Delivering quality Annual Report and Accounts 2017 WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 Strategic Report We are one of the UK’s largest Working Together to Build Your Dreams 1 At a Glance 2 residential developers. We do Where we Operate 4 Chairman’s Statement 6 much more than build homes Our UK Market 10 – we add social, economic Chief Executive’s Statement 12 Our Investment Case 19 and environmental value to Our Strategy 20 Our Business Model 21 the wider communities in which Our People 22 we operate. We are first and Selecting Land 24 Managing the Planning and foremost a local business and Community Engagement Process 26 Getting the Homebuilding Basics Right 28 an important contributor to Delivering Customer Service 32 local communities. Optimising Value 34 Our Approach to Risk Management 36 Principal Risks and Uncertainties 38 Our mission is to create great Group Financial Review 42 places to live and deliver Directors’ Report: Governance excellent service which inspires Board of Directors 46 Corporate Governance 48 and delights our customers, our Audit Committee Report 62 Nomination Committee Report 67 people and our shareholders. Remuneration Committee Report 74 Statutory, Regulatory and Other Information 93 Financial Statements Independent Auditor’s Report 98 Consolidated Income Statement 103 Consolidated Statement of Comprehensive Income 104 Consolidated Balance Sheet 105 Consolidated Statement of Changes in Equity 106 Contents Consolidated Cash Flow Statement 107 Notes to the Consolidated Financial Statements 108 Company Balance Sheet 138 Company Statement of Changes in Equity 139 Connect with us Notes to the Company Financial Statements 140 There are several ways you can get in Particulars of Subsidiaries, Associates 144 touch with us or follow our news: and Joint Ventures Five Year Review and www.taylorwimpey.co.uk/corporate Alternative Performance Measures 148 Shareholder Information www.twitter.com/taylorwimpeyplc Notice of Annual General Meeting 151 Notes to the Notice of Annual General Meeting 155 www.linkedin.com/company/taylor-wimpey Shareholder Facilities 158 Navigating this report The icons below help to signpost where you can find more information. Read more Key Performance Indicators Q&A Question and answers Link to Remuneration WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 1 Working Together to Build Your Dreams At Taylor Wimpey we are defined not just by who we are today, but by what we want to be in the future. Our vision is to work together to build your dreams. This extends and applies to all of our stakeholders. We believe that our strategy differentiates us as a company to invest in, work for, engage and partner with and buy a home from. We are a value-driven business with a long term, sustainable focus: Demonstrating excellence through improved operational efficiency and discipline Read more on pages 14 and 28 to 31. Developing and nurturing stakeholder relationships which play a key role in our business success Read more on pages 15 and 51. Driving financial performance in the right way to deliver sustainable shareholder returns Read more on pages 42 to 45. Read more about our vision, mission and values on page 20. taylorwimpey.co.uk WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 2 Strategic Report At a Glance A strong performance for 2017 Adjusted Return on net operating Profit before Total dividend operating assets** Year end Revenue (£m) profit* (£m) tax (£m) paid per share (p) (%) net cash (£m) 3,965.2 841.2 682.0 13.79 32.4 511.8 4,500 1,000 800 15 35 600 32.4 13.79 732.9 3,965.2 4,000 30.7 511.8 700 682.0 841.2 30 3,676.2 500 800 12 27.1 764.3 3,500 603.2 600 10.91 3,139.8 25 3,000 400 637.0 9.49 500 364.7 600 9 20 2,500 400 300 2,000 15 400 6 223.3 300 1,500 200 10 200 1,000 200 3 100 5 100 500 0 0 0 0 0 0 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 Alternative Performance Measures The Group uses Alternative Performance Measures (APMs) as key financial performance indicators (KPIs) to assess underlying performance of the Group. The APMs used are widely used industry measures, form the measurement basis of the key strategic targets (return on net operating assets** and operating profit* margin) and are linked directly to executive remuneration. All references to adjusted operating profit or operating profit throughout this report meet the definition of an APM. Definitions of the APMs discussed throughout this Annual Report and Accounts, and a reconciliation to the equivalent statutory measure, are detailed on pages 148 to 150. Taylor Wimpey plc Annual Report and Accounts 2017 WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 3 KPIs Read more Link to Remuneration Annual Injury Incidence Rate Tangible net Adjusted basic (per 100,000 asset value per earnings per Basic earnings Customer employees and share† (p) share†† (p) per share (p) satisfaction (%) contractors) 95.7 20.2 17.0 88 152 105 22 20 100 220 211 20.2 95.7 18.1 20 200 88 86 17.0 85 90 88.6 18.1 175 83.5 18 180 80 15.1 15 16 160 75 152 14.9 14 140 60 60 12 120 10 10 100 45 40 8 80 30 6 60 5 20 4 40 15 2 20 0 0 0 0 0 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 2015 2016 2017 Definitions can be found in the Group Financial Review on page 43. NB Customer satisfaction and Annual Injury Incidence Rate are UK only measures. taylorwimpey.co.uk WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 4 Strategic Report Where we Operate We strive to be the homebuilder of choice We operate at a local level from 24 regional businesses across the UK, and we also have operations in Spain. North Division Our North Division covers our East and West Scotland, North East, North Yorkshire, Yorkshire, North West, Manchester, North Midlands, Midlands and West Midlands regional businesses. Central and South West Division Our Central and South West Division covers our East Midlands, South Midlands, East Anglia, Oxfordshire, South Wales, Bristol, Southern Counties and Exeter regional businesses. London and South East Division including Central London Our London and South East Division includes Central London and covers our East London, North Thames, South East, South Thames and West London regional businesses. Spain We build high-quality homes in the popular locations of Costa Blanca, Costa del Sol and the islands of Mallorca and Ibiza. UK map key Head office North Division regional offices London market Central and South West Division regional offices London and South East Division regional offices Completions North Division: 6,076 Central and South West Division: 5,135 London and South East Division including Central London: 3,176 Taylor Wimpey plc Annual Report and Accounts 2017 WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 5 Operating profit* by region £294.9m North Division £318.0m Central and South West Division £271.4m London and South East Division including Central London £26.8m Spain Read more on pages 42 to 45. taylorwimpey.co.uk WorldReginfo - 7af126db-408f-436b-963e-6a4ae3b21906 6 Strategic Report Chairman’s Statement A responsible business Introduction On behalf of your Board, I am delighted to report that we have made good progress on both our financial and operational metrics and delivered another year of growth in shareholder returns, with £451 million returned to shareholders in 2017 in total dividends. Group revenue for the year increased by 7.9% to £3,965.2 million (2016: £3,676.2 million) and we were pleased to report an operating profit* of £841.2 million, an increase of 10.1% year on year (2016: £764.3 million). More detailed information on our financial performance can be found on pages 42 to 45. During the year, we completed 14,541 much-needed new homes in the UK, which represents a 4.8% growth on last year, whilst also continuing to make a significant contribution to the communities in which we operate, where we invested over £400 million through planning obligations. I am proud to report that since we implemented our strategy outlined in 2011, Taylor Wimpey has delivered nearly 87k new homes across the country and returned £1.2 billion to shareholders. The housing cycle Trading performance and customer demand remained resilient throughout the year and in our core geographies. You can find more perspective on market conditions on pages 10 and 11. We recognise that the outcome of the General Election, combined with the on-going Brexit negotiations, has resulted in greater political uncertainty. We maintain and welcome an open Kevin Beeston and active dialogue with the Government and the main political parties. We Chairman are pleased to note that all the main parties understand the importance of housebuilding to the country. Whist we have not seen any adverse impact We are delighted to have on the new build housing market or consumer confidence, we are monitoring both the consumer and political environment. We remain confident that our “delivered another year of growth strategy, with a robust balance sheet, high-quality landbank and a highly experienced management team, provides the resilience and flexibility to in shareholder returns in 2017. enable us to deal with changing market conditions, as required, and to ” perform well through changing market conditions. More information on our strategy can be found on pages 20 and 21 and you will see the key themes reflected throughout this document, and importantly in our general approach to business.