TIDMTW.
RNS Number : 4789H
Taylor Wimpey PLC
04 August 2021
4 August 2021
Taylor Wimpey plc
Half year results for the period ended 4 July 2021
Record first half performance and excellent momentum into the
medium term
Pete Redfern, Chief Executive, commented:
"We have delivered a record first half performance and a strong
operating profit margin* performance of 19.3%, which reflects tight
cost discipline as well as higher completions in the period.
Our focus remains on driving further improvement in our
operating profit margin and accelerated outlet-driven volume growth
from 2023.
Backed by last year's equity raise we stepped up our activity in
the land market before competition returned and we successfully
increased our land pipeline with high-quality sites that will
deliver a strong financial performance. We are progressing this
land through the planning stages as expected, providing excellent
momentum for growth, enhanced returns for our stakeholders and
increased numbers of new homes.
We have a clear purpose to deliver high-quality homes and create
thriving communities and a strategy to ensure the long term
sustainability of the business. We now expect to deliver 2021 full
year Group operating profit* of c.GBP820 million, above the top end
of consensus(1) , with UK completions (excluding joint ventures)
expected to be towards the upper end of our guidance range of
13,200 to 14,000."
Financial highlights:
-- Group completions of 7,303 homes (H1 2020: 2,771) excluding
joint ventures, a record first half performance, partly due to the
delayed Q4 2020 completions
-- Strong margin performance with first half Group operating
profit margin of 19.3% (H1 2020: (2.1)%; H1 2019: 18.0%), as a
result of our strong cost and price discipline throughout the
business and benefiting from increased completions
-- Net cash (++) of GBP906.5 million, due to timing of land payments
-- Acted decisively in March 2021, to announce a new cladding
fire safety provision of GBP125 million to make apartment buildings
safe and mortgageable up to EWS1 (External Wall Fire Review)
guidance
-- 2021 interim dividend of 4.14 pence per share (c.GBP151
million in total) in line with our Ordinary Dividend Policy to
return c.7.5% of net assets to shareholders annually in two equal
payments
Group financial highlights
H1 2021 H1 2020 Change FY 2020
Revenue GBPm 2,196.3 754.6 191.1% 2,790.2
-------- -------- -------- --------
Operating profit / (loss)*
GBPm 424.0 (16.1) n/a 300.3
-------- -------- -------- --------
Operating profit margin 19.3% (2.1)% 21.4ppt 10.8%
-------- -------- -------- --------
Profit / (loss) before
tax and exceptional items
GBPm 412.5 (29.8) n/a 274.4
-------- -------- -------- --------
Profit / (loss) before
tax GBPm 287.5 (39.8) n/a 264.4
-------- -------- -------- --------
Basic earnings / (loss)
per share pence 6.5 (1.0) n/a 6.3
-------- -------- -------- --------
Adjusted basic earnings
/ (loss) per share pence 9.3 (0.7) n/a 6.5
-------- -------- -------- --------
Tangible net asset value
per share pence 113.3 102.8 10.2% 110.0
-------- -------- -------- --------
Net cash GBPm 906.5 497.3 82.3% 719.4
-------- -------- -------- --------
Return on net operating
assets** 23.0% 16.8% 6.2ppt 9.9%
-------- -------- -------- --------
UK operational highlights
-- Positive momentum in the first half:
o H1 2021 net private sales rate of 0.97 (H1 2020: 0.70)
o Average outlets during the period of 228 (H1 2020: 237)
o Opened 37 new outlets in the period (H1 2020: 39)
o We expect to grow our outlet numbers by around 50 over the
next 24 months
-- Strong UK total order book representing 10,344 homes with a
value of GBP2,608 million as at 4 July 2021 (28 June 2020: 11,686
homes, GBP2,904 million), excluding joint ventures
-- At the half year, 97% forward sold for 2021 completions (H1 2020: 91%; H1 2019: 82%)
-- c.14.5k plots approved during the first half (H1 2020:
c.5.2k) at attractive margins and return on capital employed (***)
(ROCE)
-- Strong growth in short term landbank by c.5k plots to c.82k plots (H1 2020: c.77k)
-- Significant additions to the strategic land pipeline which
stood at c.147k potential plots as at 4 July 2021 (31 December
2020: c.139k)
-- Further improvement in average Construction Quality Review score to 4.65 (H1 2020: 4.31)
-- 4 out of 5 star rating on Trustpilot and 92% of customers
would recommend us in H1 2021 according to the Home Builders
Federation 8-week customer survey
-- Excellent employee survey results:
o Health and safety continued to be the top scoring area at
97%
o Overall employee engagement score of 91%
o 95% of employees are proud to work for Taylor Wimpey
o 96% of employees feel they can be their authentic self at
work
-- Recently included in the Financial Times inaugural list of
Europe's Climate Leaders and rated by ISS ESG with prime status for
our performance in ESG, the highest among the construction sector
organisations it rates
First half performance overview
The UK housing market has continued to perform strongly across
all our geographies in the first half of the year. Having entered
2021 with an excellent order book we have delivered a strong first
half performance, benefiting, as anticipated, from delayed Q4 2020
completions and the continuing strength in the housing market. We
are particularly pleased with our Group operating margin
performance which was 19.3% as a result of our strong cost
discipline, a slightly higher weighting of completions in the first
half and our focus on optimising price and driving margin
performance.
Total UK home completions (excluding joint ventures) increased
to 7,219 in the first half (H1 2020: 2,713), with the comparator
heavily impacted by the COVID-19 shutdown. Group revenue increased
to GBP2,196.3 million (H1 2020: GBP754.6 million). Group operating
profit increased to GBP424.0 million (H1 2020: GBP16.1 million
loss) with operating profit margin increasing to 19.3% (H1 2020:
(2.1)%).
Today we announce a 2021 interim dividend to be paid in November
2021 of 4.14 pence per share amounting to c.GBP151 million in total
in line with our Ordinary Dividend Policy to return c.7.5% of net
assets to shareholders annually in two equal payments.
UK current trading
During the first half of 2021 we have seen strong demand for
homes in the UK underpinned by low interest rates, good mortgage
availability and Government support for customers in the form of
Help to Buy. We have continued to see high levels of demand for our
homes and have built a strong forward sales position.
Our sales rate for the first half was 0.97 (H1 2020: 0.70), due
to strong customer demand. There have been healthy levels of
customer interest in reservations extending well beyond the end of
the Stamp Duty Land Tax holiday. Cancellation numbers have remained
at normal levels throughout H1 2021. The cancellation rate for H1
2021 was 14% (H1 2020: 21%; H1 2019: 14%).
Forward indicators remain robust and as at 1 August 2021, our
order book value was GBP2,712 million (2020 equivalent period:
GBP3,022 million), excluding joint ventures, representing 10,589
homes (2020 equivalent period: 12,014 homes). As at 1 August 2021,
we were c.99% forward sold for private completions for 2021 (2020
equivalent period: c.97%; 2019 equivalent period: c.87%).
The sector has seen increased build cost and supply chain
pressure in relation to some materials in the first half of 2021,
however this is being fully offset by healthy levels of house price
growth.
Outlook
The UK housing market remains strong, underpinned by low
interest rates, good mortgage availability and Government support
for customers.
We anticipate full year 2021 completions for the UK, excluding
joint ventures, will be towards the upper end of our guidance range
of 13,200 to 14,000 homes. We continue to expect to end 2021 on a
similar number of outlets to those at the beginning of the
year.
We now expect 2021 full year Group operating profit to be
c.GBP820 million, above the top end of consensus (1) .
Our 2021 year end net cash balance is anticipated to be around
GBP700 million, subject to the timing of certain land
transactions.
Looking further ahead, we have excellent momentum going into the
medium term and are well positioned for accelerated volume growth
from 2023. In the past 12 months we have approved a record c.32k
plots in line with our medium term operating margin target of
c.21-22% and at a ROCE of over 30%, taking timely advantage of the
lack of competition in the land market last year. We are focused on
working with our partners and local communities to progress this
additional land through the planning system and expect to grow our
outlets by around 50 over the next 24 months, leading to a
significant increase in completions of much needed new homes from
2023. Assuming normal market conditions, the additional land we
have approved over the last year will enable us to deliver volumes
of 17-18k in the medium term.
Our first priority remains driving improvement in our operating
profit margin, followed by this outlet driven growth. We remain
focused on value, execution and driving operating margin to achieve
our c.21-22% operating margin target in the medium term. We also
continue to build on the long term sustainability of the business,
delivering value for all our stakeholders.
(1) As published on 3 August 2021, the Company compiled
consensus expectation for full year 2021 is for operating profit of
GBP779 million with a range of GBP756 million to GBP808
million.
Alternative performance measures and other key performance
indicators
* Operating profit or loss is defined as profit or loss on
ordinary activities before net finance costs, exceptional items and
tax, after share of results of joint ventures.
* Operating margin is defined as operating profit or loss
divided by revenue.
** Return on net operating assets (RONOA) is defined as rolling
12 months operating profit or loss 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.
*** Return on capital employed (ROCE) is defined as rolling 12
months operating profit or loss divided by the average capital
employed calculated on a monthly basis over the period.
**** Operating cash flow is defined as cash generated by
operations (which is before income taxes paid, interest paid and
payments related to exceptional charges).
Tangible net assets per share is defined as net assets before
any accrued dividends excluding goodwill and intangible assets
divided by the number of ordinary shares in issue at the end of the
period.
Adjusted basic earnings per share represents earnings attributed
to the shareholders of the parent, excluding exceptional items and
tax on exceptional items, divided by the weighted average number of
shares in issue during the period.
* Net operating asset turn is defined as 12 months rolling total
revenue divided by the average of opening and closing net operating
assets of the 12 month period .
(***) The Injury Incidence Rate (IIR) is defined as the number
of incidents per 100,000 employees and contractors, calculated on a
rolling 12 month basis, where the number of employees and
contractors is calculated using a monthly average over the same
period.
(++) Net cash is defined as total cash less total borrowings
.
(++++) Cash conversion is defined as operating cash flow divided
by operating profit or loss on a rolling 12 month basis.
(++++++++) Adjusted gearing is defined as adjusted net debt
divided by net assets. Adjusted net debt is defined as net cash
less land creditors.
A reconciliation of alternative performance measures to
statutory measures is disclosed in note 18 of the financial
statements.
- Ends -
A presentation to investors and analysts will be hosted by Chief
Executive Pete Redfern, Group Finance Director Chris Carney, and
Divisional Chair of London & South East Ingrid Osborne via
conference call at 8:30am on Wednesday 4 August 2021. 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 4 August 2021.
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7826 874 461
Chris Carney, Group Finance Director
Debbie Archibald, Investor Relations
Andrew McGeary, Investor Relations
Finsbury TaylorWimpey@Finsbury.com
Faeth Birch
Anjali Unnikrishnan
Notes to editors:
Taylor Wimpey plc is a customer-focused homebuilder, operating
at a local level from 23 regional businesses across the UK. We also
have operations in Spain.
For further information please visit the Group's website:
www.taylorwimpey.co.uk
Follow us on Twitter @TaylorWimpeyplc
Positioned for accelerated growth with enhanced returns over the
medium term
In the last 12 months, following our opportunity-led equity
raise, we have moved decisively to source and approve a quality
land pipeline in a very attractive land market, equating to around
double the plots sourced and approved in an average year, to drive
accelerated volume growth in the medium term. With increased
competition in the land market, as the housing market shows
strength, we are now able to operate on a selective and replacement
basis, further protecting future margin.
Overall, we expect the short term landbank to grow in excess of
the 10k additional plots targeted at the time of the equity raise,
when our short term landbank was 77k plots. We continue to expect
meaningful growth in outlets in the fourth quarter of 2022 leaving
us well positioned for significant growth in completions from 2023.
Assuming normal market conditions, the additional land we have
approved over the last year will enable us to deliver volumes of
17-18k in the medium term.
We are a quality and responsible business, with a strong culture
where ESG and sustainability are integrated within our strategy and
day to day working. We have a talented and committed workforce, and
excellent subcontractor and supplier relationships which we have
built on during the pandemic. Having simplified our focus on
driving operating margin, we are now also realising the benefits of
our previous investments in customer service and our people, and
are embedding operational and efficiency improvements and a culture
of cost discipline across the business.
Looking forward, we are in an excellent position with strong
growth momentum without the need to add meaningfully to our
operating structure. We are confident of achieving our medium term
operating margin target of c.21-22% and delivering increased
returns for our stakeholders.
Progress against our 2021 priorities
At our full year 2020 results we outlined our four key
priorities:
-- Operating profit margin delivery
-- Bringing through new land acquisitions for volume growth in 2023/24
-- Delivering consistently great build quality and customer service
-- Building on our strengths in social and governance areas and new environmental strategy
We are pleased that we have made excellent progress in each of
these areas:
Operating profit margin delivery
Operating profit margin is our primary performance measure and
we remain confident of delivering our target operating profit
margin of c.21-22% in the medium term. We have made good progress
driving this with a first half margin of 19.3% (H1 2020: (2.1)%; H1
2019: 18.0%), driven by our cost and price discipline and increased
volumes.
As previously announced, annualised cost savings amounting to
GBP16 million that were identified last year are being realised
this year.
With our UK businesses 99% forward sold for the year as at 1
August 2021, we remain focused on driving value over short term
volume. Our long order book and the positive selling environment
have allowed us to focus on price optimisation whilst maintaining
strong sales rates.
Bringing through new land acquisitions for volume growth in
2023/24
In the last 12 months we have approved c.32k plots, equating to
around double the number of plots sourced and approved in an
average year, providing an excellent base for growth in the medium
term.
Importantly, the step up in land acquisitions, sourced and
transacted in a time of reduced competition in the land market,
enabled us to add high-quality sites at targeted returns of
c.21-22% operating margin in all our locations, including smaller
sites where there is generally more competition.
We are focused on progressing new land through the planning
system and expect our outlet numbers to grow by around 50 in the
next 24 months, driving significant growth in completions from
2023.
Delivering consistently great build quality and customer
service
It remains a key priority to deliver excellent customer service,
building on the improvements we have made over recent years. We are
pleased to see this reflected in our customer feedback where we
have continued to operate above the 90% level required to be
considered an HBF five star builder.
Build quality is fundamental to good customer service and
remains a key focus for our teams. We monitor this through our
independent Construction Quality Review (CQR) score which has once
again improved to 4.65 out of 6 (H1 2020: 4.31). Our improvements
in customer service, and fundamental build quality, a journey we
started several years ago, make us a better and more sustainable
business.
Building on our strengths in social and governance areas and new
environmental strategy
Our purpose is 'to build great homes and create thriving
communities', and we believe that all elements of ESG are critical
to achieving this and to the long term sustainability of the
business.
This year we were included in the Financial Times inaugural list
of Europe's Climate Leaders which includes the 300 companies that
have achieved the greatest reduction of greenhouse gas emissions
intensity (tonnes of CO per EUR1m revenue) between 2014 and 2019.
We have also been awarded prime status by ISS ESG with a score of
C+ which is the highest score among the construction sector
organisations it rates.
Our culture is built on a desire to 'do the right thing'. We
were pleased that once again health and safety was our top scoring
area at 97% in our recent employee survey which had an overall
employee engagement score of 91%. 95% of employees are proud to
work for Taylor Wimpey and 95% feel Taylor Wimpey offers
opportu-nities for employees of all backgrounds to progress.
Operational review
Taylor Wimpey plc is a customer-focused residential developer
building and delivering homes and communities across the UK and in
Spain.
Our operational review is for the UK only as the majority of
metrics do not apply to our Spanish business. A short summary of
the Spanish business follows. The financial analysis is presented
at Group level, which includes Spain, unless otherwise
indicated.
Joint ventures are excluded from the operational review and
Group financial review, unless stated otherwise.
Our key performance indicators (KPIs)
Table 1: KPIs
UK H1 2021 H1 2020 Change FY 2020
Customers and communities
Customer satisfaction 8-week
score
'Would you recommend?' 92% 91% 1.0ppt 92%
-------- -------- --------- --------
Customer satisfaction 9-month
score
'Would you recommend?' 80% 76% 4.0ppt 78%
-------------------------------------- -------- -------- --------- --------
Build quality
Construction Quality Review (average
score / 6) 4.65 4.31 7.9% 4.45
-------- -------- --------- --------
Average reportable items per
inspection 0.25 0.26 (3.8)% 0.24
-------- -------- --------- --------
Optimising our strong landbank
Land cost as % of ASP on approvals 14.4% 20.1% (5.7)ppt 18.3%
-------- -------- --------- --------
Landbank years c.5.8 c.6.5 (10.8)% c.8.1
-------- -------- --------- --------
% of completions from strategically
sourced land 55% 55% - 55%
-------- -------- --------- --------
Be the employer of choice in our industry
Employee turnover % (voluntary)
rolling 12 months 14.7% 11.1% 3.6ppt 9.4%
-------- -------- --------- --------
Number of people recruited into
early talent programmes: graduates,
management trainees and site
management trainees rolling 12
months 60 98 (38.8)% 47
-------- -------- --------- --------
Directly employed key trades
including trade apprentices 869 1,110 (21.7)% 1,038
-------- -------- --------- --------
Health and Safety Injury Incidence
Rate (per 100,000 employees and
contractors) rolling 12 months
*** 193 130 48.5% 151
-------- -------- --------- --------
Best in class efficient engine room
Net private sales rate per outlet
per week 0.97 0.70 38.6% 0.76
-------- -------- --------- --------
Private legal completions per
outlet 26.6 8.8 202.3% 31.5
-------- -------- --------- --------
Order book value GBPm 2,608 2,904 (10.2)% 2,684
-------- -------- --------- --------
Order book volume - no. of homes 10,344 11,686 (11.5)% 10,685
-------- -------- --------- --------
N.B. The 8-week 'would you recommend' score for H1 2021 relates
to customers who legally completed between October 2020 and March
2021 with the comparator relating to the same period 12 months
prior. The 9-month 'would you recommend' score for H1 2021 relates
to customers who legally completed between October 2019 and March
2020, with the comparator relating to the same period 12 months
prior.
Sales, completions and pricing
Total home completions (excluding joint ventures) increased by
166% to 7,219 (H1 2020: 2,713) including 1,158 affordable homes (H1
2020: 637), equating to 16.0% of total completions (H1 2020:
23.5%).
Our net private sales rate for the first half of the year was
0.97 homes per outlet per week (H1 2020: 0.70). Cancellation
numbers have remained at normal levels in the first half of 2021,
at a rate of 14% (H1 2020: 21%; H1 2019: 14%). Average selling
prices on private completions increased by 6.5% to GBP327k (H1
2020: GBP307k). Our total average selling price increased by 11.2%
to GBP299k (H1 2020: GBP269k), reflecting a lower proportion of
affordable homes in the mix, in line with previous guidance, and
house price inflation.
We have a wide range of products from one-bedroom apartments to
five-bedroom homes. First time buyers accounted for 46% of total
sales in the first half of 2021 (H1 2020: 50%). Investor sales
continued to be at a very low level at 4% (H1 2020: 3%).
During the first half of 2021 approximately 27% of private
reservations used the Help to Buy scheme (H1 2020: c.53%), as we
transitioned to the new Help to Buy scheme in H1 2021.
As at H1 2021, our order book represented 10,344 homes (H1 2020:
11,686 homes; H1 2019: 10,137 homes) with an order book value of
GBP2,608 million (H1 2020: GBP2,904 million; H1 2019: GBP2,366
million), excluding joint ventures. Our affordable order book stood
at 4,428 homes at H1 2021 (H1 2020: 5,119 homes; H1 2019: 4,474
homes).
During the first half of 2021 we opened 37 new outlets (H1 2020:
39).
Customers
We were pleased to have been recognised as a five star builder
in the latest customer satisfaction survey by the Home Builders
Federation (HBF) in March 2021, covering the 12 months from October
2019 to September 2020. We are pleased that our average survey
score for the first half of 2021 of 92%, continues to be above the
90% level required to be considered a five star builder. We
continue to focus on offering excellent service with targeted
improvements in our responsiveness to customer issues. We expect to
benefit further from the recent roll out of the Microsoft Dynamics
platform, which is providing valuable customer insights and
improving the ease of doing business for both our customers and our
sales and customer service teams. We also encourage customers to
leave reviews on Trustpilot. We currently have a 4 out of 5 star
rating with a TrustScore of 3.9 out of 5.
Delivering build quality consistently has been key to customer
satisfaction. In evaluating our progress, we continue to assess a
broad range of measures of quality and service. In 2019 we
introduced the NHBC Construction Quality Review (CQR) score as a
new KPI. In H1 2021 we scored an average of 4.65 (H1 2020: 4.31)
from a possible score of 6. We aim to improve this further by
ensuring our quality assurance processes are embedded at every
stage of build.
We are piloting our new house type range this year, with build
complete on the key pilot homes ahead of roll out. These standard
house types based on our customer feedback will improve light,
space, storage and flexible living with the design allowing for
flexible areas for home working spaces. The new house types will
help us reduce the number of stock items and improve quality and
consistency of our product and are designed to more readily adapt
to future changes, such as upcoming changes to parts L & F
(heating and ventilation) of the Future Homes Standard.
The pandemic has altered our ways of working, providing valuable
lessons on how we can continue to improve our service offering. For
example, our switch to dedicated customer appointments was warmly
welcomed by customers, helping us provide a better, more
personalised service and we expect to mainly continue with this
sales model. We will also continue to offer more flexible employee
and customer contact hours, building on lessons learned during the
pandemic. We continue to see Taylor Wimpey as having an important
role to play in helping establish new communities through the
communal infrastructure we create and the initiatives and local
charities we support.
Following the recent consultation, we support the Government's
New Homes Quality Code that will sit at the centre of the new
arrangements being put in place by the New Homes Quality Board,
including the appointment of an independent New Homes Ombudsman
Service expected later this year. The new service will provide
impartial rulings on unresolved customer issues and help raise
standards in the wider industry.
Fire safety
In the 2020 full year results announcement in March 2021, we
announced a new cladding fire safety provision of GBP125 million to
make apartment buildings safe and mortgageable in line with the
latest Royal Institute of Chartered Surveyors (RICS) EWS1 (External
Wall Fire Review) guidance. Together with the existing provision in
place for the removal of Aluminium Composite Material (ACM) on high
rise buildings, this takes our total provisions recorded for
cladding EWS1 related works to GBP165 million. The provision
announced in March covers an estimate of the total cost of the work
required to meet the updated EWS1 requirements.
Where we own the buildings, we are undertaking EWS1 assessments
on the buildings and where works are required, we are procuring
those works. Where a third party owns the building and we have been
contacted by the freeholder or management company we are engaging
with them in relation to the assessment process. We continue to
make good progress in remediating the buildings identified in our
original GBP40 million provision to cover the cost of removing and
replacing ACM cladding on high rise buildings.
New Building Safety Bill and Residential Property Developer
Tax
The Government published the Building Safety Bill for a second
reading in Parliament on 21 July 2021. Over the last year we have
consulted closely with the Government on the changes that will be
implemented, and the published Bill was largely as anticipated.
We continue to engage with the Government on the proposed
Residential Property Developer Tax which is being introduced to
help contribute to the cost of cladding remediation work. We were
involved in consultations which ran up until 22 July 2021 and we
await the outcome of this consultation. The new levy is expected to
be introduced in 2022.
Competition and Markets Authority (CMA) update
As we noted in our full year 2020 results announcement on 2
March, the CMA's investigation into leasehold remains open and we
will continue to engage with the CMA and work with them to find a
satisfactory resolution.
Land
Our high-quality landbank remains a key competitive advantage
and value driver and underpins our confidence in delivering our
medium term target of c.21-22% operating profit margin. We have
grown our landbank by c.5k units over the past 12 months and expect
our landbank to ultimately grow by over 10k units compared to the
77k plots in our landbank as at 28 June last year. We are
progressing this land through the planning stages as expected,
which is providing us with excellent momentum heading into the
medium term. Competition in the land market has increased as the
housing market has shown strong growth and, having added
significantly to our landbank over the last year, we have returned
to a more normal replacement level of land acquisition.
We approved c.14.5k plots during the first half of 2021 (H1
2020: c.5.2k plots) at an average operating margin in line with our
medium term operating targets of c.21-22%, at ROCE of over 30% and
with an average size of 392 plots.
Our short term landbank stood at c.82k plots, as at 4 July 2021
(31 December 2020: c.77k plots).
Our strategic pipeline stood at c.147k potential plots as at 4
July 2021 (31 December 2020: c.139k potential plots) which will add
further growth to our short term landbank as we progress land
through planning. During the first six months of 2021 we converted
a further 3,232 plots from the strategic pipeline to the short term
landbank (H1 2020: 2,501 plots). In the period, 55% of our
completions were sourced from the strategic pipeline (H1 2020:
55%).
The average cost of land as a proportion of average selling
price within the short term owned landbank remains low at 14.8% (H1
2020: 14.8%). The estimated average selling price in the short term
owned landbank in H1 2021 was GBP300k (H1 2020: GBP288k).
We prioritise engaging with local communities as part of the
planning and construction process and strive to make a positive
impact in the wider community. In the first half of 2021, through
our planning obligations, we have contributed over GBP184 million
to the local communities in which we build (H1 2020: GBP92
million). This provides vital local infrastructure, affordable
homes, public transport and education facilities.
Employees
With 23 regional businesses across the country, we are a
significant local employer, employing on average 5,384 people (H1
2020: 6,024) directly, with thousands more working with us through
subcontractors and suppliers.
Our rolling 12 months voluntary employee turnover rate remains
low at 14.7% (H1 2020: 11.1%; H1 2019: 12.9%).
Our employees remain our most important resource and we were
pleased to have been named in the top 50 places to work in the UK
for 2021 by Glassdoor, as voted for by employees, for the fourth
consecutive year.
Employee survey
Our culture is built on a desire to 'do the right thing' and we
are pleased that this was borne out in the results of our recent
employee survey and employee engagement throughout the
pandemic.
Health and safety was once again our top scoring area at 97% in
our recent employee survey which had an overall employee engagement
score of 91%. 95% of employees are proud to work for Taylor Wimpey
and 95% feel Taylor Wimpey offers opportunities for employees of
all backgrounds to progress.
The employee survey also outlined slightly lower scoring areas
we will work to improve such as future development opportunities
and progression.
Diversity and inclusion
We recognise we have further work to do in this important area
to improve the representation of different communities across our
business and we are pleased that 96% of employees feel they can be
their authentic self at work. We recently held our diversity and
inclusion conference to share best practice and identify areas we
can improve which was attended by senior leaders from across the
business.
Environmental, social and governance (ESG)
Our purpose is 'to build great homes and create thriving
communities', and we believe that all elements of ESG are critical
to achieving this and to the long term sustainability of the
business.
This year we were included in the Financial Times inaugural list
of Europe's Climate Leaders which includes the 300 companies that
have achieved the greatest reduction of greenhouse gas emissions
intensity (tonnes of CO per EUR1m revenue) between 2014 and 2019.
We have also been awarded prime status by ISS ESG with a score of
C+ which is the highest score among the construction sector
organisations it rates.
Environment strategy
Climate change, declining nature and other environmental
problems are increasingly becoming a threat to the wellbeing of
people today and future generations. Across the UK, local
authorities have declared climate emergencies and the UK Government
has committed to net zero emissions by 2050. We want to play our
part in addressing these challenges, working with our partners to
minimise the impact we have on climate change and to protect our
planet for future generations.
Our business has a significant environmental footprint through
the resources we use and the emissions associated with our
operations, supply chain and the homes we build. We will also be
affected by the physical impacts of climate change and new
legislation aimed at reducing the UK's carbon footprint. Through
our operations, we can positively impact the local environment in
hundreds of locations around the UK and, through the homes and
places we build, we can enable our customers to live more
sustainably.
At our 2020 full year results we committed to challenging,
measurable targets based on science making changes to the way we
work to address climate change, nature and resources and waste.
These included the launch, in early 2021, of our ambitious
science-based carbon reduction targets to reduce operational carbon
emissions intensity by 36% by 2025 from a 2019 baseline and to
reduce carbon emissions intensity from our supply chain and
customer homes by 24% by 2030 from a 2019 baseline. These have been
approved by the Science Based Targets initiative (SBTi) and our
operational target is consistent with reductions required to keep
warming to 1.5degC, the most ambitious goal of the Paris
Agreement.
The roll out of our environmental strategy has progressed well,
with our sustainability team delivering extensive training and
engagement sessions to the business. We have also published
guidance documents for the regional teams on energy and nature and
we are adopting a new water policy. We are piloting approaches to
carbon emissions reduction on construction sites, nature
enhancement, waste, and indoor and outdoor air quality. There has
been an encouraging level of engagement across the business with
good progress on the inclusion of hedgehog highways and beehives on
our sites, two of our key biodiversity targets.
The Future Homes Standard
The Future Homes Standard outlines new regulations aimed at
making new homes more energy-efficient, Part L relates to the
conservation of fuel and power, and Part F covers ventilation.
These measures were delayed by COVID-19 and will come into force in
June 2022 and will allow for a one year transitional period. This
has given us additional time to prepare and to factor in the
additional costs of the new regulation into our land purchases
particularly those since March 2020.
We are also awaiting the outcome of the Government's EV
(electric vehicle) charging regulations consultation with an
implementation date expected of late 2021 which could have
important implications in relation to charging points on new
developments, and may raise potential issues regarding the overall
capacity of the grid to serve future developments.
The pending Environment Act will accelerate the environmental
agenda nationally. The UK's 2050 net zero emissions target will
necessitate an overhaul of the UK's energy infrastructure to move
away from our reliance on gas. This change is currently planned to
take effect in relation to new homes from 2025 from which time gas
central heating systems will no longer be permitted for use in new
build homes. The transition will require significant changes in the
supply chain in order to build an infrastructure capable of
supporting alternative heating sources for new homes. We are
assessing the potential alternative energy and technology solutions
with industry partners.
Suppliers, subcontractors and partners
The health and safety of individuals on our sites will always be
our number one priority. Our Injury Incidence Rate (IIR) for
reportable injuries per 100,000 employees and contractors was 193
on a rolling 12 months basis to 4 July 2021 (2020 equivalent
period: 130; 2019 equivalent period: 241). Whilst this remains much
lower than the sector average, we continue to seek ways to further
improve our safety performance across all sites and functions.
Whilst there is pressure on pricing and supply chains for
certain materials such as timber and steel owing to strong global
demand, healthy increases in house prices are fully offsetting
build cost inflation.
Our central procurement team and logistics business continues to
work closely with our supply chain to understand and track the
origins of our components and subcomponents and stocking levels
within the supply chain. This helps provide visibility of our
materials supply, identifying and pre-empting potential
bottlenecks.
We work to foster close relationships with our partners and have
extensive framework agreements which gives us greater visibility
over pricing and materials availability to meet our requirements.
We also continue to achieve efficiency improvements through the
reduction in the number of different components and by providing
our partners with enhanced visibility of our build plans.
Charities
We continue to support our six national charities which are the
Youth Adventure Trust, End Youth Homelessness, Crisis, CRASH, St
Mungo's and Foundations Independent Living Trust. Having conducted
a virtual challenge in 2020 due to COVID-19, we are pleased that
this September we will restart our annual Taylor Wimpey Challenge
in person which will see our teams raise funds for the Youth
Adventure Trust and other charities by undertaking a series of
challenges in the Peak District.
Dividends
We intend to pay a 2021 interim dividend of 4.14 pence per share
in November, in line with our Ordinary Dividend Policy to return
c.7.5% of net assets annually, which will be at least GBP250
million per annum, in two equal instalments. As we look forward, it
remains our intention to return excess capital to shareholders in
line with our policy.
We will review the potential level of excess capital for the
2021 financial year at the time of our 2021 full year results in
March 2022, for payment in 2022.
Spain
Our Spanish business primarily sells second homes to European
and international customers, with a small proportion of sales being
primary homes for Spanish occupiers. The business has continued to
face market disruption as a result of international travel
restrictions imposed during the COVID-19 pandemic. The business has
performed well against this backdrop and sales rates have recovered
as restrictions have eased, with the H1 sales rate comparable with
H1 2019. However, we will require the return of more normal travel
before the business is able to recover to more normal levels of
completions.
We completed 84 homes in the first half of 2021 (H1 2020: 58; H1
2019: 109) at an average selling price of EUR415k (H1 2020:
EUR407k). Gross margin decreased to 21.1% (H1 2020: 27.0%),
reflecting mix impacts. The business delivered an operating profit
of GBP4.4 million for the first half of 2021 (H1 2020: GBP3.5
million), reflecting the higher completions, and an operating
profit margin of 14.6% (H1 2020: 17.2%). Our total order book as at
4 July 2021 was 188 homes (28 June 2020: 209 homes). We have not
seen a material impact on cancellations, and we have continued to
complete on properties as expected subject to travel limitations on
buyers' requirements to attend completions.
The total plots in the landbank stood at 2,762 (31 December
2020: 2,819), with net operating assets at GBP102.2 million (31
December 2020: GBP111.5 million). We continue to invest in work in
progress to deliver our strong order book.
Group financial review of operations
The Group uses Alternative Performance Measures (APMs) as key
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 key strategic KPIs (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 18 of the financial
statements.
Income statement
Group revenue increased to GBP2,196.3 million in the first half
of 2021 (H1 2020: GBP754.6 million), reflecting the impact of site
closures due to COVID-19 in the comparative period. Completions in
the UK (excluding joint ventures) increased to 7,219 (H1 2020:
2,713) with UK average selling prices up 11.2% to GBP299k (H1 2020:
GBP269k). Average selling prices on private completions increased
by 6.5% to GBP327k (H1 2020: GBP307k) in the UK, partly due to
house price inflation, with the remainder due to product and
location mix.
In H1 2020 we identified and expensed GBP39.2 million of costs
relating to the COVID-19 pandemic, with GBP38.3 million charged to
gross profit and GBP0.9 million to administrative costs. These
costs included unproductive site overhead costs incurred during the
controlled closure and lockdown period which would ordinarily be
capitalised to WIP and expensed as plots legally completed.
By the end of 2020 our sites had returned to near normal
operating levels and they had adapted to operating in a
COVID-secure way. As a result, no costs in relation to COVID-19
have been separately identified in H1 2021.
Group gross profit increased to GBP522.3 million (H1 2020:
GBP91.0 million), representing a gross margin of 23.8% (H1 2020
12.1%). The increase in margin over the prior period was mainly
driven by the lack of COVID-19 costs seen in H1 2020 (as discussed
above) as well as fixed build and direct selling costs being
absorbed across more completions in the current period.
Administrative costs decreased marginally to GBP102.1 million
(H1 2020: GBP103.3 million).
During the period, completions from joint ventures were 70 (H1
2020: 35). The total order book value of joint ventures as at 4
July 2021 was GBP88 million (28 June 2020: GBP90 million),
representing 188 homes (28 June 2020: 183). Our share of joint
ventures profits in the period was GBP1.3 million (H1 2020: loss of
GBP1.8 million).
Operating profit was GBP424.0 million (H1 2020: loss of GBP16.1
million), delivering an operating profit margin of 19.3% (H1 2020:
(2.1)%).
In January 2021, RICS issued proposed guidance for public
consultation to improve consistency of EWS1 requests. This
consultation clarified the circumstances in which an EWS1 form is
required. As a result of this clarified guidance the Group
announced an additional GBP125.0 million provision to fund cladding
fire safety improvements works which has been charged to
exceptional items in line with our policy. The prior year
exceptional charge of GBP10.0 million arose following a review of
ongoing works to replace Aluminium Composite Material (ACM)
cladding on a small number of legacy developments.
The net finance expense of GBP11.5 million (H1 2020: GBP13.7
million) principally includes imputed interest on land acquired on
deferred terms, bank interest and interest on the pension scheme.
The decrease compared with the prior half year is mainly due to net
bank interest payable, which in H1 2020 reflected the prudent step
of fully drawing down the previously unutilised GBP550 million
revolving credit facility following the temporary closure of sites.
Once construction had restarted under new operating protocols the
facility was fully repaid before the end of June 2020. In addition,
changes in foreign exchange rates in the year resulted in a small
foreign exchange loss compared with a gain in the prior period.
Profit on ordinary activities before tax, after the exceptional
charge of GBP125.0 million (H1 2020: GBP10.0 million), increased to
GBP287.5 million (H1 2020: loss of GBP39.8 million). The
pre-exceptional tax charge was GBP75.5 million (H1 2020: credit of
GBP6.6 million). This represents an underlying tax rate of 18.3%
(H1 2020: 22.1%) which includes a GBP2.7 million credit (H1 2020:
GBP1.3 million credit) arising from the remeasurement, in part, of
the Group's UK deferred tax assets at 25.0% following the changes
to the corporation tax rates enacted by the UK Government in the
first half of the year. A tax credit of GBP23.8 million was
recognised in respect of the exceptional charge (H1 2020: GBP1.7
million). This resulted in a total tax charge of GBP51.7 million
(H1 2020: credit of GBP8.3 million), a rate of 18.0% (H1 2020:
20.9%). Profit for the period was GBP235.8 million (H1 2020: loss
of GBP31.5 million).
Basic earnings per share was 6.5 pence (H1 2020: loss per share
of 1.0 pence). The adjusted basic earnings per share was 9.3 pence
(H1 2020: loss per share of 0.7 pence).
Balance sheet
Net assets at 4 July 2021 increased by 3.1% to GBP4,140.2
million (31 December 2020: GBP4,016.8 million), with net operating
assets** decreasing by GBP66.3 million to GBP3,198.5 million (31
December 2020: GBP3,264.8 million). Return on net operating assets
increased to 23.0% (H1 2020: 16.8%) as the increase in average net
operating assets over the twelve months ended 4 July 2021, compared
with the prior twelve month period, was more than offset by the
increase in operating profit over the same period. Group net
operating asset turn (*) was 1.31 times (H1 2020: 1.08 times, FY
2020: 0.92).
The balance sheet principally comprises work in progress and
land investment, with total investment in the period increasing by
GBP266.9 million.
Land
Land at 4 July 2021 increased by GBP385.4 million in the period
as the Group continued to invest in land opportunities following
the equity raise completed in June 2020. The increased land
investment also meant that land creditors increased to GBP843.1
million (31 December 2020: GBP675.9 million) with new obligations
exceeding payments in the period. Included within the gross land
creditor balance is GBP63.4 million of UK land overage commitments
(31 December 2020: GBP64.9 million). GBP394.4 million of the land
creditors is expected to be paid within 12 months and GBP448.7
million thereafter.
At 4 July 2021 the UK short term landbank comprised 82,218 plots
(31 December 2020: 77,435), with a net book value of GBP2.8 billion
(31 December 2020: GBP2.5 billion). Short term owned land comprised
GBP2.6 billion (31 December 2020: GBP2.4 billion), representing
59,312 plots (31 December 2020: 53,731). The controlled short term
landbank represented 22,906 plots (31 December 2020: 23,704).
The value of long term owned land increased to GBP306 million
(31 December 2020: GBP217 million), representing 38,745 plots (31
December 2020: 36,968), with a further total controlled strategic
pipeline of 108,369 plots (31 December 2020: 101,676). Total
potential revenue in the owned and controlled landbank increased to
GBP59 billion in the period (31 December 2020: GBP54 billion),
reflecting the overall mix of opportunities in the short term
landbank and strategic pipeline.
As at 4 July 2021, in the UK, 91% of the short term owned and
controlled landbank was purchased after 2009, 51% of which was
sourced through our strategic pipeline. This results in a land cost
to average selling price in the short term owned landbank of 14.8%
(31 December 2020: 15.2%).
Work in progress ('WIP')
Total WIP has reduced as delayed completions from 2020 occurred
in the first half of the current year. Whilst the number of outlets
at 4 July 2021 were lower than at the start of the period, the
average WIP per UK outlet was broadly flat at GBP6.5 million (31
December 2020: GBP6.6 million), reflecting a continuing investment
in build on active sites.
Provisions and deferred tax
Provisions increased to GBP249.3 million (31 December 2020:
GBP130.5 million) due to the GBP125.0 million cladding fire safety
provision recognised in the period. There was continued utilisation
of the existing ACM provision as works have been carried out and
the Ground Rent Review Assistance Scheme provision as claims have
been received and processed.
Our net deferred tax asset of GBP26.9 million (31 December 2020:
GBP33.7 million) relates to our pension deficit, employee share
schemes and the temporary differences of our Spanish business,
including brought forward trading losses. The decrease in the
pension deficit in the period decreased the deferred tax asset
recognised, with some offset as the deferred tax asset has been
remeasured, in part, at 25.0% (31 December 2020: 19.0%) following
the UK enacted change in rate in the period.
Pensions
Following the 31 December 2016 triennial valuation, the Group
agreed a recovery plan with the Trustee to pay deficit reduction
contributions of GBP40.0 million per annum for the period from
April 2018 to December 2020. During 2020 and in response to the
site shutdowns, a temporary suspension of the agreed deficit
reduction contributions was agreed with the Trustee for the three
months between April and June 2020 and as a result, the recovery
plan period was extended to 31 March 2021.
During 2020, the Group engaged with the Taylor Wimpey Pension
Scheme ('TWPS') Trustee on the triennial valuation of the pension
scheme with a reference date of 31 December 2019. In March 2021, a
new funding arrangement was agreed with the Trustee that commits
the Group to paying GBP20.0 million per annum into an escrow
account between April 2021 and March 2024. The first six months of
contributions between 1 April 2021 and 30 September 2021 are
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 would be suspended should the TWPS Technical Provisions
funding position at any quarter-end be 100% or more and would
restart should the funding subsequently fall below 98%.
The most recent funding test at June 2021 showed a surplus of
GBP51 million and a funding level of 102.1%. The Group continues to
provide a contribution for Scheme expenses and also makes
contributions via the Pension Funding Partnership. Total Scheme
contributions and expenses are expected to be GBP17.4 million in
2021 (2020: GBP37.1 million) with a further GBP10.0 million, as a
minimum, to be paid into the escrow account (2020: nil). Further
payments into escrow after September 2021 are subject to
quarter-end funding tests and would amount to an additional GBP5.0
million being paid into escrow in 2021 if the funding level of the
Scheme is less than 100% on 30 September 2021.
At 4 July 2021, the IAS 19 valuation of the Scheme was a surplus
of GBP59.0 million (31 December 2020: deficit of GBP89.1 million).
Due to the rules of the TWPS, any surplus cannot be recovered by
the Group and therefore a deficit has been recognised on the
balance sheet under IFRIC14. The deficit being equal to the present
value of the remaining committed payments under the 2019 triennial
valuation. No such adjustment was recognised at 31 December 2020
since the deficit on an IAS 19 accounting basis exceeded the
present value of committed payments at that time. Retirement
benefit obligations of GBP37.0 million at 4 July 2021 (31 December
2020: GBP89.5 million) comprise a defined benefit pension liability
of GBP36.6 million (31 December 2020: GBP89.1 million) and a
post-retirement healthcare liability of GBP0.4 million (31 December
2020: GBP0.4 million).
The Group continues to work closely with the Trustee in managing
pension risks, including management of interest rate, inflation and
longevity risks.
Net cash and financing position
Net cash increased to GBP906.5 million at 4 July 2021 from
GBP719.4 million at 31 December 2020, due to strong cash generation
from operating activities being partially offset by an increase in
land investment, and the payment of the 2020 final dividend in the
period.
Average net cash for the period was GBP709.9 million (28 June
2020: GBP241.5 million, 31 December 2020: GBP399.3 million).
In the 12 months to 4 July 2021, the inflow of cash from
operations as a result of the improved trading led to cash
conversion of 96.7% of operating profit (12 months to 28 June 2020:
46.5%).
Net cash, combined with land creditors, resulted in an adjusted
gearing(++++++++) of (1.5)% (31 December 2020: (1.1)%).
At 4 July 2021 our committed borrowing facilities were GBP649.1
million of which GBP550 million was undrawn. The average maturity
of the committed borrowing facilities at 4 July 2021 was 3.3 years
(31 December 2020: 3.8 years).
Dividends
On 14 May 2021, we returned GBP150.7 million to shareholders by
way of a 2020 final ordinary dividend of 4.14 pence per share.
The Board has declared that a 2021 interim dividend of 4.14
pence per share is to be paid on 12 November 2021 to shareholders
on the register at the close of business on 8 October 2021. The
2021 interim dividend will be paid as a cash dividend, and
shareholders have the option to reinvest all of their dividend
under the Dividend Re-Investment Plan (DRIP), details of which are
available on our website www.taylorwimpey.co.uk/corporate.
Our intention remains to return cash generated by the business
in excess of that needed by the Group to fund land investment, all
working capital, taxation and other cash requirements of the
business, and once the ordinary dividend has been met.
We are not proposing to return excess capital in 2021. We will
review the level of excess capital and potential return in respect
of 2021 at the time of the 2021 full year results in March 2022,
for payment in 2022.
Going concern
The Directors remain of the view that the Group's financing
arrangements and balance sheet strength provide both the necessary
liquidity and covenant headroom to enable the Group to conduct its
business for at least the next 12 months. Accordingly, the
financial statements are prepared on a going concern basis, see
note 1 of the financial statements for further details of the
assessment performed.
Principal risks and uncertainties
As with any business, Taylor Wimpey's operational performance
and ability to achieve its strategic objectives are subject to
several potential risks and uncertainties. The Board takes a
proactive approach to the management of these and regularly reviews
both internal and external factors to identify and assess their
impact on the business. These risks and uncertainties are then
managed through effective mitigating controls and the development
of action plans, with the continual monitoring of progress against
agreed KPIs as an integral part of the business process and core
activities.
The Board assesses and monitors the Principal Risks of the
business regularly. Set out in the Group's Annual Report and
Accounts for the year ended 31 December 2020 are details of the
Principal Risks and uncertainties for the Group and the key
mitigating activities used to address them at that time.
COVID-19
The impact of COVID-19 continues to be recognised across our
risk environment with additional actions implemented where
necessary to mitigate the impact. The Group continues to prioritise
the health and safety of our employees, customers and
subcontractors and has embedded COVID-19 working practices and
protocols across the organisation, in line with the latest guidance
from the Government and Public Health Authorities.
Principal Risks
Since the year end, the Board has changed the headings of six of
the seven Principal Risks of the Group, to better reflect the risk
they represent. There are no fundamental changes to the underlying
nature of our Principal Risks, nor have there been any new ones
added or removed. The updated Principal Risk headings, in no order
of significance, are reflected below , with the December 2020
headings in brackets .
-- Government policies, regulations and planning (Government policy and planning regulations)
-- Mortgage availability and housing demand (Impact of the
market environment on mortgage availability and housing demand)
-- Availability and costs of materials and subcontractors
(Material costs and availability of subcontractors)
-- Attract and retain high-calibre employees (Ability to attract
and retain high-calibre employees)
-- Land availability (Land purchasing)
-- Quality and reputation (No change)
-- Health, safety and environment (Site and product safety)
During the past six months we have seen increases in the risk
profile of two of our Principal Risks and further detail is
provided below.
Government policies, regulations and planning
Our industry is facing an unprecedented level of change over the
coming years; Planning Reform and the Future Homes Standard are two
examples of where we need to recognise the risks associated with
these significant changes. We have therefore seen an increase in
the inherent risk level, but we believe the actions and mitigations
we have implemented have resulted in no increase in the residual
risk. We will continue to consult with government agencies and
invest in R&D to help us prepare for regulation, to manage the
risks of transition, to meet changing customer needs, improve
efficiency and respond to social, demographic, economic and
environmental trends.
Availability and costs of materials and subcontractors
The combined effects of COVID-19 and the withdrawal of the UK
from the EU have impacted our supply chain, in particular resulting
in shortages of both materials and site labour. Coupled with strong
levels of construction, this has given rise to increasing
availability and cost pressures. Consequently, we have seen an
increase in both the inherent and residual risk levels and whilst
we are currently delivering our planned levels of production, we
expect these challenges to continue for the foreseeable future.
Except for the changes referenced above, no other changes have
been made to the Group's Principal Risks as reported at 31 December
2020. Further details of the Principal Risks and the mitigations in
place are outlined on pages 49 to 53 of the 2020 Annual Report and
Accounts, published in March 2021, which is available at
www.taylorwimpey.co.uk/corporate
Emerging Risks
The Group faces a number of emerging risks which have the
potential to be significant to the achievement of our strategy. Due
to their nature their impact cannot be fully understood but where
possible we have put in place or are planning to put in place
mitigations to reduce the level of potential risk. Emerging risks
are considered as part of our established risk management process
and reviewed and approved by the Board on a regular basis.
Cautionary note concerning forward looking statements
This announcement includes statements that are, or may be deemed
to be, 'forward-looking statements'. These forward-looking
statements can be identified by the use of forward-looking
terminology, including the terms 'believes', 'estimates', 'plans',
'projects', 'anticipates' or 'expects'. Such statements are based
on current expectations and assumptions and are subject to a number
of risks and uncertainties that could cause actual events or
results to differ materially from any expected future events or
results expressed or implied in these forward-looking
statements.
Accordingly, there are or will be important factors that could
cause Taylor Wimpey plc's actual results to differ materially from
those indicated in these statements. Persons receiving this
announcement should not place reliance on forward-looking
statements. Forward-looking statements speak only as of the date
they are made and, except as required by applicable law or
regulation, Taylor Wimpey plc undertakes no obligation to update
these forward-looking statements. Nothing in this statement should
be construed as a profit forecast.
Taylor Wimpey plc
Condensed consolidated income statement
For the half year ended 4 July 2021
(Reviewed) (Reviewed) (Audited)
Half Half year Half Half Half Half Year Year Year
year ended year year year year ended ended ended
ended 4 July ended ended ended ended 31 December 31 December 31
4 July 2021 4 July 28 June 28 June 28 June 2020 2020 December
2021 2021 2020 2020 2020 2020
----------- ----------- --------- ----------- ----------- ------- ----------- ----------- ---------
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
GBP million Note items items Total items items Total items items Total
---------------- ---- ----------- ----------- --------- ----------- ----------- ------- ----------- ----------- ---------
Continuing
operations
Revenue 2 2,196.3 - 2,196.3 754.6 - 754.6 2,790.2 - 2,790.2
Cost of sales (1,674.0) - (1,674.0) (663.6) - (663.6) (2,293.5) - (2,293.5)
================ ==== =========== =========== ========= =========== =========== ======= =========== =========== =========
Gross profit
before
positive
contribution 519.8 - 519.8 90.3 - 90.3 492.1 - 492.1
Positive
contribution
from written
down
inventory 2.5 - 2.5 0.7 - 0.7 4.6 - 4.6
================ ==== =========== =========== ========= =========== =========== ======= =========== =========== =========
Gross profit 522.3 - 522.3 91.0 - 91.0 496.7 - 496.7
Net operating
expenses 4 (99.6) (125.0) (224.6) (105.3) (10.0) (115.3) (204.3) (10.0) (214.3)
Profit/(loss) on
ordinary
activities
before finance
costs 422.7 (125.0) 297.7 (14.3) (10.0) (24.3) 292.4 (10.0) 282.4
Finance income 5 1.2 - 1.2 1.9 - 1.9 3.5 - 3.5
Finance costs 5 (12.7) - (12.7) (15.6) - (15.6) (29.4) - (29.4)
Share of results
of joint
ventures 1.3 - 1.3 (1.8) - (1.8) 7.9 - 7.9
---------------- ---- ----------- ----------- --------- ----------- ----------- ------- =========== =========== =========
Profit/(loss)
before
taxation 412.5 (125.0) 287.5 (29.8) (10.0) (39.8) 274.4 (10.0) 264.4
Taxation
(charge)/credit 6 (75.5) 23.8 (51.7) 6.6 1.7 8.3 (49.1) 1.7 (47.4)
---------------- ---- ----------- ----------- --------- ----------- ----------- ------- =========== =========== =========
Profit/(loss)
for
the period 337.0 (101.2) 235.8 (23.2) (8.3) (31.5) 225.3 (8.3) 217.0
---------------- ---- ----------- ----------- --------- ----------- ----------- ------- ----------- ----------- ---------
Basic
earnings/(loss)
per share 7 6.5p (1.0)p 6.3p
Diluted
earnings/
(loss)
per share 7 6.5p (1.0)p 6.2p
Adjusted basic
earnings/
(loss) per
share 7 9.3p (0.7)p 6.5p
Adjusted diluted
earnings/
(loss)
per share 7 9.2p (0.7)p 6.5p
---------------- ---- ----------- ----------- --------- ----------- ----------- ------- ----------- ----------- ---------
All of the profit/(loss) for the period is attributable to the
equity holders of the Parent Company.
Taylor Wimpey plc
Condensed consolidated statement of comprehensive income
For the half year ended 4 July 2021
Half year ended 4 Half year ended 28 Year ended
July 2021 June 2020 31 December 2020
GBP million (Reviewed) (Reviewed) (Audited)
--------------------------------------------------------- ----------------- ------------------ -----------------
Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translation of foreign operations (4.3) 6.0 5.2
Movement in fair value of hedging instruments 3.1 (4.9) (4.2)
Items that will not be reclassified subsequently to
profit or loss:
Actuarial gain/(loss) on defined benefit pension schemes 37.6 (43.7) (36.6)
Tax (charge)/credit on items taken directly to other
comprehensive income (5.4) 10.0 8.6
---------------------------------------------------------- ----------------- ------------------ -----------------
Other comprehensive income/(expense) for the period 31.0 (32.6) (27.0)
Profit/(loss) for the period 235.8 (31.5) 217.0
---------------------------------------------------------- ----------------- ------------------ -----------------
Total comprehensive income/(expense) for the period 266.8 (64.1) 190.0
---------------------------------------------------------- ----------------- ------------------ -----------------
All of the comprehensive income/(expense) for the period is
attributable to the equity holders of the Parent Company.
Taylor Wimpey plc
Condensed consolidated balance sheet
As at 4 July 2021
4 July 28 June 31 December 2020
GBP million Note 2021 (Reviewed) 2020 (Reviewed) (Audited)
------------------------------- ---- ---------------- ----------------- ----------------
Non-current assets
Intangible assets 7.8 8.1 8.1
Property, plant and equipment 23.3 25.3 24.0
Right-of-use assets 28.6 24.4 27.5
Interests in joint ventures 75.7 77.1 82.2
Trade and other receivables 28.3 42.0 26.3
Other financial assets 8 5.0 - -
Deferred tax assets 6 26.9 37.4 33.7
------------------------------- ---- ---------------- ----------------- ================
195.6 214.3 201.8
------------------------------- ---- ---------------- ----------------- ================
Current assets
Inventories 4,801.6 4,543.4 4,534.7
Trade and other receivables 145.6 144.0 189.1
Tax receivables 9.2 - -
Cash and cash equivalents 9 1,005.6 601.8 823.0
================
5,962.0 5,289.2 5,546.8
------------------------------- ---- ---------------- ----------------- ================
Total assets 6,157.6 5,503.5 5,748.6
------------------------------- ---- ---------------- ----------------- ================
Current liabilities
Trade and other payables (1,004.8) (901.9) (919.3)
Lease liabilities (7.0) (7.1) (6.4)
Bank and other loans 9 (12.9) - (13.5)
Tax payables (0.9) (23.3) (1.1)
Provisions 12 (96.3) (72.3) (70.6)
(1,121.9) (1,004.6) (1,010.9)
------------------------------- ---- ---------------- ----------------- ----------------
Net current assets 4,840.1 4,284.6 4,535.9
------------------------------- ---- ---------------- ----------------- ----------------
Non-current liabilities
Trade and other payables (596.8) (449.5) (459.8)
Lease liabilities (22.5) (17.7) (21.6)
Bank and other loans 9 (86.2) (104.5) (90.1)
Retirement benefit obligations 10 (37.0) (114.7) (89.5)
Provisions 12 (153.0) (57.3) (59.9)
------------------------------- ---- ---------------- ----------------- ================
(895.5) (743.7) (720.9)
------------------------------- ---- ---------------- ----------------- ================
Total liabilities (2,017.4) (1,748.3) (1,731.8)
------------------------------- ---- ---------------- ----------------- ================
Net assets 4,140.2 3,755.2 4,016.8
------------------------------- ---- ---------------- ----------------- ----------------
Equity
Share capital 13 292.2 292.2 292.2
Share premium 774.7 771.5 773.1
Own shares (10.4) (12.3) (11.5)
Other reserves 542.5 543.8 543.7
Retained earnings 2,541.2 2,160.0 2,419.3
------------------------------- ---- ---------------- ----------------- ================
Total equity 4,140.2 3,755.2 4,016.8
------------------------------- ---- ---------------- ----------------- ----------------
Taylor Wimpey plc
Condensed consolidated statement of changes in equity
For the half year ended 4 July 2021
Reviewed half year ended 4 Total
July 2021
GBP million Share capital Share premium Own shares Other reserves Retained earnings
----------------------------- ------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January 2021 292.2 773.1 (11.5) 543.7 2,419.3 4,016.8
Other comprehensive
(expense)/income for the
period - - - (1.2) 32.2 31.0
Profit for the period - - - - 235.8 235.8
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive
(expense)/income for the
period - - - (1.2) 268.0 266.8
New share capital subscribed - 1.6 - - - 1.6
Utilisation of own shares - - 1.1 - - 1.1
Cash cost of satisfying share
options - - - - (1.4) (1.4)
Share-based payment credit - - - - 6.2 6.2
Tax charge on items taken
directly to statement of
changes in equity - - - - (0.2) (0.2)
Dividends approved and paid - - - - (150.7) (150.7)
Total equity at 4 July 2021 292.2 774.7 (10.4) 542.5 2,541.2 4,140.2
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Reviewed half year ended 28 Total
June 2020
GBP million Share capital Share premium Own shares Other reserves Retained earnings
----------------------------- ------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January 2020 288.6 762.9 (17.6) 43.6 2,230.3 3,307.8
Other comprehensive
income/(expense) for the
period - - - 1.1 (33.7) (32.6)
Loss for the period - - - - (31.5) (31.5)
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive
income/(expense) for the
period - - - 1.1 (65.2) (64.1)
New share capital subscribed 3.6 8.6 - 499.1 - 511.3
Utilisation of own shares - - 5.3 - - 5.3
Cash cost of satisfying share
options - - - - (6.0) (6.0)
Share-based payment credit - - - - 1.4 1.4
Tax charge on items taken
directly to statement of
changes in equity - - - - (0.5) (0.5)
Total equity at 28 June 2020 292.2 771.5 (12.3) 543.8 2,160.0 3,755.2
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Audited year ended 31 Total
December 2020
GBP million Share capital Share premium Own shares Other reserves Retained earnings
----------------------------- ------------- ------------- ---------- -------------- ----------------- -------
Balance as at 1 January 2020 288.6 762.9 (17.6) 43.6 2,230.3 3,307.8
Other comprehensive
income/(expense) for the year - - - 1.0 (28.0) (27.0)
Profit for the year - - - - 217.0 217.0
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Total comprehensive income for
the year - - - 1.0 189.0 190.0
New share capital subscribed 3.6 10.2 - 499.1 - 512.9
Utilisation of own shares - - 6.1 - - 6.1
Cash cost of satisfying share
options - - - - (8.0) (8.0)
Share-based payment credit - - - - 7.0 7.0
Tax credit on items taken
directly to statement of
changes in equity - - - - 1.0 1.0
Total equity at 31 December
2020 292.2 773.1 (11.5) 543.7 2,419.3 4,016.8
------------------------------ ------------- ------------- ---------- -------------- ----------------- -------
Taylor Wimpey plc
Condensed consolidated cash flow statement
For the half year ended 4 July 2021
Half year ended 4 Half year ended 28 June 2020 Year ended
July 2021 31 December 2020
GBP million Note (Reviewed) (Reviewed) (Audited)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Operating activities:
Profit/(loss) on ordinary activities before
finance costs 297.7 (24.3) 282.4
Adjustments for:
Depreciation and amortisation 7.7 7.8 16.4
Pension contributions in excess of
charge to the income statement (15.5) (14.8) (33.4)
Share-based payment charge 6.2 1.4 7.0
Net increase in provisions excluding
exceptional payments 126.3 8.7 19.6
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Operating cash flows before movements in
working capital 422.4 (21.2) 292.0
Increase in inventories (108.3) (423.8) (362.2)
Decrease/(increase) in receivables 50.6 13.9 (19.5)
Increase/(decrease) in payables 40.6 (44.2) (75.3)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Cash generated by operations 405.3 (475.3) (165.0)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Payments relating to exceptional charges (7.3) (7.8) (17.7)
Income taxes paid (60.0) (34.1) (107.7)
Interest paid (2.5) (6.5) (10.8)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Net cash from operating activities 335.5 (523.7) (301.2)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Investing activities:
Interest received 1.1 1.9 3.1
Dividends received from joint ventures 6.9 - 0.8
Purchase of property, plant and equipment (1.5) (2.1) (3.1)
Purchase of software (1.5) (2.5) (4.9)
Investment in pension scheme escrow (5.0) - -
Amounts repaid by/(invested in) joint
ventures 0.9 (23.7) (19.8)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Net cash generated from/(used in) investing
activities 0.9 (26.4) (23.9)
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Financing activities:
Lease capital repayments (3.3) (4.0) (8.0)
Proceeds from the issue of own shares 13 - 510.1 510.1
Cash received on exercise of share options 1.4 0.3 0.8
Proceeds from borrowings - 13.5 13.5
Dividends paid (150.7) - -
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Net cash (used in)/generated from financing
activities (152.6) 519.9 516.4
-------------------------------------------- ---- ----------------- ---------------------------- -----------------
Net increase/(decrease) in cash and cash
equivalents 183.8 (30.2) 191.3
Cash and cash equivalents at beginning of
period 823.0 630.4 630.4
Effect of foreign exchange rate changes (1.2) 1.6 1.3
-------------------------------------------- ---- ----------------- ---------------------------- =================
Cash and cash equivalents at end of period 9 1,005.6 601.8 823.0
-------------------------------------------- ---- ----------------- ---------------------------- =================
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
For the half year ended 4 July 2021
1. Accounting policies
Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. Taylor Wimpey
plc transitioned to UK adopted international accounting standards
in its consolidated financial statements on 1 January 2021. There
was no impact or changes in accounting policies from the
transition. The condensed consolidated financial statements have
been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards as adopted
by the United Kingdom and the disclosure requirements of the
Listing Rules.
The condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting', as adopted by
the United Kingdom. These should be read in conjunction with the
Group's annual financial statements for the year ended 31 December
2020, which have been prepared in accordance with applicable
IFRSs.
The information contained in this report does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. The condensed consolidated financial statements are unaudited
but have been reviewed by the Group's auditor
PricewaterhouseCoopers LLP, who were appointed on 22 April 2021. A
copy of the statutory accounts for year ended 31 December 2020 has
been delivered to the Registrar of Companies. The auditor at the
time, Deloitte LLP, reported on those accounts, their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under sections 498 (2) or
(3) of the Companies Act 2006.
The accounting policies and method of computations adopted in
the preparation of these condensed consolidated financial
statements are consistent with those followed in the preparation of
the Group's annual financial statements for the year ended 31
December 2020.
Going concern
Group forecasts have been prepared that have considered the
Group's current financial position and current market
circumstances. The forecasts were subject to sensitivity analysis
including severe but plausible scenarios together with the likely
effectiveness of mitigating actions.
The assessment considered sensitivity analysis based on a number
of realistically possible, but severe and prolonged, changes to
principal assumptions. In determining these, the Group included
macro-economic and industry wide projections, as well as matters
specific to the Group. To arrive at the sensitivity analysis, the
Group has also drawn on experience gained managing the business
through previous economic downturns and stress tested the business
against a number of scenarios including:
- Volume - a decline in total volumes of c.30% from pre-COVID-19
levels, followed by a gradual recovery
- Price - a reduction in current selling prices of 20% by the end of 2022
Mitigations to this sensitivity analysis includes a reduction in
land investment, a reduction in the level of production and work in
progress held and optimising the overhead base to ensure it aligned
with the scale of the operations through the cycle.
The Group's liquidity (defined as cash and undrawn committed
facilities) was GBP1,556 million at 4 July 2021. The undrawn
facilities of GBP550 million mature in February 2025 with the
majority of drawn facilities having maturities more than one year
after the current balance sheet date with EUR15 million due in
December 2021 and EUR100 million due in June 2023. This is
sufficient to absorb the financial impact of each of the risks
modelled in the stress and sensitivity analysis.
Based on these forecasts, it is considered that there are
sufficient resources available for the Group to conduct its
business for at least the next 12 months from the date of these
condensed consolidated financial statements. Consequently the
condensed consolidated financial statements have been prepared on a
going concern basis.
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
1. Accounting policies (continued)
Estimates and judgements
The preparation of a condensed set of financial statements
requires management to make significant judgements and estimates.
Management have considered whether there are any such sources of
estimation or accounting judgements in preparing the condensed
financial statements. In identifying these areas management have
considered the size of the associated balance and the potential
likelihood of changes due to macro-economic factors such as the
United Kingdom leaving the European Union or the impact of
COVID-19.
In preparing these condensed consolidated financial statements,
the critical judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were principally the same as those applied to the Group's
consolidated financial statements for the year ended 31 December
2020, with the exception of the cladding fire safety provision that
was recognised in the period.
The cladding fire safety provision was established to support
building owners and leaseholders with investment to ensure their
apartment buildings are safe and meet current EWS1 (External Wall
Fire Review) requirements. This applies to Taylor Wimpey apartment
buildings constructed over the last 20 years, including apartment
buildings below 18 metres. The Group has estimated the provision
based on the number of buildings that may require works under EWS1
requirements, costs to carry out the identified works and
eligibility of buildings for the UK Government's Building Safety
Fund. Determining the total cost of works across a number of
different buildings contains inherent estimation uncertainty, it is
not anticipated that any reasonable possible changes would lead to
a material adjustment in the value of the provision. The scope of
works may also be impacted by future industry guidance or
regulations.
2. Revenue
An analysis of the Group's revenue is as follows:
Half year Half year Year ended
ended 4 ended 28 31 December
GBP million July 2021 June 2020 2020
-------------------- ---------- ---------- ------------
Private sales 2,012.3 657.8 2,507.9
Partnership housing 173.5 92.0 269.3
Land and other 10.5 4.8 13.0
-------------------- ---------- ---------- ------------
Total revenue 2,196.3 754.6 2,790.2
-------------------- ---------- ---------- ------------
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
3. Operating segments
The Group operates in two countries, being the United Kingdom
and Spain.
As part of a 2020 review of operating efficiencies the Group
split its three UK divisions into five and as a result re-assessed
its reporting segments in accordance with IFRS 8. It was determined
that all the UK operating segments share similar economic
characteristics. In making this assessment the Group has considered
the key metrics that are used to monitor the performance of the
segments; these have been considered over a long term period and
have included historic and forecast results. The metrics focus on
profitability, return on capital and other asset related measures.
In addition each division builds and delivers residential homes,
uses consistent methods of construction, sells homes to both
private customers and local housing associations, follows a single
UK sales process, is subject to the same macroeconomic 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, with the comparative period shown on
the same basis. Revenue in Spain arises entirely on private
sales.
Half year ended 4 Half year ended 28 Year ended 31 December
July 2021 June 2020 2020
---------------------------- ---------------------------- ----------------------------
GBP million UK Spain Total UK Spain Total UK Spain Total
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
Revenue
External sales 2,166.1 30.2 2,196.3 734.3 20.3 754.6 2,726.9 63.3 2,790.2
Result
Profit/(loss) before
joint ventures, finance
costs and exceptional
items 418.3 4.4 422.7 (17.8) 3.5 (14.3) 276.6 15.8 292.4
Share of results of
joint ventures 1.3 - 1.3 (1.8) - (1.8) 7.9 - 7.9
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
Operating profit (Note
18) 419.6 4.4 424.0 (19.6) 3.5 (16.1) 284.5 15.8 300.3
Exceptional items (Note
4) (125.0) - (125.0) (10.0) - (10.0) (10.0) - (10.0)
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
Profit/(loss) before
finance costs 294.6 4.4 299.0 (29.6) 3.5 (26.1) 274.5 15.8 290.3
Net finance costs (11.5) (13.7) (25.9)
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
Profit/(loss) before
taxation 287.5 (39.8) 264.4
Taxation (charge)/credit (51.7) 8.3 (47.4)
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
Profit/(loss) for the
period 235.8 (31.5) 217.0
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
4 July 2021 28 June 2020 31 December 2020
---------------------------- ---------------------------- ----------------------------
GBP million UK Spain Total UK Spain Total UK Spain Total
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ ---------
Assets and liabilities
Segment operating assets 4,870.1 170.1 5,040.2 4,608.7 178.5 4,787.2 4,635.1 174.6 4,809.7
Joint ventures 75.7 - 75.7 77.1 - 77.1 82.2 - 82.2
Segment operating
liabilities (1,849.5) (67.9) (1,917.4) (1,540.6) (79.9) (1,620.5) (1,564.0) (63.1) (1,627.1)
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ -----------
Net operating assets 3,096.3 102.2 3,198.5 3,145.2 98.6 3,243.8 3,153.3 111.5 3,264.8
Net current taxation 8.3 (23.3) (1.1)
Net deferred taxation 26.9 37.4 33.7
Net cash 906.5 497.3 719.4
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ -----------
Net assets 4,140.2 3,755.2 4,016.8
-------------------------- --------- ------ --------- --------- ------ --------- --------- ------ -----------
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
4. Net operating expenses and profit/(loss) on ordinary activities before finance costs
Profit/(loss) on ordinary activities before finance costs has
been arrived at after charging/(crediting):
Half year Half year Year ended
ended 4 ended 28 31 December
GBP million July 2021 June 2020 2020
------------------------ ---------- ---------- ------------
Administration expenses 102.1 103.3 206.8
Other expense 6.1 3.9 7.2
Other income (8.6) (1.9) (9.7)
Exceptional items 125.0 10.0 10.0
------------------------ ---------- ---------- ------------
Other income and expenses include profits on the sale of
property, plant and equipment, revaluation of certain shared equity
mortgage receivables, pre-acquisition and abortive costs, and
profit/loss on the sale of part exchange properties.
Half year Half year Year ended
Exceptional items: ended 4 ended 28 31 December
GBP million July 2021 June 2020 2020
------------------------------------------------------ ---------- ---------- ------------
Provision in relation to cladding fire safety 125.0 10.0 10.0
125.0 10.0 10.0
------------------------------------------------------ ---------- ---------- ------------
Tax credit (23.8) (1.7) (1.7)
------------------------------------------------------ ---------- ---------- ------------
Net exceptional items charged to the income statement 101.2 8.3 8.3
------------------------------------------------------ ---------- ---------- ------------
Cladding fire safety
Following the tragic fire at Grenfell Tower, the Group conducted
a detailed review into all legacy and current buildings Aluminium
Composite Materials (ACM) cladding and worked with building owners,
management companies, and the Fire Service to implement Government
advice on interim mitigation measures, where applicable. Whilst
each situation is different, and this is an exceptionally complex
issue, the Group has in a number of cases, having regard to all of
the relevant facts and circumstances, agreed to support our
customers both financially and practically with removal and
replacement of ACM cladding, even though the buildings concerned
met the requirements of building regulations at the time
construction was formally approved. This decision was taken for
buildings recently constructed by the Group because management
believe that it is morally right, not because it is legally
required. In 2020 the provision was increased by GBP10.0 million to
reflect the latest cost estimates of the work to be performed.
During 2021 the Group announced its intention to support
building owners and leaseholders with investment to ensure their
apartment buildings are safe and meet current EWS1 (External Wall
Fire Review) requirements. This applies to Taylor Wimpey apartment
buildings constructed over the last 20 years, including apartment
buildings below 18 metres. As a result the Group has recognised an
additional GBP125.0 million provision and, in line with Group
policy, recognised it as an exceptional item.
This is a complex and exceptional situation, but Taylor Wimpey
is focused on doing the right thing for its customers. The Board
has determined that the Group will fund and oversee the improvement
works of apartment buildings in its ownership, regardless of
eligibility for the UK Government Building Safety Fund, to make
them safe and mortgageable by achieving EWS1 certification. If
Taylor Wimpey no longer owns the building and it is not eligible
for the Building Safety Fund, or similar support that may be
announced in the future, where a freeholder produces a fair and
proportionate plan for fire safety improvement works following EWS1
assessment, the Group will contribute funding to bring those
buildings up to the standards required by current Royal Institution
of Chartered Surveyors (RICS) EWS1 guidance. Whilst the legal
responsibility continues to rest with the building owner, the Group
will also provide advice and other assistance where
appropriate.
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
5. Finance income and finance costs
Half year Half year
ended ended
Finance income: 4 28 Year ended
July June 31 December
GBP million 2021 2020 2020
--------------------------- --------- --------- ------------
Interest receivable 1.2 1.9 3.1
Foreign exchange movements - - 0.4
--------------------------- --------- --------- ------------
1.2 1.9 3.5
--------------------------- --------- --------- ------------
Half year Half year
ended ended
Finance costs: 4 28 Year ended
July June 31 December
GBP million 2021 2020 2020
-------------------------------------------------- --------- --------- ------------
Interest on bank and other loans 2.5 5.7 8.3
Foreign exchange movements 0.5 (0.6) -
-------------------------------------------------- --------- --------- ------------
3.0 5.1 8.3
Unwinding of discount on land creditors and other
items 9.0 9.5 19.3
Interest on lease liabilities 0.2 0.2 0.4
Net interest on pension liability 0.5 0.8 1.4
-------------------------------------------------- --------- --------- ------------
12.7 15.6 29.4
-------------------------------------------------- --------- --------- ------------
6. Taxation
Tax (charged)/credited in the income statement is analysed as
follows:
Half year Half year
ended ended
4 28 Year ended
July June 31 December
GBP million 2021 2020 2020
------------ ------------------------------------- --------- --------- ------------
Current
tax:
UK: Current year (49.8) 10.8 (38.5)
Adjustment in respect of prior years - - (0.6)
Overseas: Current year (0.6) (0.4) (2.2)
Adjustment in respect of prior years (0.1) (0.1) -
-------------------------------------------------- --------- --------- ------------
(50.5) 10.3 (41.3)
-------------------------------------------------- --------- --------- ------------
Deferred
tax:
UK: Current year (0.3) (2.0) (5.5)
Adjustment in respect of prior years (0.8) - (0.2)
Overseas: Current year (0.1) - (0.4)
Adjustment in respect of prior years - - -
------------ ------------------------------------- --------- --------- ------------
(1.2) (2.0) (6.1)
-------------------------------------------------- --------- --------- ------------
(51.7) 8.3 (47.4)
-------------------------------------------------- --------- --------- ------------
The effective tax rate for the period is 18.0% (28 June 2020
effective tax rate: 20.9%).
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. In his
budget speech on 3 March 2021, the Chancellor of the Exchequer
announced that the rate of corporation tax for large companies will
increase to 25% from 1 April 2023 and this change has now been
substantively enacted. Accordingly the temporary differences have
been calculated at between 19% and 25% (28 June 2020: 19%).
The primary components of the deferred tax asset at 4 July 2021
are in relation to retirement benefit obligations (GBP8.7 million,
31 December 2020: GBP16.9 million) and losses (GBP6.1 million, 31
December 2020: GBP5.9 million).
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
7. Earnings/(loss) per share
Half year Half year
ended 4 ended 28 Year ended
July 2021 June 2020 31 December 2020
--------------------------------------------------------------------------- ---------- ---------- -----------------
Basic earnings/(loss) per share 6.5p (1.0)p 6.3p
Diluted earnings/(loss) per share 6.5p (1.0)p 6.2p
Adjusted basic earnings/(loss) per share 9.3p (0.7)p 6.5p
Adjusted diluted earnings/(loss) per share 9.2p (0.7)p 6.5p
Weighted average number of shares for basic earnings/(loss) per share -
million 3,639.2 3,305.1 3,471.2
Weighted average number of shares for diluted earnings/(loss) per share -
million 3,648.0 3,305.1 3,473.6
--------------------------------------------------------------------------- ---------- ---------- -----------------
Adjusted basic and adjusted diluted earnings/(loss) per share,
which exclude the impact of exceptional items and the associated
net tax charges, are shown to provide clarity on the underlying
performance of the Group. In accordance with IAS 33, the weighted
average number of shares for diluted earnings/(loss) per share are
without reference to adjustments in respect of outstanding shares
when the impact would be anti-dilutive.
A reconciliation from profit/(loss) from operations attributable
to equity shareholders used for basic and diluted earnings/(loss)
per share to that used for adjusted earnings/(loss) per share is
shown below:
Half year Half year
ended 4 ended 28 Year ended
GBP million July 2021 June 2020 31 December 2020
--------------------------------------------------------------------------- ---------- ---------- -----------------
Earnings for basic and diluted earnings/(loss) per share 235.8 (31.5) 217.0
Adjust for exceptional items 125.0 10.0 10.0
Adjust for tax on exceptional items (23.8) (1.7) (1.7)
--------------------------------------------------------------------------- ---------- ---------- -----------------
Earnings for adjusted basic and adjusted diluted earnings/(loss) per share 337.0 (23.2) 225.3
--------------------------------------------------------------------------- ---------- ---------- -----------------
8. Other financial assets
Amounts in other financial assets are held in an escrow account
for the benefit of the Taylor Wimpey Pension Scheme ('TWPS'). The
Trustee of the TWPS holds a charge over the escrow account.
Transfers out of the escrow account (either to the TWPS or the
Group) are subject to the 2019 triennial funding arrangement
entered into between the Group and the Trustee and as such the
funds are restricted from use by the Group for other purposes and
are therefore not classified as cash or cash equivalents. Interest
earned by the escrow account is retained within the escrow
account.
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
9. Notes to the cash flow statement
Cash and cash equivalents comprise cash at bank and other short
term highly liquid investments with an original maturity of three
months or less.
Movement in net cash:
Cash and cash equivalents Bank and Total
GBP million other loans net cash
------------------ ------------------------- ------------ ---------
At 1 January 2021 823.0 (103.6) 719.4
Net cash flow 183.8 - 183.8
Foreign exchange (1.2) 4.5 3.3
------------------ ------------------------- ------------ ---------
At 4 July 2021 1,005.6 (99.1) 906.5
------------------ ------------------------- ------------ ---------
Cash and cash equivalents Bank and Total
GBP million other loans net cash
------------------ ------------------------- ------------ ---------
At 1 January 2020 630.4 (84.7) 545.7
Net cash flow (30.2) (13.5) (43.7)
Foreign exchange 1.6 (6.3) (4.7)
------------------ ------------------------- ------------ ---------
At 28 June 2020 601.8 (104.5) 497.3
------------------ ------------------------- ------------ ---------
Cash and cash equivalents Bank and Total
GBP million other loans net cash
-------------------- ------------------------- ------------ ---------
At 1 January 2020 630.4 (84.7) 545.7
Net cash flow 191.3 (13.5) 177.8
Foreign exchange 1.3 (5.4) (4.1)
-------------------- ------------------------- ------------ ---------
At 31 December 2020 823.0 (103.6) 719.4
-------------------- ------------------------- ------------ ---------
The committed borrowing facilities are currently GBP649.1
million with an average maturity of 3.3 years.
10. Pensions
Following the 31 December 2016 triennial valuation, the Group
agreed a recovery plan with the Trustee to pay deficit reduction
contributions of GBP40.0 million per annum for the period from
April 2018 to December 2020. During 2020 and in response to the
site shutdowns, a temporary suspension of the agreed deficit
reduction contributions was agreed with the Trustee for the three
months between April and June 2020 and as a result, the recovery
plan period was extended to 31 March 2021.
During 2020, the Group engaged with the Taylor Wimpey Pension
Scheme ('TWPS') Trustee on the triennial valuation of the pension
scheme with a reference date of 31 December 2019. In March 2021, a
new funding arrangement was agreed with the Trustee that commits
the Group to paying GBP20.0 million per annum into an escrow
account between April 2021 and March 2024. The first six months of
contributions between 1 April 2021 and 30 September 2021 are
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 would be suspended should the TWPS Technical Provisions
deficit position at any quarter-end be 100% or more and would
restart should the deficit subsequently fall below 98%.
The Group continues to provide a contribution for Scheme
expenses and also makes contributions via the Pension Funding
Partnership.
At 4 July 2021 the IAS19 surplus was GBP59.0 million (31
December 2020: IAS19 deficit of GBP89.1 million). An IFRIC 14
deficit has been recognised at 4 July 2021, which represents the
present value of future contributions under the funding plan
together with distributions from the Pension Funding Partnership.
This results in an IFRIC 14 deficit recognised on the balance sheet
of GBP36.6 million (31 December 2020: IAS 19 deficit of GBP89.1
million). In addition there is as a post-retirement healthcare
liability of GBP0.4 million (31 December 2020: GBP0.4 million).
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
11. Financial assets and liabilities
Carrying amount Fair value
----------------------------- -----------------------------
4 July 28 June 31 December 4 July 28 June 31 December
GBP million 2021 2020 2020 2021 2020 2020
---------------------------- ------- ------- ----------- ------- ------- -----------
Financial assets
Cash and cash equivalents a 1,005.6 601.8 823.0 1,005.6 601.8 823.0
Land receivables a 14.4 7.5 4.6 14.4 7.5 4.6
Other financial assets a 5.0 - - 5.0 - -
Trade and other receivables a 95.6 106.2 118.2 95.6 106.2 118.2
Mortgage receivables b 21.8 30.6 26.7 21.8 30.6 26.7
---------------------------- ------- ------- ----------- ------- ------- -----------
Financial liabilities
Bank and other loans c 99.1 104.5 103.6 100.8 104.3 102.9
Land creditors a 843.1 630.6 675.9 843.1 630.6 675.9
Trade and other payables a 593.1 543.9 539.2 593.1 543.9 539.2
Lease liabilities a 29.5 24.8 28.0 29.5 24.8 28.0
---------------------------- ------- ------- ----------- ------- ------- -----------
(a) The Directors consider the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
condensed consolidated financial statements approximate their fair
values.
(b) Mortgage receivables relate to sales incentives including
shared equity loans and are measured at fair value through profit
or loss. The fair value is established based on a publicly
available national house price index, being significant other
observable inputs (level 2).
(c) The fair value of the EUR100 million fixed rate loan notes
has been determined by reference to external interest rates and the
Directors' assessment of the margin for credit risk (level 2).
Land receivables and trade and other receivables are included in
the balance sheet as trade and other receivables for current and
non-current amounts and include GBP42.1 million (31 December 2020:
GBP65.9 million) of non-financial assets.
Current and non-current trade and other payables includes
non-financial liabilities of GBP165.4 million (31 December 2020:
GBP164.0 million).
The Group has designated a financial liability in the sum of
EUR79.0 million (31 December 2020: EUR79.0 million) as a net
investment hedge. The Group had no financial instruments with fair
values that are determined by reference to significant unobservable
inputs (level 3), nor have there been any transfers of assets or
liabilities between levels of the fair value hierarchy. There are
no non-recurring fair value measurements.
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
12. Provisions
Cladding
GBP million fire safety Leasehold Other Total
------------------------ ------------ --------- ----- ------
At 31 December 2020 28.6 59.6 42.3 130.5
Additions in the period 125.0 - 11.6 136.6
Utilised (4.1) (3.2) (6.3) (13.6)
Released - - (4.0) (4.0)
Foreign exchange - - (0.2) (0.2)
------------------------ ------------ --------- ----- ------
At 4 July 2021 149.5 56.4 43.4 249.3
------------------------ ------------ --------- ----- ------
4 July 28 June 31 December
GBP million 2021 2020 2020
------------ ------ ------- -----------
Current 96.3 72.3 70.6
Non-current 153.0 57.3 59.9
------------ ------ ------- -----------
249.3 129.6 130.5
------------ ------ ------- -----------
In 2018 the Group established an exceptional provision for the
cost of replacing ACM on a small number of legacy developments,
which was increased by GBP10.0 million in 2020 to reflect the
latest estimate of costs to complete the planned works. Following
the guidance issued by RICS in the period the Group announced an
additional GBP125.0 million provision to fund cladding fire safety
improvements (see note 4). It is expected that around a quarter of
the remaining provision will be utilised over the next twelve
months.
In 2017 the Group launched an assistance scheme to help certain
customers restructure their ground rent agreements with their
freeholder and established an associated provision of GBP130.0
million to fund this. The amounts and timing of the outflows depend
largely on the number and rate of eligible applicants to the scheme
and ongoing discussion with freeholders. The Group expects the
scheme will run for several years and anticipates approximately
GBP30.0 million of the provision will be utilised within the next
twelve months.
Other provisions consist of a remedial work provision covering
various obligations on a limited number of sites across the Group.
Other provisions also includes amounts for legal claims and other
contract-related costs associated with various matters arising
across the Group, the majority of which are anticipated to be
settled within a three year period; however, there is some
uncertainty regarding the timing of these outflows due to the
nature of the claims and the length of time it can take to reach
settlement.
13. Share capital
In June 2020 the Group issued 360,265,931 ordinary shares of 1p
at a price of 145p to raise total net proceeds of GBP510.1 million
after expenses. 355,000,000 of these shares were placed via a cash
box structure (the "Placing") in which the cash box entity issued
redeemable preference shares in consideration for the receipt of
the net cash proceeds arising from the placement of those shares.
Taylor Wimpey plc ordinary shares were issued in consideration for
the transfer of the redeemable preference shares, that it did not
already own, of the cash box entity. It was therefore determined
that the placing of those shares qualified for merger relief under
section 612 of the Companies Act 2006 such that the excess of the
value of the acquired shares in the cash box entity over the
nominal value of the ordinary shares issued by Taylor Wimpey plc
was credited to Other reserves. The remainder of the shares issued,
5,265,931, were issued via a Retail Offer open to employees and
other retail investors and a Directors Subscription. The Placing
was performed to allow the Group to pursue additional near term
land acquisition opportunities.
The Placing, Retail and Subscription shares placed rank pari
passu in all respects with the existing ordinary shares of the
Company, including, without limitation, the right to receive all
dividends and other distributions declared, made or paid after the
date of issue.
14. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed within the financial statements or related notes. There
have been no material changes in the nature of transactions with
joint ventures, which are also related parties, since the last
annual financial statements as at, and for
the year ended, 31 December 2020.
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
15. Dividends
Half year Year ended
Half year ended 31 December
ended 28 2020
4 July June
GBP million 2021 2020
===================== ========= ========= ============
Approved and paid 150.7 - -
Approved and accrued - - -
Approved 151.0 - -
Proposed - - 151.0
===================== ========= ========= ============
The Directors have assessed the Company's performance in the
current period and approved an interim dividend of 4.14
pence per share in line with the Group's dividend policy. The
dividend will be paid on 12 November 2021 to all shareholders
registered at the close of business on 8 October 2021. This is
expected to result in a payment of c.GBP151.0 million.
In accordance with IAS 10 'Events after the Reporting Period'
the approved interim dividend has not been accrued in the
4 July 2021 balance sheet.
16. Share based payments
The Group recognised a share based payment expense of GBP6.3
million to 4 July 2021 (28 June 2020: GBP2.4 million), which was
composed of GBP6.2 million in relation to equity settled schemes
and GBP0.1 million in relation to cash settled elements (28 June
2020: GBP1.4 million and GBP1.0 million).
17. Seasonality
Weekly sales rates in some of the Group's key markets
historically experience significant seasonal variation, with the
highest levels of reservations usually occurring in the spring and
autumn in the UK. As such, economic weakness which affects these
peak selling seasons can have a disproportionate impact on the
results for the year.
This pattern of reservations tends to result in higher levels of
home completions towards the end of the financial year. As a
result, the Group's work in progress and debt profile exhibits
peaks and troughs over the course of the financial year.
With the impact of COVID-19 in 2020 these seasonal variations
have been disrupted and the current period may not be reflective of
prior period variations.
18. Alternative performance measures
The Group uses a number of Alternative Performance Measures
(APMs) which are not defined within IFRS. The Directors use these
measures in order to assess the underlying operational performance
of the Group and, as such, these measures should be considered
alongside the IFRS measures. The following APMs are referred to
throughout the half year results.
Profit/(loss) before taxation and exceptional items and
profit/(loss) 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/(loss) before taxation and
profit/(loss) for the period respectively, on the face of the
condensed consolidated income statement.
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
18. Alternative performance measures (continued)
Operating profit/(loss) and operating margin
Throughout the report operating profit/(loss) is used as one of
the main measures of performance. Operating profit/(loss) is
defined as profit/(loss) on ordinary activities before net finance
costs, exceptional items and tax, after share of results of joint
ventures. The Directors consider this to be an important measure of
underlying performance of the Group. Operating margin is calculated
as operating profit/(loss) divided by total revenue.
Half year Half year
ended ended
4 28 Year ended
July June 31 December
2021 2020 2020
---------------------------------------------------- --------- --------- ------------
Profit/(loss) on ordinary activities before finance
costs (GBPm) 297.7 (24.3) 282.4
Adjusted for:
Share of results of joint ventures (GBPm) 1.3 (1.8) 7.9
Exceptional items (GBPm) 125.0 10.0 10.0
---------------------------------------------------- --------- --------- ------------
Operating profit/(loss) (GBPm) 424.0 (16.1) 300.3
==================================================== ========= ========= ============
Revenue (GBPm) 2,196.3 754.6 2,790.2
==================================================== ========= ========= ============
Operating margin 19.3% (2.1)% 10.8%
==================================================== ========= ========= ============
Rolling 12-month operating profit* (GBPm) 740.4 522.5 300.3
==================================================== ========= ========= ============
* Operating profit for the 6-month period ended 31 December
2019: Profit before interest and tax: GBP544.7m; Share of results
of joint ventures: GBP8.2m; Exceptional items: GBP(14.3)m.
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 .
4 July 28 June 31 December 31 December 30 June
GBPmillion 2021 2020 2020 2019 2019
--------------------------------- ---------- --------- ------------ ------------ ----------
Basic net assets (GBPm) 4,140.2 3,755.2 4,016.8 3,307.8 3,007.6
Adjusted for:
Cash (GBPm) (1,005.6) (601.8) (823.0) (630.4) (481.3)
Borrowings (GBPm) 99.1 104.5 103.6 84.7 89.3
Net taxation (GBPm) (35.2) (14.1) (32.6) 38.1 16.1
Accrued dividends (GBPm) - - - - 350.0
--------------------------------- ---------- --------- ------------ ------------ ----------
Net operating assets (GBPm) 3,198.5 3,243.8 3,264.8 2,800.2 2,981.7
--------------------------------- ---------- --------- ------------ ------------ ----------
Average basic net assets (GBPm) 3,947.7 3,381.4 3,662.3
--------------------------------- ---------- --------- ------------ ------------ ----------
Average net operating assets
(GBPm) 3,221.2 3,112.8 3,032.5
--------------------------------- ---------- --------- ------------ ------------ ----------
Return on net operating assets
Return on net operating assets is defined as rolling 12-month
operating profit divided by average net operating assets. The
Directors consider this to be an important measure of the
underlying operating efficiency and performance of the Group.
31 December
4 July 2021 28 June 2020 2020
----------------------------------------- ----------- ------------ -----------
Rolling 12-month operating profit (GBPm) 740.4 522.5 300.3
Average net operating assets (GBPm) 3,221.2 3,112.8 3,032.5
----------------------------------------- ----------- ------------ -----------
Return on net operating assets 23.0% 16.8% 9.9%
========================================= =========== ============ ===========
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
18. Alternative performance measures (continued)
Net operating asset turn
This is defined as total revenue divided by the average of
opening and closing net operating assets, based on a rolling
12-month period. The Directors consider this to be good indicator
of how efficiently the Group is utilising its assets to generate
value for the shareholders.
31 December
4 July 2021 28 June 2020 2020
------------------------------------ ----------- ------------ -----------
Rolling 12-month revenue* (GBPm) 4,231.9 3,363.2 2,790.2
Average net operating assets (GBPm) 3,221.2 3,112.8 3,032.5
------------------------------------ ----------- ------------ -----------
Net operating asset turn 1.31 1.08 0.92
==================================== =========== ============ ===========
* Revenue for the 6-month period ended 31 December 2019:
GBP2,608.6 million
Tangible net assets per share
This is calculated as net assets before any accrued dividends
excluding goodwill and intangible assets divided by the number of
ordinary shares in issue at the end of the period. The Directors
consider this to be a good measure of the value intrinsic within
each ordinary share.
31 December
4 July 2021 28 June 2020 2020
-------------------------------------- ----------- ------------ -----------
Basic net assets (GBPm) 4,140.2 3,755.2 4,016.8
Adjusted for:
Accrued dividends (GBPm) - - -
Intangible assets (GBPm) (7.8) (8.1) (8.1)
-------------------------------------- ----------- ------------ -----------
Tangible net assets (GBPm) 4,132.4 3,747.1 4,008.7
Ordinary shares in issue (millions) 3,646.5 3,644.4 3,645.4
====================================== =========== ============ ===========
Tangible net assets per share (pence) 113.3 102.8 110.0
====================================== =========== ============ ===========
Net cash
Net cash is defined as total cash less total borrowings. This is
considered by the Directors to be the best indicator of the
financing position of the Group and is reconciled in Note 9.
Cash conversion
This is defined as cash generated by operations divided by
operating profit, based on a rolling 12-month period. The Directors
consider this measure to be a good indication of how efficiently
the Group is turning profit into cash.
31 December
4 July 2021 28 June 2020 2020
----------------------------------------- ----------- ------------ -----------
Rolling 12-month cash generated by/(used
in) operations* (GBPm) 715.6 242.9 (165.0)
Rolling 12-month operating profit (GBPm) 740.4 522.5 300.3
----------------------------------------- ----------- ------------ -----------
Cash conversion 96.7% 46.5% (54.9)%
========================================= =========== ============ ===========
* Cash generated by operations for the 6-month period ended 31
December 2019: GBP718.2m.
Adjusted gearing
This is defined as adjusted net debt divided by basic net
assets. The Directors consider this to be a more representative
measure of the Group's gearing levels. Adjusted net debt is defined
as net cash less land creditors.
31 December
4 July 2021 28 June 2020 2020
-------------------------------- ----------- ------------ -----------
Cash (GBPm) 1,005.6 601.8 823.0
Loans (GBPm) (99.1) (104.5) (103.6)
-------------------------------- ----------- ------------ -----------
Net cash (GBPm) 906.5 497.3 719.4
Land creditors (GBPm) (843.1) (630.6) (675.9)
-------------------------------- ----------- ------------ -----------
Adjusted net cash/(debt) (GBPm) 63.4 (133.3) 43.5
-------------------------------- ----------- ------------ -----------
Basic net assets (GBPm) 4,140.2 3,755.2 4,016.8
-------------------------------- ----------- ------------ -----------
Adjusted gearing (1.5)% 3.5% (1.1)%
================================ =========== ============ ===========
Taylor Wimpey plc
Notes to the condensed consolidated financial statements
(continued)
For the half year ended 4 July 2021
18. Alternative performance measures (continued)
Adjusted basic earnings per share
This is calculated as earnings attributed to the shareholders,
excluding exceptional items and tax on exceptional items, divided
by the weighted average number of shares. The Directors consider
this provides an important measure of the underlying earnings
capacity of the Group. Note 7 shows a reconciliation from basic
earnings per share to adjusted basic earnings per share.
19. Post balance sheet events
There were no material subsequent events affecting the Group
between 4 July 2021 and the date of this announcement that need to
be disclosed.
Taylor Wimpey plc
Statement of Directors' responsibility
For the half year ended 4 July 2021
The Directors confirm that these condensed consolidated interim
financial statements have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and that the interim management report includes a fair
review of the information required by DTR 4.2.7 and DTR 4.2.8,
namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
and any material changes in the related party transactions
described in the last annual report.
By order of the Board
Irene Dorner, Chairman
Pete Redfern, Chief Executive
3 August 2021
Independent review report to Taylor Wimpey plc
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Taylor Wimpey plc's condensed consolidated
financial statements (the "interim financial statements") in the
Half Year Results of Taylor Wimpey plc for the 6 month period ended
4 July 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated balance sheet as at 4 July 2021;
-- the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- the condensed consolidated cash flow statement for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year
Results of Taylor Wimpey plc have been prepared in accordance with
UK adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the Directors
The Half Year Results, including the interim financial
statements, is the responsibility of, and has been approved by the
Directors. The Directors are responsible for preparing the Half
Year Results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the Half Year Results based on our review.
This report, including the conclusion, has been prepared for and
only for the Company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half Year
Results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
3 August 2021
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