenses were £248.7
million (2022: £304.9 million), the comparative including £80.0
million of exceptional costs relating to the cladding fire safety
provision following the signing of the Government's Building Safety
Pledge for Developers in April 2022, with no such amount in the
current year. Excluding exceptional costs, the net operating
expenses were £248.7 million (2022: £224.9 million), which was
predominantly made up of administrative costs of £232.7 million
(2022: £220.7 million). The increase in administrative costs over
the comparative period was driven mainly by the non-recurring costs
associated with the change programme announced at the start of the
year and the annual pay review process, partially offset by a
portion of the savings associated with the change programme. This
resulted in a profit on ordinary activities before financing of
£467.8 million (2022: £827.5 million), £467.8 million (2022: £907.5
million) excluding exceptional items.
Completions from joint ventures in
the year were 82 (2022: 222). The lower level was a result of both
the current market and the status of the joint
ventures' developments. As a result of the decreased joint
venture completions, the share of joint ventures' profit in the
period was £2.4 million (2022: £15.9 million). When including this
in the profit on ordinary activities before financing, the
resulting operating profit was £470.2 million (2022: £923.4
million), delivering an operating profit margin of 13.4% (2022:
20.9%). The total order book value of joint ventures as at 31
December 2023 decreased to £6 million (31 December 2022: £26
million), representing nine homes (31 December 2022:
56).
The net finance income of £3.6
million (2022: £15.5 million expense) represents interest earned on
deposits in the current year, more than offsetting the imputed
interest on land acquired on deferred terms, bank interest and
interest on the pension scheme.
Profit on ordinary activities
before tax decreased to £473.8 million (2022: £827.9
million). The total tax charge for the period was £124.8
million (2022: £184.3 million), a rate of 26.3% (2022: 22.3%); the
prior year included a credit of £17.6 million in respect of the
exceptional charge recognised in that year and a £1.7 million
credit arising from the remeasurement of the Group's UK deferred
tax assets following the introduction of the new Residential
Property Developer Tax. The pre-exceptional tax charge was £124.8
million (2022: £201.9 million), representing an underlying tax rate
of 26.3% (2022: 22.2%).
As a result, profit for the year
was £349.0 million (2022: £643.6 million).
Basic earnings per share was 9.9
pence (2022: 18.1 pence). The adjusted basic earnings per share was
9.9 pence (2022: 19.8 pence).
Spain
Our Spanish business
primarily sells second homes to European and
other international customers, with a small proportion of sales
being primary homes for Spanish occupiers. The business completed
410 homes (2022: 381) with the average selling price increasing to
€400k (2022: €383k), due to regional mix. The total order book as
at 31 December 2023 increased to 490 homes (31 December 2022: 448
homes).
Gross margin decreased to 28.1%
(2022: 29.7%), due to timing variances on the recognition of sales
commissions that had a positive impact on the prior year; this
flowed through to an operating profit of £35.3 million (2022: £32.6
million) and an operating profit margin of 24.7% (2022:
26.2%).
The total plots in the landbank
stood at 2,755 (31 December 2022: 2,544), with net operating
assets** of £94.0 million (31 December 2022: £89.8
million).
Balance sheet
Net assets at 31 December 2023
increased marginally to £4,523.4 million (31 December 2022:
£4,502.1 million), with net operating assets increasing by £204.2
million, 5.6%, to £3,823.7 million (31 December 2022: £3,619.5 million). Return on net operating assets**
decreased to 12.6% (31 December 2022: 26.1%)
primarily due to the reduction in Group operating profit in
the year, and to a lesser extent by the increase in average net
operating assets. Group net operating
asset turn†*
was 0.94 times (31 December 2022: 1.25),
reflecting the decreased revenue in the year.
Land
Land as at 31 December 2023
decreased by £158.8 million in the year to £3,269.5 million as the
highly selective approach to acquiring new land continued
throughout the year, resulting in land creditors decreasing to
£516.1 million (31 December 2022: £725.6 million). Included within
the gross land creditor balance is £44.9 million of UK land overage
commitments (31 December 2022: £43.0 million). £301.2 million of
the land creditors is expected to be paid within 12 months and
£214.9 million thereafter.
As at 31 December 2023, the UK
short term landbank comprised 80,323 plots (31 December 2022:
82,830), with a net book value of £2.8 billion (31 December 2022:
£2.9 billion). Short term owned land had a net book value of £2.7
billion (31 December 2022: £2.8 billion), representing 61,190 plots
(31 December 2022: 63,088). The controlled short term landbank
represented 19,133 plots (31 December 2022: 19,742).
The value of long term owned land
decreased to £242 million (31 December 2022: £311 million),
representing 34,319 plots (31 December 2022: 36,646), with a
further total controlled strategic pipeline of 107,676 plots (31
December 2022: 107,739). Total potential revenue in the short and
long term owned and controlled landbank was £61 billion (31
December 2022: £61 billion).
Work in progress (WIP)
Total WIP investment, excluding
part exchange and other, increased to £1,871.0 million (31 December
2022: £1,725.9 million) due primarily to build cost inflation. This
also resulted in average WIP per UK outlet to increase to £7.6
million (31 December 2022: £6.4 million).
Provisions and deferred tax
Provisions decreased to £286.7
million (31 December 2022: £290.3 million), primarily due to
utilisation of the cladding fire safety provision (£16.8 million)
as works have been carried out, which was offset by increases in
other provisions which largely relate to remedial works on a
limited number of sites around the Group.
Our net deferred tax asset of
£23.4 million (31 December 2022: £26.0 million) relates to our
pension deficit and UK and Spanish provisions that are tax
deductible when the expenditure is incurred.
Pensions
As a result of the 31 December
2019 triennial valuation, a funding arrangement was agreed with the
Trustee of the Taylor Wimpey Pension Scheme (TWPS) that committed
the Group to paying up to £20.0 million per annum into an escrow
account between April 2021 and March 2024. Following an initial
contribution totalling £10.0 million, all further payments into the
escrow account are subject to a quarterly funding test, effective
from 30 September 2021. Should the TWPS Technical Provisions
funding position at any quarter end be 100% or more, payments into
the escrow account are suspended and would only restart should the
funding subsequently fall below 98%. The funding test at 30
September 2021 showed a funding level of 103% and has remained
above 100% since then and therefore escrow payments were suspended
on, and from, 1 October 2021. The most recent funding test at 31
December 2023 showed a surplus of £54 million and a funding level
of 103.3% and as a result no payment into escrow is due in the
first quarter of 2024.
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 £7.1 million (2022: £7.1 million) with no further
amounts paid into the escrow account (2022: nil). At 31 December
2023, the IAS 19 valuation of the Scheme was a surplus of £76.7
million (31 December 2022: £76.6 million). Due to the rules of the
TWPS, any surplus cannot be recovered by the Group and therefore a deficit has been recognised on the
balance sheet under IFRIC 14. The deficit is equal to the present
value of the remaining committed payments under the 2019 triennial
valuation. Retirement benefit obligations of £26.5 million
at 31 December 2023 (31 December 2022: £29.9 million) comprise a
defined benefit pension liability of £26.3 million (31 December
2022: £29.6 million) and a post-retirement healthcare liability of
£0.2 million (31 December 2022: £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.
The triennial valuation of the TWPS with a
reference date of 31 December 2022 is in progress.
Legislation requires that the valuation must be
concluded by 31 March 2024.
Net cash and financing position
Net cash decreased to £677.9
million at 31 December 2023 from £863.8 million at 31 December
2022, due to the settlement of land creditors and payment of
dividends in the year. Average net cash for the year was £606.6
million (2022: £595.7 million).
The decrease in completions caused
cash generated from operations to decrease in the year and resulted
in a cash conversion‡‡
of 61.4% of operating profit for the year ended
31 December 2023 (2022: 76.3%).
Net cash, combined with land
creditors, resulted in an adjusted gearing‡‡‡‡ of (3.6)% (31 December
2022: (3.1)%).
At 31 December 2023, our committed
borrowing facilities were £687 million, of which the revolving
credit facility was undrawn throughout the year. In July 2023, the
Group renewed its revolving credit facility, increasing it to £600
million with a maturity of July 2028 and the option to request an
extension for two further years. In December 2022, the Group
entered into an agreement to refinance the €100 million 2.02%
senior loan notes due June 2023 with €100 million 5.08% senior loan
notes due June 2030. The weighted average maturity of the committed
borrowing facilities at 31 December 2023 was 4.8 years (31 December
2022: 1.9 years). The new revolving credit
facility includes three sustainability-linked performance targets,
which adjust the margin by a small amount. The three performance
targets are: (1) reductions in scope 1 and 2 GHG emissions; (2)
reductions in waste; and (3) reductions in carbon emissions of the
homes we build.
Dividends
Subject to shareholder approval at
the AGM scheduled for 23 April 2024, the 2023 final ordinary
dividend of 4.79 pence per share will be paid on 10 May 2024 to
shareholders on the register at the close of business on 2 April
2024 (2022 final dividend: 4.78 pence per share). In combination
with the 2023 interim dividend of 4.79 pence per share, this gives
total ordinary dividends for the year of 9.58 pence per share (2022
ordinary dividend: 9.40 pence per share).
The dividend will be paid as a
cash dividend, and shareholders have the option to reinvest all of
their dividend under the Dividend Re-Investment Plan (DRIP),
details of which are available on our website
www.taylorwimpey.co.uk/corporate.
Going concern
The Directors remain of the view
that the Group's financing arrangements and balance sheet strength
provide both the necessary liquidity and covenant headroom to
enable the Group to conduct its business for at least the next 12
months. Accordingly, the financial statements are prepared on a
going concern basis, see Note 1 of the Condensed Consolidated
Financial Statements for further details of the assessment
performed.
Assessment of prospects
We consider the long term
prospects of the Group in light of our business model. Our strategy
to deliver sustainable value is achieved through delivering
high-quality homes for our customers, in the locations where people
want to live, whilst carefully managing our cost base and the
Group's balance sheet.
In assessing the Group's prospects
and long term viability, due consideration is given to:
•
The Group's current performance and the Group's
financing arrangements.
•
The wider economic environment and mortgage
market, as well as changes to government policies and regulations,
including those influenced by sustainability, climate change and
the environment, that could impact the Group's business
model.
•
Strategy and business model flexibility,
including customer dynamics and approach to land
investment.
•
Principal Risks associated with the Group's
strategy and business model, including those which have the most
impact on our ability to remain in operation and meet our
liabilities as they fall due.
Further detail is provided in our
Annual Report and Accounts 2023.
Viability disclosure
In accordance with the 2018 UK
Corporate Governance Code, the Directors and the senior management
team have assessed the prospects and financial viability of the
Group for a period longer than the 12 months required for the
purpose of the 'going concern' assessment.
Time period
The Directors have assessed the
viability of the Group over a five-year period, taking account
of the Group's current financial position, current market
circumstances and the potential impact of the Principal and
Emerging Risks facing the Group. The Directors have determined this
as an appropriate period over which to assess the viability
based on the following:
- It is aligned with the Group's bottom-up five-year budgeting
and forecasting cycle.
- Five years represents a reasonable estimate of the
typical time between purchasing land, its progression through the
planning cycle, building out the development and selling homes to
customers from it.
Five years is also a reasonable
period for consideration given the following broader external
trends:
- The cyclical nature of the market in which the Group
operates, which tends to follow the economic cycle.
- Consideration of the impact of government policy, planning
regulations and the mortgage market.
- Long term supply of land, which is supported by our strategic
land pipeline.
- Changes in technology and customer expectations.
Principal Risks
The Principal Risks, to which the
Group are subject, have undergone a comprehensive review by the GMT
and Board in the current year. Consideration is given to the risk
likelihood based on the probability of occurrence and potential
impact on our business, together with the effectiveness of
mitigations.
The Directors identified the
Principal Risks that have the most impact on the longer term
prospects and viability of the Group, and as such these have been
used in the modelling of a severe but plausible downside scenario,
as:
·
Government policies, regulations and planning
(A).
·
Mortgage availability and housing demand
(B).
·
Availability and costs of materials and
subcontractors (C).
·
Quality and reputation (F).
·
Cyber security (I).
A range of sensitivity analyses
for these risks together with likely mitigating actions that would
be adopted in response to these circumstances were modelled,
including a severe but plausible downside scenario in which the
impacts were aggregated together.
The impact from 'Natural resources
and climate change' (H) is not deemed to be material within the
five-year forecast period, as costs associated with the regulatory
changes have been included in the modelling.
Assessment of viability
The Group adopts a disciplined
annual business planning process involving the management teams of
the UK regional businesses and Spain, and the Group's senior
management, and is built on a bottom-up basis. This planning
process covers a five-year period comprising a detailed budget for
the next financial year, together with a forecast for
the following four financial years ('forecast').
The financial planning process
considers the Group's profitability and Income Statement, Balance
Sheet including landbank, gearing and debt covenants, cash
flows and other key financial metrics over the forecast period.
These financial forecasts are based on a number of key assumptions,
the most important of which include:
- Timing and volume of legal completions of new homes sold,
which includes annual production volumes and sales rates over the
life of the individual developments.
- Average selling prices achieved.
- Build costs and cost of land acquisitions, including the
impact from the Future Homes Standard.
- Working capital requirements.
- Capital repayment plan, where we have assumed the payment of
the ordinary dividend in line with the current policy, which is a
minimum of £250 million or 7.5% of the Group's net assets per
annum, throughout the period.
Stress testing our risk resilience
The assessment considers
sensitivity analysis on a series of realistically possible, but
severe and prolonged, changes to principal assumptions.
In determining these we have included macroeconomic and
industry-wide projections as well as matters specific to the
Group.
The severe but plausible downside
scenario reflects the aggregated impact of sensitivities, taking
account of a further decline in customer confidence, disposable
incomes and mortgage availability than has been experienced during
2023. To arrive at our stress test we have drawn on experience
gained from managing the business through previous economic
downturns and the COVID-19 pandemic.
We have applied the market
dynamics encountered at those times, as well as the mitigations
adopted, to our 2024 expectations in order to test the resilience
of our business. As a result, we have stress tested our business
against the following severe but plausible downside scenario, which
can be attributed back to the Group's Principal Risks
that have been identified as having the most impact on the
longer term prospects and viability of the Group.
Volume (Principal Risk: A, B,
C, F) - a further decline in total volumes of 10% in 2024 from 2023
levels, before recovering back to 2023 levels by 2026.
Price (Principal Risk: B) - a
reduction to current selling prices of 10%, remaining at these
levels across 2024 and 2025 before recovering to 2023 levels by
2026.
One-off costs (Principal
Risk: A, F, I) - a one-off exceptional charge and cash cost of £150
million for an unanticipated event, change in government
regulations or financial penalty has been included in
2024.
Within the scenario, build costs
are forecast to reduce across 2024 and 2025 with lower volumes
reducing demand for materials and resources and land cost remaining
broadly flat as the possible increase in availability due to lower
volumes is offset by a restriction in supply. An estimate for the
cost of the Future Homes Standard has been assumed.
The mitigating actions considered
in the model include a continued reduction in land investment, a
reduction in the level of production and work in progress held and
further reducing our overhead base to reflect the lower
volumes.
If this scenario were to occur,
the Directors also have a range of additional options to maintain
financial strength, including: a more severe reduction in land
spend and work in progress, the sale of assets, reducing the
dividend, and/or raising debt.
At 31 December 2023, the Group had
a cash balance of £765 million and access to £600 million from a
fully undrawn revolving credit facility, together totalling £1,365
million. The combination of both of these is sufficient to absorb
the financial impact of each of the risks modelled in the stress
and sensitivity analysis, individually and in aggregate.
Confirmation of viability
Based on the results of this
analysis, the Directors have a reasonable expectation that
the Group will be able to continue in operation and meet its
liabilities as they fall due over the five-year period of their
assessment.
Definitions
* Operating profit is defined as
profit on ordinary activities before financing, exceptional items
and tax, after share of results of joint ventures.
*† Operating profit
margin is defined as operating profit divided by
revenue.
** Return on net operating assets
(RONOA) is defined as rolling 12 months' operating profit divided
by the average of the opening and closing net operating assets of
the 12-month period, which is defined as net assets less net cash,
excluding net taxation balances and accrued dividends.
† Tangible net assets per share is defined as net assets before
any accrued dividends excluding intangible assets divided by the
number of ordinary shares in issue at the end of the
period.
†† Adjusted basic earnings per share represents earnings
attributed to the shareholders of the parent, excluding exceptional
items and tax on exceptional items, divided by the weighted average
number of shares in issue during the period.
†* Net operating asset turn is defined as 12 months' rolling
total revenue divided by the average of opening and closing net
operating assets of the 12-month period.
†***
The Annual Injury Incidence Rate (AIIR) is
defined as the number of incidents per 100,000 employees and
contractors, calculated on a rolling 12-month basis, where the
number of employees and contractors is calculated using a monthly
average over the same period.
‡ Net cash is defined as total cash less total
borrowings.
‡‡ Cash conversion is defined as operating cash flow divided by
operating profit 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.
The Group uses Alternative
Performance Measures (APMs) as important financial performance
indicators to assess underlying performance of the Group. The APMs
used are widely used industry measures and form the measurement
basis of the strategic financial metrics (operating margin, return
on net operating assets, and cash conversion). A portion of
executive remuneration is also directly linked to some of the APMs.
Definitions and reconciliations to the equivalent statutory
measures are included in Note 14 of the Condensed Consolidated
Financial Statements.
Shareholder information
The Company's 2024 Annual General
Meeting (AGM) will be held at 10:30am on 23 April 2024 in the
Gerrards Suite at the Crowne Plaza Gerrards Cross, Oxford Road,
Beaconsfield, HP9 2XE.
Copies of the Annual Report and
Accounts 2023 will be available from 20 March 2024 on the Company's
website www.taylorwimpey.co.uk/corporate. Hard copy documents will
be posted to shareholders who have elected to receive them and will
also be available from our registered office at Gate House,
Turnpike Road, High Wycombe, Buckinghamshire, HP12 3NR from 22
March 2023.
A copy of the Annual Report and
Accounts 2023 will be submitted to the National Storage Mechanism
and will be available for inspection
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Directors' responsibilities
The responsibility statement below
has been prepared in connection with the full Annual Report and
Accounts for the year ended 31 December 2023. Certain parts thereof
are not included within this announcement.
We confirm to the best of our
knowledge that:
·
the Group financial statements, which have been
prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Group; and
·
the Strategic report includes a fair review of
the development and performance of the business and the position of
the Group and Company, together with a description of the Principal
Risks and uncertainties that it faces.
This responsibility statement was
approved by the Board of Directors on 27 February 2024 and is
signed on its behalf by:
Robert Noel, Chair
Jennie Daly, Chief
Executive
Principal Risks and
uncertainties
The Board has overall
responsibility for risk oversight, for maintaining a robust risk
management and internal control system and for determining the
Group's appetite for exposure to the Principal Risks to the
achievement of its strategy. Our Annual Report and Accounts 2023
details the full governance procedures and processes for
identification and subsequent monitoring of the risks undertaken by
the Group.
The Audit Committee supports the
Board in the management of risk and is responsible for reviewing
the effectiveness of the risk management and internal control
processes during the year.
The Chief Executive is primarily
responsible for the management of the risks with the support of the
GMT and other senior managers located in the business. In line with
the 2018 UK Corporate Governance Code, the Board holds formal risk
reviews at least half yearly and routinely considers risk at each
Board meeting as appropriate. The formal assessment includes a
robust consideration of the Principal and emerging risks to ensure
they remain appropriate as well as a review of the key risks
identified by the business, and their risk profile and mitigating
factors. During the year, three of our Principal Risks ('Government
policies, regulations and planning', 'Mortgage availability and
housing demand' and 'Quality and reputation') have seen an increase
in both their inherent and residual risk profiles, and our 'Cyber
security' Principal Risk has seen an increase in its inherent
profile. Our Principal Risks are described in more detail in the
tables below.
In addition, the Board also
considers emerging risks which could impact on the Group's ability
to deliver its strategy. The emerging risks are those where the
extent and implications are not yet fully understood but
consideration has been given to the potential timeframe of
occurrence and velocity of impact that these could have on the
Group. As part of our risk management process, these are monitored
and reviewed on an ongoing basis and discussed and agreed by the
Board.
Our emerging risks are grouped
into the categories listed in the table below, which also contains
some narrative description against each category indicating example
focus areas into which the identified emerging risks
fall.
Category
|
Example focus area
|
Environmental/climate
|
Unpredictable weather
patterns
|
Operational/build
|
Adaption of building
methodologies
|
Political/economic
|
Geopolitical
uncertainty
|
Technological
|
Artificial intelligence
|
Social
|
Customer demographics and
preferences
|
Governmental
|
Changing Government
policies
|
The Group considers other specific
risk areas recognising the increasing complexity of the industry in
which it operates and which are in addition to its identified
Principal Risks. We continue to monitor and mitigate the impacts on
our supply chain and labour force and the overall economic market
impacting mortgage availability and demand.
Our Sustainability and Climate
Change Risk and Opportunity Register highlights the material risks
and opportunities facing the Company in relation to sustainability
and climate change. In addition, our climate change-related risks
and opportunities are available as part of our 2023 CDP submission.
More information is available at www.taylorwimpey.co.uk/corporate.
The Principal Risks, their
mitigations and key risk indicators are detailed below:
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunities
|
A. Government policies,
regulations and planning
The industry in which we operate
is becoming increasingly regulated. Failure to adhere to government
regulations could impact our operational performance and our
ability to meet our strategic objectives.
Changes to the planning system or
planning delays could result in missed opportunities to optimise
our landbank, affecting profitability and production
delivery.
Accountability
Group Technical Director
Director of Planning
Regional Managing
Directors
|
Moderate
|
Low
|
Example key risk indicators
- New government regulations (e.g.
around planning and climate)
- Delays in planning
- Sentiment towards the industry
(e.g. Cladding fire safety remediation)
Key mitigations
- Research conducted to update
technical specification of our new house type range, in preparation
for the Future Homes Standard (FHS), including a trial of five
FHS-compliant plots
- Consultation with government
agencies
- Cladding fire safety remediation
and signing of the Government's Building Safety Pledge for
Developers
- Engagement with national and
local government
- Working with HBF and other
stakeholders
- Member of Future Homes
Hub
Opportunities
To build enhanced collaborative
networks with stakeholders and peers, to monitor the implications
of regulatory change
Lead the business in addressing
pressing environmental issues, including reducing our carbon
footprint and targeting biodiversity
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
B. Mortgage availability and
housing demand
A decline in the economic
environment, driven by sustained growth in interest rates,
increased cost of living, low wage inflation or increasing levels
of unemployment, could result in tightened mortgage availability
and challenge mortgage affordability for our customers, resulting
in a direct impact on our volume targets.
Accountability
UK Sales and Marketing
Director
Regional Sales and Marketing
Directors
|
Moderate
|
Low
|
Example key risk indicators
- Interest rate
increases
- Levels of
unemployment
- Volume of enquiries/people
visiting our developments
- UK household spending/levels of
disposable income
- Loan to value metrics
Key mitigations
- Increase outlets to provide
greater customer choice and flexibility to respond quickly to
changing market conditions
- Review of pricing and incentives
offered
- Monitoring external data (e.g.
HBF and mortgage lenders)
- Strong relationships with
mainstream lenders
- Work with financial services
industry to ensure customers receive appropriate advice on mortgage
products
Opportunities
To continue to develop strong
working relationships with established mainstream lenders and those
wishing to increase volume in the new build market.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
C. Availability and costs of
materials and subcontractors
Increase in housing demand and
production or a breakdown within the supply chain may further
strain the availability of skilled subcontractors and materials and
put pressure on utility firms to keep up with the pace of
installation, resulting in increased costs and construction
delays.
Accountability
Supply Chain Director
Procurement Director
Group Commercial Director
|
Moderate
|
Low-moderate
|
Example key risk indicators
- Material and trade
shortages
- Material and trade price
increases
- Level of build quality and waste
produced from sites
- Longer build times
- Number of skilled
trades
Key mitigations
- Central procurement and key
supplier agreements
- Supplier and subcontractor
relationships
- Disaster recovery and business
continuity plans with all key suppliers
- Buffer stock with key
suppliers
- Contingency plans for critical
path products
- Direct trade and apprenticeship
programmes
- Key commodity risk assessment
matrix
- Regular checks on all key
suppliers
- Monitoring of the supply
chain
Opportunities
To develop and implement different
build methods as alternatives to conventional brick and
block.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
D. Attract and retain high-calibre
employees
An inability to attract, develop,
motivate and retain high-calibre employees, together with a failure
to consider the retention and succession of key management, could
result in a failure to deliver our strategic objectives, a loss of
corporate knowledge and a loss of competitive advantage.
Accountability
Group HR Director
Every employee managing
people
|
Low
|
Moderate
|
Example key risk indicators
- Employee engagement
score
- Number of, and time to fill,
vacancies
- Employee turnover
levels
Key mitigations
- Production Academy and
Production Manager succession development programme
- Schools outreach
strategy
- Collaboration with major
organisations on sector skills plan
- Graduate and apprenticeship
programmes
- Management training
- Enhanced remote working
procedures
- Educational
masterclasses
- Salary benchmarking
Opportunities
To further develop in-house
capability, expertise and knowledge.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
E. Land availability
An inability to secure land at an
appropriate cost, the purchase of land of poor quality or in the
wrong location, or the incorrect timing of land purchases in
relation to the economic cycle could impact future
profitability.
Accountability
Divisional Chairs
Regional Managing
Directors
Regional Land and Planning
Directors
Managing Director Group Strategic
Land
UK Business, Land and Development
Director
|
Low
|
Moderate
|
Example key risk indicators
- Movement in landbank
years
- Number of land
approvals
- Timing of conversions from
strategically sourced land
Key mitigations
- Critically assess
opportunities
- Land quality
framework
- Engagement with national and
local government
- Review of land
portfolio
- Obtaining specialist
environmental and legal advice
Opportunities
A strong balance sheet allows us
to invest when land market conditions are attractive.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
F. Quality and
reputation
The quality of our products is key
to our strategic objective of being a customer-focused business and
in ensuring that we do things right first time.
If the Group fails to deliver
against these standards and its wider development obligations, it
could be exposed to reputational damage, as well as reduced sales
and increased costs.
Accountability
Customer Director
UK Head of Production
Director of Design
|
Moderate
|
Low
|
Example key risk indicators
- Customer satisfaction metrics
(9-month and 8-week)
- Number of NHBC claims
- Construction Quality Review
(CQR) scores
- Average reportable items per
inspection found during NHBC inspections at key stages of the
build
Key mitigations
- Customer-ready Home Quality
Inspection
- Consistent Quality
Approach
- Quality Managers in the
business
- Customer-driven
strategy
- Enhanced data
analytics
- Ombudsman readiness
Opportunities
To better understand the needs of
our customers enabling increased transparency of our build
profile.
To lead the industry in quality
standards (our CQR score) and reduce the number of reportable items
identified through monitoring defects at every stage of
build.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
G. Health, safety and
environment
The health and safety of all our
employees, subcontractors, visitors and customers is of paramount
importance. Failure to implement and monitor our stringent health,
safety and environment (HSE) procedures and policies across all
parts of the business could lead to accidents or site-related
incidents, resulting in serious injury or loss of life.
Accountability
Head of Health, Safety and
Environment
Regional Managing
Directors
|
Low
|
Low
|
Example key risk indicators
- Increase in near misses and
fatalities
- Health and safety audit
outcomes
- Number of reportable health and
safety incidents
Key mitigations
- Embedded HSE system
- HSE training and
inductions
- Mental health training and
support for all employees
- Robust monitoring and reporting
procedures
- Utilisation of certified
operatives
- Identification, review and
evaluation of the impact of new construction methods and
materials
Opportunities
To lead the industry in health and
safety and to reduce the amount and level of incidents.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
H. Natural resources and climate
change
An inability to reduce our
environmental footprint, the challenges of a degraded environment
including the impacts of climate change, nature loss and water
scarcity on our business, supply chain scarcity due to
environmental change and the increasing desire of our customers to
live more sustainably could impact our reputation, ability to
attract investment and obtain planning permission and the delivery
of our strategic targets.
Accountability
Director of
Sustainability
Regional Managing
Directors
|
Moderate
|
Low
|
Example key risk indicators
- Energy use & greenhouse gas
emissions
- Biodiversity net gain
%
- Construction waste generation
and waste to landfill
Key mitigations
- Net Zero Transition
Plan
- Published Environment
Strategy
- Adopted and verified
science-based targets
- Climate change governance,
including LEAF committee and sustainability champions
- Achievement of Carbon Trust
Standard
- HBF and investor
liaison
- Training and development in house
and in our supply chain
- External benchmarking
- Collection and interpretation of
data to drive relevant actions
Opportunities
Sustainable homes and developments
attractive to customers.
A sustainable business of choice
for investors.
Advantageous planning
positions.
|
Description
|
Residual risk rating
|
Risk appetite
|
Example key risk indicators, mitigations and
opportunity
|
I. Cyber security
The Group places increasing
reliance on IT to conduct its operations and the requirement to
maintain the accuracy and confidentiality of its information
systems and the data contained therein. A cyber-attack leading to
the corruption, loss or theft of data could result in reputational
and operational damage.
Accountability
IT Director
|
Moderate
|
Low-moderate
|
Example key risk indicators
- Number of devices with critical
and high open vulnerabilities
- Number of devices without latest
patching in place
- Phishing test results
- Cyber training completion
statistics
- Number of users with
administrative privileges to critical systems
Key mitigations
- Complex passwords policy and
multi-factor authentication for remote access
- Regular security patching and
penetration testing
- Risky logins check
- Intrusion detection and prevention
systems
- Suspected phishing emails
process
- Mandated cyber training for all
staff
- Cyber insurance
- Dedicated Head of Cyber
Security
- Cyber security KPIs
- Enhanced end-point
protection software implemented across the IT estate
- Blocked traffic originating from
countries deemed a threat to the UK
Opportunities
Together with our service
partners, provide a level of security to reinforce our reputation
as a trusted partner.
|
Cautionary note concerning
forward looking statements
This report contains certain
forward-looking statements. These statements are made by the
Directors and include statements regarding their current
intentions, beliefs and expectations, based on the information
available to them up to the time of their approval of this report
and unless otherwise required by applicable law, the Company and
its Directors undertake no obligation to update or revise these
forward looking statements, nor do they accept any liability should
the future results actually achieved fail to correspond to the
forward-looking statements included in this report.
By their nature these
forward-looking statements involve uncertainty (including both
economic and business risk factors) and are subject to a number of
risks since future events and circumstances can cause actual
results and developments to differ materially to those anticipated.
As such, these forward-looking statements should be treated with
caution.
Nothing in this report should be
construed as a profit forecast and does not constitute or form part
of, any offer, invitation or the solicitation of an offer to
purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of, any securities in Taylor Wimpey plc or any other
invitation or inducement to engage in investment activities and
does not constitute a recommendation to sell or buy any such
securities.
Consolidated Income
Statement
for the year to 31 December
2023
£ million
|
Note
|
Before
exceptional
items
2023
|
Exceptional
items
2023
|
Total
2023
|
Before
exceptional
items
2022
|
Exceptional
items
2022
|
Total
2022
|
Continuing operations
|
|
|
|
|
|
|
|
Revenue
|
2
|
3,514.5
|
-
|
3,514.5
|
4,419.9
|
-
|
4,419.9
|
Cost of sales
|
|
(2,798.0)
|
-
|
(2,798.0)
|
(3,287.5)
|
-
|
(3,287.5)
|
Gross profit
|
|
716.5
|
-
|
716.5
|
1,132.4
|
-
|
1,132.4
|
Net operating expenses
|
4
|
(248.7)
|
-
|
(248.7)
|
(224.9)
|
(80.0)
|
(304.9)
|
Profit on ordinary activities
before financing
|
|
467.8
|
-
|
467.8
|
907.5
|
(80.0)
|
827.5
|
Finance income
|
5
|
29.5
|
-
|
29.5
|
8.6
|
-
|
8.6
|
Finance costs
|
5
|
(25.9)
|
-
|
(25.9)
|
(24.1)
|
-
|
(24.1)
|
Share of results of joint
ventures
|
|
2.4
|
-
|
2.4
|
15.9
|
-
|
15.9
|
Profit before taxation
|
|
473.8
|
-
|
473.8
|
907.9
|
(80.0)
|
827.9
|
Taxation (charge)/credit
|
6
|
(124.8)
|
-
|
(124.8)
|
(201.9)
|
17.6
|
(184.3)
|
Profit for the year
|
|
349.0
|
-
|
349.0
|
706.0
|
(62.4)
|
643.6
|
|
|
|
|
2023
|
|
|
2022
|
Basic earnings per share
|
7
|
|
|
9.9p
|
|
|
18.1p
|
Diluted earnings per
share
|
7
|
|
|
9.9p
|
|
|
18.0p
|
Adjusted basic earnings per
share
|
7
|
|
|
9.9p
|
|
|
19.8p
|
Adjusted diluted earnings per
share
|
7
|
|
|
9.9p
|
|
|
19.7p
|
All of the profit for the year is
attributable to the equity holders of the Parent
Company.
Consolidated Statement of
Comprehensive Income
for the year to 31 December
2023
£ million
|
Note
|
2023
|
2022
|
Items that may be reclassified subsequently to profit or
loss:
|
|
|
|
Exchange differences on translation
of foreign operations
|
|
(2.4)
|
6.6
|
Movement in fair value of hedging
instruments
|
|
1.2
|
(3.5)
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
|
Actuarial gain on defined benefit
pension schemes
|
10
|
0.8
|
3.2
|
Tax (charge)/credit on items taken
directly to other comprehensive income
|
8
|
(0.2)
|
0.7
|
Other comprehensive (expense)/income for the
year
|
|
(0.6)
|
7.0
|
Profit for the year
|
|
349.0
|
643.6
|
Total comprehensive income for the year
|
|
348.4
|
650.6
|
All of the comprehensive income for
the year is attributable to the equity holders of the Parent
Company.
Consolidated Balance
Sheet
at 31 December 2023
£ million
|
Note
|
2023
|
2022
|
Non-current assets
|
|
|
|
Intangible assets
|
|
2.6
|
4.2
|
Property, plant and
equipment
|
|
22.0
|
17.3
|
Right-of-use assets
|
|
37.8
|
26.3
|
Interests in joint
ventures
|
|
70.5
|
74.0
|
Trade and other
receivables
|
|
28.1
|
12.2
|
Other financial assets
|
10
|
10.3
|
10.0
|
Deferred tax assets
|
8
|
23.4
|
26.0
|
|
|
194.7
|
170.0
|
Current assets
|
|
|
|
Inventories
|
9
|
5,169.6
|
5,169.6
|
Trade and other
receivables
|
|
124.4
|
191.2
|
Cash and cash
equivalents
|
|
764.9
|
952.3
|
|
|
6,058.9
|
6,313.1
|
Total assets
|
|
6,253.6
|
6,483.1
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
(992.8)
|
(1,130.8)
|
Lease liabilities
|
|
(8.8)
|
(7.3)
|
Bank and other loans
|
|
-
|
(88.5)
|
Tax payables
|
|
(1.6)
|
(7.2)
|
Provisions
|
|
(124.9)
|
(106.7)
|
|
|
(1,128.1)
|
(1,340.5)
|
Net current assets
|
|
4,930.8
|
4,972.6
|
Non-current liabilities
|
|
|
|
Trade and other payables
|
|
(295.8)
|
(407.3)
|
Lease liabilities
|
|
(31.0)
|
(19.7)
|
Bank and other loans
|
|
(87.0)
|
-
|
Retirement benefit
obligations
|
10
|
(26.5)
|
(29.9)
|
Provisions
|
|
(161.8)
|
(183.6)
|
|
|
(602.1)
|
(640.5)
|
Total liabilities
|
|
(1,730.2)
|
(1,981.0)
|
|
|
|
|
Net assets
|
|
4,523.4
|
4,502.1
|
Equity
|
|
|
|
Share capital
|
|
291.3
|
291.3
|
Share premium
|
|
777.9
|
777.9
|
Own shares
|
11
|
(29.7)
|
(43.1)
|
Other reserves
|
|
544.4
|
545.6
|
Retained earnings
|
|
2,939.5
|
2,930.4
|
Total equity
|
|
4,523.4
|
4,502.1
|
Consolidated Statement of Changes
in Equity
for the year to 31 December
2023
£ million
|
Note
|
Share
capital
|
Share
premium
|
Own
shares
|
Other
reserves
|
Retained
earnings
|
Total
|
Total equity at 1 January
2022
|
|
292.2
|
777.5
|
(14.6)
|
541.6
|
2,717.3
|
4,314.0
|
Other comprehensive income for the
year
|
|
-
|
-
|
-
|
3.1
|
3.9
|
7.0
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
643.6
|
643.6
|
Total comprehensive income for the year
|
|
-
|
-
|
-
|
3.1
|
647.5
|
650.6
|
New share capital
subscribed
|
|
-
|
0.4
|
-
|
-
|
-
|
0.4
|
Own shares acquired and
cancelled
|
|
(0.9)
|
-
|
(33.8)
|
0.9
|
(117.5)
|
(151.3)
|
Utilisation of own
shares
|
|
-
|
-
|
5.3
|
-
|
-
|
5.3
|
Cash cost of satisfying share
options
|
|
-
|
-
|
-
|
-
|
(5.5)
|
(5.5)
|
Share-based payment
credit
|
|
-
|
-
|
-
|
-
|
14.0
|
14.0
|
Tax charge on items taken directly
to statement of changes in equity
|
8
|
-
|
-
|
-
|
-
|
(1.6)
|
(1.6)
|
Dividends approved and
paid
|
13
|
-
|
-
|
-
|
-
|
(323.8)
|
(323.8)
|
Total equity at 31 December 2022
|
|
291.3
|
777.9
|
(43.1)
|
545.6
|
2,930.4
|
4,502.1
|
Other comprehensive
(expense)/income for the year
|
|
-
|
-
|
-
|
(1.2)
|
0.6
|
(0.6)
|
Profit for the year
|
|
-
|
-
|
-
|
-
|
349.0
|
349.0
|
Total comprehensive (expense)/income for the
year
|
|
-
|
-
|
-
|
(1.2)
|
349.6
|
348.4
|
Utilisation of own
shares
|
|
-
|
-
|
13.4
|
-
|
-
|
13.4
|
Cash cost of satisfying share
options
|
|
-
|
-
|
-
|
-
|
(12.6)
|
(12.6)
|
Share-based payment
credit
|
|
-
|
-
|
-
|
-
|
8.9
|
8.9
|
Tax credit on items taken directly
to statement of changes in equity
|
8
|
-
|
-
|
-
|
-
|
1.1
|
1.1
|
Dividends approved and
paid
|
13
|
-
|
-
|
-
|
-
|
(337.9)
|
(337.9)
|
Total equity at 31 December 2023
|
|
291.3
|
777.9
|
(29.7)
|
544.4
|
2,939.5
|
4,523.4
|
|
|
|
|
|
|
|
|
|
|
Consolidated Cash Flow
Statement
for the year to 31 December
2023
£ million
|
Note
|
2023
|
2022
|
|
Profit on ordinary activities
before financing
|
|
467.8
|
827.5
|
|
Adjustments for:
|
|
|
|
|
Depreciation and
amortisation
|
|
12.7
|
14.5
|
|
Pension contributions in excess of
charge to the income statement
|
|
(3.8)
|
(4.8)
|
|
Share-based payment
charge
|
|
8.9
|
14.0
|
|
Loss on disposal of property, plant
and equipment
|
|
0.3
|
0.3
|
|
Increase in provisions excluding
exceptional payments
|
|
17.3
|
90.9
|
|
Operating cash flows before
movements in working capital
|
|
503.2
|
942.4
|
|
Increase in inventories
|
|
(148.7)
|
(280.4)
|
|
Decrease/(increase) in
receivables
|
|
40.2
|
(9.9)
|
|
(Decrease)/increase in
payables
|
|
(105.8)
|
52.9
|
|
Cash generated from operations
|
|
288.9
|
705.0
|
|
Payments related to exceptional
charges
|
|
(20.8)
|
(45.9)
|
|
Income taxes paid
|
|
(126.5)
|
(176.9)
|
|
Interest paid
|
|
(12.0)
|
(4.7)
|
|
Net cash generated from operating activities
|
|
129.6
|
477.5
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Interest received
|
|
26.4
|
6.9
|
|
Dividends received from joint
ventures
|
|
11.7
|
3.1
|
|
Proceeds on disposal of property,
plant and equipment
|
|
-
|
1.5
|
|
Purchase of property, plant and
equipment
|
|
(6.8)
|
(1.7)
|
|
Purchase of software
|
|
(0.1)
|
(0.4)
|
|
Amounts (invested in)/repaid by
joint ventures
|
|
(3.8)
|
24.2
|
|
Net cash generated from investing activities
|
|
27.4
|
33.6
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Lease capital repayments
|
|
(7.9)
|
(7.6)
|
|
Cash received on exercise of share
options
|
|
3.0
|
0.3
|
|
Purchase of own shares
|
|
-
|
(151.3)
|
|
Repayment of borrowings
|
|
(87.0)
|
-
|
|
Proceeds from borrowings
|
|
87.0
|
-
|
|
Dividends paid
|
|
(337.9)
|
(323.8)
|
|
Net cash used in financing activities
|
|
(342.8)
|
(482.4)
|
|
Net (decrease)/increase in cash and cash
equivalents
|
|
(185.8)
|
28.7
|
|
Cash and cash equivalents at beginning of
year
|
|
952.3
|
921.0
|
|
Effect of foreign exchange rate
changes
|
|
(1.6)
|
2.6
|
|
Cash and cash equivalents at end of year
|
12
|
764.9
|
952.3
|
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
1. Basis of preparation
These results do not constitute the
Group's statutory accounts for the year ended 31 December 2023 but
are derived from those accounts. Statutory accounts for 2022 have
been delivered to the Registrar of Companies and those for 2023
will be delivered following the Company's Annual General Meeting.
The external auditors have reported on those accounts; its report
was unqualified, did not contain an emphasis of matter paragraph
and did not contain any statements under section 498 of the
Companies Act 2006.
The consolidated financial
statements are prepared in accordance with UK-adopted international
accounting standards. The statutory accounts have been prepared
based on the accounting policies and method of computations
consistent with those followed in the preparation of the Group's
annual financial statements for the year ended 31 December
2022.
Going concern
Group forecasts have been prepared
that have considered the Group's current financial position and
current market circumstances. The forecasts were subject to
sensitivity analysis including a severe but plausible scenario
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 macroeconomic 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 further decline in total volumes of 10% in 2024 from 2023 levels,
before recovering back to 2023 levels by 2026
- Price - a
reduction to current selling prices of 10%, remaining at these
levels across 2024 and 2025 before recovering to 2023 levels by
2026
- Costs - a
one-off exceptional charge and cash cost of £150 million for an
unanticipated event, change in government regulations or financial
penalty has been included in 2024
Mitigations to this sensitivity
analysis include a continued 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. If this scenario were to
occur, the Directors also have a range of additional options to
maintain financial strength, including: a more severe reduction in
land spend and work in progress, the sale of assets, reducing the
dividend, and/or raising debt.
At 31 December 2023, the Group had
a cash balance of £765 million and had access to £600 million from
a fully undrawn revolving credit facility, together totalling
£1,365 million. The combination of both of these is sufficient to
absorb the financial impact of each of the risks modelled in the
stress and sensitivity analysis, individually and in
aggregate.
Based on these forecasts, it is
considered that there are sufficient resources available for the
Group to conduct its business, and meet its liabilities as they
fall due, for at least the next 12 months from the date of these
consolidated financial statements. Consequently the consolidated
financial statements have been prepared on a going concern
basis.
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
2. Revenue
An analysis of the Group's
continuing revenue is as follows:
£ million
|
2023
|
2022
|
Private sales
|
3,103.5
|
3,886.1
|
Partnership housing
|
395.6
|
476.4
|
Land & other
|
15.4
|
57.4
|
|
3,514.5
|
4,419.9
|
3. Operating segments
The Group operates in two
countries, 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. The
Group aggregates the UK operations into a single reporting segment
on the basis that they share similar economic characteristics. 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.
|
2023
|
|
2022
|
|
|
£ million
|
UK
|
Spain
|
Total
|
UK
|
Spain
|
Total
|
|
Revenue
|
|
|
|
|
|
|
|
External sales
|
3,371.7
|
142.8
|
3,514.5
|
4,295.5
|
124.4
|
4,419.9
|
|
Result
|
|
|
|
|
|
|
|
Profit before joint ventures,
finance income/(costs) and exceptional items
|
432.5
|
35.3
|
467.8
|
874.9
|
32.6
|
907.5
|
|
Share of results of joint
ventures
|
2.4
|
-
|
2.4
|
15.9
|
-
|
15.9
|
|
Operating profit (Note
14)
|
434.9
|
35.3
|
470.2
|
890.8
|
32.6
|
923.4
|
|
Exceptional items (Note
4)
|
-
|
-
|
-
|
(80.0)
|
-
|
(80.0)
|
|
Profit before net finance
income/(costs)
|
434.9
|
35.3
|
470.2
|
810.8
|
32.6
|
843.4
|
|
Net finance
income/(costs)
|
|
|
3.6
|
|
|
(15.5)
|
|
Profit before taxation
|
|
|
473.8
|
|
|
827.9
|
|
Taxation charge
|
|
|
(124.8)
|
|
|
(184.3)
|
|
Profit for the year
|
|
|
349.0
|
|
|
643.6
|
|
|
|
|
|
|
|
|
|
|
2023
|
2022
|
£ million
|
UK
|
Spain
|
Total
|
UK
|
Spain
|
Total
|
Segment operating assets
|
5,153.2
|
241.6
|
5,394.8
|
5,222.9
|
207.9
|
5,430.8
|
Joint ventures
|
70.5
|
-
|
70.5
|
74.0
|
-
|
74.0
|
Segment operating
liabilities
|
(1,494.0)
|
(147.6)
|
(1,641.6)
|
(1,767.2)
|
(118.1)
|
(1,885.3)
|
Net operating assets
|
3,729.7
|
94.0
|
3,823.7
|
3,529.7
|
89.8
|
3,619.5
|
Net current taxation
|
|
|
(1.6)
|
|
|
(7.2)
|
Net deferred taxation
|
|
|
23.4
|
|
|
26.0
|
Net cash
|
|
|
677.9
|
|
|
863.8
|
Net assets
|
|
|
4,523.4
|
|
|
4,502.1
|
|
|
|
|
|
|
|
|
|
|
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
3. Operating segments (continued)
|
2023
|
2022
|
£ million
|
UK
|
Spain
|
Total
|
UK
|
Spain
|
Total
|
Other information
|
|
|
|
|
|
|
Property, plant and equipment
additions
|
6.6
|
0.2
|
6.8
|
1.6
|
0.1
|
1.7
|
Right-of-use asset
additions
|
20.7
|
0.4
|
21.1
|
7.1
|
0.1
|
7.2
|
Software additions
|
0.1
|
-
|
0.1
|
0.4
|
-
|
0.4
|
Property, plant and equipment
depreciation
|
(1.7)
|
(0.1)
|
(1.8)
|
(4.2)
|
(0.1)
|
(4.3)
|
Right-of-use asset
depreciation
|
(8.9)
|
(0.3)
|
(9.2)
|
(7.2)
|
(0.2)
|
(7.4)
|
Amortisation of intangible
assets
|
(1.7)
|
-
|
(1.7)
|
(2.8)
|
-
|
(2.8)
|
4. Net operating expenses and profit on ordinary
activities before financing
Profit on ordinary activities
before financing for continuing operations has been arrived at
after charging/(crediting):
£ million
|
2023
|
2022
|
Administration expenses
|
232.7
|
220.7
|
Other expenses
|
101.7
|
70.1
|
Other income
|
(85.7)
|
(65.9)
|
Exceptional items
|
-
|
80.0
|
Net operating expenses
|
248.7
|
304.9
|
The majority of the other income
and other expenses shown above relates to the income and associated
costs arising on the sale of part exchange properties. Also
included in other income and other expenses are profit/loss on the
sale of property, plant and equipment, the revaluation of certain
shared equity mortgage receivables and abortive land acquisition
costs.
Exceptional items:
£ million
|
2023
|
2022
|
Provision in relation to cladding
fire safety
|
-
|
80.0
|
Exceptional items
|
-
|
80.0
|
Cladding fire safety
In 2018 the Group established an
exceptional provision for the cost of replacing ACM on a small
number of legacy developments, which was increased in 2020 to
reflect the latest estimate of costs to complete the planned works.
Following the guidance issued by RICS in 2021, the Group announced
an additional £125.0 million provision to fund cladding fire safety
improvements and, in line with Group policy, recognised it as an
exceptional item.
In April 2022 the Group signed up
to the Government's Building Safety Pledge for Developers,
extending the period covered to all buildings constructed by the
Group since 1992, as well as committing to reimburse any funds
allocated or used for Taylor Wimpey buildings over 18 metres from
the Building Safety Fund. In the year to 31 December 2022 the Group
recognised an increase in the provision of £80.0 million, as an
exceptional expense; no further amounts were recognised in the year
to 31 December 2023.
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
4.
Net operating expenses and profit on ordinary activities before
financing (continued)
Profit on ordinary activities
before financing has been arrived at after charging:
£ million
|
2023
|
2022
|
Cost of inventories recognised as
an expense in cost of sales
|
2,646.8
|
3,155.7
|
Property, plant and equipment
depreciation
|
1.8
|
4.3
|
Right-of-use asset
depreciation
|
9.2
|
7.4
|
Amortisation of intangible
assets
|
1.7
|
2.8
|
5.
Finance income and finance costs
£ million
|
2023
|
2022
|
Interest receivable
|
29.5
|
8.6
|
|
29.5
|
8.6
|
£ million
|
2023
|
2022
|
Interest on bank and other
loans
|
(8.3)
|
(4.8)
|
Foreign exchange loss
|
(0.5)
|
-
|
|
(8.8)
|
(4.8)
|
Unwinding of discount on land
creditors and other items
|
(14.8)
|
(18.3)
|
Interest on lease
liabilities
|
(1.0)
|
(0.4)
|
Net interest on pension liability
(Note 10)
|
(1.3)
|
(0.6)
|
|
(25.9)
|
(24.1)
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
6.
Taxation charge
Tax (charged)/credited in the
income statement is analysed as follows:
£ million
|
2023
|
2022
|
Current tax:
|
|
|
|
UK:
|
Current year
|
(116.6)
|
(179.3)
|
|
Adjustment in respect of prior
years
|
1.8
|
0.5
|
Overseas:
|
Current year
|
(6.7)
|
(5.4)
|
|
Adjustment in respect of prior
years
|
0.1
|
(0.5)
|
|
|
(121.4)
|
(184.7)
|
Deferred tax:
|
|
|
|
UK:
|
Current year
|
(2.5)
|
0.4
|
|
Adjustment in respect of prior
years
|
(0.2)
|
(0.1)
|
Overseas:
|
Current year
|
(0.7)
|
(1.7)
|
|
Adjustment in respect of prior
years
|
-
|
1.8
|
|
|
(3.4)
|
0.4
|
|
|
(124.8)
|
(184.3)
|
Corporation tax is calculated at
27.5% (2022: 22.0%) of the estimated assessable profit for the year
in the UK. This includes corporation tax at the rate of 23.5%
(2022: 19.0%) for the year and residential property developer tax
(RPDT) at the rate of 4.0% (2022: 4.0% with effect from 1 April
2022) on profits arising from residential property development
activities. Taxation outside the UK is calculated at the rates
prevailing in the respective jurisdictions. The tax charge for the
prior year includes an exceptional credit of £17.6 million relating
to the cladding fire safety provision.
The charge for the year can be
reconciled to the profit per the income statement as
follows:
£ million
|
2023
|
2022
|
Profit before tax
|
473.8
|
827.9
|
|
|
|
Tax at the UK corporation tax rate
of 27.5% (2022: 22.0%)
|
(130.3)
|
(182.1)
|
Net over provision in respect of
prior years
|
1.7
|
1.7
|
Net impact of items that are not
taxable or deductible
|
0.1
|
(5.6)
|
Recognition of deferred tax asset
relating to Spanish business
|
1.0
|
1.0
|
Other rate impacting
adjustments
|
2.7
|
0.7
|
Tax charge for the year
|
(124.8)
|
(184.3)
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
7.
Earnings per share
|
2023
|
2022
|
Basic earnings per share
|
9.9p
|
18.1p
|
Diluted earnings per
share
|
9.9p
|
18.0p
|
Adjusted basic earnings per
share
|
9.9p
|
19.8p
|
Adjusted diluted earnings per
share
|
9.9p
|
19.7p
|
|
|
|
Weighted average number of shares
for basic earnings per share - million
|
3,530.4
|
3,564.8
|
Weighted average number of shares
for diluted earnings per share - million
|
3,537.5
|
3,576.5
|
Adjusted basic and adjusted
diluted earnings per share, which exclude the impact of exceptional
items and any associated net tax amounts, are presented to provide
a measure of the underlying performance of the Group. A
reconciliation of earnings attributable to equity shareholders used
for basic and diluted earnings per share to that used for adjusted
earnings per share is shown below.
£ million
|
2023
|
2022
|
Earnings for basic and diluted
earnings per share
|
349.0
|
643.6
|
Adjust for exceptional items (Note
4)
|
-
|
80.0
|
Adjust for tax on exceptional items
(Note 6)
|
-
|
(17.6)
|
Earnings for adjusted basic and
adjusted diluted earnings per share
|
349.0
|
706.0
|
8. Deferred tax
£ million
|
Share-
based payments
|
Capital
allowances
|
Temporary
differences on overseas provisions
|
Retirement benefit obligations
|
Losses
and other
temporary
differences
|
Total
|
At
1 January 2022
|
3.9
|
2.4
|
5.5
|
8.8
|
5.6
|
26.2
|
(Charge)/credit to
income
|
(1.7)
|
0.4
|
0.2
|
(0.9)
|
2.4
|
0.4
|
Credit to other comprehensive
income
|
-
|
-
|
-
|
0.7
|
-
|
0.7
|
Charge to statement of changes in
equity
|
(1.6)
|
-
|
-
|
-
|
-
|
(1.6)
|
Foreign exchange
|
-
|
-
|
0.3
|
-
|
-
|
0.3
|
At
31 December 2022
|
0.6
|
2.8
|
6.0
|
8.6
|
8.0
|
26.0
|
Credit/(charge) to
income
|
0.2
|
(0.8)
|
(0.6)
|
(0.7)
|
(1.5)
|
(3.4)
|
Charge to other comprehensive
income
|
-
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
Credit to statement of changes in
equity
|
1.1
|
-
|
-
|
-
|
-
|
1.1
|
Foreign exchange
|
-
|
-
|
(0.1)
|
-
|
-
|
(0.1)
|
At
31 December 2023
|
1.9
|
2.0
|
5.3
|
7.7
|
6.5
|
23.4
|
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. Accordingly, deferred tax on UK temporary differences has
been calculated at 29% (31 December 2022: between 25% and 29%).
Deferred tax on Spanish temporary differences has been calculated
at 25% (31 December 2022: 25%).
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
8. Deferred tax (continued)
The net deferred tax balance is
analysed into assets and liabilities as follows:
£ million
|
2023
|
2022
|
Deferred tax assets
|
25.0
|
27.4
|
Deferred tax liabilities
|
(1.6)
|
(1.4)
|
|
23.4
|
26.0
|
The Group has not recognised
temporary differences relating to tax losses carried forward and
other temporary differences amounting to £2.0 million (2022: £2.4
million) in the UK and £19.4 million (2022: £23.8 million) in
Spain. The UK temporary differences have not been recognised as
they are predominantly non-trading in nature and insufficient
certainty exists as to their future utilisation. The temporary
differences in Spain have not been recognised due to uncertainty of
sufficient taxable profits in the future against which to utilise
these amounts.
At the balance sheet date, the
Group has unused UK capital losses of £269.7 million (2022: £269.5
million). No deferred tax asset has been recognised in respect of
the capital losses at 31 December 2023 (2022: £nil) because the
Group does not believe that it is probable that these capital
losses will be utilised in the foreseeable future.
9.
Inventories
£ million
|
2023
|
2022
|
Land
|
3,269.5
|
3,428.3
|
Development and construction
costs
|
1,871.0
|
1,725.9
|
Part exchange and other
|
29.1
|
15.4
|
|
5,169.6
|
5,169.6
|
The markets in our core
geographies, which are the primary drivers of our business,
continue to trade positively. At 31 December 2023, the Group
completed a net realisable value assessment of inventory,
considering each site individually and based on estimates of sales
price, costs to complete and costs to sell. At 31 December 2023,
the provision held in the United Kingdom was £26.5 million (2022:
£16.0 million) and £32.4 million in Spain (2022: £35.5
million).
The table below details the
movements on the inventory provision recorded in the
year.
£ million
|
2023
|
2022
|
1 January
|
51.5
|
54.8
|
Net additions/(utilised)
|
8.0
|
(5.1)
|
Foreign exchange
|
(0.6)
|
1.8
|
31 December
|
58.9
|
51.5
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
10. Retirement benefit obligations
Total retirement benefit
obligations of £26.5 million (2022: £29.9 million) comprise a
defined benefit pension liability of £26.3 million (2022: £29.6
million) and a post-retirement healthcare liability of £0.2 million
(2022: £0.3 million).
Defined benefit pension scheme
The Group's defined benefit pension
scheme in the UK is the Taylor Wimpey Pension Scheme (TWPS). The
TWPS is a funded defined benefit pension scheme which provides
benefits to beneficiaries in the form of a guaranteed level of
pension payable for life. The level of benefits provided depends on
an individual member's length of service and their salary in the
final years leading up to retirement or date of ceasing active
accrual if earlier. Pension payments are generally increased in
line with inflation. The TWPS is closed to new members and future
accrual.
The Group operates the TWPS under
the UK regulatory framework. Benefits are paid to members from a
Trustee-administered fund and the Trustee is responsible for
ensuring that the TWPS is well managed and that members' benefits
are secure. Scheme assets are held in trust.
The TWPS Trustee's other duties
include managing the investment of scheme assets, administration of
scheme benefits and exercising of discretionary powers. The Group
works closely with the Trustee to manage the TWPS. The Trustee of
the TWPS owes fiduciary duties to the TWPS' beneficiaries. The
appointment of the Directors to the Trustee Board is determined by
the TWPS trust documentation.
The most recent triennial valuation
of the TWPS was undertaken with a reference date of 31 December
2019. The result of this valuation was a Technical Provisions
deficit at 31 December 2019 of £36.0 million.
In March 2021, a new funding
arrangement was agreed with the TWPS 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 (£10.0 million) between 1 April 2021 and 30 September
2021 were guaranteed. 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.
Contributions to the escrow are suspended should the TWPS Technical
Provisions funding level at any quarter-end be 100% or more and
would restart only if the funding level subsequently falls below
98%. The funding test at 30 September 2021 showed a funding level
of 103% and it has remained above 98% since then and therefore
escrow payments were suspended on, and from, 1 October 2021. The
Group continues to contribute £5.1 million per annum from the
Pension Funding Partnership and £2.0 million per annum to cover
scheme expenses.
During 2023, the Group has engaged
with the TWPS Trustee on the triennial valuation of the pension
scheme with a reference date of 31 December 2022. At the current
time, discussions are ongoing with the TWPS Trustee to agree the
valuation as well as future contributions (if applicable).
Legislation requires that the valuation must be concluded by 31
March 2024.
The escrow account, over which the
TWPS Trustee holds a fixed charge, is recognised in other financial
assets and at 31 December 2023 was £10.3 million (31 December 2022:
£10.0 million), with interest earned by the escrow account being
retained within 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.
On an IAS 19 accounting basis the
underlying surplus in the TWPS at 31 December 2023 was £76.7
million (2022: £76.6 million). The terms of the TWPS are such that
the Group does not have an unconditional right to a refund of
surplus. As a result, the Group recognised an adjustment to the
underlying surplus in the TWPS on an IAS 19 accounting basis of
£103.0 million (2022: £106.2 million), resulting in an IFRIC 14
deficit of £26.3 million (2022: £29.6 million), which represented
the present value of future contributions under the funding
plan.
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
10. Retirement benefit obligations
(continued)
In 2013, the Group introduced a
£100.0 million Pension Funding Partnership that utilises the
Group's show homes, as well as six offices, in a sale and leaseback
structure. This provides an additional £5.1 million of annual
funding for the TWPS. The assets held within the Pension Funding
Partnership do not affect the IAS 19 figures (before IFRIC 14) as
they remain assets of the Group, and are not assets of the TWPS. At
31 December 2023 there was £79.9 million of property and £32.7
million of cash held within the structure (2022: £75.2 million of
property and £39.8 million of cash). The current terms of the
Pension Funding Partnership are such that, should the TWPS be in a
Technical Provisions deficit at 31 December 2028, then a bullet
payment will be due to the TWPS equal to the lower of £100.0
million or the Technical Provisions deficit at that
time.
The Group continues to work closely
with the Trustee in managing pension risks, including management of
interest rate, inflation and longevity risks. The TWPS assets are
approximately 96% hedged against changes in both interest rates and
inflation expectations on the scheme's long term funding basis that
is currently used for investment strategy purposes. The TWPS also
benefits from a bulk annuity contract which covers some of the
largest liabilities in the scheme, providing protection against
interest rate, inflation and longevity risk.
Accounting assumptions:
The assumptions used in calculating
the accounting costs and obligations of the TWPS, as detailed
below, are set by the Directors after consultation with independent
actuaries. The basis for these assumptions is prescribed by IAS 19
and they do not reflect the assumptions that may be used in future
funding valuations of the TWPS.
|
2023
|
2022
|
At 31 December
|
|
|
Discount rate for scheme
liabilities
|
4.60%
|
4.95%
|
General pay inflation
|
n/a
|
n/a
|
Deferred pension
increases
|
2.15%
|
2.30%
|
Pension increases
|
1.90%-3.70%
|
2.10%-3.65%
|
The table below shows the impact
to the present value of scheme liabilities of movements in key
assumptions.
Assumption
|
Change in
assumption
|
Impact
on
scheme liabilities
|
Impact on
scheme liabilities (%)
|
Discount rate
|
Decrease
by 0.5% p.a.
|
Increase
by £90m
|
5.4
|
Rate of inflation*
|
Increase
by 0.5% p.a.
|
Increase
by £51m
|
3.0
|
Life expectancy
|
Members
live 1 year longer
|
Increase
by £66m
|
3.9
|
* Assumed to affect deferred
revaluation and pensioner increases in payment.
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
10. Retirement benefit obligations
(continued)
The table below details the
movements in the TWPS pension liability and assets recorded through
the income statement and other comprehensive income.
£ million
|
|
Present
value of obligation
|
Fair
value
of scheme assets
|
Asset/(liability) recognised on balance sheet
|
At 1 January 2023
|
|
(1,675.9)
|
1,646.3
|
(29.6)
|
Administration expenses
|
|
-
|
(3.3)
|
(3.3)
|
Interest
(expense)/income
|
|
(80.3)
|
79.0
|
(1.3)
|
Total amount recognised in income
statement
|
|
(80.3)
|
75.7
|
(4.6)
|
Remeasurement gain on scheme
assets
|
|
-
|
29.7
|
29.7
|
Change in demographic
assumptions
|
|
27.1
|
-
|
27.1
|
Change in financial
assumptions
|
|
(34.9)
|
-
|
(34.9)
|
Experience loss
|
|
(29.5)
|
-
|
(29.5)
|
Adjustment to liabilities for IFRIC
14
|
|
8.4
|
-
|
8.4
|
Total remeasurements in other
comprehensive income
|
|
(28.9)
|
29.7
|
0.8
|
Employer contributions
|
|
-
|
7.1
|
7.1
|
Employee contributions
|
|
-
|
-
|
-
|
Benefit payments
|
|
105.3
|
(105.3)
|
-
|
At 31 December 2023
|
|
(1,679.8)
|
1,653.5
|
(26.3)
|
£ million
|
|
Present
value of obligation
|
Fair
value
of scheme assets
|
Asset/(liability) recognised on balance sheet
|
At 1 January 2022
|
|
(2,482.3)
|
2,445.3
|
(37.0)
|
Administration expenses
|
|
-
|
(2.3)
|
(2.3)
|
Interest
(expense)/income
|
|
(44.9)
|
44.3
|
(0.6)
|
Total amount recognised in income
statement
|
|
(44.9)
|
42.0
|
(2.9)
|
Remeasurement loss on scheme
assets
|
|
-
|
(746.1)
|
(746.1)
|
Change in demographic
assumptions
|
|
(20.0)
|
-
|
(20.0)
|
Change in financial
assumptions
|
|
758.8
|
-
|
758.8
|
Experience loss
|
|
(73.6)
|
-
|
(73.6)
|
Adjustment to liabilities for IFRIC
14
|
|
84.1
|
-
|
84.1
|
Total remeasurements in other
comprehensive income
|
|
749.3
|
(746.1)
|
3.2
|
Employer contributions
|
|
-
|
7.1
|
7.1
|
Employee contributions
|
|
-
|
-
|
-
|
Benefit payments
|
|
102.0
|
(102.0)
|
-
|
At 31 December 2022
|
|
(1,675.9)
|
1,646.3
|
(29.6)
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
11. Own shares
During the prior year 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.
12. 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
other loans
|
Total
net
cash
|
Balance at 1 January
2022
|
921.0
|
(84.0)
|
837.0
|
Net cash flow
|
28.7
|
-
|
28.7
|
Foreign exchange
|
2.6
|
(4.5)
|
(1.9)
|
Balance at 31 December
2022
|
952.3
|
(88.5)
|
863.8
|
Net cash flow
|
(185.8)
|
-
|
(185.8)
|
Foreign exchange
|
(1.6)
|
1.5
|
(0.1)
|
Balance at 31 December 2023
|
764.9
|
(87.0)
|
677.9
|
In December 2022, the Group entered
into an agreement to refinance the €100 million loan notes maturing
in June 2023. The new loan notes were issued in June 2023, maturing
June 2030.
13. Dividends
£ million
|
2023
|
2022
|
Proposed
|
|
|
Interim dividend 2023: 4.79p (2022:
4.62p) per ordinary share of 1p each
|
169.1
|
162.9
|
Final dividend 2023: 4.79p (2022:
4.78p) per ordinary share of 1p each
|
169.4
|
169.0
|
|
338.5
|
331.9
|
Amounts recognised as distributions
to equity holders
|
|
|
Paid
|
|
|
Final dividend 2022: 4.78p (2021:
4.44p) per ordinary share of 1p each
|
168.8
|
160.9
|
Interim dividend 2023: 4.79p (2022:
4.62p) per ordinary share of 1p each
|
169.1
|
162.9
|
|
337.9
|
323.8
|
The Directors recommend a final
dividend for the year ended 31 December 2023 of 4.79 pence per
share (2022: 4.78 pence per share) subject to shareholder approval
at the Annual General Meeting, with an equivalent final dividend
charge of c.£169 million based on the number of shares in issue at
the end of the year (2022: £168.8 million). The final dividend will
be paid on 10 May 2024 to all shareholders registered at the close
of business on 2 April 2024.
In accordance with IAS 10 'Events
after the Reporting Period', the proposed final dividend has not
been accrued as a liability at 31 December 2023.
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
14. Alternative performance measures
The Group uses a number of
alternative performance measures (APMs) which are not defined
within UK-adopted international accounting standards. 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 statutory measures. The following APMs are
referred to throughout the year end 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 tax and profit for the period, on the face of the
Consolidated Income Statement.
Operating profit and operating profit margin
Throughout the statement, operating
profit is used as one of the main measures of performance.
Operating profit is defined as profit on ordinary activities before
financing, exceptional items and tax, after share of results of
joint ventures. The Directors consider this to be an important
measure of the underlying performance of the Group. Operating
profit margin is calculated as operating profit divided by total
revenue.
|
2023
|
2022
|
Profit on ordinary activities
before financing (£m)
|
467.8
|
827.5
|
Adjusted for:
|
|
|
Share of results of joint ventures
(£m)
|
2.4
|
15.9
|
Exceptional items (£m)
|
-
|
80.0
|
Operating profit (£m)
|
470.2
|
923.4
|
Revenue (£m)
|
3,514.5
|
4,419.9
|
Operating profit margin
|
13.4%
|
20.9%
|
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.
|
2023
|
2022
|
2021
|
Basic net assets (£m)
|
4,523.4
|
4,502.1
|
4,314.0
|
Adjusted for:
|
|
|
|
Cash (£m)
|
(764.9)
|
(952.3)
|
(921.0)
|
Borrowings (£m)
|
87.0
|
88.5
|
84.0
|
Net taxation (£m)
|
(21.8)
|
(18.8)
|
(26.4)
|
Accrued dividends (£m)
|
-
|
-
|
-
|
Net operating assets (£m)
|
3,823.7
|
3,619.5
|
3,450.6
|
Average basic net assets (£m)
|
4,512.8
|
4,408.1
|
|
Average net operating assets (£m)
|
3,721.6
|
3,535.1
|
|
Return on net operating assets
Return on net operating assets is
defined as rolling 12-month operating profit divided by the average
of opening and closing net operating assets. The Directors consider
this to be an important measure of the underlying operating
efficiency and performance of the Group.
|
2023
|
2022
|
Operating profit (£m)
|
470.2
|
923.4
|
Average net operating assets
(£m)
|
3,721.6
|
3,535.1
|
Return on net operating assets
|
12.6%
|
26.1%
|
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
14. Alternative performance measures
(continued)
Net operating asset turn
This is defined as 12 month rolling
total revenue divided by the average of opening and closing net
operating assets. The Directors consider this to be a good
indicator of how efficiently the Group is utilising its assets to
generate value for shareholders.
|
2023
|
2022
|
Revenue (£m)
|
3,514.5
|
4,419.9
|
Average net operating assets
(£m)
|
3,721.6
|
3,535.1
|
Net operating asset turn
|
0.94
|
1.25
|
Tangible net assets per share
This is calculated as net assets
before any accrued dividends, excluding intangible assets, divided
by the number of ordinary shares in issue at the end of the period.
The Directors consider this to be a good measure of the value
intrinsic within each ordinary share.
|
2023
|
2022
|
Basic net assets (£m)
|
4,523.4
|
4,502.1
|
Adjusted for:
|
|
|
Intangible assets (£m)
|
(2.6)
|
(4.2)
|
Tangible net assets (£m)
|
4,520.8
|
4,497.9
|
Ordinary shares in issue
(millions)
|
3,557.0
|
3,557.0
|
Tangible net assets per share (pence)
|
127.1
|
126.5
|
Net cash
Net cash is defined as cash and
cash equivalents less total borrowings. This is considered by the
Directors to be the best indicator of the financing position of the
Group. This is reconciled in Note 12.
Cash conversion
This is defined as cash generated
from operations, which excludes payments relating to exceptional
charges, divided by operating profit on a rolling 12 month basis.
The Directors consider this measure to be a good indication of how
efficiently the Group is turning profit into cash.
|
2023
|
2022
|
Cash generated from operations
(£m)
|
288.9
|
705.0
|
Operating profit (£m)
|
470.2
|
923.4
|
Cash conversion
|
61.4%
|
76.3%
|
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.
|
2023
|
2022
|
Cash (£m)
|
764.9
|
952.3
|
Loans (£m)
|
(87.0)
|
(88.5)
|
Net cash (£m)
|
677.9
|
863.8
|
Land creditors (£m)
|
(516.1)
|
(725.6)
|
Adjusted net debt (£m)
|
161.8
|
138.2
|
Basic net assets (£m)
|
4,523.4
|
4,502.1
|
Adjusted gearing
|
(3.6)%
|
(3.1)%
|
Adjusted basic and diluted 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 in issue during the period. The Directors consider this
provides an important measure of the underlying earnings capacity
of the Group. Note 7 shows a reconciliation from basic and diluted
earnings per share to adjusted basic and diluted earnings per
share.
Notes to the Condensed Consolidated
Financial Statements
for the year to 31 December
2023
15. Post balance sheet events
There were no material subsequent
events affecting the Group after 31 December 2023.