Becoming a Customer-Centric Homebuilder
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Taylor Wimpey plc Annual Report and Accounts 2018 Becoming a www.taylorwimpey.co.uk customer-centric homebuilder Annual Report and Accounts 2018 At a glance how we performed in 2018 Revenue (£m) Customer satisfaction 8-week score Tangible net asset Group completions including JVs Number recruited to early talent Operating profit* (£m) ‘Would you recommend?’ (%) value per share† (p) programmes in the year 2018 4,082.0 2018 15,275 2018 880.2 2017 3,965.2 90 98.3 2017 14,842 175 2017 844.1 2016 3,676.2 2016 14,185 2016 768.1 2017: 89 2017: 95.7 2017: 126 Return on net Annual Injury Incidence Rate (per Year end net cash‡ (£m) Profit for the year (£m) Basic earnings per share (p) Employee turnover (%) operating assets** (%) 100,000 employees and contractors) 14.5 644.1 33.4 656.6 20.1 228 2017: 511.8 2017: 555.3 2017: 17.0 2017: 14.0 2017: 32.5 2017: 152 Profit before tax (£m) Adjusted basic earnings Net private sales rate Total dividend per share (p) per share†† (p) per outlet per week Construction Quality Review Landbank years 2018 810.7 15.28 2017 682.0 21.3 0.80 3.93 c.5.1 2017: 13.79 2016 732.9 2017: 20.2 2017: 0.77 2017: 3.74 2017: c.5.1 Definitions can be found in the Group financial review on page 53 North Division Central and South We participate in various benchmarks and have West Division been awarded a number of industry accreditations Where we 6,431 Homes completed 5,259 operate 10 offices Homes completed 8 offices London and South We operate at a local level UK map key East Division Spain from 24 regional businesses Head office across the UK, and we also Regional offices 3,132 342 have operations in Spain. London market Homes completed Homes completed 6 offices 3 offices This document is printed on UPM Finesse Silk and UPM Fine Offset, both papers containing fibre sourced from well-managed, responsible, FSC® certified forests and other controlled sources. Alternative Performance Measures The Group uses Alternative Performance Measures (APMs) as key financial performance indicators to assess underlying Definitions of the APMs, discussed throughout our Annual Report and Accounts, and a reconciliation to the equivalent statutory This is a certified CarbonNeutral® publication. performance of the Group. The APMs used are widely used industry measures, form the measurement basis of the key measure are detailed in the Alternative Performance Measures section on pages 178 to 180. strategic KPIs (return on net operating assets** and operating profit* margin) and are linked directly to executive remuneration. The 2017 financial statements have been restated for the adoption of IFRS 9 – ‘Financial Instruments’ and IFRS 15 – ‘Revenue from Designed and produced by Black Sun Plc www.blacksunplc.com All references to operating profit* throughout this report meet the definition of an APM. Contracts with Customers’. They have not been restated for IFRS 16 as it has been applied from 1 January 2018 using the ‘modified retrospective’ approach, as outlined in the standard. Printed by Park Communications on FSC® certified paper. Taylor Wimpey plc is a customer-focused residential developer building and delivering homes and communities across the UK and in Spain. We are one of the UK’s largest residential developers. We do much more than build homes – we add social, economic and environmental value to the wider communities in which we operate. We are first and foremost a local business and an important contributor to the local communities. Contents Strategic report Financial statements Connect with us 2 Chair’s statement 124 Independent auditor’s report There are several ways you can get in 4 Chief Executive’s letter 130 Consolidated income statement touch with us or follow our news. 6 Group Management Team Q&A 131 Consolidated statement of www.taylorwimpey.co.uk/corporate 8 UK market review comprehensive income 12 Our strategy 132 Consolidated balance sheet www.twitter.com/taylorwimpeyplc 24 Our key performance indicators 133 Consolidated statement of 26 Strategic goals changes in equity www.linkedin.com/company/taylor-wimpey 27 Our investment proposition 134 Consolidated cash flow statement 28 Our business model 135 Notes to the consolidated financial statements Navigating this report 30 Creating value for stakeholders 168 Company balance sheet The icons below help to signpost where 42 Our approach to risk management 169 Company statement of changes you can find more information. 44 Principal risks and uncertainties in equity 52 Group financial review Read more 170 Notes to the Company financial statements Q&A Questions and answers Directors’ report: governance 174 Particulars of subsidiaries, associates Key performance indicators 58 Board of Directors and joint ventures 60 Corporate governance 178 Five year review and alternative Link to remuneration performance measures 82 Audit Committee report Link to our stakeholders 87 Nomination Committee report 96 Remuneration Committee report Shareholder information Link to our business model 117 Statutory, regulatory and 181 Notice of Annual General Meeting Link to our strategic goals other information 184 Notes to the notice of Annual General Meeting 189 Shareholder facilities 1 Our ultimate aim is to become a genuinely customer-centric homebuilder by shifting our focus to our customers’ needs and their aspirations for their homes and communities. Best in Customers and class efficient communities at the engine room heart of our strategy See pages 22 and 23 See pages 14 and 15 Becoming a Becoming the customer-centric Build quality: employer homebuilder getting it of choice right first time See pages 20 and 21 See pages 16 and 17 Optimising our strong landbank See pages 18 and 19 Read more on pages 30 to 41 Read more on pages 24 to 25 Read more on pages 28 to 29 2 Chair’s statement A step change in strategy We recognise that each of the decisions our Taylor Wimpey 2018 financial teams take, from the land we buy to the house 2018 has been an exciting year for Taylor Wimpey. performance types and community facilities we build, has a I will touch on some of the year’s operating I’m delighted that during 2018 we have significant impact on our customers’ lives. Our highlights and our record financial performance delivered 14,933 home completions across the homes are where important memories are later in my statement, but will first begin with our UK (2017: 14,541). During the year operating made, where birthday parties are hosted, where new strategy which we introduced to shareholders profit* has grown to £880.2 million, a new record the first photos in school uniform are taken, and at our Capital Markets Day in May 2018. This is for the Group. Profit before tax was £810.7 million, where we live, work and play. We therefore have something we are all very passionate about and up 19% in 2018 (2017: £682.0 million) and an important role to play in our customers’ lives represents a shift for Taylor Wimpey, following profit for the year increased to £656.6 million and are aware of the huge responsibility this brings. the natural conclusion of a very successful (2017: £555.3 million). I am particularly pleased strategic plan which took us from 2011, through to report that in 2018, we have also returned a Your Board also believes that there will be a the early stages of the housing market recovery, record amount to shareholders through real benefit not only to our customers, but to up to early 2018. Our new strategy reflects a dividends and, alongside our strategy update in our employees, shareholders and other deep desire to do more for our customers and May 2018, we announced an enhanced ordinary stakeholders from delivering on our new strategy. a recognition that, in an ever-changing world, dividend going forward. During 2018 As shareholders, you own a business that believes our customers’ expectations have moved on shareholders continued to benefit from our in its customers and, through identifying and significantly and that our products and services success, receiving c.£500 million in dividends, serving customers’ needs better than anyone must too. Our strategy ultimately aims to position and we have committed to returning 20% more else in the industry, this will make us a bigger, Taylor Wimpey as a genuinely customer-centric dividends in 2019 which underlines our confidence better and stronger business. We have reordered homebuilder. This evolution takes place in a in the business. More information about our this 2018 Annual Report to clearly show how we much-improved planning and land environment, financial performance can be found in the ‘At a plan to achieve our objectives. More information which we are confident will persist for the glance’ section and within Chris Carney’s financial about our strategy, and our investment proposition foreseeable future. More information on this can review on pages 52 to 56. It is worth taking to you, can be found within Pete Redfern’s letter be found on pages 10 and 11. the time to recognise that whilst financial on page 5 and on page 27. performance is obviously very important to us As Chair, I am proud of the investment and the and our shareholders, we want to ensure that The UK housing market in 2018 progress we have already made in improving our we deliver this in the right way. Accordingly, and customer service to date, and we are very The housing market has been stable throughout as I have said in prior years, a key function of the pleased to have scored over 90% on the Home 2018, despite the wider macro-economic and Board is to ensure good corporate governance Builders Federation (HBF) 2017/18 survey, significant political uncertainty that has at all times, and this is something we take very however there is still some way to go before we characterised the year.