Taylor Wimpey Plc · LSE:TW.
Taylor Wimpey — H1 2023 Earnings Presentation
44 slides from Taylor Wimpey's earnings presentation, Aug 2, 2023
Slide 1: Half Year Results Presentation for the six months to 2 July 2023
Half Year Results Presentation for the six months to 2 July 2023 2 August 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 Highlights Financial review Driving performance Jennie Daly Chris Carney Jennie Daly 3 Half Year Results Presentation for the six months to 2 July 2023
Slide 4: Highlights
Highlights Jennie Daly Chief Executive
Slide 5: First half highlights
First half highlights ● First half Group completions of 5,120, slightly ahead of expectations ● Delivered a strong operational performance in variable market conditions ● Sales rate of 0.71 (H1 2022: 0.90), sales rate excluding bulk deals of 0.62 (H1 2022: 0.88) ● Proactive approach with tight WIP m
Slide 6: Financial review
Financial review Chris Carney Group Finance Director
Slide 7: Summary Group results
Summary Group results £m (before exceptional items) H1 2023 H1 2022 Change FY 2022 Revenue 1,637.1 2,076.8 (21.2)% 4,419.9 Gross profit 353.9 524.5 (32.5)% 1,132.4 Gross profit margin % 21.6 25.3 (3.7)ppt 25.6 Operating profit* 235.6 424.6 (44.5)% 923.4 Operating margin* % 14.4 20.4 (6.0)ppt 20.9 Pr
Slide 8: UK performance summary
UK performance summary H1 2023 H1 2022 Change FY 2022 Legal completions – excl JVs 4,854 6,587 (26.3)% 13,551 Private 3,743 5,137 (27.1)% 10,675 Affordable 1,111 1,450 (23.4)% 2,876 Average selling price – excl JVs 320 300 6.7% 313 Private £000 366 337 8.6% 352 Affordable £000 166 169 (1.8)% 166 Leg
Slide 9: UK operating margin
UK operating margin ● The decline in H1 2023 operating margin is a Illustrative movements in UK operating margin Annual Impact on H1 2023 result of: H1 2022 to H1 2023 change income statement (ppt) Market inflation on selling prices c.4.0%* 2.9 ● Build cost inflation exceeding house price inflation
Slide 10: Summary Group balance sheet
Summary Group balance sheet Group £m 2 July 2023 3 July 2022 Change 31 Dec 2022 Long term assets and JVs 129.8 144.2 (14.4) 131.8 Land 3,362.1 3,636.3 (274.2) 3,428.3 WIP 1,926.0 1,673.4 252.6 1,741.3 Debtors 177.1 202.4 (25.3) 203.4 Land creditors (588.0) (843.7) 255.7 (725.6) Other creditors (851.
Slide 11: Group cashflow
Group cashflow 1,200 235.6 17.3 (80.0) (152.9) 1,000 (4.4) 15.6 (57.9) 863.8 (168.8) 800 2.2 654.9 £m 600 400 200 0 Opening net cash Operating profit Movement in Investment in Investment in Payments to Cash generated Tax and Dividends Other Closing net cash debtors and land* WIP pension from operati
Slide 12: 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 13: 2023 guidance
2023 guidance Guidance UK completions (excl. JVs) Within 10 – 10.5k range Group operating profit (incl. JVs) £440 – £470 million Year end net cash £500 – £650 million Land Cautious and opportunistic approach to new approvals Net finance charges c.£3 million net income (including c.£25 million cash r
Slide 14: Driving performance
Driving performance Jennie Daly Chief Executive
Slide 15: Current market backdrop challenging but long term outlook favourable
Current market backdrop challenging but long term outlook favourable ● Short term drivers of demand remain challenging ● Mortgage rates have risen but providers remain keen to lend ● Overall consumer confidence is low ● Unemployment still at low levels ● Pricing remains resilient ● Long term fundame
Slide 16: Performing well in the current market
Performing well in the current market H2 2023 (w/e 30 July 2023) H1 2023 H2 2022 H1 2022 Average outlets open 234 244 235 228 Private sales rate (net) 0.47 0.71 0.48 0.90 Underlying private sales rate excl. bulk (net) 0.47 0.62 0.43 0.88 Private sales price £000 350 352 377 354 Cancellation rate (pr
Slide 17: Our customers
Our customers c.18% of customers Average FTB were cash buyers LTV was 81% Reservations by buyer type 100% 3% 4% 5% 15% 18% 25% 80% Mortgage terms of 68% bought jointly – above 36 years 66% with average 60% 41% increased joint income of 40% substantially from £50k – 100k, 42% 2021 18% with over £100k
Slide 18: Improved customer engagement
Improved customer engagement ● Microsoft Dynamics customer relationship management system gives more insight at individual customer and site level than ever before ● Prospective customers identified and proactively engaged with ● Customer communications more personalised and targeted at all stages ●
Slide 19: Agile response to market conditions
Agile response to market conditions ● Tight control of cost and WIP: build rates aligned with sales rates at a site level ● All sales staff trained to operate more effectively in a challenging market ● Cautious and highly selective land buying ● Approved c.1.4k plots during the first half of 2023 (H
Slide 20: Planning permission approvals are volatile and uncertain
Planning permission approvals are volatile and uncertain ● Downward trend in approvals during 2022 has continued across large, small, private and social housing projects Residential planning approvals (Great Britain) 120k 7k ● Lichfields estimates an additional 4 - 5 medium sites (50 - 250 homes) pe
Slide 21: Well positioned with high-quality landbank
Well positioned with high-quality landbank ● Excellent short term landbank of c.83k plots (31 December 2022: c.83k) Micro location – position within macro Short term location ● Consistent focus on high-quality locations supporting sales landbank (plots) rates 2 July 2023 A B C D Total ● Largest stra
Slide 22: Investing in the future
Investing in the future ● Committed to net zero in our operations by 2035 and across our value chain by 2045, five years ahead of regulation ● Industry’s first research concept trialling multi-specification homes on a live development site ● Focused on delivering high-quality, zero carbon ready home
Slide 23: Summary and 2023 priorities
Summary and 2023 priorities Delivering on our 2023 priorities Summary - Performing well in a challenging market - Developing our customer offering whilst further improving customer service - Driving operational excellence and a focus on execution - Driving tight cost management and WIP control, alig
Slide 24: 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 25: Future investor communications
Future investor communications ● 9 November 2023 Trading update ● 11 January 2024 Trading update ● 28 February 2024 Full year results 2023 ● 23 April 2024 AGM and trading update 25 Half Year Results Presentation for the six months to 2 July 2023
Slide 26: Appendices
Appendices Half Year Results Presentation for the six months to 2 July 2023 Taylor Wimpey plc
Slide 27: Operational KPIs
Operational KPIs Land H1 2023 H1 2022 FY 2022 Land cost as % of ASP on approvals 12.9% 20.8% 19.0% Landbank years c.7.0 c.6.5 c.6.0 % of completions from strategically sourced land 46% 47% 52% Operational excellence Construction Quality Review (average score / 6) 4.90 4.77 4.81 Average reportable it
Slide 28: Proactive customer engagement
Proactive customer engagement Organic customer interest* has continued to be weak Total website traffic is supported by our media approach 1 6 11 16 21 26 31 36 41 46 51 1 6 11 16 21 26 31 36 41 46 51 2021 2022 2023 2021 2022 2023 Total enquiries reflecting macro environment Appointments and walk-in
Slide 29: Summary income statement
Summary income statement* Group £m H1 2023 H1 2022 Change FY 2022 Revenue 1,637.1 2,076.8 (21.2)% 4,419.9 Cost of sales (1,283.2) (1,552.3) (17.3)% (3,287.5) Gross profit 353.9 524.5 (32.5)% 1,132.4 Net operating expenses (118.0) (109.9) 7.4% (224.9) Profit on ordinary activities 235.9 414.6 (43.1)%
Slide 30: Cash flow summary
Cash flow summary Group £m H1 2023 FY 2022 H2 2022 H1 2022 Profit from ordinary activities before financing 235.9 827.5 492.9 334.6 Increase in inventories (232.9) (280.4) 37.3 (317.7) Exceptional items charge - 80.0 - 80.0 Other operating items* 12.6 77.9 (30.9) 108.8 Cash generated by operations 1
Slide 31: Financing
Financing ● Net cash at 2 July 2023 of £654.9 million (31 December 2022: £863.8 million, 3 July 2022: £642.4 million) ● Cash balances of £740.4 million (31 December 2022: £952.3 million, 3 July 2022: £729.4 million) ● Adjusted gearing, including land creditors of £588.0 million, is -1.5% (31 Decembe
Slide 32: Finance charges
Finance charges £m H1 2023 H1 2022 Change FY 2022 Financial indebtedness 2.7 2.4 0.3 4.8 Foreign exchange movements 0.3 0.3 - - Unwind of land creditors and 7.1 9.0 (1.9) 18.3 other items Pensions 0.7 0.3 0.4 0.6 Interest on lease liabilities 0.3 0.2 0.1 0.4 Total 11.1 12.2 (1.1) 24.1 32 Half Year R
Slide 33: Tax
Tax Asset / (liability) Current tax £m Deferred tax £m Net tax £m As at 1 January 2023 (7.2) 26.0 18.8 Income statement* (59.0) (3.0) (62.0) SOCI / SOCIE - (0.2) (0.2) Cash paid 55.2 - 55.2 Other (including foreign - (0.2) (0.2) exchange) As at 2 July 2023 (11.0) 22.6 11.6 ● Effective tax rate of 26
Slide 34: Pension funding
Pension funding FY 2023 £m FY 2022 Min Max Deficit contributions to the Scheme - - - Payments to escrow - - 5.0 Pension Funding Partnership 5.1 5.1 5.1 Scheme expenses 2.0 2.0 2.0 Total 7.1 7.1 12.1 ● IAS 19 surplus at 2 July 2023 of £95.6 million, deficit of £25.1 million recognised after IFRIC 14
Slide 35: UK completions mix
UK completions mix UK completions £201k – £251k – £301k – £451k – £601k – H1 2023 <£200k £250k £300k £450k £600k £1m >£1m Total Price band 21% 14% 14% 34% 12% 4% 1% 100% UK completions H1 2023 FY 2022 H2 2022 H1 2022 FY 2021 H2 2021 H1 2021 First time buyers 31% 35% 35% 35% 41% 39% 43% Second time b
Slide 36: Policy instability and uncertainty
Policy instability and uncertainty 2012 2017 2018 2020-2022 2022 2023 2023 NPPF Environmental Impact Standard Method Nutrient neutrality NPPF consultation Competition and Part L and F In favour of development / Assessment Based on out of date data Severely inhibiting Potential removal of five-year M
Slide 37: UK land commitments
UK land commitments As at 2 As at 31 £m < 1 yr 1-2 yrs 2-5 yrs 5+ yrs July 2023 Dec 2022 Committed cash payments in respect of unconditional land 352 141 73 24 590 720 contracts Expected cash payments in respect of conditional land 152 105 100 119 476 632 contracts ● Included in unconditional land c
Slide 38: UK planning permissions
UK planning permissions 20,000 Sites with implementable planning permission 18,000 16,000 96.7% 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 2023 2.9% H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 H1 Permissions gained (rolling 12 m
Slide 39: UK land pipeline
UK land pipeline 2 July 2023 31 Dec 2022 Plots Owned Controlled Total Total Detailed planning 37,136 3,528 40,664 41,643 Outline planning 20,780 7,820 28,600 26,271 Resolution to grant 4,810 9,337 14,147 14,916 Short term 62,726 20,685 83,411 82,830 Short term with implementable 36,668 36,668 38,800
Slide 40: UK land portfolio - net cost
UK land portfolio ‒ net cost 2 July 2023 31 Dec 2022 £m Owned Controlled Total Total Detailed planning 2,088 5 2,093 2,069 Outline planning 649 16 665 732 Resolution to grant 114 34 148 87 Sub-total 2,851 55 2,906 2,888 plots 62,726 20,685 83,411 82,830 Strategic* 245 104 349 419 plots* 34,344 105,9
Slide 41: UK landbank
UK landbank ● Land cost in short term owned landbank is 13.3% of ASP (3 July 2022: 14.3%), supported by strategic pipeline conversions ● Land cost as % of ASP on H1 2023 approvals of 12.9% (H1 2022: 20.8%) ● Potential revenue in the landbank at 2 July 2023 was £62 billion (31 December 2022: £61 bill
Slide 42: UK sales performance
UK sales performance H2 2023 (w/e Private and affordable reservations excl JV 30 July 2023) H1 2023 H2 2022 H1 2022 Average outlets open 234 244 235 228 Average sales rate (net) 0.47 0.84 0.70 1.10 Average selling price £000 349 325 312 326 H2 2023 (w/e As at 30 July 2023) 2 July 2023 31 Dec 2022 3
Slide 43: Spain financial summary
Spain financial summary H1 2023 H1 2022 Change FY 2022 Average number of active sites 23 22 4.5% 24 Legal completions 228 203 12.3% 381 Average selling price £000 326 332 (1.8)% 327 Average selling price €000 374 391 (4.3)% 383 Revenue £m 74.1 67.4 9.9% 124.4 Operating profit £m 19.7 18.0 9.4% 32.6
Slide 44: Definitions
Definitions ● Operating profit is defined as profit on ordinary activities before financing, 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 attributed t