Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — H1 2022 Earnings Presentation
45 slides from Taylor Wimpey's earnings presentation, Aug 3, 2022
Slide 1: Half Year Results Presentation for the six months to 3 July 2022
Half Year Results Presentation for the six months to 3 July 2022 3 August 2022
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 Highlights and current Financial review Well positioned: A strong and trading resilient business Jennie Daly Chris Carney Jennie Daly 3 Half Year Results Presentation for the six months to 3 July 2022
Slide 4: Highlights and current trading
Highlights and current trading Jennie Daly CEO
Slide 5: Well positioned: a strong and resilient business
Well positioned: a strong and resilient business ● Excellent first half against strong comparators ● UK completions excluding JVs of 6,587 (H1 2021: 7,219) ● Operating profit* of £424.6 million (H1 2021: £424.0 million) with Group operating margin* increasing to 20.4% (H1 2021: 19.3%) including some
Slide 6: Current market backdrop
Current market backdrop ● Industry dynamics: ● Current housing market continuing to prove resilient ● Demand continuing to outweigh supply ● Good availability of attractively priced mortgages including 95% LTV ● Material and labour cost inflation over the last twelve months, fully offset by house pr
Slide 7: Market performance – to date
Market performance – to date H2 2022 (w/e 31 July 2022) H1 2022 H2 2021 H1 2021 Average outlets open 230 228 221 228 Private sales rate (net) 0.57 0.90 0.85 0.97 Private sales price £000 352 354 340 322 Cancellation rate (private)* 19% 15% 14% 14% ● 50 new outlets opened in H1 2022 (H1 2021: 37) ● T
Slide 8: Positive sales momentum and forward indicators
Positive sales momentum and forward indicators ● Continued good levels of Customer interest* customer interest ● Forward indicators remain good relative to recent years 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 ● Media spend a third less Week number compared to 2019 2019 2020 2021 2022 Appo
Slide 9: What our customers want is reflected in the quality of our locations
What our customers want is reflected in the quality of our locations Recent customer research – considerations of recent movers and those in market 80% 70% 60% 50% 40% 30% 20% 10% 0% Proximity to green open space was/will Proximity to shops was/will be a key Proximity to a station or road network Qu
Slide 10: Financial review
Financial review Chris Carney Group Finance Director
Slide 11: Summary Group results
Summary Group results £m (before exceptional items) H1 2022 H1 2021 Change FY 2021 Revenue 2,076.8 2,196.3 (5.4)% 4,284.9 Gross profit 524.5 522.3 0.4% 1,027.0 Gross profit margin % 25.3 23.8 1.5ppt 24.0 Operating profit 424.6 424.0 0.1% 828.6 Operating margin % 20.4 19.3 1.1ppt 19.3 Profit before t
Slide 12: UK performance summary
UK performance summary H1 2022 H1 2021 Change FY 2021 Legal completions – excl JVs 6,587 7,219 (8.8)% 13,929 Private 5,137 6,061 (15.2)% 11,481 Affordable 1,450 1,158 25.2% 2,448 Average selling price – excl JVs 300 299 0.3% 300 Private £000 337 327 3.1% 332 Affordable £000 169 150 12.7% 148 Legal c
Slide 13: UK operating margin
UK operating margin ● The improvement in H1 2022 operating Illustrative movements in UK operating margin Annual Impact on H1 2022 H1 2021 to H1 2022 change income statement (ppt) margin has been supported by: Market inflation on selling prices c.6.5%* 4.4 ● The net benefit from house price and Marke
Slide 14: Summary Group balance sheet
Summary Group balance sheet Group £m 3 July 2022 4 July 2021 Change 31 Dec 2021 Long term assets and JVs 144.2 140.4 3.8 150.2 Land 3,636.3 3,261.1 375.2 3,385.7 WIP 1,673.4 1,540.5 132.9 1,560.0 Debtors 202.4 173.9 28.5 195.7 Land creditors (843.7) (843.1) (0.6) (806.4) Other creditors (857.8) (788
Slide 15: Group cashflow
Group cashflow 103.9 (218.8) 424.6 (98.9) (5.1) 205.7 (85.7) (160.9) 837.0 (151.3) £m (2.4) 642.4 Opening net Operating profit Movement in Investment in Investment in Payments to Cash generated Tax and Dividends Share Other Closing net cash debtors and land * WIP pension from operations interest pai
Slide 16: 2022 guidance
2022 guidance Continue to expect low single digit growth vs 2021 volumes UK completions (excl. JVs) c.20% affordable Group operating profit (incl. JVs) To be around the top end of the current consensus range* Year end net cash c.£600 million Land New approvals on a replacement basis Net finance char
Slide 17: Well positioned: A strong and resilient business
Well positioned: A strong and resilient business Jennie Daly CEO
Slide 18: Building a stronger, more resilient business
Building a stronger, more resilient business 2. Operational 4. Capital 1. Land 3. Sustainability excellence allocation Core targets: 21-22% operating margin and 30% RONOA To deliver superior returns for shareholders through our sector leading landbank and enhance value through sharper operational fo
Slide 19: Operational KPIs
Operational KPIs Land H1 2022 H1 2021 FY 2021 Land cost as % of ASP on approvals 20.8% 14.4% 16.1% Landbank years c.6.5 c.5.8 c.6.1 % of completions from strategically sourced land 47% 55% 50% Operational excellence Construction Quality Review (average score / 6) 4.77 4.65 4.67 Average reportable it
Slide 20: House type range
House type range New house type range legal completions 100% ● Simplification and standardisation 80% ● 107 house types in 2017 60% 40% ● 46 houses in our consolidated house type range in 2018 20% ● 28 core house types in the new house type range 0% ● Feedback from sales of prototypes: 2022 2023 202
Slide 21: Tetford flythrough
Tetford flythrough 21 Half Year Results Presentation for the six months to 3 July 2022
Slide 22: Land market
Land market ● Land market continues to be very competitive and given our strong landbank position and high visibility of future pipeline we remain well positioned and can be selective in our new approvals ● We are seeing industry-wide planning issues including localised ‘nutrient neutrality’, potent
Slide 23: Current land market backdrop
Current land market backdrop UK greenfield land values grow close to their 2007/08 peak 160 140 100 Index (100 =2007/08 peak) 120 100 Index (100 =2007/08 peak 80 95 60 40 90 20 0 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 85 Jun-19
Slide 24: Strong planning status of completions
Strong planning status of completions 100% 90% 80% 80% 70% 99% with planning 60% 61% 50% 40% 30% 20% 10% 0% 2023 status as at FY 2021 2023 status as at HY 2022 Owned with detailed planning permission and started on site Owned with detailed planning permission and not started on site Owned with plann
Slide 25: On track to deliver growth
On track to deliver growth ● Excellent progression for 2022 and 2023 outlets ● Started work on 24 outlets due to open H2 2022 Current status of outlets planned to open in 2022 and H1 2023 2022 H1 2023 Outlet opened Owned Controlled Deal progressing 25 Half Year Results Presentation for the six month
Slide 26: Summary
Summary ● Market remains resilient and market fundamentals remain strong ● Remain agile in our approach across the business to optimise performance ● With our sector leading landbank and strong financial position, our business is well positioned and flexible ● Clear focus on driving operational exce
Slide 27: Strong investment case
Strong investment case Q&A Margin and returns Differentiated by Sustainable and Substantial focused landbank responsible shareholder returns Focused on Sector leading ESG embedded Committed to paying operational landbank with throughout the an annual ordinary excellence to deliver capacity to delive
Slide 28: Future investor communications
Future investor communications ● 9 November 2022 Trading update ● 12 January 2023 Trading update ● 2 March 2023 Full year results 2022 28 Half Year Results Presentation for the six months to 3 July 2022
Slide 29: Appendices
Appendices Half Year Results Presentation for the six months to 3 July 2022 Taylor Wimpey plc
Slide 30: Summary income statement
Summary income statement* Group £m H1 2022 H1 2021 Change FY 2021 Revenue 2,076.8 2,196.3 (5.4)% 4,284.9 Cost of sales (1,552.3) (1,674.0) (7.3)% (3,257.9) Gross profit 524.5 522.3 0.4% 1,027.0 Net operating expenses (109.9) (99.6) 10.3% (203.8) Profit on ordinary activities before 414.6 422.7 (1.9)
Slide 31: Cash flow summary
Cash flow summary Group £m H1 2022 FY 2021 H2 2021 H1 2021 Profit from ordinary activities before finance costs 334.6 698.2 400.5 297.7 Increase in inventories (317.7) (293.2) (184.9) (108.3) Exceptional items charge 80.0 125.0 - 125.0 Other operating items* 108.8 44.7 (46.2) 90.9 Cash generated by
Slide 32: Financing
Financing ● Net cash at 3 July 2022 of £642.4 million (31 December 2021: £837.0 million, 4 July 2021: £ 906.5 million) ● Cash balances of £729.4 million (4 July 2021: £1,005.6 million) ● Adjusted gearing including land creditors of 4.7% (31 December 2021: -0.7%, 4 July 2021: -1.5%) ● Average net cas
Slide 33: 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 34: Finance charges
Finance charges £m H1 2022 H1 2021 Change FY 2021 Financial indebtedness 2.4 2.5 (0.1) 5.0 Foreign exchange movements 0.3 0.5 (0.2) 0.8 Unwind of land creditors and 9.0 9.0 - 19.2 other items Pensions 0.3 0.5 (0.2) 1.0 Interest on lease liabilities 0.2 0.2 - 0.4 Total 12.2 12.7 (0.5) 26.4 34 Half Ye
Slide 35: 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* (72.2) (1.6) (73.8) SOCI / SOCIE - (0.6) (0.6) Cash paid 83.3 - 83.3 Other (including foreign (0.1) 0.2 0.1 exchange) As at 3 July 2022 11.2 24.2 35.4 ● Pre-exceptional effective ta
Slide 36: Pension funding
Pension funding FY 2022 FY 2023 £m FY 2021 Min Max Min Max Deficit contributions to the Scheme 10.3 - - - - Payments to escrow 10.0 - 5.0 - 20.0 Pension Funding Partnership 5.1 5.1 5.1 5.1 5.1 Scheme expenses 2.0 2.0 2.0 2.0 2.0 Total 27.4 7.1 12.1 7.1 27.1 ● IAS 19 surplus at 3 July 2022 of £211.6
Slide 37: UK completions mix
UK completions mix UK completions £201k – £251k – £301k – £451k – £601k – H1 2022 <£200k £250k £300k £450k £600k £1m >£1m Total Price band 23% 14% 16% 36% 8% 3% - 100% UK completions H1 2022 FY 2021 H2 2021 H1 2021 FY 2020 H2 2020 H1 2020 First time buyers 35% 41% 39% 43% 40% 43% 35% Second time buy
Slide 38: UK land commitments
UK land commitments As at 3 As at 31 £m < 1 yr 1-2 yrs 2-5 yrs 5+ yrs July 2022 Dec 2021 Committed cash payments in respect of unconditional land 367 203 238 29 837 813 contracts Expected cash payments in respect of conditional land 241 103 103 118 565 526 contracts ● Included in unconditional land
Slide 39: UK planning permissions
UK planning permissions 20,000 Sites with implementable planning permission 18,000 16,000 94.7% 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 3.0% Permissions gained (rolling 12 months) C
Slide 40: UK land pipeline
UK land pipeline 3 July 2022 31 Dec 2021 Plots Owned Controlled Total Total Detailed planning 41,553 3,400 44,953 43,329 Outline planning 22,442 7,300 29,742 24,790 Resolution to grant 2,579 10,370 12,949 17,257 Short term 66,574 21,070 87,644 85,376 Short term with implementable 41,487 41,487 41,68
Slide 41: UK landbank
UK landbank ● Land cost in short term owned landbank is 14.3% of ASP (4 July 2021: 14.8%), supported by strategic pipeline conversions ● Land cost as % of ASP on H1 2022 approvals of 20.8% (H1 2021: 14.4%) ● Potential revenue in the landbank at 3 July 2022 was £61 billion (31 December 2021: £59 bill
Slide 42: UK land quality matrix
UK land quality matrix Micro location – position within macro Short term landbank location (plots) 3 July 2022 A B C D Total A 12% 13% 1% - 26% Macro location – city, broken B 18% 42% 4% - 64% down by major C 3% 6% 1% - 10% suburb, town, D - - - - - village or rural area Total 33% 61% 6% - 100% 42 H
Slide 43: UK sales performance
UK sales performance H2 2022 (w/e Private and affordable reservations excl JV 31 July 2022) H1 2022 H2 2021 H1 2021 Average outlets open 230 228 221 228 Average sales rate (net) 0.60 1.10 1.13 1.16 Average selling price £000 342 326 297 294 H2 2022 (w/e As at 31 July 2022) 3 July 2022 31 Dec 2021 4
Slide 44: Spain financial summary
Spain financial summary H1 2022 H1 2021 Change FY 2021 Average number of active sites 22 21 4.8% 22 Legal completions 203 84 141.7% 215 Average selling price £000 332 360 (7.8)% 357 Average selling price €000 391 415 (5.8)% 417 Revenue £m 67.4 30.2 123.2% 76.8 Operating profit £m 18.0 4.4 309.1% 14.
Slide 45: 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 margin is defined as operating profit divided by revenue. ● Adjusted basic earnings per share represents earnings attr