Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — FY2021 Earnings Presentation
60 slides from Taylor Wimpey's earnings presentation, Mar 3, 2022
Slide 1: Full Year Results Presentation for the year ended 31 December 2021
Full Year Results Presentation for the year ended 31 December 2021 3 March 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 2021 review Financial review Operational review and Pete Redfern Chris Carney outlook Jennie Daly 3 Results Presentation for the year ended 31 December 2021
Slide 4: 2021 review
2021 review Pete Redfern Chief Executive
Slide 5: Strong 2021 performance
Strong 2021 performance 2021 highlights ● Positioned Group for growth with high quality land Group investment completions Revenue Operating profit* ● 5-star customer rating 14,302 £4,284.9 million £828.6 million maintained ● Environment strategy progressed Construction Quality Review 8-week ‘would y
Slide 6: Strong trading performance
Strong trading performance H1 2022 (w/e 27 Feb 2022) H2 2021 H1 2021 H2 2020 H1 2020 Average outlets open 230 221 228 244 237 Private sales rate (net) 1.02 0.85 0.97 0.81 0.70 Private sales price £000 343 340 322 320 320 Cancellation rate (private) 14% 14% 14% 19% 21% ● 84 new outlets opened in 2021
Slide 7: Operational progress
Operational progress Construction Quality Review score (out of six) 8-week ‘would you recommend’ score 5 94% 92% 4 90% 88% 3 86% 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2021 employee survey 9-month ‘would you recommend’ score 99% 80% 96% 78% 93% 76% 90% 74% 72% 87% Engagement Diversity and
Slide 8: Driving operational excellence
Driving operational excellence ● Customer relationship management system is now live and driving information and value benefits ● 2020 restructure has increased MD ownership and renewed cost discipline mindset ● Central procurement efficiency and improvement programme ● Further reduction of product
Slide 9: ESG highlights 2021
ESG highlights 2021 • Achieved 35% absolute reduction in emissions since 2013, and reduced our carbon emissions intensity by 50% since 2013 • One of the first UK developers to set Science Based Targets across our value chain, including a 1.5 ⷪC target for operational emissions. During 2022, we will
Slide 10: Fire safety in high rise buildings
Fire safety in high rise buildings ● We believe customers and leaseholders should not have to pay for fire safety remediation works to ensure their buildings are safe and mortgageable ● TW took early and proactive action, committing significant funding to address fire safety and cladding issues on o
Slide 11: Delivering 2021 priorities
Delivering 2021 priorities Progress Delivered strong uplift in 2021 completion volumes ⚫ Strong recovery in operating margin through increased volumes and continued cost discipline ⚫ Significant land investment and outlet progress provides platform for growth ⚫ Embedding new environment strategy wit
Slide 12: Financial review
Financial review Chris Carney Group Finance Director
Slide 13: Summary Group results
Summary Group results £m (before exceptional items) FY 2021 FY 2020 Change Revenue 4,284.9 2,790.2 53.6% Gross profit 1,027.0 496.7 106.8% Gross profit margin % 24.0 17.8 6.2ppt Operating profit 828.6 300.3 175.9% Operating profit margin % 19.3 10.8 8.5ppt Profit before tax and exceptional items 804
Slide 14: UK performance summary
UK performance summary FY 2021 FY 2020 Change Legal completions – excl JVs 13,929 9,412 48.0% Private 11,481 7,564 51.8% Affordable 2,448 1,848 32.5% Average selling price – excl JVs 300 288 4.2% Private £000 332 323 2.8% Affordable £000 148 146 1.4% Legal completions – JVs 158 197 (19.8%) Share of
Slide 15: Movement in UK operating margin
Movement in UK operating margin Impact on 2021 ● The improvement in operating margin in 2021 has been Illustrative movements in UK operating margin Annual income statement FY 2020 to FY 2021 change (ppt) supported by: Market inflation on selling prices c.4.0%* 2.9 ● The net benefit from house price
Slide 16: Bridge to medium term operating margin target
Bridge to medium term operating margin target 22.6% +1.4 21.2% +1.9 19.3% 19.3% 2021 Higher volumes Landbank evolution Operational Target improvements incl. CRM, Range Targeted improvement - low new house types etc Targeted improvement - high Illustrative, assuming stable market with selling price g
Slide 17: Summary Group balance sheet
Summary Group balance sheet Group £m 31 Dec 2021 31 Dec 2020 Change Long term assets and JVs 150.2 141.8 8.4 Land 3,385.7 2,875.7 510.0 WIP 1,560.0 1,659.0 (99.0) Debtors 195.7 215.4 (19.7) Land creditors (806.4) (675.9) (130.5) Other creditors (752.2) (731.2) (21.0) Pensions and post-retirement ben
Slide 18: Group cashflow
Group cashflow 54.5 (417.7) 828.6 124.5 (15.2) 574.7 (127.7) (15.1) (5.9) (301.5) £m (6.9) 837.0 719.4 Opening net Operating Movement in Investment in Reduction in Payments to Cash Tax and Exceptional Investment in Dividends paid Other*** Closing net cash profit debtors and land* WIP pension generat
Slide 19: 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 20: 2022 guidance
2022 guidance Guidance Modest, low single digit growth vs 2021 volumes UK completions (excl. JVs) c.20% affordable Group operating profit margin (incl. JVs) Further progress towards 21-22% Year end net cash c.£600 million Land New approvals on a replacement basis Net finance charges c.£28 million (c
Slide 21: Operational review and outlook
Operational review and outlook Jennie Daly Group Operations Director and CEO Designate
Slide 22: Medium to long term structural backdrop remains favourable
Medium to long term structural backdrop remains favourable Housing market Land market Political environment Current conditions positive: Current conditions: − Cladding and Building Safety − High LTV mortgages − Competitive land market − Levelling up White Paper – Housing 1 − Overall affordability re
Slide 23: Positive sales momentum and forward indicators
Positive sales momentum and forward indicators Customer interest* 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Week number 2019 2020 2021 2022 Appointments 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Week number 2020 2021 2022 * Organic traffic i.e. traffic via a search engine, to our p
Slide 24: Strong landbank
Strong landbank ● Short term landbank c.85k plots as at 31 December 2021 (31 December 2020: c.77k plots) ● Acquired 14,450 plots in the short term land market during 2021 (2020: 7,644) ● Over the 18 months to 31 December 2021, we have added c.29k new plots to our short term landbank ● Converted 7,69
Slide 25: Strong planning status of completions
Strong planning status of completions 100% 90% 80% 70% 100% with planning 97% with planning 60% 50% 40% 30% 20% 10% 0% 2022 2023 Owned with detailed planning permission and started on site Owned with detailed planning permission and not started on site Owned with planning Controlled with planning Ow
Slide 26: Quality led growth
Quality led growth ● Excellent progression for 2022 and 2023 outlets Current status of outlets planned to open in 2022 and H1 2023 2022 H1 2023 Outlet opened Owned Controlled Deal progressing Not owned or controlled 26 Results Presentation for the year ended 31 December 2021
Slide 27: Case studies – TW Bristol
Case studies – TW Bristol The site • 450 plots acquired with outline planning consent • Exchanged unconditional contracts in July 2020 with completion in January 2021 • Site start – July 2021 • Outlet open – December 2021 • First legal completion on track for April 2022 Deal background • Site initia
Slide 28: Case studies – TW London
Case studies – TW London The site • 136 plots with outline planning permission • Site secured by exchange of contracts in November 2020 • Site start anticipated – Summer 2022 • Outlet opening anticipated Q1 2023 • First legal completion anticipated in 2023 Deal background • Site under offer to anoth
Slide 29: Strategic land
Strategic land ● Restructured team with central resource driving strategic land strategy in collaboration with operational businesses ● Strategic land continues to deliver 50% of completions ● Strategic land pipeline was c.145k potential plots as at 31 December 2021 (31 December 2020: c.139k plots)
Slide 30: New house type update
New house type update ● Businesses primed to adopt new range ● New range designed to be high-quality, energy-efficient and cost effective to build ● During prototyping consistent savings realised in superstructure build costs ● Better suited to accommodate Future Homes Standard and ease of build ● P
Slide 31: Optimising our land asset
Optimising our land asset ● Improved plotting efficiency ● Repetition of plot depths ● Designed to efficiently accommodate on plot parking requirements ● Reduced build costs and improved build efficiency ● Range of price point offerings ● Increased customer attractiveness and “kerb appeal” 31 Result
Slide 32: TW Logistics
TW Logistics ● Certainty ● Holds stock of high volume standard components ● Consolidates supplier deliveries, providing certainty by mitigating supplier fluctuations and availability challenges ● Centrally manages new product implementation alleviating availability gaps ● Efficiency ● Direct access
Slide 33: Prepared for the future
Prepared for the future Part L, F & O Future Homes Standard New Homes Ombudsman • Part L, F & O costs built into • Target 75% reduced emissions • Support the introduction of an landbuying decisions from customer homes in use by independent Ombudsman in • Phasing in of the new Part L, F 2030 2022 & O
Slide 34: Maintaining momentum
Maintaining momentum ● Operating margin ● Operational excellence and discipline driving increase in operating margin ● Outlet growth ● Progressing recent land acquisitions through planning to facilitate outlet growth in late 2022 and volume growth in 2023 ● Great stakeholder experience ● Continue to
Slide 35: Outlook
Outlook ● Continuing good affordability and mortgage availability ● Expect to deliver modest, low single digit growth in 2022 and to continue to make progress towards 21-22% operating margin ● Current build cost inflation of c.6%, fully offset by sales price growth ● Additional land secured has crea
Slide 36: Investment case
Investment case Q & A Strong momentum Clear levers to improve Highly cash generative Delivering for all following significant operating margin with a commitment to stakeholders recent land investment return excess cash to drive outlet growth and volumes 36 Results Presentation for the year ended 31
Slide 37: Future investor communications
Future investor communications ● 26 April 2022 AGM and trading update ● Early Summer 2022 Investor update ● 3 August 2022 Half year results 2022 ● 9 November 2022 Trading update 37 Results Presentation for the year ended 31 December 2021
Slide 38: Appendices
Appendices Full Year Results Presentation for the year ended 31 December 2021 Taylor Wimpey plc
Slide 39: Group financial metrics
Group financial metrics Return on net operating assets Cash conversion* 100 82.6 31.4 69.4 30 24.7 20 % 0 % 9.9 10 -54.9 0 -100 2019 2020 2021 2019 2020 2021 2018-2023 medium term target: Increase to 35% 2018-2023 medium term target: Convert 70-100% of operating profit into operating cash flow Opera
Slide 40: 2021 operational performance – our KPIs
2021 operational performance – our KPIs Customer FY 2021 FY 2020 FY 2019 Customer satisfaction – would you recommend 8-week score %* 92 92 89 Customer satisfaction – would you recommend 9-month score %** 79 78 77 Build quality Construction Quality Review – average score out of 6 4.67 4.45 4.13 Avera
Slide 41: 2021 operational performance – our KPIs
2021 operational performance – our KPIs Efficiency FY 2021 FY 2020 FY 2019 Net private sales rate per outlet per week 0.91 0.76 0.96 Private legal completions per outlet 51.0 31.5 48.2 Order book value £m 2,550 2,684 2,176 Order book volume – number of homes 10,009 10,685 9,725 Employee Employee tur
Slide 42: Environmental strategy targets
Environmental strategy targets Science-based carbon Nature Resources and waste reduction target • Increase natural habitats by • By 2022, publish a ‘towards 10% on new sites from zero waste’ strategy for our • Reduce operational carbon sites emissions intensity by 36% 2023 by 2025 from a 2019 • Incl
Slide 43: Summary income statement
Summary income statement* Group £m FY 2021 FY 2020 Change H1 2021 Revenue 4,284.9 2,790.2 53.6% 2,196.3 Cost of sales (3,257.9) (2,293.5) 42.0% (1,674.0) Gross profit 1,027.0 496.7 106.8% 522.3 Net operating expenses (203.8) (204.3) (0.2)% (99.6) Profit on ordinary activities before 823.2 292.4 181.
Slide 44: Cash flow summary
Cash flow summary Group £m FY 2021 H2 2021 H1 2021 FY 2020 Profit on ordinary activities before finance costs 698.2 400.5 297.7 282.4 Increase in inventories (293.2) (184.9) (108.3) (362.2) Exceptional items charge 125.0 - 125.0 10.0 Other operating items* 44.7 (46.2) 90.9 (95.2) Cash generated by /
Slide 45: Group segmental analysis
Group segmental analysis FY 2021 FY 2020 Operating Operating Operating Operating profit profit margin RONOA profit profit margin RONOA £m % % £m % % UK 814.0 19.3 25.1 284.5 10.4 9.7 Spain 14.6 19.0 13.2 15.8 25.0 16.7 Group 828.6 19.3 24.7 300.3 10.8 9.9 45 Results Presentation for the year ended 3
Slide 46: Excess cash return payment profile
Excess cash return payment profile Paid (or to be paid) pence per share FY 2022*** FY 2021 FY 2020 Ordinary dividend* c.8.88 8.28 - Paid (or to be paid) £m FY 2022*** FY 2021 FY 2020 Ordinary dividend* c.324 302 - Share buyback** c.150 - - Total c.474 302 - ● Final ordinary dividend of 4.44 pence pe
Slide 47: Financing
Financing ● Net cash at 31 December 2021: £837.0 million (31 December 2020: £719.4 million) ● Adjusted gearing including land creditors of -0.7% (2020: -1.1%) ● Average net cash during 2021: £788.1 million (2020: £399.3 million) ● Borrowings and facilities: ● £550 million Revolving Credit Facility e
Slide 48: Finance charges
Finance charges £m FY 2021 FY 2020 Change Financial indebtedness 5.0 8.3 (3.3) Foreign exchange loss 0.8 - 0.8 Unwind of land creditors and other 19.2 19.3 (0.1) items Pensions 1.0 1.4 (0.4) Interest on IFRS 16 leases 0.4 0.4 - Total 26.4 29.4 (3.0) 48 Results Presentation for the year ended 31 Dece
Slide 49: 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* (122.3) (1.8) (124.1) SOCI / SOCIE 0.1 (5.3) (5.2) Cash paid 123.0 - 123.0 Other (including foreign exchange) 0.5 (0.4) 0.1 As at 31 December 2021 0.2 26.2 26.4 ● Pre-exceptional
Slide 50: Pensions
Pensions Movement in present value of defined benefit obligations Total UK £m FY 2021 FY 2020 FY 2019 FY 2018 Pre-IFRIC 14 deficit / (surplus) brought forward 89.1 (100.5) (33.1) (23.9) Employer contributions* (17.4) (37.1) (47.1) (34.1) Administration cost 2.2 2.5 1.8 1.9 Interest charge / (income)
Slide 51: Pension funding
Pension funding FY 2022 FY 2020 FY 2021 £m Min Max Deficit contributions to the Scheme 30.0 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 37.1 27.4 7.1 22.1 ● Pension payments total £27.4 million in the year (deficit contr
Slide 52: UK completions mix
UK completions mix £201k – £251k – £301k – £451k – £601k – UK completions 2021 <£200k £250k £300k £450k £600k £1m >£1m Total Price band 23% 18% 17% 31% 7% 3% 1% 100% UK completions FY 2021 H2 2021 H1 2021 FY 2020 H2 2020 H1 2020 First time buyers 41% 39% 43% 40% 43% 35% Second time buyers 37% 38% 36
Slide 53: UK land commitments
UK land commitments 2021 2020 £m (at 31 December 2021) < 1 yr 1-2 yrs 2-5 yrs 5+ yrs total total Committed cash payments in respect of unconditional land contracts 315 295 180 23 813 690 Expected cash payments in respect of conditional land contracts 159 105 149 113 526 333 ● Included in uncondition
Slide 54: UK planning permissions
UK planning permissions 20,000 Sites with implementable planning permission 18,000 16,000 92.9% 14,000 12,000 10,000 8,000 6,000 4,000 4.2% 2,000 0.6% 2.3% 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Started on site as at 31 December 2021 Permissions gained Completions* Starti
Slide 55: UK land pipeline
UK land pipeline 31 Dec 2021 31 Dec 2020 Plots Owned Controlled Total Total Detailed planning 41,961 1,368 43,329 42,774 Outline planning 17,784 7,006 24,790 19,777 Resolution to grant 2,915 14,342 17,257 14,884 Short term 62,660 22,716 85,376 77,435 Short term with implementable 41,680 - 41,680 39,
Slide 56: UK land portfolio – net cost
UK land portfolio ‒ net cost 31 Dec 2021 31 Dec 2020 £m Owned Controlled Total Total Detailed planning 2,129 1 2,130 1,860 Outline planning 591 73 664 553 Resolution to grant 40 34 74 44 Sub-total 2,760 108 2,868 2,457 plots 62,660 22,716 85,376 77,435 Strategic 298 98 396 316 plots 37,425 107,809 1
Slide 57: UK landbank
UK landbank ● Land cost in short term owned landbank is 14.6% of ASP (2020: 15.2%), supported by strategic pipeline conversions ● Land cost as % of ASP on 2021 approvals 16.1% (2020: 18.3%) ● Potential revenue in the landbank was £59 billion (31 December 2020: £54 billion), comprising: ● Short term
Slide 58: UK sales performance
UK sales performance Private and affordable reservations H1 2022 (w/e excl. JVs 27 Feb 2022) H2 2021 H1 2021 H2 2020 H1 2020 Average outlets open 230 221 228 244 237 Average sales rate (net) 1.09 1.13 1.16 0.90 0.76 Average selling price £000 331 297 294 302 308 H1 2022 (w/e As at 27 Feb 2022) 31 De
Slide 59: Spain financial summary
Spain financial summary FY 2021 FY 2020 Change Average number of active sites 22 20 2 Legal completions 215 190 13.2% Average selling price £000 357 333 7.2% Average selling price €000 417 375 11.2% Revenue £m 76.8 63.3 21.3% Operating profit £m 14.6 15.8 (7.6)% Operating profit margin % 19.0 25.0 (
Slide 60: 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. ● Adjusted basic earnings per share represents earnings attributed to the shareholders of the parent, excluding exceptional items