Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — H1 2021 Earnings Presentation
57 slides from Taylor Wimpey's earnings presentation, Aug 4, 2021
Slide 1: Half Year Results Presentation for the six months to 4 July 2021
Half Year Results Presentation for the six months to 4 July 2021 4 August 2021
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 Introduction and UK London & South Financial review Priorities and operational East overview, and guidance outlook overview Environment and Chris Carney Pete Redfern Pete Redfern Social update Ingrid Osborne 3 Half Year Results Presentation for the six months to 4 July 2021
Slide 4: Introduction and UK operational overview
Introduction and UK operational overview Pete Redfern Chief Executive
Slide 5: H1 2021 overview
H1 2021 overview H1 2021 highlights ● Great H1 performance, going Plots approved forward prioritising margin and then outlet led growth in the year to Operating profit margin* Operating profit* from 2023 4 July 2021 ● Ongoing strong housing market 19.3% £424 million c.32,000 ● Focused on margin thro
Slide 6: H1 2021 market backdrop
H1 2021 market backdrop • Continued strong customer demand across all regions • Successful transition to next phase of Help to Buy Customer • Strong order book beyond Stamp Duty Land Tax holiday • UK housing market has continued to perform strongly across all our geographies in H1 2021 • New build s
Slide 7: Market performance – to date
Market performance – to date H2 2021 (w/e 1 August 2021) H1 2021 H2 2020 H1 2020 H2 2019 H1 2019 Average outlets open 220 228 244 237 243 257 Private sales rate (net) 0.81 0.97 0.81 0.70 0.92 1.00 Private sales price £000 323 322 320 320 314 298 Cancellation rate (private) 16% 14% 19% 21% 16% 14% ●
Slide 8: Positive sales momentum and forward indicators
Positive sales momentum and forward indicators ● Healthy levels of customer Customer interest* interest in reservations extending beyond the Stamp Duty Land Tax holiday ● Launched new customer facing website ● Includes improved development pages, plot listings and an optimised 1 4 7 10 13 16 19 22 2
Slide 9: London & South East overview, Environment and Social update
London & South East overview, Environment and Social update Ingrid Osborne Divisional Chair London & South East
Slide 10: London & South East overview, Environment and Social update
London & South East overview, Environment and Social update London & South East highlights Environment Strategy update v Social 10 Half Year Results Presentation for the six months to 4 July 2021
Slide 11: London & South East – how we operate
London & South East – how we operate ● Active presence both in London and wider South East area covering 100 local authorities across 5 TW business units (BUs) ● Product includes traditional housing (70%) and apartments (30%), JVs and partnerships – mix of mature and growing BUs ● Predominantly TW r
Slide 12: Positive momentum in sales, customer service, quality and margin
Positive momentum in sales, customer service, quality and margin Customer service and quality L&SE excl. JVs H1 2021 H2 2020 H1 2020 H2 2019 H1 2019 100% 5.00 91% 90% 92% Private completions 1,148 1,173 427 1,559 848 80% 81% 78% 80% 4.00 Average outlets 40 48 53 52 51 60% 3.00 Private sales rate (ne
Slide 13: Sales market trends – London vs wider South East
Sales market trends – London vs wider South East ● “De-urbanisation” is over simplified and not our experience ● London has proven resilient; micro-location and open space important; high sales rates at Chobham and Greenwich Millennium Village ● Overseas purchasers buying without viewings at certain
Slide 14: Land market and our outstanding performance
Land market and our outstanding performance London & South East 4 July 2021 31 December 2020 31 December 2019 31 December 2018 Short term land portfolio - plots 14,579 14,278 12,109 13,474 Short term land portfolio - years 4.7 6.4 3.4 4.1 Strategic land pipeline - plots* 26,310 21,941 21,101 18,353
Slide 15: Land acquisition case studies
Land acquisition case studies Gilston Village, Harlow • Strategic purchase with allocation (purchased June 2021) • Intimate knowledge of area from other Taylor Wimpey sites, including previous acquisition from vendor • Gilston is the largest new allocation in Hertfordshire • 1,500 units, KPIs above
Slide 16: Environmental strategy targets
Environmental strategy targets Carbon reduction Nature Waste and resources • Reduce operational carbon • Increase natural habitats by • By 2022, publish a ‘towards emissions intensity by 36% 10% on new sites from zero waste’ strategy for our 2023 sites by 2025 from a 2019 baseline • Include our prio
Slide 17: Nature – TW South Thames – Prince Philip Park, Bordon, Hampshire
Nature – TW South Thames – Prince Philip Park, Bordon, Hampshire 17 Half Year Results Presentation for the six months to 4 July 2021
Slide 18: Nature – TW South Thames – Prince Philip Park, Bordon, Hampshire
Nature – TW South Thames – Prince Philip Park, Bordon, Hampshire • Encourage an active lifestyle and accessibility for elderly residents and those with disabilities or dementia • Seven mile ‘green loop’ and ‘green grid’ connects the whole site, enabling residents to walk and cycle to their homes, wo
Slide 19: Enhancing our communities
Enhancing our communities 19 Half Year Results Presentation for the six months to 4 July 2021
Slide 20: Carbon reduction – TW London
Carbon reduction – TW London Coronation Square, Leyton • District Heating Network will produce energy for Coronation Square and the emerging neighbourhood to the west, becoming vital infrastructure for this new piece of city Chobham Manor, Stratford v • Constructed exemplar townhouses achieving zero
Slide 21: Employee survey
Employee survey 96% 96% I see employees from Taylor Wimpey takes all cultures and health and safety in backgrounds being the workplace respected and valued seriously in Taylor Wimpey 96% 93% I can be my authentic I know how to access self at work without a support for mental need to cover my health
Slide 22: Financial review and guidance
Financial review and guidance Chris Carney Group Finance Director
Slide 23: Summary Group results
Summary Group results £m (before exceptional items) H1 2021 H1 2020 Change FY 2020 Revenue 2,196.3 754.6 191% 2,790.2 Gross profit 522.3 91.0 474% 496.7 Gross profit margin % 23.8 12.1 11.7ppt 17.8 Operating profit / (loss) 424.0 (16.1) - 300.3 Operating margin % 19.3 (2.1) 21.4ppt 10.8 Profit / (lo
Slide 24: UK performance summary
UK performance summary H1 2021 H1 2020 Change FY 2020 Legal completions – excl JVs 7,219 2,713 166% 9,412 Private 6,061 2,076 192% 7,564 Affordable 1,158 637 82% 1,848 Average selling price – excl JVs 299 269 11.2% 288 Private £000 327 307 6.5% 323 Affordable £000 150 144 4.2% 146 Legal completions
Slide 25: Recovery of UK operating margin
Recovery of UK operating margin Impact on H1 2021 ● The improvement in H1 2021 operating margin has been Illustrative movements in UK operating margin Annual income statement H1 2020 to H1 2021 change (ppt) supported by: Market inflation on selling prices 3.0* 2.2 ● The absence of non-recurring COVI
Slide 26: Summary Group balance sheet
Summary Group balance sheet Group £m 4 July 2021 28 June 2020 Change 31 Dec 2020 Long term assets and JVs 140.4 134.9 5.5 141.8 Land 3,261.1 2,806.3 454.8 2,875.7 WIP 1,540.5 1,737.1 (196.6) 1,659.0 Debtors 173.9 186.0 (12.1) 215.4 Land creditors (843.1) (630.6) (212.5) (675.9) Other creditors (788.
Slide 27: Group cashflow
Group cashflow (240.1) 105.1 424.0 131.8 (15.5) (62.5) 405.3 (7.3) 0.9 (150.7) 1.4 906.5 719.4 £m Opening net Operating Movement in Investment in Investment in Payments to Cash Tax and Exceptional Repaid by Dividends paid Other *** Closing net cash profit debtors and land * WIP pension generated int
Slide 28: 2021 guidance
2021 guidance Expected to be towards the upper end of our guidance (13.2-14k) UK completions (excl. JVs) c.17% affordable Group operating profit (incl. JVs) Expected to be c.£820 million, above the top end of consensus* Year end net cash c.£700 million Land New approvals on a replacement basis Net f
Slide 29: Priorities and outlook
Priorities and outlook Pete Redfern Chief Executive
Slide 30: Priorities for 2021 and 2022
Priorities for 2021 and 2022 Margin delivery – optimisation of selling price and an enhanced cost mindset Bringing through new land acquisitions for volume growth in 2023/24 v Delivering excellent customer service and consistently right build quality alongside great employee experience Building on s
Slide 31: Margin delivery – optimisation of selling price and an enhanced cost mindset
Margin delivery – optimisation of selling price and an enhanced cost mindset ● Returned to a margin led philosophy from late 2019 ● Cost control focus and systems improvements in place and bearing fruit showing in underlying margin improvement in H1 ● Restructuring completed late 2020 improving both
Slide 32: Bringing through new land acquisitions for volume growth in 2023/24
Bringing through new land acquisitions for volume growth in 2023/24 Land acquisition ● Increased landbank by c.5k units in the last year, confident that our landbank will grow by >10k units as recent acquisitions flow through ● Great mix of sites secured including smaller additions, broad geographic
Slide 33: Delivering excellent customer service and consistently right build quality
Delivering excellent customer service and consistently right build quality alongside great employee experience ● Underlying focus on right first time build quality remains key ● Measure and incentivise NHBC CQR score (H1 2021: 4.65; FY 2020: 4.45) ● National standards for Taylor Wimpey build and qua
Slide 34: Outlook
Outlook ● Market conditions remain good, with resilience demonstrating strength of underlying demand ● Strong TW H1 performance shows underlying quality of landbank and discipline in managing price, cost balance, with margin delivery well on track ● 2021 FY upgraded, H2 de-risked and 2022 expected t
Slide 35: Future investor communications
Future investor communications ● 11 November 2021 Trading update ● 13 January 2022 Trading update ● 3 March 2022 Full year results 2021 35 Half Year Results Presentation for the six months to 4 July 2021
Slide 36: Appendices
Appendices Half Year Results Presentation for the six months to 4 July 2021 Taylor Wimpey plc
Slide 37: Group financial highlights
Group financial highlights Return on net operating assets Cash conversion* 100 96.7 29.4 30 71.3 23.0 % 20 16.8 46.5 % 10 0 0 H1 2019 H1 2020 H1 2021 H1 2019 H1 2020 H1 2021 Operating margin Landbank years 6.5 5.8 19.3 6 20.0 18.0 5.1 5 15.0 4 Years 10.0 % 3 5.0 2 0.0 1 -5.0 H1 2019 H1 2020 H1 2021
Slide 38: H1 2021 operational performance – our KPIs
H1 2021 operational performance – our KPIs Customer H1 2021 H2 2020 H1 2020 FY 2020 Customer satisfaction – would you recommend 8-week score %* 92 94 91 92 Customer satisfaction – would you recommend 9-month score %** 80 80 76 78 Build quality Construction Quality Review – average score out of 6 4.6
Slide 39: H1 2021 operational performance – our KPIs
H1 2021 operational performance – our KPIs Efficiency H1 2021 H2 2020 H1 2020 FY 2020 Net private sales rate per outlet per week 0.97 0.81 0.70 0.76 Private legal completions per outlet 26.6 22.5 8.8 31.5 Order book value £m 2,608 2,684 2,904 2,684 Order book volume – number of homes 10,344 10,685 1
Slide 40: Summary income statement
Summary income statement* Group £m H1 2021 H1 2020 Change FY 2020 Revenue 2,196.3 754.6 191% 2,790.2 Cost of sales (1,674.0) (663.6) 152% (2,293.5) Gross profit 522.3 91.0 474% 496.7 Net operating expenses (99.6) (105.3) (5.4)% (204.3) Profit / (loss) on ordinary activities 422.7 (14.3) - 292.4 befo
Slide 41: Cash flow summary
Cash flow summary Group £m H1 2021 FY 2020 H2 2020 H1 2020 Profit / (loss) from ordinary activities before finance costs 297.7 282.4 306.7 (24.3) (Increase) / decrease in inventories (108.3) (362.2) 61.6 (423.8) Exceptional items charge 125.0 10.0 - 10.0 Other operating items* 90.9 (95.2) (58.0) (37
Slide 42: Group segmental analysis
Group segmental analysis H1 2021 H1 2020 FY 2020 Operating Operating Operating profit/ Operating Operating Operating profit margin RONOA (loss) margin RONOA profit margin RONOA £m % % £m % % £m % % UK 419.6 19.4 23.2 (19.6) (2.7) 16.4 284.5 10.4 9.7 Spain 4.4 14.6 16.6 3.5 17.2 30.4 15.8 25.0 16.7 G
Slide 43: Financing
Financing ● Net cash at 4 July 2021 of £906.5 million (31 December 2020: £719.4 million, 28 June 2020: £497.3 million) ● Cash balances of £1,005.6 million ● Adjusted gearing* including land creditors of -1.5% (31 December 2020: -1.1%, 28 June 2020: 3.5%) ● Average net cash during H1 2021 of £709.9 m
Slide 44: Shareholder returns
Shareholder returns Ordinary dividend ● Ordinary Dividend Policy to return c.7.5% of net assets annually which will be at least £250 million per annum, in two equal instalments ● Resumed dividend payments with 2020 final ordinary dividend of 4.14 pence per share, totalling £150.7 million, paid on 14
Slide 45: Finance charges
Finance charges £m H1 2021 H1 2020 Change FY 2020 Financial indebtedness 2.5 5.7 (56.1)% 8.3 Foreign exchange movements 0.5 (0.6) - - Unwind of land creditors and 9.0 9.5 (5.3)% 19.3 other items Pensions 0.5 0.8 (37.5)% 1.4 Interest on lease liabilities 0.2 0.2 - 0.4 Total 12.7 15.6 (18.6)% 29.4 45
Slide 46: Tax
Tax Asset / (liability) Current tax £m Deferred tax £m Net tax £m As at 1 January 2021 (1.1) 33.7 32.6 Income statement* (50.5) (1.2) (51.7) SOCI / SOCIE - (5.6) (5.6) Cash paid 60.0 - 60.0 Other (including foreign (0.1) - (0.1) exchange) As at 4 July 2021 8.3 26.9 35.2 ● Pre-exceptional effective t
Slide 47: Pensions
Pensions Movement in present value of defined benefit obligations Total UK £m HY 2021 FY 2020 FY 2019 FY 2018 Pre-IFRIC 14 deficit / (surplus) brought forward 89.1 (100.5) (33.1) (23.9) Employer contributions* (16.4) (37.1) (47.1) (34.1) Administration cost 0.9 2.5 1.8 1.9 Interest charge / (income)
Slide 48: Pension funding
Pension funding FY 2021 FY 2022 FY 2020 £m Min Max Min Max Deficit contributions to the Scheme 30.0 10.3 10.3 - - Payments to escrow - 10.0 15.0 - 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 37.1 27.4 32.4 7.1 27.1 ● Pension payments total £21.4 mil
Slide 49: UK completions mix
UK completions mix UK completions £201k – £251k – £301k – £451k – £601k – H1 2021 <£200k £250k £300k £450k £600k £1m >£1m Total Price band 23% 19% 17% 30% 7% 3% 1% 100% UK completions H1 2021 FY 2020 H2 2020 H1 2020 FY 2019 H2 2019 H1 2019 First time buyers 43% 40% 43% 35% 36% 36% 35% Second time bu
Slide 50: UK land commitments
UK land commitments As at 4 As at 31 £m < 1 yr 1-2 yrs 2-5 yrs 5+ yrs July 2021 Dec 2020 Committed cash payments in respect of unconditional land 394 204 235 32 865 690 contracts Expected cash payments in respect of conditional land 129 57 130 126 442 333 contracts ● Included in unconditional land c
Slide 51: UK planning permissions
UK planning permissions 20,000 Sites with implementable planning permission 18,000 16,000 14,000 94.5% 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 2.6% H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Permissions gained (rolling 12 months) Completio
Slide 52: UK land pipeline
UK land pipeline 4 July 2021 31 Dec 2020 Plots Owned Controlled Total Total Detailed planning 40,405 2,149 42,554 42,774 Outline planning 17,738 6,461 24,199 19,777 Resolution to grant 1,169 14,296 15,465 14,884 Short term 59,312 22,906 82,218 77,435 Short term with implementable 40,382 40,382 39,10
Slide 53: UK land portfolio ‒ net cost
UK land portfolio ‒ net cost 4 July 2021 31 Dec 2020 £m Owned Controlled Total Total Detailed planning 1,987 4 1,991 1,860 Outline planning 613 93 706 553 Resolution to grant 25 28 53 44 Sub-total 2,625 125 2,750 2,457 plots 59,312 22,906 82,218 77,435 Strategic* 306 109 415 316 plots 38,745 108,369
Slide 54: UK landbank
UK landbank ● Land cost in short term owned landbank is 14.8% of ASP (H1 2020: 14.8%), supported by strategic pipeline conversions ● Land cost as % of ASP on H1 2021 approvals of 14.4% (H1 2020: 20.1%) ● Potential revenue in the landbank at 4 July 2021 was £58.5 billion (31 December 2020: £54.1 bill
Slide 55: UK sales performance
UK sales performance H2 2021 (w/e 1 Private and affordable reservations excl JV August 2021) H1 2021 H2 2020 H1 2020 Average outlets open 220 228 244 237 Average sales rate (net) 0.91 1.16 0.90 0.76 Average selling price £000 305 294 302 308 H2 2021 (w/e 1 As at August 2021) 4 July 2021 31 Dec 2020
Slide 56: Spain financial summary
Spain financial summary H1 2021 H1 2020 Change FY 2020 Average number of active sites 21 20 5.0% 20 Legal completions 84 58 44.8% 190 Average selling price £000 360 352 2.3% 333 Average selling price €000 415 407 2.0% 375 Revenue £m 30.2 20.3 48.8% 63.3 Operating profit £m 4.4 3.5 25.7% 15.8 Operati
Slide 57: Definitions
Definitions ● Operating profit or loss 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 or loss divided by revenue. ● Adjusted basic earnings per share represen