Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — FY2015 Earnings Presentation
65 slides from Taylor Wimpey's earnings presentation, Mar 1, 2016
Slide 1: Full Year Results Presentation for the year ended 31 December 2015
Full Year Results Presentation for the year ended 31 December 2015 1 March 2016 1
Slide 2: Disclaimer
Disclaimer This presentation is not intended to, and does not constitute or form part of, any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Taylor Wimpey plc or any other invitation or inducement to en
Slide 3: Agenda
Agenda Summary and operations Pete Redfern Sustainable financial Ryan Mangold performance Outlook Pete Redfern 3
Slide 4: Summary and operations
Summary and operations Pete Redfern Chief Executive 4
Slide 5: Financial highlights
Financial highlights Operating profit* margin Return on net operating assets* 25 30 27.1 20.3 Medium 25 20 22.5 17.9 term target Medium 20 15 13.6 16.8 term target 15 % % 10 10 5 5 0 0 2013 2014 2015 2013 2014 2015 Net asset annual growth NAV Conversion of operating profit* to (pre-cash distribution
Slide 6: UK operating highlights
UK operating highlights £1.8bn 14.1% £59.4k Total value of record Increase in ASP in Contribution per year end order book private order book to completion 31 Dec 2015 0.73 20.3% 8.7k Private net sales rate Operating Plots converted from (per outlet per week) profit* margin strategic pipeline * See d
Slide 7: TW UK market performance
TW UK market performance 2012 2013 2014 2015 2016 Customer interest Sales rate Number of outlets 7
Slide 8: Our UK market performance
Our UK market performance H2 2015 H1 2015 H2 2014 H1 2014 Average outlets open 300 302 298 307 Private sales rate (net) 0.66 0.78 0.58 0.71 Private sales price £000 273 257 248 238 Cancellation rate (private) 13% 11% 16% 11% • c.37% of total 2015 sales using Help to Buy • 123 new outlets opened in 2
Slide 9: North Division
North Division • Average selling price on 1,603 completions completions ASP £206k – 2015: £196k +7% 0.60 sales rate* • Private sales rate* 1,785 completions – 2015: 0.65 +12% ASP £192k 2,132 completions 0.68 sales rate* • Net operating assets** ASP £191k – 2015: £813.0m +5% 0.68 sales rate* Data bas
Slide 10: Central and South West Division
Central and South West Division • Average selling price on 2,558 completions completions – 2015: £218k +8% ASP £230k 0.78 sales rate* • Private sales rate* – 2015: 0.75 +15% 2,252 completions • Net operating assets** ASP £205k – 2015: £705.1m -3% 0.72 sales rate* Data based on completions excluding
Slide 11: London and South East Division including Central London
London and South East Division including Central London • Average selling price on completions – 2015: £313k +11% • Private sales rate* 1,910 – 2015: 0.89 +14% completions ASP £277k • Net operating assets** 979 completions† 0.83 sales rate* – 2015: £994.2m +21% ASP £381k† 0.96 sales rate* Data based
Slide 12: Land market
Land market • Land market remains stable and positive, with acquisition margins remaining at c.20% • TW focus is on: – Continued improvement to site quality – Maintaining high margin land acquisition, with additional focus on margin v risks – Continual improvement to ROCE – Strategic capital allocat
Slide 13: Quality of land acquisitions
Quality of land acquisitions Capital allocation of land approvals Micro location – position within in the period macro location 31% Total: 458 sites in short 30% A B C D Site based ROCE term owned landbank 29% Macro location – Q1 – A 33 62 10 2 28% City, broken down by Q2 – B 79 156 17 - 27% major s
Slide 14: Short term landbank
Short term landbank 100,000 8,660 13,341 90,000 6,971 80,000 1,004 712 75,710 75,136 Plots 70,000 60,000 50,000 31 December Plots acquired Strategic land Completions Land sales Scope changes 31 December 2014 conversion 2015 Movement in year 14
Slide 15: Strategic pipeline
Strategic pipeline 140,000 16,033 8,660 120,000 109,586 10,259 106,700 100,000 80,000 Plots 60,000 40,000 20,000 0 31 December Plots acquired Strategic land Land sales Review and scope 31 December 2014 conversion changes 2015 Movement in year • Strategic land conversion target: average of c.6,000 pl
Slide 16: Continuous business improvement
Continuous business improvement • Health and safety • Business operating methods • Customer service • People • Product 16
Slide 17: Customer service survey score
Customer service 8 Week Customer Service Survey Score – 3 Month Average 2012-2015: ‘Would you Recommend a Friend?’ 100% 90% % Score 80% 70% 17
Slide 18: Customer service
Customer service • Completed an in-depth review of every aspect and stage of our Customer Journey in mid-2015 • 2015 actions have been focused on delivering existing process uniformly well • 2016 will focus on implementing changes in three main areas: – New Head of Customer Service role in each busi
Slide 19: Product
Product • Standard house floorplans – working well and in place across over 70% of sites • Full review of product specification – Focus on customer added value – Changes to doors, bathroom fittings etc – Ties in to online specification project • R&D and innovation – Longer term R&D – aims to shape,
Slide 20: Sustainable financial performance
Sustainable financial performance Ryan Mangold Group Finance Director 20
Slide 21: Summary Group results
Summary Group results £m FY 2015 FY 2014 Change Revenue 3,139.8 2,686.1 16.9% Gross profit 788.0 620.9 26.9% Gross profit margin % 25.1 23.1 2.0ppt Operating profit* 637.0 480.7 32.5% Operating profit* margin % 20.3 17.9 2.4ppt Profit before tax and exceptional 603.8 450.1 34.1% items Adjusted basic
Slide 22: Group segmental analysis
Group segmental analysis FY 2015 FY 2014 Operating Operating RONOA* Operating Operating RONOA* profit* profit* % profit* profit* % £m margin £m margin % % North 251.0 22.9 31.8 203.5 21.8 29.0 Central and South 243.2 22.6 34.1 179.5 20.2 25.3 West London and South 203.2 22.3 22.4 154.8 18.7 20.6 Eas
Slide 23: Finance charges
Finance charges £m FY 2015 FY 2014 Change Financial indebtedness 11.6 14.4 (19.4)% Land creditor unwind 15.9 12.3 29.3% Pensions 6.0 7.5 (20.0)% Other 0.4 (3.0) 113.3% Total 33.9 31.2 8.7% • Finance charges include £1.5m of interest charges in relation to tax • The ‘amend and extend’ to the revolvin
Slide 24: Exceptional items and tax
Exceptional items and tax Exceptional items £m FY 2015 FY 2014 Change Impairment review (0.6) 18.7 (19.3) UK tax on NRV addition / (release) 0.1 (4.0) 4.1 Spain deferred tax asset 8.0 - 8.0 Total 7.5 14.7 (7.2) • Land and WIP impairment review resulted in an additional charge of £0.6m and an associa
Slide 25: UK performance summary
UK performance summary FY 2015 FY 2014 Change Legal completions – excl JVs 13,219 12,294 7.5% Private 10,710 10,116 5.9% Affordable 2,509 2,178 15.2% Average selling price – excl JVs 230 213 8.0% Private £000 254 234 8.5% Affordable £000 124 115 7.8% Legal completions – JVs 122 160 (23.8)% Share of
Slide 26: Indicative movements in UK operating profit margin
Indicative movements in UK operating profit* margin Annual change Impact on 2015 2014 to 2015 income statement Market inflation on selling prices 6.5%** 4.7% Market inflation on build cost 5.0% (2.9)% Net economic benefit captured 1.8% Market impact of landbank evolution (1.1)% Net market impact 0.7
Slide 27: UK per plot analysis
UK per plot analysis 260 240 220 59.8 55.9 200 53.2 25.6% 45.3 24.3% 24.9% Key 180 38.1 22.0% 34.2 39.6 Contribution 33.6 19.6% 160 18.3% 21.1% ASP £000 margin* 19.1% 140 Selling expenses 120 53.0% 53.5% 52.2% 100 55.1% 53.2% Build cost 56.9% 55.1% 55.2% 80 Land cost 60 40 20.9% 22.2% 20.9% 22.0% 21
Slide 28: UK build cost environment
UK build cost environment FY 2015 FY 2014 FY 2013 FY 2012 Total build cost per sq ft (£ / sq ft) 120 114 105 103 Total ASP (£ / sq ft) 223 213 191 186 Build cost to ASP recovery (£ / sq ft) 103 99 86 83 % apartments of private completions 13% 18% 20% 24% • Underlying build cost increase was c.5% in
Slide 29: Quality of landbank
Quality of landbank 100% 50% Operating profit* margin / EBITLA* 80% 40% 60% 30% 40% 20% 20% 10% 0% 0% FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 Short term completions completions completions completions completions landbank FY 2015 Post 2009 strategic land Post 2009 short term land Pre 2009 strategic
Slide 30: Movement in Group net assets
Movement in Group net assets 31 Dec 2015 31 Dec 2014 Breakdown of £m £m movement % Opening net assets 2,535.3 2,251.8 N/A Pre-exceptional net earnings 482.3 359.7 19.0% Net impact of exceptional items 7.5 14.7 0.3% Actuarial losses after tax (9.3) (20.7) (0.3)% Net share scheme and other 15.9 2.5 0.
Slide 31: Investment in UK landbank
Investment in UK landbank • ASP in short term owned landbank of £245k (2014: £222k) • Land cost in short term owned landbank is 16.3% of ASP (2014: 17.3%) supported by strategic land conversions • Land cost as % of ASP on 2015 approvals – 23.0% • Revenue in short term landbank – c.£18bn • Revenue in
Slide 32: Balance sheet and financing structure
Balance sheet and financing structure • Year end net cash – 2015: £223.3 million (2014: £112.8 million) • Committed debt facility of £650m with an average maturity of 4 years (2014: 5 years) • Adjusted gearing (net debt plus land creditors) – 14.3% (2014: 14.8%) • Land creditors 2015 2014 £m < 1 yr
Slide 33: Turning profit into cash
Turning profit into cash 650 80 75 450 70 Short term landbank plots 000’s 250 65 £m 50 60 55 (150) 50 (350) 45 (550) 40 2012 2013 2014 2015 Dividends Pensions, tax, interest Working capital EBITDA* Short term landbank plots * See definitions slide in the appendix 33
Slide 34: Dividends
Dividends Change Declared per share (pence) FY 2015 FY 2014 (pence) Maintenance dividend* 1.67 1.56 0.11 Cash return** 9.20 7.68 1.52 Total 10.87 9.24 1.63 • Final maintenance dividend will be paid on 20 May 2016 subject to AGM approval • Cash return of c.£300m will be paid on 15 July 2016 subject t
Slide 35: Summary
Summary • Good progress against medium term targets made to date • Underlying balance sheet quality continues to improve, supported by excellent operational execution FY 2015 FY 2014 FY 2013 FY 2012 Operating profit* margin % 20.3 17.9 13.6 11.2 Net operating asset turn* 1.33 1.26 1.23 1.19 Return o
Slide 36: Outlook
Outlook Pete Redfern Chief Executive 36
Slide 37: TW UK market performance
TW UK market performance H1 2016 (w/e H2 2015 H1 2015 H2 2014 H1 2014 21/02/2016) Average outlets open 296 300 302 298 307 Private sales rate (net) 0.77 0.66 0.78 0.58 0.71 Private sales price £000 266 273 257 248 238 Cancellation rate (private) 12% 13% 11% 16% 11% H1 2016 (w/e 31 Dec 28 Jun 31 Dec
Slide 38: 2016 trading environment
2016 trading environment • Land and planning – Positive planning environment, good land availability – Starter Homes remain an opportunity / risk • Sales and customer – Strong customer demand and confidence – Impact of EU referendum – Good mortgage availability, accessibility and cost • Build costs
Slide 39: Conclusions
Conclusions 2015 – 2017 FY 2015 medium term targets Operating profit* margin % 20.3 20 Return on net operating assets* % 27.1 20 Net asset annual growth NAV (pre-cash distribution)* % 19.6 15 Cash conversion* % 67.0 65 • Land cost in short term owned landbank is 16.3% of ASP (2014: 17.3%) * See defi
Slide 40: Questions and Answers
Taylor plc . reais Questions and Answers
Slide 41: Future investor communications
Future investor communications • 28 April 2016 AGM and trading update • 17 May 2016 Analyst day • 27 July 2016 Half year results • 14 November 2016 Trading update 41
Slide 42: Appendices
Taylor Wimpey plc Full Year Results Presentation for the year ended 31 December 2015 Appendices 42
Slide 43: Summary income statement
Summary income statement* Group £m FY 2015 FY 2014 Change H1 2015 Revenue 3,139.8 2,686.1 16.9% 1,335.3 Cost of sales (2,351.8) (2,065.2) 13.9% (1,005.1) Gross profit 788.0 620.9 26.9% 330.2 Net operating expenses (155.9) (142.8) 9.2% (75.7) Profit on ordinary activities 632.1 478.1 32.2% 254.5 befo
Slide 44: Summary balance sheet
Summary balance sheet Group £m 31 Dec 2015 31 Dec 2014 Change Long term assets and JVs 49.8 57.9 (14.0)% Land 2,743.8 2,582.4 6.3% WIP 1,147.4 907.7 26.4% Debtors 209.4 213.7 (2.0)% Land creditors (629.8) (487.7) 29.1% Other creditors (865.6) (783.8) 10.4% Pensions and post retirement benefits (178.
Slide 45: 2015 cash flow summary
2015 cash flow summary Group £m FY 2015 H2 2015 H1 2015 FY 2014 Profit from ordinary activities before finance costs* 631.5 377.8 253.7 496.8 Other non-cash items 6.5 3.1 3.4 0.2 Increase in inventories (269.1) (12.9) (256.2) (409.1) Decrease / (increase) in receivables 13.0 28.0 (15.0) 20.6 Increas
Slide 46: 2015 cash flow summary – continued
2015 cash flow summary – continued Group £m FY 2015 H2 2015 H1 2015 FY 2014 Cash generated by operations 426.9 405.7 21.2 207.2 Tax (5.5) (5.9) 0.4 0.1 Interest paid (14.5) (9.5) (5.0) (14.6) Net cash from operating activities 406.9 390.3 16.6 192.7 Investing activities 10.6 10.2 0.4 (10.2) Financin
Slide 47: Pensions
Pensions Movement in present value of defined FY 2015 FY 2014 FY 2013 benefit obligations £m Total UK Total UK Total UK Brought forward 182.4 182.2 242.5 Employer contributions* (23.1) (36.3) (48.1) Settlement gain** - - (4.1) Administration cost 3.2 3.1 3.2 Interest cost 6.0 7.5 9.7 Measurement cha
Slide 48: Number of residential units approved
Number of residential units approved England Southern Wales Scotland Great Britain North of England Midlands All England 2007 65,645 37,613 109,209 212,467 10,765 29,109 252,341 2008 40,892 25,290 102,377 168,559 6,894 22,541 197,994 2009 27,598 19,334 79,078 126,010 3,894 17,800 147,704 2010 33,714
Slide 49: Real house prices remain below peak
Real house prices remain below peak £200,000 £150,000 £100,000 £50,000 £0 1987 1991 1995 1999 2003 2007 2011 2015 Nominal prices Real prices Source: Nationwide – Nominal house prices ONS - RPI 49
Slide 50: FTB mortgage payments as % of pay / interest rates
FTB mortgage payments as % of pay / interest rates 100% 16 90% 14 80% 12 70% % of take home pay 10 Interest rate % 60% 50% 8 40% 6 30% 4 20% 2 10% 0% 0 1983 1987 1991 1995 1999 2003 2007 2011 2015 Interest Rates London UK • FPC recommend to stress test assuming Bank Rate increases by 3% Source: Nati
Slide 51: UK net operating assets
UK net operating assets £m 31 Dec 2015 31 Dec 2014 31 Dec 2013 Fixed assets 22 19 12 Investment in JVs 27 38 34 Land 2,662 2,537 2,141 WIP 1,146 870 721 Total inventories 3,808 3,407 2,862 Debtors 207 211 227 Land (622) (481) (347) Other (830) (754) (617) Total creditors (1,452) (1,235) (964) Pensio
Slide 52: Short term landbank
Short term landbank Movements in year 31 December 2014 75,136 Planning status + Plots acquired 6,971 2015 2014 Detailed planning 46,493 43,616 + Strategic land conversion 8,660 Outline planning 22,063 22,313 - Completions (13,341) Resolution to grant 7,154 9,207 - Land sales (1,004) Total 75,710 75,
Slide 53: Strategic pipeline
Strategic pipeline Movements in year 31 December 2014 109,586 + Plots acquired 16,033 - Strategic land conversion (8,660) - Land sales - - Review and scope change (10,259) 31 December 2015 106,700 53
Slide 54: Average selling prices in short term owned and controlled landbank
Average selling prices in short term owned and controlled landbank Central and South West London and South East North including Central London Average selling price £226k Average selling + 7% price Average selling £205k price + 1% £271k + 3% Average selling price £189k + 6% Average selling Average s
Slide 55: UK land portfolio – plots
UK land portfolio ‒ plots 31 Dec 2015 31 Dec 2014 Owned Controlled Pipeline Total Total Detailed planning 43,735 2,758 197 46,690 43,959 Outline planning 15,588 6,475 627 22,690 24,581 Resolution to grant 1,863 5,291 355 7,509 9,207 Sub-total 61,186 14,524 1,179 76,889 77,747 Allocated strategic 4,7
Slide 56: UK land portfolio – net cost
UK land portfolio ‒ net cost 31 Dec 2015 31 Dec 2014 £m Owned Controlled Total Total Detailed planning 1,822 5 1,827 1,691 Outline planning 596 18 614 539 Resolution to grant 20 14 34 98 Sub-total 2,438 37 2,475 2,328 plots 61,186 14,524 75,710 75,136 Strategic 110 61 171 161 plots 28,118 78,582 106
Slide 57: North Division
North Division Scotland Yorkshire West Midlands North North & North East & North West Division Division FY 2015 FY 2014 As at 31 Dec 2015 Short term owned and controlled 9,429 11,334 7,204 27,967 28,569 land portfolio plots Land portfolio years 5.9 5.3 4.0 5.1 5.7 Land portfolio years, three-year 5.
Slide 58: Central and South West Division
Central and South West Division Eastern South West & Central and Central and South Wales South West West Division Division FY 2014 As at 31 Dec 2015 FY 2015 Short term owned and controlled 16,420 15,848 32,268 31,727 land portfolio plots Land portfolio years 6.4 7.0 6.7 7.2 Land portfolio years, thr
Slide 59: London and South East Division including Central London
London and South East Division including Central London South East, London market† London and London and excluding London South East South East market Division Division As at 31 Dec 2015 FY 2015 FY 2014 Short term owned and controlled 10,946 4,529 15,475 14,840 land portfolio plots Land portfolio ye
Slide 60: Land disposals
Land disposals FY 2015 FY 2014 £m Proceeds UK 35.9 18.6 Spain - - Total 35.9 18.6 Gross profit UK* 6.2 11.6 Spain - - Total 6.2 11.6 Land disposals are included in revenue and cost of sales * Includes land provision releases 60
Slide 61: UK product mix
UK product mix 2015 2014 Private completions FY H2 H1 FY H2 H1 % Apartments 13% 15% 11% 18% 18% 18% 1 / 2 / 3 bed 47% 46% 49% 45% 45% 46% houses 4 / 5 bed houses 40% 39% 40% 37% 37% 36% Total 100% 100% 100% 100% 100% 100% Data based on completions excluding JVs 61
Slide 62: UK customer segmentation
UK customer segmentation 2015 2014 Total completions % FY H2 H1 FY H2 H1 First time buyers 36% 36% 35% 36% 34% 38% Second time buyers 38% 37% 39% 37% 38% 36% Affordable 19% 20% 19% 19% 20% 18% Investor 7% 7% 7% 8% 8% 8% Total 100% 100% 100% 100% 100% 100% Help to Buy* 37% 37% 37% 35% 34% 35% * Help
Slide 63: 2015 sales performance
2015 sales performance H1 2016 (w/e H2 2015 H1 2015 H2 2014 H1 2014 21/02/2016) Average outlets open 296 300 302 298 307 Average sales rate (net) 0.84 0.86 0.94 0.75 0.83 Average selling price £000 248 237 237 217 221 H1 2016 (w/e 31 Dec 28 Jun 31 Dec 29 Jun As at 21/02/2016) 2015 2015 2014 2014 Tot
Slide 64: Spain financial summary
Spain financial summary* FY 2015 FY 2014 Change £m Average number of active sites 18 18 0.0% Legal completions 251 164 53.0% Average selling price (£000) 227 198 14.6% Average selling price (€000) 315 250 26.0% Revenue £m 58.1 33.7 72.4% Operating profit** £m 10.0 4.2 138.1% Operating profit** margi
Slide 65: Definitions
Definitions • Operating profit is defined as profit on ordinary activities before net finance costs, exceptional items and tax, after share of results of joint ventures. • Adjusted basic earnings per share represents earnings, attributed to the shareholders of the parent, excluding exceptional items