Annual Report and Accounts 2019 Difference The Taylor Wimpey Taylor Wimpey plc Annual Report and Accounts 2019 www.taylorwimpey.co.uk Taylor Wimpey plc is a customer-focused residential developer building and delivering homes and communities across the UK and in Spain. Our Company purpose is to deliver new homes within thriving communities, in a safe and environmentally responsible manner, with customers at the heart of our decision making and consideration of the potential impact on wider stakeholders. Contents Strategic report Financial statements Connect with us 1 The Taylor Wimpey difference 140 Independent auditor’s report There are several ways you can get in 12 Investment case 148 Consolidated income statement touch with us or follow our news. 14 Chair’s statement 149 Consolidated statement of www.taylorwimpey.co.uk/corporate 17 Group Management Team Q&A comprehensive income 18 UK market review 150 Consolidated balance sheet www.twitter.com/taylorwimpeyplc 22 Chief Executive’s letter 151 Consolidated statement of changes in equity 24 Our strategy and www.linkedin.com/company/taylor-wimpey key performance indicators 152 Consolidated cash flow statement 30 Our business model 153 Notes to the consolidated financial statements 32 Making a difference for our stakeholders Navigating this report 183 Company balance sheet 44 Non-financial information statement The icons below help to signpost where you 184 Company statement of changes 45 Our approach to identifying and can find more information. in equity managing risk 185 Notes to the Company financial 48 Our principal risks and uncertainties Read more statements 54 Group financial review 189 Particulars of subsidiaries, associates Key performance indicators Directors’ report: governance and joint ventures Link to remuneration 60 Corporate Governance 191 Five year review Link to our stakeholders 64 Q&A with Irene Dorner, Chair-designate Shareholder information BM Link to our business model 66 Board Leadership and 192 Notice of Annual General Meeting Company Purpose 195 Notes to the notice of Annual Link to our strategic goals 82 Division of Responsibilities General Meeting PR Link to our Principal Risks 86 Composition, Succession 199 Shareholder facilities and Evaluation MI Link to material issues 98 Audit, Risk and Internal Control 106 Remuneration SR Link to our Sustainability Report 132 Statutory, regulatory and other information We participate in various benchmarks and have been awarded a number of industry accreditations We are a constituent of the Dow Jones Sustainability Europe Index and the FTSE4Good Index series, the leading responsible investment indices. We participate in the CDP Climate report and received a score of B in 2019 and in CDP Water, scoring B. We also participate in CDP Forests, disclosing our approach to timber sourcing. We received a C rating. On the front cover is Rebecca Bowker, Project Manager for our Oxfordshire business unit, pictured at Great Western Park, Didcot. Strategic report The Taylor Wimpey difference At Taylor Wimpey, we are a different kind of homebuilder. We aim to deliver our strategy in a way that makes a positive contribution to all stakeholders, particularly our employees, the communities we operate in and the environment. This will help build a sustainable advantage and deliver leading financial returns with strong and reliable cashflows through: 1. Our strong culture and values 2. A renewed focus on sustainability 3. A well invested, quality landbank and strong balance sheet 4. Growth at the right time in the cycle 5. Cash generation, enabling significant and reliable returns to shareholders www.taylorwimpey.co.uk 1 THE TAYLOR WIMPEY DIFFERENCE 1. Our strong culture and values We have a culture embedded throughout the business of ‘doing the right thing’. Our reputation is important to us and we will not compromise the character of the business. This is increasingly important in a politically sensitive industry and with increased scrutiny and customer expectations. “We have diverse and hardworking people at Taylor Wimpey who are committed to doing the right thing by the business and our customers; it’s what I have enjoyed most about working here.” Novraj Sidhu, Managing Director Our values empower us to do the right thing Do the right thing Read more on pages 23 and 71 Read more on pages 30 to 31 2 Taylor Wimpey plc Annual Report and Accounts 2019 Strategic report www.taylorwimpey.co.uk 3 4 Taylor Wimpey plc Annual Report and Accounts 2019 Strategic report THE TAYLOR WIMPEY DIFFERENCE 2. A renewed focus on sustainability Whilst short term performance is important, we run the business for the long term. This underpins our approach to the investments into build quality and in developing our people. We also need to be prepared to respond to changes in our regulatory environment and want to play our part in tackling climate change. In an industry with a well-known skills shortage we see a long term benefit in our apprentice and direct labour programmes. “I was thrilled to receive a coveted NHBC Pride in the Job Regional Award in 2019. It’s testament to all the hard work that has been put in by everyone on site and I for one am very proud of what we have achieved in raising the standards and quality of the homes we build.” Dean Chinsky, Project Manager SR Read more in our 2019 Sustainability Report www.taylorwimpey.co.uk 5 6 Taylor Wimpey plc Annual Report and Accounts 2019 Strategic report THE TAYLOR WIMPEY DIFFERENCE 3. A well invested, quality landbank and strong balance sheet Our high-quality landbank remains a key competitive advantage and an important driver of value as it enables us to build and sell the right product, create the right community and deliver the right service to our customers. We have an excellent short term landbank and strategic land pipeline, as measured by scale, quality of location and embedded margin. This gives us flexibility and options. Together, with our strong and well capitalised balance sheet, this means we can be very resilient through the cycle. “One of the best parts of my job is completing and opening new infrastructure on a development, such as play areas and shops, which I know will make a huge difference to the local residents and help bring the place to life.” Rebecca Bowker, Project Manager Read more on page 27 www.taylorwimpey.co.uk 7 8 Taylor Wimpey plc Annual Report and Accounts 2019 Strategic report THE TAYLOR WIMPEY DIFFERENCE 4. Growth at the right time in the cycle We have the ability to grow, without compromising on quality or adding meaningful market risk at the right time in the cycle. Our factory approach to build can drive faster and more controlled growth which can be scaled up to deliver increases in volumes and cashflow on existing assets, depending on market conditions. Our differentiated approach to apprentices and direct labour provides us with a different kind of workforce that is flexible, high quality and part of the Taylor Wimpey culture, offering a route to high-quality growth. “We have our own dedicated apprentice area on site which has been great as we learn new skills. I have also become a qualified first-aider since starting with Taylor Wimpey. Eventually I would like to work my way up to become a Site Manager.” Louis Mist, Carpentry Apprentice Read more on page 28 www.taylorwimpey.co.uk 9 THE TAYLOR WIMPEY DIFFERENCE 5. Cash generation, enabling significant and reliable returns to shareholders We are a cash generative business and believe we can sustain this in times of market weakness, due to the strength of our balance sheet, the quality and length of our landbank and consequently the control we have over the timing of land investment. Our aim is to provide a reliable income stream to our shareholders. “Being the first person a customer meets on their homebuying journey is a real privilege. My first home was a Taylor Wimpey home and we just recently moved up into our second! It’s given me a great insight into how and why customer experience matters so much, as a customer, employee and as a shareholder.” Melissa Preston, Sales Executive Read more on pages 40 and 41 Read more on page 24 10 Taylor Wimpey plc Annual Report and Accounts 2019 Strategic report www.taylorwimpey.co.uk 11 Investment case The Taylor Wimpey difference Our Company purpose is to deliver new homes within thriving communities, in a safe and environmentally responsible manner, with customers at the heart of our decision making and consideration of the potential impact on wider stakeholders. We aim to deliver our strategy in a way that makes a positive contribution to all stakeholders, particularly our employees, the communities we operate in and the environment. This will help build a sustainable advantage and deliver leading financial returns with strong and reliable cashflows through: 1. Our strong culture and values We have a culture embedded throughout the business of ‘doing the right thing’. Our reputation is important to us and we will not compromise the character of the business. This is increasingly important in a politically sensitive industry and with increased scrutiny and customer expectations. 2. A renewed focus on sustainability Whilst short term performance is important, we run the business for the long term. This underpins our approach to the investments into build quality and in developing our people. We also need to be prepared to respond to changes in our regulatory environment and want to play our part in tackling climate change. In an industry with a well-known skills shortage we see a long term benefit in our apprentice and direct labour programmes. 3. A well invested, quality landbank and strong balance sheet Our high-quality landbank remains a key competitive advantage and an important driver of value as it enables us to build and sell the right product, create the right community and deliver the right service to our customers.