Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — FY2023 Earnings Presentation
51 slides from Taylor Wimpey's earnings presentation, Feb 28, 2024
Slide 1: Full Year Results Presentation for the year ended 31 December 2023
Full Year Results Presentation for the year ended 31 December 2023 28 February 2024
Slide 2: Disclaimer
Disclaimer For the purposes of this notice, this “presentation” shall include these slides and any question-and-answer session that follows oral briefings by representatives of Taylor Wimpey plc. This presentation is for information purposes only and is not intended to, and does not constitute or fo
Slide 3: Agenda
Agenda 2023 trading and market Financial review Building for the future: backdrop Priorities for the year and Jennie Daly Chris Carney outlook Jennie Daly 3 Results Presentation for the year ended 31 December 2023
Slide 4: 2023 trading and market backdrop
2023 trading and market backdrop Jennie Daly Chief Executive
Slide 5: Delivering a good performance by managing through the cycle
Delivering a good performance by managing through the cycle Net sales rate homes Group completions Operating profit Dividend per share per outlet per week including joint margin* paid in 2023 ventures 0.62 10,848 13.4% 9.57p (2022: 0.68) (2022: 14,154) (2022: 20.9%) (2022: 9.06p) Plots in short term
Slide 6: UK trading performance impacted by affordability and customer confidence
UK trading performance impacted by affordability and customer confidence Impact of mortgage rates on sales rates 2023 performance: continued focus on value over 7 1.00 volume 0.90 ● Net private reservation rate of 0.62 (2022: 0.68), and 6 0.54 excluding bulk deals (2022: 0.65) 0.80 5 0.70 ● Cancella
Slide 7: Financial review
Financial review Chris Carney Group Finance Director
Slide 8: Summary Group results
Summary Group results £m (before exceptional items) FY 2023 FY 2022 Change Revenue 3,514.5 4,419.9 (20.5)% Gross profit 716.5 1,132.4 (36.7)% Gross profit margin % 20.4 25.6 (5.2)ppt Operating profit* 470.2 923.4 (49.1)% Operating profit margin % 13.4 20.9 (7.5)ppt Profit before tax and exceptional
Slide 9: UK performance summary
UK performance summary FY 2023 FY 2022 Change Legal completions – excl JVs 10,356 13,551 (23.6)% Private 8,005 10,675 (25.0)% Affordable 2,351 2,876 (18.3)% Average selling price – excl JVs 324 313 3.5% Private £000 370 352 5.1% Affordable £000 168 166 1.2% Legal completions – JVs 82 222 (63.1)% Sha
Slide 10: UK operating margin reflects build cost inflation and reduced volume
UK operating margin reflects build cost inflation and reduced volume ● As previously guided, factors impacting 2023 margin: Illustrative movements in UK operating margin Annual Impact on 2023 income FY 2022 to FY 2023 change statement (ppt) ● Build cost inflation exceeded house price inflation Marke
Slide 11: Summary Group balance sheet
Summary Group balance sheet Group £m 31 Dec 2023 31 Dec 2022 Change Long term assets and JVs 143.2 131.8 11.4 Land 3,269.5 3,428.3 (158.8) WIP 1,900.1 1,741.3 158.8 Debtors 152.5 203.4 (50.9) Land creditors (516.1) (725.6) 209.5 Other creditors (812.3) (839.5) 27.2 Pensions and post-retirement benef
Slide 12: Group cashflow
Group cashflow 1,600 1,400 (28.8) 470.2 (53.0) (95.7) 1,200 (3.8) 288.9 (112.1) (337.9) 1,000 863.8 £m 800 (24.8) 677.9 600 400 200 0 Opening net Operating profit Movement in Investment in Investment in Payments to Cash generated Tax paid and net Dividends Other*** Closing net cash cash debtors and
Slide 13: Our capital allocation priorities
Our capital allocation priorities Highly cash generative business allows for investment for growth and attractive shareholder returns 1 2 3 4 Investment in land and Maintain a strong Sustainable ordinary WIP to drive future Return excess cash balance sheet dividend growth Maintain low adjusted geari
Slide 14: 2024 guidance
2024 guidance Guidance 9,500 to 10,000 range UK completions (excl. JVs) Half year c.45% of full year Admin expenses Broadly similar to FY 2023 Net finance charges c.£5 million net expense (including c.£10 million cash receipt) JV share of profit c.£1 million 14 Results Presentation for the year ende
Slide 15: Building for the future: Priorities for the year and outlook
Building for the future: Priorities for the year and outlook Jennie Daly Chief Executive
Slide 16: Short term drivers of demand – early signs of improvement
Short term drivers of demand – early signs of improvement Recent mortgage rate reductions aiding improved affordability Mortgage product availability 6,000 5,694 5,315 8% 5,000 6% 3,730 4,000 4% 3,000 2,000 2% 706 718 1,000 353 457 253 144 0% 0 2019 2020 2021 2022 2023 2024 December 2021 December 20
Slide 17: Fundamentals remain positive
Fundamentals remain positive Unemployment remains at low levels Average wages returned to real-terms growth in 2023 10% Forecast 10% 8% 5% 6% 0% 4% 2% -5% 0% -10% 2000 2004 2008 2012 2016 2020 2024 2028 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 Source: ONS, OBR Source: ONS Real hou
Slide 18: Current trading
Current trading H1 2024 (w/e 25 Feb 2024) H2 2023 H1 2023 Average outlets open 237 232 244 Private sales rate (net) 0.67 0.52 0.71 Private sales price £000 355 352 352 Cancellation rate (private) 12% 20% 16% ● Pricing remains reasonably firm ● Total order book of 7,402 homes as at w/e 25 February 20
Slide 19: Interest levels supported by a step up in marketing intensity
Interest levels supported by a step up in marketing intensity While organic customer interest* remains lower year on year… 1 6 11 16 21 26 31 36 41 46 51 2022 2023 2024 …total website traffic boosted by marketing approach Source: Think with Google ● Good appointment and walk-in levels with growth on
Slide 20: Responding to and understanding our customers
Responding to and understanding our customers Our customer trends remain stable year on year ● Responding to affordability challenges ● Good quality homes that are attractive to customers c.18% of customers Average FTB ● Tailoring incentives to address individual needs were cash buyers LTV was 78% ●
Slide 21: Focused on progressing land through planning
Focused on progressing land through planning ● Challenging backdrop impacting near term outlets ● Responded to slower planning system ● As at 31 December 2023 we had c.30k plots in planning for first principle determination ● Proactive approach to support growth when the market and policy environmen
Slide 22: Differentiated by high quality landbank and resilient outlets
Differentiated by high quality landbank and resilient outlets ● c.80k plots in the short term landbank as at 31 December 2023 (2022: c.83k) in good quality locations, despite significantly reduced land buying in the last 18 months ● Supported by c.8k conversions from the strategic land pipeline (202
Slide 23: Resilient landbank and well positioned for recovery
Resilient landbank and well positioned for recovery Small Medium Large Super large Total (1-200) (201-375) (376-750) (751+) 31 December 2023 Plots Plots Plots Plots Plots Owned 35% 29% 20% 16% 100% Controlled 18% 12% 24% 46% 100% Total 31% 25% 21% 23% 100% Average remaining plots 71 160 439 1,166 15
Slide 24: Continued focus on protecting value
Continued focus on protecting value ● Systematically assessing our offering for value improvement opportunities ● Extensive product line review supported by customer feedback ● Optimising product routes to site ● Improved benchmarking and consistency of supply resulting in savings ● Negotiated comme
Slide 25: Driving efficiencies through operational excellence
Driving efficiencies through operational excellence Taylor Wimpey Logistics (TWL) Timber Frame My Task subcontractor portal Enabling just in time delivery to our Production commenced, deliveries to Newly implemented portal to digitise sites and increasing resilience site in H1 2024 the process for a
Slide 26: Prepared for future regulation
Prepared for future regulation Future Homes Standard (FHS) trial update Timeline for future regulation ⚫ Learnings from trial position us well for the FHS change in 2025 February 2024: Biodiversity Net ⚫ Performed quantitative and qualitative customer research to evaluate trial Gain (BNG) technologi
Slide 27: Outlook and priorities
Outlook and priorities Priorities Outlook ⚫ Continue to prioritise value over volume ⚫ Early signs of improved affordability and customer confidence ⚫ Remain focused on building a strong order book ⚫ Lower order book will impact completions in 2024 ⚫ Adjust build plans to meet anticipated demand ⚫ L
Slide 28: Investment case
Investment case Q&A Strong and resilient Differentiated by Sustainable and Reliable business landbank responsible shareholder returns Operational High-quality ESG embedded Committed to paying excellence to landbank together throughout the an annual ordinary optimise margin and with a significant org
Slide 29: Future investor communications
Future investor communications ● 23 April 2024 AGM and trading update ● 31 July 2024 Half year results 2024 ● 7 November 2024 Trading update 29 Results Presentation for the year ended 31 December 2023
Slide 30: Appendices
Appendices Full Year Results Presentation for the year ended 31 December 2023 Taylor Wimpey plc
Slide 31: Good delivery against our operational KPIs
Good delivery against our operational KPIs Land FY 2023 FY 2022 Land cost as % of ASP on approvals 15.2% 19.0% Landbank years c.7.7 c.6.0 % of completions from strategically sourced land 45% 52% Operational excellence Construction Quality Review (average score / 6) 4.89 4.81 Average reportable items
Slide 32: Forward indicators
Forward indicators Organic customer interest* Total website traffic 1 6 11 16 21 26 31 36 41 46 51 1 6 11 16 21 26 31 36 41 46 51 2022 2023 2024 2022 2023 2024 Total enquiries Appointments and walk-ins 1 6 11 16 21 26 31 36 41 46 51 1 6 11 16 21 26 31 36 41 46 51 2022 2023 2024 2022 2023 2024 * Orga
Slide 33: Building safety update
Building safety update ● Long-held belief that leaseholders should not pay Financial position £m Total funds set aside for cladding and fire safety remediation 245 ● Took early and proactive actions with funds first committed in 2017 Spend to 31 December 2023 (53) Remaining provision 192 ● Continue
Slide 34: Summary income statement
Summary income statement* Group £m FY 2023 FY 2022 Change H1 2023 Revenue 3,514.5 4,419.9 (20.5)% 1,637.1 Cost of sales (2,798.0) (3,287.5) (14.9%) (1,283.2) Gross profit 716.5 1,132.4 (36.7)% 353.9 Net operating expenses (248.7) (224.9) 10.6% (118.0) Profit on ordinary activities before 467.8 907.5
Slide 35: UK performance summary
UK performance summary H1 2023 H2 2023 FY 2023 Private ASP £000 366 374 370 Affordable ASP £000 166 170 168 Total ASP £000 320 328 324 Private and affordable completions 4,854 5,502 10,356 47% 53% 100% Affordable % of total completions 22.9 22.5 22.7 Gross profit margin % 21.2 19.1 20.1 Operating pr
Slide 36: Cash flow summary
Cash flow summary Group £m FY 2023 H2 2023 H1 2023 FY 2022 Profit on ordinary activities before finance costs 467.8 231.9 235.9 827.5 (Increase)/decrease in inventories (148.7) 84.2 (232.9) (280.4) Exceptional items charge - - - 80.0 Other operating items* (30.2) (42.8) 12.6 77.9 Cash generated by o
Slide 37: Group segmental analysis
Group segmental analysis FY 2023 FY 2022 Operating Operating Operating Operating profit profit margin RONOA profit profit margin RONOA £m % % £m % % UK 434.9 12.9 12.0 890.8 20.7 25.9 Spain 35.3 24.7 38.4 32.6 26.2 32.8 Group 470.2 13.4 12.6 923.4 20.9 26.1 37 Results Presentation for the year ended
Slide 38: Cash returns payment profile
Cash returns payment profile Paid (or to be paid) pence per share FY 2024*** FY 2023 FY 2022 Ordinary dividend* c.9.59 9.57 9.06 Paid (or to be paid) £m FY 2024*** FY 2023 FY 2022 Ordinary dividend* 339 338 324 Share buyback** - - 150 Total 339 338 474 ● Final ordinary dividend of 4.79 pence per sha
Slide 39: Financing
Financing ● Net cash at 31 December 2023: £677.9 million (31 December 2022: £863.8 million) ● Adjusted gearing including land creditors of -3.6% (2022: -3.1%) ● Average net cash during 2023: £606.6 million (2022: £595.7 million) ● Borrowings and facilities: ● £600 million Revolving Credit Facility e
Slide 40: Finance charges
Finance charges £m FY 2023 FY 2022 Change Financial indebtedness 8.3 4.8 3.5 Foreign exchange loss 0.5 - 0.5 Unwind of land creditors and other 14.8 18.3 (3.5) items Pensions 1.3 0.6 0.7 Interest on IFRS 16 leases 1.0 0.4 0.6 Total 25.9 24.1 1.8 40 Results Presentation for the year ended 31 December
Slide 41: Tax
Tax Asset / (liability) Current tax £m Deferred tax £m Net tax £m As at 1 January 2023 (7.2) 26.0 18.8 Income statement* (121.4) (3.4) (124.8) SOCI / SOCIE - 0.9 0.9 Cash paid 126.5 - 126.5 Other (including foreign exchange) 0.5 (0.1) 0.4 As at 31 December 2023 (1.6) 23.4 21.8 ● Pre-exceptional effe
Slide 42: Pension funding
Pension funding £m FY 2021 FY 2022 FY 2023 Deficit contributions to the Scheme 10.3 - - Payments to escrow 10.0 - - Pension Funding Partnership 5.1 5.1 5.1 Scheme expenses 2.0 2.0 2.0 Total 27.4 7.1 7.1 ● IAS 19 surplus at 31 December 2023 of £76.7 million, deficit of £26.3 million recognised after
Slide 43: UK completions mix
UK completions mix £201k – £251k – £301k – £451k – £601k – UK completions 2023 <£200k £250k £300k £450k £600k £1m >£1m Total Price band 20% 15% 15% 35% 11% 3% 1% 100% UK completions FY 2023 H2 2023 H1 2023 FY 2022 H2 2022 H1 2022 First time buyers 29% 28% 31% 35% 35% 35% Second time buyers 41% 42% 3
Slide 44: UK land commitments
UK land commitments 2023 2022 £m (at 31 December 2023) < 1 yr 1-2 yrs 2-5 yrs 5+ yrs total total Committed cash payments in respect of unconditional land contracts 276 133 58 31 498 720 Expected cash payments in respect of conditional land contracts 86 45 86 62 279 632 ● Included in unconditional la
Slide 45: UK planning permissions
UK planning permissions 20,000 Sites with implementable planning permission 18,000 97.7% 16,000 14,000 12,000 10,000 8,000 6,000 4,000 1.9% 2,000 0.4% 0 Started on site as at 31 December 2023 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Starting on site Q1 2024 Permissi
Slide 46: UK land pipeline
UK land pipeline 31 Dec 2023 31 Dec 2022 Plots Owned Controlled Total Total Detailed planning 36,217 2,735 38,952 41,643 Outline planning 20,708 7,375 28,083 26,271 Resolution to grant 4,265 9,023 13,288 14,916 Short term 61,190 19,133 80,323 82,830 Short term with implementable 36,161 36,161 38,800
Slide 47: UK land portfolio ‒ net cost
UK land portfolio ‒ net cost 31 Dec 2023 31 Dec 2022 £m Owned Controlled Total Total Detailed planning 1,971 6 1,977 2,069 Outline planning 692 8 700 732 Resolution to grant 83 17 100 87 Sub-total 2,746 31 2,777 2,888 plots 61,190 19,133 80,323 82,830 Strategic 242 115 357 419 plots 34,319 107,676 1
Slide 48: UK landbank
UK landbank ● Land cost in short term owned landbank is 13.7% of ASP (2022: 14.0%), supported by strategic pipeline conversions ● Land cost as % of ASP on 2023 approvals 15.2% (2022: 19.0%) ● Potential revenue in the landbank was £61 billion (31 December 2022: £61 billion), comprising: ● Short term
Slide 49: UK sales performance
UK sales performance Private and affordable reservations H1 2024 (w/e excl. JVs 25 Feb 2024) H2 2023 H1 2023 H2 2022 H1 2022 Average outlets open 237 232 244 235 228 Average sales rate (net) 0.71 0.73 0.84 0.70 1.10 Average selling price £000 345 305 325 312 326 H1 2024 (w/e As at 25 Feb 2024) 31 De
Slide 50: Spain financial summary
Spain financial summary FY 2023 FY 2022 Change Average number of active sites 23 24 (4.2)% Legal completions 410 381 7.6% Average selling price £000 347 327 6.1% Average selling price €000 400 383 4.4% Revenue £m 142.8 124.4 14.8% Operating profit £m 35.3 32.6 8.3% Operating profit margin % 24.7 26.
Slide 51: Definitions
Definitions ● Operating profit is defined as profit on ordinary activities before financing, exceptional items and tax, after share of results of joint ventures. ● Operating profit margin is defined as operating profit divided by revenue. ● Adjusted basic earnings per share represents earnings attri