Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — FY2022 Earnings Presentation
51 slides from Taylor Wimpey's earnings presentation, Mar 2, 2023
Slide 1: Full Year Results Presentation for the year ended 31 December 2022
Full Year Results Presentation for the year ended 31 December 2022 2 March 2023
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 2022 trading and market Financial review Priorities for the year and backdrop outlook Jennie Daly Chris Carney Jennie Daly 3 Results Presentation for the year ended 31 December 2022
Slide 4: 2022 trading and market backdrop
2022 trading and market backdrop Jennie Daly Chief Executive
Slide 5: 2022 year of delivery
2022 year of delivery ● Group completions including joint ventures of 14,154 (2021: 14,302) ● Delivered an excellent performance in tough market with an improved operating profit margin* of 20.9% ● Operational and pricing discipline core focus in 2022 and beyond ● Executed outlet openings in line wi
Slide 6: UK trading performance – a year of two halves
UK trading performance – a year of two halves Private sales rate (net) Cancellation rate (private) 1.00 0.90 25% 23% 0.80 0.68 20% 18% 15% 0.60 0.48 15% 0.40 10% 0.20 5% 0.00 0% H1 2022 H2 2022 FY 2022 H1 2022 H2 2022 FY 2022 Average selling price on private completions £k Average outlets open 370 £
Slide 7: Financial review
Financial review Chris Carney Group Finance Director
Slide 8: Summary Group results
Summary Group results £m (before exceptional items) FY 2022 FY 2021 Change Revenue 4,419.9 4,284.9 3.2% Gross profit 1,132.4 1,027.0 10.3% Gross profit margin % 25.6 24.0 1.6ppt Operating profit* 923.4 828.6 11.4% Operating profit margin % 20.9 19.3 1.6ppt Profit before tax and exceptional items 907
Slide 9: UK performance summary
UK performance summary FY 2022 FY 2021 Change Legal completions – excl JVs 13,551 13,929 (2.7%) Private 10,675 11,481 (7.0%) Affordable 2,876 2,448 17.5% Average selling price – excl JVs 313 300 4.3% Private £000 352 332 6.0% Affordable £000 166 148 12.2% Legal completions – JVs 222 158 40.5% Share
Slide 10: UK performance summary continued
UK performance summary continued H1 2022 H2 2022 FY 2022 Private ASP £000 337 367 352 Affordable ASP £000 169 162 166 Total ASP £000 300 325 313 Private and affordable completions 6,587 6,964 13,551 49% 51% 100% Affordable % of total completions 22.0 20.5 21.2 Gross profit margin % 25.1 25.8 25.5 10
Slide 11: UK operating margin
UK operating margin ● The improvement in operating margin in 2022 has been Illustrative movements in UK operating margin Annual Impact on 2022 income supported by: FY 2021 to FY 2022 change statement (ppt) ● Price optimisation offset by build cost inflation Market inflation on selling prices c.8.0%*
Slide 12: Summary Group balance sheet
Summary Group balance sheet Group £m 31 Dec 2022 31 Dec 2021 Change Long term assets and JVs 131.8 150.2 (18.4) Land 3,428.3 3,385.7 42.6 WIP 1,741.3 1,560.0 181.3 Debtors 203.4 195.7 7.7 Land creditors (725.6) (806.4) 80.8 Other creditors (839.5) (752.2) (87.3) Pensions and post-retirement benefits
Slide 13: Building safety update
Building safety update ● Long-held belief that leaseholders should Financial position £m not pay Total funds set aside for cladding and fire safety remediation 245 ● Took early and proactive actions with Spend to 31 December 2022 (36) funds first committed in 2017 Remaining provision 209 ● We are in
Slide 14: Group cashflow
Group cashflow 2,000 66.8 (133.7) 1,800 923.4 (146.7) 1,600 (4.8) 705.0 (181.6) 1,400 (323.8) 1,200 (150.0) £m 1,000 (22.8) 863.8 837.0 800 600 400 200 0 Opening net Operating profit Movement in Investment in Investment in Payments to Cash Tax and Dividends Share Other Closing net cash debtors and l
Slide 15: 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 16: 2023 guidance
2023 guidance Guidance Within 9 - 10.5k range UK completions (excl. JVs) (Broadly equivalent to private sales rates between 0.5 and 0.7) Half year c.45% of full year Land Cautious and opportunistic approach to new approvals Net finance charges c.£10 million net charge (including c.£9m cash receipt)
Slide 17: Priorities for the year and outlook
Priorities for the year and outlook Jennie Daly Chief Executive
Slide 18: Market backdrop: long term dynamics supportive despite near term challenges
Market backdrop: long term dynamics supportive despite near term challenges Population has increased at a significantly faster rate than net Unemployment is expected to remain at a relatively low level additional dwellings 10% 600k Forecast 8% 500k 400k 6% 300k 4% 200k 2% 100k 0k 0% 2002 2008 2014 2
Slide 19: Current trading
Current trading H1 2023 (w/e 26 Feb 2023) H2 2022 H1 2022 Average outlets open 253 235 228 Private sales rate (net) 0.62 0.48 0.90 Private sales price £000 352 377 354 Cancellation rate (private) 17% 23% 15% ● Total order book of 8,078 homes as at w/e 26 February 2023 (2022 equivalent period: 10,934
Slide 20: Interest levels supported by increased media spend
Interest levels supported by increased media spend Organic customer interest* declined post mini-budget Total website traffic supported by our media approach in Q4 2022 Mini budget Step up in media spend in 2022 1 6 11 16 21 26 31 36 41 46 51 1 6 11 16 21 26 31 36 41 46 51 2020 2021 2022 2023 2020 2
Slide 21: Working hard to understand and support our customers
Working hard to understand and support our customers ● Deep understanding of our customers ● Locational quality matrix ensures we buy land in the places people want to live 66% of January c.84% of customers reservations came use a mortgage with ● Data led insights software to optimise sales performa
Slide 22: A clear strategy to manage through changing market conditions
A clear strategy to manage through changing market conditions Four cornerstones that underpin our resilience Land Operational excellence Sustainability Capital allocation 22 Results Presentation for the year ended 31 December 2022
Slide 23: Land: high-quality landbank a differentiator enabling agile approach
Land: high-quality landbank a differentiator enabling agile approach ● We remain highly selective but opportunistic in the land market ● c.83k plots in the short term landbank as at 31 December 2022 (2021: c.85k) located across the country, with a mix of small and large sites ● Priority is progressi
Slide 24: Well positioned against challenging planning backdrop
Well positioned against challenging planning backdrop Planning consents remain constrained ● The planning environment remains difficult with a 400,000 shortage of resources and delays in planning 350,000 ● Pleased to have delivered planned increase in outlets 300,000 New homes annual rolling 250,000
Slide 25: Operational excellence: actions to protect value for shareholders
Operational excellence: actions to protect value for shareholders Demonstrating agility and flexibility in the current market ● Prioritise a strong balance sheet ● Reduced land spend ● Tight cost control ● Closely managed work in progress ● Efficient business structure refined through change program
Slide 26: Operational excellence: continuing to drive performance
Operational excellence: continuing to drive performance ● Tight cost control and work in progress management embedded throughout business with senior management oversight of operational spend ● Introduction of new standard apartments and higher density house types to support standardisation and plot
Slide 27: Sustainability: our journey to net zero
Sustainability: our journey to net zero 27 Results Presentation for the year ended 31 December 2022
Slide 28: Sustainability: customers getting on board
Sustainability: customers getting on board Key factors when selecting a homebuilder (aside from location, size and price) 80% 71% 60% 51% 49% 48% 44% 43% 39% 40% 20% 0% Their reputation How attractive Being highly The home allows Their green Their customer Known for for quality work their homes are
Slide 29: Outlook and priorities
Outlook and priorities Outlook Priorities - Early signs of more stabilised customer - Understand our customer better confidence, usual seasonal trading patterns and the benefit of our focused promotional activity - Improved sales and customer service - Good underlying levels of demand and continue -
Slide 30: 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 31: Future investor communications
Future investor communications ● 27 April 2023 AGM and trading update ● 2 August 2023 Half year results 2023 31 Results Presentation for the year ended 31 December 2022
Slide 32: Appendices
Appendices Full Year Results Presentation for the year ended 31 December 2022 Taylor Wimpey plc
Slide 33: Good delivery against our operational KPIs
Good delivery against our operational KPIs Land FY 2022 FY 2021 Land cost as % of ASP on approvals 19.0% 16.1% Landbank years c.6.0 c.6.1 % of completions from strategically sourced land 52% 50% Operational excellence Construction Quality Review (average score / 6) 4.81 4.67 Average reportable items
Slide 34: Environmental strategy targets
Environmental strategy targets Science-based carbon Nature Resources and waste reduction target • Increase natural habitats by • Developed our Towards 10% on new sites from Zero Waste Strategy and • Reduce operational carbon Action Plan emissions intensity by 36% 2023 by 2025 from a 2019 • Include o
Slide 35: Summary income statement
Summary income statement* Group £m FY 2022 FY 2021 Change H1 2022 Revenue 4,419.9 4,284.9 3.2% 2,076.8 Cost of sales (3,287.5) (3,257.9) 0.9% (1,552.3) Gross profit 1,132.4 1,027.0 10.3% 524.5 Net operating expenses (224.9) (203.8) 10.4% (109.9) Profit on ordinary activities before 907.5 823.2 10.2%
Slide 36: Cash flow summary
Cash flow summary Group £m FY 2022 H2 2022 H1 2022 FY 2021 Profit on ordinary activities before finance costs 827.5 492.9 334.6 698.2 (Increase)/decrease in inventories (280.4) 37.3 (317.7) (293.2) Exceptional items charge 80.0 - 80.0 125.0 Other operating items* 77.9 (30.9) 108.8 44.7 Cash generate
Slide 37: Group segmental analysis
Group segmental analysis FY 2022 FY 2021 Operating Operating Operating Operating profit profit margin RONOA profit profit margin RONOA £m % % £m % % UK 890.8 20.7 25.9 814.0 19.3 25.1 Spain 32.6 26.2 32.8 14.6 19.0 13.2 Group 923.4 20.9 26.1 828.6 19.3 24.7 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 2023*** FY 2022 FY 2021 Ordinary dividend* c.9.56 9.06 8.28 Paid (or to be paid) £m FY 2023*** FY 2022 FY 2021 Ordinary dividend* 338 324 302 Share buyback** - 150 - Total 338 474 302 ● Final ordinary dividend of 4.78 pence per sha
Slide 39: Financing
Financing ● Net cash at 31 December 2022: £863.8 million (31 December 2021: £837.0 million) ● Adjusted gearing including land creditors of -3.1% (2021: -0.7%) ● Average net cash during 2022: £595.7 million (2021: £788.1 million) ● Borrowings and facilities: ● £550 million Revolving Credit Facility e
Slide 40: Finance charges
Finance charges £m FY 2022 FY 2021 Change Financial indebtedness 4.8 5.0 (0.2) Foreign exchange loss - 0.8 (0.8) Unwind of land creditors and other 18.3 19.2 (0.9) items Pensions 0.6 1.0 (0.4) Interest on IFRS 16 leases 0.4 0.4 - Total 24.1 26.4 (2.3) 40 Results Presentation for the year ended 31 De
Slide 41: Tax
Tax Asset / (liability) Current tax £m Deferred tax £m Net tax £m As at 1 January 2022 0.2 26.2 26.4 Income statement* (184.7) 0.4 (184.3) SOCI / SOCIE - (0.9) (0.9) Cash paid 176.9 - 176.9 Other (including foreign exchange) 0.4 0.3 0.7 As at 31 December 2022 (7.2) 26.0 18.8 ● Pre-exceptional effect
Slide 42: Pension funding
Pension funding FY 2023 £m FY 2021 FY 2022 Min Max Deficit contributions to the Scheme 10.3 - - - Payments to escrow 10.0 - - 15.0 Pension Funding Partnership 5.1 5.1 5.1 5.1 Scheme expenses 2.0 2.0 2.0 2.0 Total 27.4 7.1 7.1 22.1 ● IAS 19 surplus at 31 December 2022 of £76.6 million, deficit of £29
Slide 43: UK completions mix
UK completions mix £201k – £251k – £301k – £451k – £601k – UK completions 2022 <£200k £250k £300k £450k £600k £1m >£1m Total Price band 21% 14% 16% 37% 9% 3% - 100% UK completions FY 2022 H2 2022 H1 2022 FY 2021 H2 2021 H1 2021 First time buyers 35% 35% 35% 41% 39% 43% Second time buyers 39% 39% 39%
Slide 44: UK land commitments
UK land commitments 2022 2021 £m (at 31 December 2022) < 1 yr 1-2 yrs 2-5 yrs 5+ yrs total total Committed cash payments in respect of unconditional land contracts 373 215 101 31 720 813 Expected cash payments in respect of conditional land contracts 263 123 128 118 632 526 ● Included in uncondition
Slide 45: UK planning permissions
UK planning permissions 20,000 Sites with implementable planning permission 18,000 16,000 94.5% 14,000 12,000 10,000 8,000 6,000 4,000 3.1% 2,000 1.4% 1.0% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Started on site as at 31 December 2022 Starting on site Q1 2023 Permissi
Slide 46: UK land pipeline
UK land pipeline 31 Dec 2022 31 Dec 2021 Plots Owned Controlled Total Total Detailed planning 39,168 2,475 41,643 43,329 Outline planning 20,028 6,243 26,271 24,790 Resolution to grant 3,892 11,024 14,916 17,257 Short term 63,088 19,742 82,830 85,376 Short term with implementable 38,800 - 38,800 41,
Slide 47: UK land portfolio ‒ net cost
UK land portfolio ‒ net cost 31 Dec 2022 31 Dec 2021 £m Owned Controlled Total Total Detailed planning 2,063 6 2,069 2,130 Outline planning 720 12 732 664 Resolution to grant 57 30 87 74 Sub-total 2,840 48 2,888 2,868 plots 63,088 19,742 82,830 85,376 Strategic 311 108 419 396 plots 36,646 107,739 1
Slide 48: UK landbank
UK landbank ● Land cost in short term owned landbank is 14.0% of ASP (2021: 14.6%), supported by strategic pipeline conversions ● Land cost as % of ASP on 2022 approvals 19.0% (2021: 16.1%) ● Potential revenue in the landbank was £61 billion (31 December 2021: £59 billion), comprising: ● Short term
Slide 49: UK sales performance
UK sales performance Private and affordable reservations H1 2023 (w/e excl. JVs 26 Feb 2023) H2 2022 H1 2022 H2 2021 H1 2021 Average outlets open 253 235 228 221 228 Average sales rate (net) 0.65 0.70 1.10 1.13 1.16 Average selling price £000 342 312 326 297 294 H1 2023 (w/e As at 26 Feb 2023) 31 De
Slide 50: Spain financial summary
Spain financial summary FY 2022 FY 2021 Change Average number of active sites 24 22 9.1% Legal completions 381 215 77.2% Average selling price £000 327 357 (8.4%) Average selling price €000 383 417 (8.2%) Revenue £m 124.4 76.8 62.0% Operating profit £m 32.6 14.6 123.3% Operating profit margin % 26.2
Slide 51: 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. ● Operating profit margin is defined as operating profit divided by revenue. ● Adjusted basic earnings per share represents earnin