Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — Investor Day (May 2018)
94 slides from Taylor Wimpey's investor day presentation, May 15, 2018
Slide 1: Strategy 2018 – 2028
Strategy 2018 – 2028 Pete Redfern 15 May 2018
Slide 2: Agenda
Agenda Team Trading Strategy Changing environment Strategy and goals Enhanced dividend and capital structure 2
Slide 3: Group Management Team
Group Management Team Pete Redfern Chief Executive Chris James Jennie Daly Anne Daniel Nigel Ingrid Lee Bishop Group Operations McGowan Managing Director, Carney Jordan Director Billson- Holland Osborne Major Group Finance Group Legal Divisional Chairman Divisional Chairman Divisional Chairman Direc
Slide 4: Current trading and outlook for 2018 – no change since AGM
Current trading and outlook for 2018 – no change since AGM ▪ The underlying housing market has remained stable in the first four months of 2018, with continued good accessibility to mortgages at competitive rates ▪ During the first few weeks of March, poor weather conditions had a noticeable impact
Slide 5: Strategy introduction
Strategy introduction ▪ Operating to current strategy since around 2011, have updated during the last 7 years with: ▪ Increased focus on customer satisfaction and staff development ▪ New financial targets ▪ Enhanced dividend ▪ Now is the time for a more in depth review: ▪ Changed and changing enviro
Slide 6: 2011 – 2018: A changing environment?
2011 – 2018: A changing environment? Housing market and customer drivers Land and planning environment and industry structure People, production, resources and capacity constraints Taylor Wimpey 6
Slide 7: Today’s housing market drivers
Today’s housing market drivers ▪ Macro drivers have changed little over 20 years: ▪ Strong underlying demand due to household formation ▪ Supply running consistently below ▪ Mortgage availability and cost remain the key determinants of volume and value ▪ However financing market and therefore the ne
Slide 8: Today’s customer drivers
Today’s customer drivers ▪ Again, many of the drivers for individual customers haven’t changed: ▪ Location, location, location, and the suitability of product for need ▪ Short term affordability of mortgage costs and therefore price ▪ Confidence in underlying house prices and own employment position
Slide 9: 2011 – 2018: A changing environment?
2011 – 2018: A changing environment? Housing market and customer drivers Land and planning environment and industry structure People, production, resources and capacity constraints Taylor Wimpey 9
Slide 10: Land and planning environment and industry structure
Land and planning environment and industry structure ▪ Land and planning no longer the single key determinant of success: ▪ Still important – defines target customers, product, locations, financial structure, market risk ▪ However both more land is available with a decent planning prospect and indus
Slide 11: 2011 – 2018: A changing environment?
2011 – 2018: A changing environment? Housing market and customer drivers Land and planning environment and industry structure People, production, resources and capacity constraints Taylor Wimpey 11
Slide 12: People, production, resources and capacity constraints
People, production, resources and capacity constraints ▪ With the growth in the industry, and the easing of land restrictions, other constraints have a bigger impact: ▪ Production resources ▪ Technical and management skills ▪ Managing quality and volume growth ▪ Ensuring that we respond to the chang
Slide 13: Sites, outlets and factories, balancing sales and production
Sites, outlets and factories, balancing sales and production ▪ Site – a single piece of land, generally getting outline planning as a single entity. TW size range 50-3,500 homes ▪ Outlet – a sales unit, with fully staffed customer presence. TW pa range historically 30-75 homes (inc. affordable) ▪ Fa
Slide 14: 2011 – 2018: A changing environment?
2011 – 2018: A changing environment? Housing market and customer drivers Land and planning environment and industry structure People, production, resources and capacity constraints Taylor Wimpey 14
Slide 15: 2018 – Taylor Wimpey position
2018 – Taylor Wimpey position ▪ Very strong land positions – £47 billion (31 Dec 2017) of revenue potential in the landbank all at strong financial returns ▪ Strong balance sheet and a generally cautious approach ▪ Well established network of 24 regional businesses which cover the geographies with t
Slide 16: What has changed?
What has changed? FY 2006 FY 2011 FY 2017 Group * (George Wimpey) (Taylor Wimpey) (Taylor Wimpey) Operating profit margin 13.4% 8.8% 21.2% Return on net operating assets 20.8% 9.8% 32.4% Net cash / (debt) - £m (387.1) (116.9) 511.8 Dividends paid - £m 58.2 - 450.5 FY 2006 FY 2011 FY 2017 UK (George
Slide 17: 2011 – 2017: Underlying principles
2011 – 2017: Underlying principles ▪ Maximise the value from each home completion ▪ Will not return to ‘feed the machine’ mentality ▪ Active management of land portfolio is the key driver of value creation ▪ Efficient ‘engine-room’ to protect and enhance value through build stage ▪ Far more active a
Slide 18: Life has moved on but do those principles still apply?
Life has moved on but do those principles still apply? ▪ Maximise the value from each home completion ▪ Will not return to ‘feed the machine’ mentality ▪ Active management of land portfolio is a key driver of value creation ▪ Efficient ‘engine-room’ to protect and enhance value through build stage ▪
Slide 19: Summary of strategic direction
Summary of strategic direction ▪ Continuing focus on customer satisfaction but going further to ensure that the business puts the needs of customers at the heart of decisions. Share the responsibility for affordability of our homes ▪ Use the increased opportunity in the land market to work our land
Slide 20: Summary of strategic direction continued
Summary of strategic direction continued ▪ Develop on our internal work of the last 4-5 years to launch our new social purpose, which is very much about connecting with and supporting communities around the UK ▪ We are committed to investment in skills, supply chain development and research and deve
Slide 21: Changing operational metrics – next 5 years
Changing operational metrics – next 5 years ▪ We will measure our customer performance based on: ▪ The existing ‘standard’ NHBC ‘5 Star’ survey where we see 90% as the appropriate target ▪ The longer term 9 month survey which measures a more rounded view of long term satisfaction ▪ Sales rates and p
Slide 22: Operational metrics
Operational metrics ▪ We anticipate medium term completion growth coming from the existing scale of landbank ▪ We will start to report on site numbers and factory numbers in addition to outlets which gives better visibility of the potential of the business ▪ Depending on the value available in the l
Slide 23: What does being customer-centric mean?
What does being customer-centric mean? ▪ Starting from the simple premise that our main goal is to identify and understand customer need and deliver on it in a commercially sound way ▪ Best illustrated by some examples: ▪ Garages ▪ Storage ▪ Pricing transparency and process communication ▪ Placemaki
Slide 24: Widening routes to market
Widening routes to market ▪ Start from the basic premise that underlying demand is and will remain ahead of supply for at least the period to 2030 ▪ Demand side constraint is affordability, including particularly the cost, availability and qualification for a mortgage ▪ Help to Buy helps bridge both
Slide 25: Cyclical management
Cyclical management ▪ Maintain a strong balance sheet at all times, with flexible debt structure and covenants ▪ Maintain high margin at land acquisition ▪ Do not over stretch land investment at points of boom trading ▪ Focus on site quality and be best in class at delivering customer requirements ▪
Slide 26: Dividends
Dividends ▪ Dividends will remain a key part of the value offer for investors and the cyclical management strategy of the business ▪ We will maintain the dual dividend approach of a healthy long term ordinary dividend that can be paid through a normal market correction, and an additional cash return
Slide 27: Summary
Summary ▪ Long term direction focused on identifying customer needs and aspirations and delivering them in a commercially sound way ▪ Build on existing strategic land assets and skills, and work our land harder in a less constrained land environment ▪ Invest in the build and delivery capacity of the
Slide 28: Wimpey
28 Wimpey | plc
Slide 29: Planning, land and engine room
Planning, land and engine room Jennie Daly 15 May 2018
Slide 30: Agenda
Agenda Planning Land Engine room 30
Slide 31: Planning and supply side
Planning and supply side Private completions (England) 250 NPPF (2012): Responsive Plan-led system (1991- unresponsive supply Liberal planning: responsive supply supply) 200 Housing & Planning Act (2016) Planning & Compulsory Purchase Act (2004) 150 Draft Annual completions (‘000) NPPF (2018) 100 PP
Slide 32: The strategic land journey
The strategic land journey Housing land use (England) 4,500 PPS3: continued brownfield focus 4,000 PPG3: Brownfield NPPF: requirement for 5 yr First, Sequential Test Favourable where no 5 yr supply, tilted balance and supply presumption in favour 3,500 Slow take up of plans Annual Land Use (ha) 3,00
Slide 33: Three pillars of land supply
Three pillars of land supply 10-year housing need Local Plan progress Five year land supply Sources: England – MHCLG’s Standardised Methodology for Assessing Housing Need Wales – Adopted Local Development Plans Scotland – Housing Need and Demand Assessments Source: Planning Inspectorate Source: Savi
Slide 34: Steadily improving environment
Steadily improving environment Private completions and planning permissions (England) 350 NPPF (2012) 300 250 Units (‘000) 200 150 100 50 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Private dwellings Planning Permissions Source: HBF Data Tables 2006 to 2017 34
Slide 35: Continuing attractive land metrics
Continuing attractive land metrics 30% NPPF (2012) 40% ▪ Land availability driving mergers and 35% 25% acquisitions in the 1990s to mid 2000s 30% 20% Margin % / ROCE % 25% ▪ Post NPPF improved Cost % of ASP 15% 20% metrics reflecting improved housing land 15% supply 10% 10% 5% 5% 0% 0% 2000 2001 200
Slide 36: Maintaining land quality
Maintaining land quality Micro location – position within macro location Quality area A B C D Total A 49 68 5 2 124 Macro location – city, broken B 101 194 17 0 312 down by major suburb, town, C 10 56 2 0 68 village or rural area D 1 1 0 0 2 Total 161 319 24 2 506 N.B. Short term owned and controlle
Slide 37: Short term and strategic land pipeline
Short term and strategic land pipeline Land pipeline 140 8 53% 51% 7 120 47% 6 100 39% 5 29% 80 Plots (‘000) Years 4 24% 60 17% 3 40 2 20 1 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ST landbank Strategic land Years / completions (ST landbank) Strategically sourced completions 37
Slide 38: A primed land position
A primed land position Small Medium Large Super large (0-200) (201-375) (376-750) (750+) Total sites plots sites plots sites plots sites plots sites plots Total owned and controlled 315 30.3% 123 31.9% 58 25.2% 10 12.6% 506 100% Average plots per site 72 194 326 941 148 Strategic land total owned an
Slide 39: Current land market
Current land market ▪ Short term land market ▪ Good levels of quality opportunities across a range of site sizes and geographies, most competition chasing smaller sites. Better opportunities and less competition in larger sites ▪ Increasing activity from new regions by others, RSL sector and SMEs ▪
Slide 40: Land strategy
Land strategy ▪ Quality locations where customers most want to live ▪ Maintain high investment margins differentiated by site size and delivery risk ▪ An increase in the use of larger sites: ▪ Opportunity to deliver larger volumes – less competition ▪ Will concentrate around economic growth areas re
Slide 41: Understanding the relationship between outlets and volume
Understanding the relationship between outlets and volume ▪ Site x 1 – Great Western Park, TW Oxfordshire ▪ Outlet x 2 – Great Western Park and Brunel Rise Great Western Park sales area ▪ Factory x 4 – ▪ 1 @ Sapphire Fields ▪ 3 @ Brunel Rise (over 4 phases) Sapphire Fields ▪ Taylor Wimpey 2017: ▪ Si
Slide 42: A traditional approach
A traditional approach No. of No. of outlets factories in Phase Competitors on site total Taylor Wimpey 1 2 A 2 2 1 B 1 1 C 1 1 C 1 1 2 A 1 2 D 1 1 Taylor Wimpey 1 3 3 A 2 2 Not started on 4 A site 42
Slide 43: Building for the future
Building for the future Skills ▪ Increased focus on bringing labour and skills in-house: ▪ Expansion of skilled direct employed labour – target of 30% of TW employees by 2021 ▪ Trade Apprentices with a development path for each apprenticeship ▪ Trainee Apprentice Site Managers ▪ Learning, developmen
Slide 44: Securing the supply chain
Securing the supply chain ▪ Increased use of timber frame on appropriate sites ▪ Security of supply chain, increased transparency with emphasis on business continuity ▪ Focus in on timely and accurate programme forecasting ▪ Monitoring and “protection” of critical materials on fast moving sites ▪ Bu
Slide 45: TW Logistics – a tactical advantage
TW Logistics – a tactical advantage ▪ Wholly owned and key supply chain differentiator ▪ Based in 65,000 sq ft warehouse and 3.5 acre external storage facility in Newmarket ▪ Dedicated and liveried rigid vehicles and subcontract artic vehicles ▪ Security of supply and supplier transparency ▪ ‘One st
Slide 46: Design and placemaking
Design and placemaking Placemaking ▪ Completed site reviews; customer feedback, third party design reviews and post completion property value assessments – lessons learned ▪ Design and placemaking workshops and virtual design academy launched ▪ In-house design reviews and master-planning assistance
Slide 47: Wimpey
47 Wimpey | plc
Slide 48: Appendix
Appendix Taylor | ple Wimpey
Slide 49: Major sites consented
Major sites consented ▪ 560 sites identified ▪ 836,895 units England 257 sites 560,370 units Scotland 21 sites 40,322 units Wales 3 sites 7,550 units Source: Lichfields analysis of Glenigan data Note: National totals only capture within TW catchments 49
Slide 50: Customers, sales rate, costs and cash
Customers, sales rate, costs and cash Chris Carney 15 May 2018
Slide 51: Agenda
Agenda Customer-centricity Sales rate Cost and efficiency Capital structure, pensions and cash management 51
Slide 52: Learning about customers the hard way
Learning about customers the hard way ▪ Engagement with customers can be uncomfortable at times but is always TW – a business unit example 2017 2010 enlightening Operating profit - £m 33.8 6.6 ▪ Focus and attention can drive temporary improvement but permanent change is harder Total completions 545
Slide 53: Customer-centricity
Customer-centricity The drive to become truly This is not just the customer-centric right thing to do for the people we is a critical pillar serve of Taylor Wimpey’s It is critical for the long term future strategy prosperity of our organisation 53
Slide 54: Understanding our customers’ enduring emotional needs
Understanding our customers’ enduring emotional needs 54
Slide 55: Customer-centric concepts
Customer-centric concepts Academy of Community Enhanced Customer Living Experience Excellence Accredited teams Connecting people Book our show home Continuous improvement to develop a Virtual reality as standard Consistent experience thriving community Visualise your style Completion Ready Home Touc
Slide 56: Meet the nearly buyer
Meet the nearly buyer What do first time buyers do before they buy? How does that 67% break down? Yes Almost there Customer Motivated Able Aware Households segments to buy to buy of options (UK) 67% Rent privately Nearly Buyers 1.9m Expect to buy within 5 years Aspiring Buyers 29% 1.3m Live with fam
Slide 57: With or without Help to Buy, they face a challenge
With or without Help to Buy, they face a challenge Scenario1 Scenario 2 HtB, 5% deposit 95% Mortgage non HtB, 5% deposit Employment Employment Mr Smith – Trainee doctor current salary - £30,000 Mr Smith – Trainee doctor current salary - £30,000 Mrs Smith – Legal graduate - £25,000 Mrs Smith – Legal
Slide 58: Working with real customers, we’re piloting a solution
Working with real customers, we’re piloting a solution 1. Pick your dream home 2. Rent it 3. Buy it ● Pick the house that suits ● Live in a brand new home ● After two years, receive a you best built and backed by a major 5% gift deposit to help buy ● Add the personal touches homebuilder your home to
Slide 59: We will keep developing innovative ways to help customers
We will keep developing innovative ways to help customers now and in the future Our process: Listen to Create Develop Test at Pilot Implement customers solutions scale What are their How can we Build practical Rigorously Try out our Take our key needs and help, with our solutions with gather feedbac
Slide 60: What have we already done to improve our service?
What have we already done to improve our service? Build Customer Investment in New Academy of Quality Journey Customer Service Technology Customer Excellence 60
Slide 61: NHBC Customer satisfaction scores
NHBC Customer satisfaction scores – 8 weeks 100% 90% 80% Satisfaction Score 70% 60% 50% January – June 2016 Customer Journey implementation 40% Oct 15 Apr 16 Oct 16 Apr 17 Oct 17 Jan 18 Recommend Recommend StandardofofFinish Standard finish ServiceAfter Service after Lessthan Less than11 11problems
Slide 62: Sales – applying an efficient development approach to large sites
Sales – applying an efficient development approach to large sites ▪ Opportunity to optimise the production efficiency of our larger sites ▪ An experienced site manager can generate 75,000 sq ft of build given the right resources (1 factory) ▪ Our land strategy targets high quality locations and in m
Slide 63: Cost and efficiency
Cost and efficiency ▪ After years of sustained growth driving strong improvements in financial performance it makes sense to assess how efficient and effective the business operations are Build cost – £345m other ▪ No sacred cows Build cost – ▪ Cross functional collaboration to ensure quality and ot
Slide 64: Conservative capital structure
Conservative capital structure ▪ Continue to maintain a strong financial Capital structure 3.5 base through the cycle Approved dividends 3.0 ▪ Shareholders equity and long term debt principally used to finance our 2.5 investment in land and other long term investments 2.0 £bn ▪ Short term borrowings
Slide 65: Pension fund contributions
Pension fund contributions ▪ A funding update of the Group’s defined benefit pension scheme (TWPS) at 29 March 2018 identified a deficit of £23 million ▪ Decision taken to fully repair the deficit with a bullet payment of £23 million in April 2018 triggering a suspension in regular contributions ▪ A
Slide 66: Strong cash generation
Strong cash generation ▪ Cash generated by operations will continue to be obtained from high levels of profitability of at least 70% of operating profit under current market conditions ▪ Land replacement cost similar to land cost of sales as land market remains benign ▪ Modest increase in inventorie
Slide 67: Wimpey
67 Wimpey | plc
Slide 68: Major Developments
Major Developments Lee Bishop 15 May 2018
Slide 69: Agenda
Agenda What is Major Developments? Projects underway Our strategy for the future 69
Slide 70: What is Major Developments?
What is Major Developments? Taylor | pie Wimpey
Slide 71: How do we fit into Taylor Wimpey?
How do we fit into Taylor Wimpey? Homes / value Opportunities that are: ✓Large, typically 1,000 homes+ 1,000+/ Complex ✓Longer term delivery Major Developments ✓Control without commitment Strategic land ✓Complex by nature 250-500 Max Business Units ✓Partnerships / Joint Ventures Business unit Detail
Slide 72: A ‘normal’ procurement
A ‘normal’ procurement Site Pre-Qualification Invitation to Invitation to Invitation to Identification Questionnaire Submit Outline Submit Detailed Submit Final (PQQ) Solutions (ISOS) Solutions (ISDS) Tender (ISFT) 12 to 18 months 72
Slide 73: Post successful procurement
Post successful procurement Relationship management Running projects Control Control moving to support Supporting the business Continued relationship Delivery of all Advise the BU on the management aspects of Support details of the bid and how housing / non- the contract works housing 73
Slide 74: What is the benefit to Taylor Wimpey?
What is the benefit to Taylor Wimpey? 1. Shared risk and reward 2. Enhanced stakeholder relationships 3. Early delivery of placemaking 4. Security of landbank delivery 5. Improved cash flow position and ROCE position 6. Long term and future opportunities; controlled and managed 74
Slide 75: Projects underway
Projects underway Taylor | ple Wimpey
Slide 76: Direct delivery of new homes
Direct delivery of new homes 2018 2019 2020 2021 2022 2023 Total 102 170 340 360 395 200 TWD JV 40 40 40 55 40 70 Taylor Wimpey 20 20 20 28 20 35 76
Slide 77: Prince Philip Barracks, Bordon - Hampshire
Prince Philip Barracks, Bordon - Hampshire 77
Slide 78: Prince Philip Barracks, Bordon - Hampshire
Prince Philip Barracks, Bordon - Hampshire ▪ Mixed use developments over 18 years ▪ 2,400 new homes ▪ 250,000 sq ft town centre ▪ Outer relief road ▪ 6FE Secondary School, 2FE Primary School ▪ 3,000 new jobs ▪ Entitled to 35% of all private housing, and have the option to deliver: ▪ 100% of the affo
Slide 79: Winstanley & York Road
fa WINSTANLEY & YORK RD. Taylor | ple Wimpey
Slide 80: Winstanley & York Road Regeneration - Battersea
Winstanley & York Road Regeneration - Battersea Direct delivery of new homes 2018 2019 2020 2021 2022 2023 Total 0 31 237 174 396 287 Taylor Wimpey 0 15 119 87 198 143 80
Slide 81: Winstanley & York Road Regeneration - Battersea
Winstanley & York Road Regeneration - Battersea ▪ JV partnership with Wandsworth Borough Council ▪ 2,775 homes anticipated across 12 years of development ▪ 608 residents rehoused ▪ 132 leaseholders exchange properties ▪ New leisure centre, library and community centre ▪ Creation of York Gardens will
Slide 82: Our strategy for the future
Our strategy for the future Taylor | ple Wimpey
Slide 83: Current opportunities
Current opportunities Garden villages & Infrastructure Estate regeneration strategic releases partnerships 83
Slide 84: Wimpey
84 Wimpey | plc
Slide 85: Appendix
Appendix Taylor | ple Wimpey
Slide 86: Working with public and private organisations
Working with public and private organisations ▪ Government bodies ▪ Ex government / industry ▪ Private land holders ▪ Land promoters / enablers (infrastructure) ▪ Complementary developers ▪ RSLs (Registered Social Landlords) ▪ PRS (Private Rental Sector) investors ▪ Funders 86
Slide 87: Major Developments core team
Major Developments core team Lee Bishop Mel Webber Managing PA Director Andrew Sturla Andre James Ray Peacock Rachel Miller Commercial Bordon Operations Finance New Business Investment Project Team Director Director Director Director Charlie Sophia Williams Sophie Atty Lazarova Kade Dillon Waggett T
Slide 88: A wealth of experience
A wealth of experience LEE BISHOP RACHEL MILLER RAY PEACOCK ANDRE JAMES 35yrs in industry 17yrs in industry 30yrs in industry 30yrs in industry 30yrs at TW 17yrs at TW 19yrs at TW <1yr at TW SOPHIA WILLIAMS CHARLIE WAGGETT ANDREW STURLA 8yrs in industry 3yrs in industry 46yrs in industry 8yrs at TW
Slide 89: Bordon site overview
Bordon site overview Zero C delivers 138 BOSC – new new homes. sports Construction due to pavilion start Autumn 2018 New skate park New secondary school with playing fields Esdevium site New town centre Proposed Health & Wellbeing Hub New relief road with GP surgery Hogmoor Inclosure – Dukes Quarter
Slide 90: The Value Cycle
The Value Cycle Accessibility Schools [<3] Awareness (& SO Balanced fs Community -Q > 90 i Wimpey
Slide 91: Social Value
Social Value Stakeholder engagement Building/ Placemaking rebuilding a community SOCIAL VALUE Training & Health & employment wellbeing 91
Slide 92: Enhancing social value
Enhancing social value ▪ Understanding the background of the community ▪ Understanding the diversity of the area 80 events reaching 6,796 people in 2017 ▪ Being aware of the local difficulties 2,550 Facebook followers ▪ Community cohesion ▪ Creating a sense of belonging and pride E-newsletters to 1,
Slide 93: Merging old and new
Merging old and new ▪ Regular joint events with town partnership ▪ Creating a community development group ▪ Linking social media ▪ Enabling access from old to new town ▪ Leaving newsletters in old town ▪ Regular personal visits to businesses 93
Slide 94: pie
94 pie Wimpey |