TIDMTW.
RNS Number : 2785H
Taylor Wimpey PLC
31 July 2019
31 July 2019
Taylor Wimpey plc
Half year results for the period ended 30 June 2019
Pete Redfern, Chief Executive, commented:
"We have made good progress in the first half against our long
term strategy, underpinned by our continued commitment to our
customers, build quality and employee engagement. We delivered a
record sales rate in the first half as we saw strong customer
demand for our homes in a stable market and the success of our
strategy to build more homes on our larger sites coming through
more quickly than anticipated.
Despite wider political uncertainty, conditions for the housing
market continue to be supportive with good affordability and access
to finance. We have not seen any meaningful change in customer
confidence, with positive underlying metrics and forward
indicators. We expect full year results for 2019 to be in line with
expectations.
Taylor Wimpey has a customer first strategy and I am
particularly proud of the commitment from our highly motivated and
engaged teams, and the positive improvement we are seeing in our
build quality measures. We are investing for the long term in
customer service and in the quality and skills of our business,
particularly in apprenticeships and early talent. It remains our
goal to deliver high-quality homes, right first time, and create
thriving communities in places our customers want to live. This
strategy will position us to be the customer's first choice
homebuilder in all market conditions whilst providing enhanced
returns for shareholders."
Group financial highlights:
-- Completed a Group total of 6,541 homes (H1 2018: 6,497), excluding joint ventures
-- Operating profit* of GBP311.9 million (H1 2018: GBP344.3
million), reflecting higher build costs and geographic mix, partly
offset by higher volumes, delivering an operating profit margin of
18.0% (H1 2018: 20.0%)
-- Profit before tax of GBP299.8 million (H1 2018: GBP301.0 million)
-- Net cash(++) of GBP392.0 million as at 30 June 2019 (1 July
2018: GBP525.1 million), due to timing of land payments and
investment in work in progress, reflecting the increased order
book
-- 2019 full year results expected to be in line with expectations
UK operational highlights:
-- Record H1 net private sales rate at 1.00 across an average of
257 outlets, driven by customer demand and continued success of our
strategy (H1 2018: 0.83 across 280 outlets)
-- Strong order book as at 30 June 2019 representing 10,137
homes (1 July 2018: 9,241 homes), up 10%, with a value of GBP2,366
million (1 July 2018: GBP2,175 million), up 9%, excluding joint
ventures
-- Progress implementing measures to improve right first time
build quality, with the start of the roll out of Quality Managers
across each of our regional businesses
-- Apprenticeship Manager and / or Master Crafts role now
operating in around half of our regional businesses
-- Commitment to investing in long term skills, direct labour
and apprentices with 821 people employed in key trades (1 July
2018: 640)
-- Achieved 89% recommend score as measured by the National
House-Building Council (NHBC) survey on behalf of the Home Builders
Federation (HBF) (H1 2018: 90%)
-- Improved our average Construction Quality Review score to
4.05, once again in the top quartile of large homebuilders (H1
2018: 4.01)
-- Contributed GBP196 million in the first half of 2019 to local
communities via planning obligations (H1 2018: GBP192 million)
-- High employee engagement of 93% and low employee turnover of 12.9% (H1 2018: 14.6%)
Dividends
-- Interim ordinary dividend of 3.84 pence per share (H1 2018:
2.44 pence per share) to be paid in November 2019, bringing 2019
total dividends in the year to c.GBP600 million or c.18.34 pence
per share (2018 total: GBP500 million)
-- 2020 special dividend announced of GBP360 million (c.11.0
pence per share) to be paid in July 2020 subject to shareholder
approval (2019: c.GBP350 million or 10.7 pence per share)
o 2020 total dividends expected to be c.GBP610 million or c.18.6
pence per share
Group financials
H1 2019 H1 2018 Change FY 2018
Revenue GBPm 1,732.7 1,719.8 0.8% 4,082.0
-------- -------- --------- --------
Operating profit GBPm 311.9 344.3 (9.4%) 880.2
-------- -------- --------- --------
Operating profit margin 18.0% 20.0% (2.0)ppt 21.6%
-------- -------- --------- --------
Profit before tax and exceptional
items GBPm 299.8 331.0 (9.4)% 856.8
-------- -------- --------- --------
Profit before tax GBPm 299.8 301.0 (0.4)% 810.7
-------- -------- --------- --------
Profit for the period before
exceptional items GBPm 242.0 269.1 (10.1)% 694.5
-------- -------- --------- --------
Profit for the period GBPm 242.0 244.5 (1.0)% 656.6
-------- -------- --------- --------
Adjusted basic earnings
per share pence 7.4 8.2 (9.8)% 21.3
-------- -------- --------- --------
Basic earnings per share
pence 7.4 7.5 (1.3)% 20.1
-------- -------- --------- --------
Tangible net asset value
per share pence 102.2 100.3 1.9% 98.3
-------- -------- --------- --------
Net cash GBPm 392.0 525.1 (25.3)% 644.1
-------- -------- --------- --------
Return on net operating
assets** 29.4% 30.9% (1.5)ppt 33.4%
-------- -------- --------- --------
UK current trading
During the first half of 2019 the UK housing market was stable,
with robust demand. The south east remained generally more
challenging, particularly at higher price points. Pricing was flat
overall in the first six months. Whilst there remains a high degree
of uncertainty regarding the UK's exit from the EU, we have not
seen any meaningful change in customer confidence or sentiment in
2019 to date. Our customers' decisions to purchase a home continue
to be primarily driven by aspiration and the affordability of, and
access to, mortgage finance. There remains a competitive mortgage
environment across a wide range of loan to value ratios and Help to
Buy continues to be a differentiator for new build customers.
We achieved a very strong net private sales rate for H1 2019 of
1.00, across our 257 outlets (H1 2018: 0.83 sales per outlet per
week and 280 outlets), a record for Taylor Wimpey. The cancellation
rate for H1 2019 remains low at 14% (H1 2018: 13%). The net private
sales rate for the year to date (w/e 28 July 2019) stands at 0.99
(2018 equivalent period: 0.82).
As at 28 July 2019 we were c.87% forward sold for private
completions for 2019 (2018 equivalent period: 86%) and are building
our order book for 2020. Our total order book value stands at
GBP2,516 million (2018 equivalent period: GBP2,257 million),
excluding joint ventures. This order book represents 10,558 homes
(2018 equivalent period: 9,623). Our affordable order book stands
at 4,353 homes (2018 equivalent period: 4,085).
The land market continues to be stable with good opportunities.
We continue to be able to acquire land in quality locations at
attractive investment margins and returns.
At the time of our Annual General Meeting (AGM), we reported
that we were experiencing higher than expected cost inflation,
driven primarily by underlying cumulative inflation, exchange rates
impact on the cost base of suppliers, and a higher than expected
demand in the short term which has impacted operating profit
margin. We anticipate that build cost inflation will be c.5% for
2019 (FY 2018: 3.5%).
We announce today that, subject to shareholder approval, it is
our intention to pay a special dividend for 2020 of GBP360 million
which, alongside the ordinary dividend, will take total dividends
to be paid in 2020 to c.GBP610 million reflecting our ongoing
confidence in the business and our prospects (2019 total: c.GBP600
million).
Outlook and guidance
We remain committed to providing our customers with a
high-quality home and experience. There is a cost to long term
quality and sustainable growth. It requires early investment of
time and resources and a consistent approach. Over the last five
years our focus has been on targeting investment in a number of key
areas, from employee development, and apprenticeship and early
talent programmes, to ensuring we have the processes and resources
to deliver a quality home for our customers which is right first
time. We are now focused on ensuring these changes are embedded and
consistently delivered across our regional businesses. We are
confident that in the long term this will become an increasing
point of differentiation and a key part of our value proposition,
not just for customers and communities but for investors and other
stakeholders and will help us to deliver on our customer-centric
strategy. Whilst this strategy, and our strategic goals, are
deliberately set for the long term, we are pleased to see progress
more quickly than anticipated in some areas. We are benefiting from
the investments we have made in our onsite resources and processes,
and this has allowed us to respond more quickly to the opportunity
to scale up our build teams on larger sites to meet underlying
market demand. This has driven a
significantly higher sales rate year on year, outperforming the
sector, without compromising on quality and without having to
choose to put volume ahead of achieving price. The buy-in from our
employees is key. 96% of employees agree that Taylor Wimpey aims to
deliver the best customer experience in the homebuilding industry,
as measured by our recent employee survey.
We anticipate that full year 2019 results will be in line with
expectations. As previously guided, we expect full year volumes to
be slightly higher than 2018 as we have seen results from our
strategic approach to large sites impact more quickly than
expected. In this environment where pricing is flat, and there is
increased build cost pressure, our margins will be lower in 2019
than in 2018.
We continue to closely monitor the market for any changes and
customer trends and manage the business cautiously, particularly
against the backdrop of the ongoing political and
macro-uncertainty. We are well positioned with a strong order book
and balance sheet and as a network of local businesses, most of our
materials are UK-sourced. We have been working with our suppliers
to understand and mitigate the risk in their supply chains from an
uncertain Brexit outcome and utilising our internal logistics arm,
Taylor Wimpey Logistics, which provides additional visibility,
control and flexibility in managing our supply chain. As a part of
our long term planning and strategy, we have been adapting and
growing our apprenticeship, early talent management and direct
labour schemes to ensure we have the right skills in place for the
future.
We remain focused on building a resilient, high-quality business
by putting the customer at the centre of our decision making. It
remains our goal to build high-quality homes, which are right first
time, and create thriving communities in places our customers want
to live, now and in the future. This will position the business to
be the customer's first choice in all market conditions, including
a post Help to Buy environment, which will in turn provide enhanced
returns to shareholders and will benefit all stakeholders.
* Operating profit is defined as profit on ordinary activities
before net finance costs, exceptional items and tax, after share of
results of joint ventures.
** Return on net operating assets (RONOA) is defined as rolling
12-months operating profit divided by the average of the opening
and closing net operating assets, which is defined as net assets
less net cash, excluding net taxation balances and accrued
dividends.
*** Return on capital employed is defined as rolling 12-months
operating profit divided by the average capital employed calculated
on a monthly basis over the period.
**** Operating cash flow is defined as cash generated by
operations (which is before taxes paid, interest paid and payments
related to exceptional charges).
Tangible net assets per share is defined as net assets before
any accrued dividends excluding goodwill and intangible assets
divided by the number of ordinary shares in issue at the end of the
period.
Adjusted basic earnings per share represents earnings attributed
to the shareholders of the parent, excluding exceptional items and
tax on exceptional items, divided by the weighted average number of
shares in issue during the period.
* Net operating asset turn is defined as 12-months rolling total
revenue divided by the average of opening and closing net operating
assets.
(**) WIP turn is defined as total revenue divided by the average
of opening and closing work in progress.
(***) The Injury Incidence Rate (IIR) is defined as the number
of incidents per 100,000 employees and contractors, calculated on a
rolling 12 month basis, where the number of employees and
contractors is calculated using a monthly average over the same
period. Previous rates disclosed for the half year were calculated
using the number of incidents in the six month period, and the
monthly average number of employees and contractors over the same
six month period.
(++) Net cash is defined as total cash less total financing.
(++++) Cash conversion is defined as operating cash flow divided
by operating profit on a rolling 12-month basis.
(++++++) Contribution margin is defined as revenue less direct
build costs, less gross land costs and less direct selling
expenses. Contribution margin excludes the impact of supplier
rebates, land provision utilisation and discounting of deferred
land commitments.
(++++++++) Adjusted gearing is defined as adjusted net debt
divided by net assets. Adjusted net debt is defined as net cash
less land creditors.
A reconciliation of alternative performance measures to
statutory measures is disclosed in note 16 of the financial
statements.
- Ends -
A presentation to analysts will be hosted by Chief Executive
Pete Redfern and Group Finance Director Chris Carney at 8.45am on
Wednesday 31 July 2019. This presentation will be webcast live on
our website: www.taylorwimpey.co.uk/corporate
An archived version of the webcast will be available on our
website in the afternoon of 31 July 2019.
For further information please contact:
Taylor Wimpey plc Tel: +44 (0) 7826 874461
Pete Redfern, Chief Executive
Chris Carney, Group Finance Director
Debbie Archibald, Investor Relations
Finsbury
Tel: +44 (0) 20 7251 3801
Faeth Birch
Anjali Unnikrishnan
Notes to editors:
Taylor Wimpey plc is a customer-focused homebuilder, operating
at a local level from 24 regional businesses across the UK. We also
have operations in Spain.
For further information please visit the Group's website:
www.taylorwimpey.co.uk
Follow us on Twitter @TaylorWimpeyplc
Putting the customer first to become their first choice
homebuilder in all market conditions
There remains a structural undersupply of housing in the UK
which underpins long term future demand. Whilst we have had a
period of relative market stability over the last decade, we
believe the housing industry remains cyclical and we continue to
manage our business cautiously with a view that the investments and
decisions we make today will impact the long term sustainability of
the business.
In May 2018, we outlined our long term strategy to refocus our
business around the needs and aspirations of our customers. As one
of the UK's largest homebuilders, we recognise that we have a key
role in creating choices for those wanting to access high-quality
housing and we have a responsibility to deliver this in the right
way, not just for our customers, but also for the communities in
which we build, our employees and our investors. We see a need and
an exciting opportunity to change our approach and improve our
offering to customers who rightly expect more from homebuilders.
This, together with optimising our high-quality land assets,
increasing the efficiency of our processes and being recognised as
the employer of choice in the industry, creates the potential to
significantly grow the business over the medium term, depending on
market conditions. Importantly, it also enables us to become a more
resilient business, by becoming the customer's first choice through
all stages of the market cycle.
Our strategy comprises five key areas:
- Customers and communities at the heart of our strategy
- Build quality: getting it right first time
- Optimising our strong landbank
- Becoming the employer of choice
- Best in class efficient engine room
Each of these five pillars are explored in more detail
throughout the operational review.
Strategic goals
We remain focused on the financial goals outlined in May 2018
which target further improvement in the next four years to 2023.
These targets are deliberately stretching and, together with our
key performance indicators, outlined on page 8 target a broad
basket of measures.
-- Increase of return on net operating assets to 35%
-- Maintaining operating profit margins at c.21-22%
-- Operating cash conversion(++++) of between 70 and 100% of
operating profit into operating cash flow****
-- Increased landbank efficiency - reducing length of short term
owned and controlled landbank years by c.1 year to 4-4.5 years
Shareholder returns
We are an asset based business with a strong balance sheet and
an excellent short term landbank of c.5.1 years. This, together
with the control we have over land investment timing, means we are
an extremely cash generative business and allows us to provide
shareholders with a reliable dividend through the cycle, in the
form of an ordinary dividend, while continuing to invest in the
future success of the business. We will also pay a special dividend
at appropriate times in the cycle.
As previously outlined, from 2019, and subject to shareholder
approval each year, the Company will pay an enhanced ordinary
dividend of approximately 7.5% of Group net assets, which will be
at least GBP250 million per annum (or c.7.6 pence per share). Our
Ordinary Dividend Policy provides an annual return to shareholders
that we can reasonably commit to throughout the cycle and has been
the subject of prudent and comprehensive stress testing against
various downside scenarios, including a 20% reduction in prices and
a 30% reduction in volumes.
Today the Board has declared a 2019 interim dividend of 3.84
pence per share (H1 2018: 2.44 pence per share).
Our strategy enables us to drive further value from our landbank
and our business model as we focus on our customers, delivery and
efficiency, which in turn drives increased cash generation. In July
2019, our shareholders received c.GBP350 million or 10.7 pence per
share in special dividend. In 2019, shareholders will receive total
dividends (including ordinary and special dividends) of c.GBP600
million or c.18.34 pence per share.
We also announce today a special dividend for 2020 of GBP360
million (or c.11.0 pence per share) to be paid in July 2020,
subject to shareholder approval.
Our Special Dividend Policy will pay out to shareholders the
free cash generated by the Group after land investment, all working
capital, taxation and other cash requirements of the business in
executing our strategy in the near term, and once the Group's
ordinary dividend has been met. We have paid a special dividend in
each of the last five years.
In 2020 subject to approval at the AGM, shareholders will
receive a total dividend of c.GBP610 million (c.18.6 pence per
share), comprising an ordinary dividend of c.GBP250 million (c.7.6
pence per share) and the special dividend of GBP360 million (c.11.0
pence per share).
Operational review
Taylor Wimpey plc is a customer-focused residential developer
building and delivering homes and communities across the UK and in
Spain.
Our operational review is for the UK only as the majority of
metrics do not apply to our Spanish business. A short summary of
the Spanish business follows. The financial analysis is presented
at Group level, which includes Spain, unless otherwise
indicated.
Joint ventures are excluded from the operational review and
Group financial review, unless stated otherwise.
Our key performance indicators (KPIs)
Our KPIs target and measure improvement across the five key
areas of our strategy and tie into remuneration across a number of
levels in the business.
UK H1 2019 H1 2018 Change FY 2018
Customers and communities at the heart of our strategy
Customer satisfaction 8-week
score
'Would you recommend?' 89% 90% (1.0)ppt 90%
-------- -------- --------- --------
Customer satisfaction 9-month
score
'Would you recommend?' 77% 76% 1.0ppt 76%
-------- -------- --------- --------
Build quality: getting it right first time
Construction Quality Review (average
score / 6) 4.05 4.01 1.0% 3.93
-------- -------- --------- --------
Average reportable items per
inspection 0.28 0.24 16.7% 0.28
-------- -------- --------- --------
Optimising our strong landbank
Land cost as % of ASP on approvals 21.2% 17.1% 4.1ppt 19.2%
-------- -------- --------- --------
Landbank years c.5.1 c.5.3 (3.8)% c.5.1
-------- -------- --------- --------
% of completions from strategically
sourced land 58% 59% (1.0)ppt 58%
-------- -------- --------- --------
Becoming the employer of choice
Employee turnover % (voluntary)
rolling 12 months 12.9% 14.6% (1.7)ppt 14.5%
-------- -------- --------- --------
Number of people recruited into
early talent programmes: graduates,
management trainees and site
management trainees rolling 12
months 152 133 14.3% 175
-------- -------- --------- --------
Directly employed key trades
including trade apprentices 821 640 28.3% 748
-------- -------- --------- --------
Health and Safety Injury Incidence
Rate (per 100,000 employees and
contractors) rolling 12 months
*** 241 148 62.8% 228
-------- -------- --------- --------
Best in class efficient engine room
Net private sales rate per outlet
per week 1.00 0.83 20.5% 0.80
-------- -------- --------- --------
Private legal completions per
outlet 18.8 17.3 8.7% 41.8
-------- -------- --------- --------
Order book value GBPm 2,366 2,175 8.8% 1,782
-------- -------- --------- --------
Order book volume - no. of homes 10,137 9,241 9.7% 8,304
-------- -------- --------- --------
Sales, completions and pricing
The UK new housing market was stable in the first six months of
2019. Total home completions (excluding joint ventures) increased
by 1.0% to 6,432 (H1 2018: 6,367) and we delivered 1,594 affordable
homes (H1 2018: 1,513), equating to 24.8% of total completions (H1
2018: 23.8%). Our net private sales rate for the first half of the
year was 1.00 homes per outlet per week (H1 2018: 0.83).
Cancellation rates remained low at 14% (H1 2018: 13%). Average
selling prices on private completions increased by 2.0% to GBP301k
(H1 2018: GBP295k). Our total average selling price increased by
1.6% to GBP261k (H1 2018: GBP257k), reflecting product mix.
We have a wide range of products from one-bedroom apartments to
five-bedroom homes, with 95% of customers owner occupiers. First
time buyers accounted for 38% of total sales in the first half of
2019 (H1 2018: 35%). Investor sales continued to be at a very low
level at 5% (H1 2018: 4%).
During the first half of 2019 approximately 40% of total
customer sales used the Help to Buy scheme (H1 2018: c.39%) of
which 76% were to first time buyers (H1 2018: 76%) who used the
scheme to get on to the housing ladder.
We continue to see strong demand for our homes and as at 30 June
2019 our order book represented 10,137 homes (1 July 2018: 9,241
homes) increasing in value by 9% to GBP2,366 million (1 July 2018:
GBP2,175 million), excluding joint ventures. The Central London
order book is 188 homes (1 July 2018: 289 homes), at a value of
GBP154 million (1 July 2018: GBP216 million). Our affordable order
book stood at 4,474 homes at the period end (1 July 2018: 4,047
homes).
During the first half of 2019 we opened 53 new outlets (H1 2018:
49) in quality locations, where demographics are strong and people
want to live. As at 30 June 2019 we were operating with 295
factories on 246 outlets (1 July 2018: 300 factories on 278
outlets).
Customers and communities at the heart of our strategy
Last year we announced our customer-centric strategy, building
on the findings of the extensive customer research we undertook in
2017 and 2018. Whilst our employees have always sought to act in
the interests of our customers, becoming genuinely customer-centric
involves taking a more rounded and strategic approach to what we do
every day. This starts with putting customers and communities at
the heart of what we do and at the centre of our decision making.
The improvements we have identified target changes to quality and
accessibility of product, sales and after sales service and extend
beyond this to our involvement in helping communities prosper by
promoting shared community facilities, clubs and initiatives. This
desire and drive is reflected by our employees where 96% of
employees 'agree' or 'strongly agree' that Taylor Wimpey aims to
deliver the best customer experience in the homebuilding
industry.
During the first half of 2019, 89% of our customers said that
they would recommend Taylor Wimpey (H1 2018: 90%), according to the
8-week survey carried out by the NHBC on behalf of the HBF. Whilst
this is a slight reduction in the period, we are pleased to see
that the underlying quality of the homes built during the same time
was maintained, as measured by the Construction Quality Review. We
have also introduced the 9-month survey results as a KPI within the
business. In the first half of 2019, our 9-month customer
satisfaction score was 77% (H1 2018: 76%). Whilst it is common in
the sector generally to see this measure trend at significantly
lower levels, when compared to the 8-week survey, we are focused on
understanding the reason for this to help improve longer term
customer satisfaction. We are pleased that the majority of our
customers would recommend us to their friends, however we know
that, despite our best intentions and efforts, we do not always get
it right for our customers and sometimes we fall short of our high
standards. We want our customers to have confidence in their home
and trust us to deliver on what we promised. Customers can rely us
to do the right thing, put any mistakes right and learn from
them.
Affordability is an issue in the UK for many people seeking to
buy their first home. We want to do more to help more people get on
to the housing ladder and believe that by increasing access to
good-quality homes, we will increase our resilience in weaker
markets and in a post Help to Buy environment. We are exploring
ways to broaden our products and routes to market and improving the
ways in which customers can access high-quality housing and the
choices available to them.
Communities and placemaking
We are one of the largest homebuilders in the country but our
regional businesses and employees are proud to do more than just
build homes. We have a privileged role in creating thriving
communities which help people to enhance their lives.
Our customer research shows a clear relationship between good
placemaking and long term customer satisfaction. This research also
found that our customers have a very strong desire to become part
of a community quickly after they move in. Where possible in our
developments, we are also exploring how we can plan to bring
forward infrastructure and facilities, e.g. common spaces and
children's play areas, at an earlier stage of the build so that
customers can enjoy their benefits from the outset.
Housebuilding can be disruptive, and so we prioritise engaging
with the local community and strive to make a positive impact in
the wider community. In the first half of 2019, through our
planning obligations, we have contributed over GBP196 million to
the local communities in which we build (H1 2018: GBP192 million)
and over GBP2.2 billion since the start of 2013. This provides
vital local infrastructure, affordable homes, public transport and
education facilities.
Over recent years, our approach to planning applications and
consultation has naturally evolved and this, together with feedback
we have received from the local communities, has been responsible
for numerous improvements across our developments. Within every
community we build, it's our responsibility to keep local residents
and future residents well informed. To underline the importance of
this, we have developed a new Community Communication Plan, which
will be launched later in 2019, for all our regional businesses, to
map out the points at which we communicate with local residents and
potential customers throughout the life cycle of a development.
This plan also identifies ways we can help local communities to
thrive.
Build quality: getting it right first time
Getting it right first time significantly improves the customer
experience and saves significant time, cost and energy in putting
things right. Our customers rightly expect high-quality homes that
are professionally built and free from defects. We are focused on
ensuring that through all stages of build, the homes handed over to
customers consistently meet our high standards and are right first
time. For this to work properly we must ensure the approach is
adopted before we start building, and we have been working with our
material suppliers to ensure they are able to meet the high
standards required.
Last year we introduced a Taylor Wimpey national quality manual
and we are now focused on ensuring that a right first time approach
is adopted consistently throughout the business. During 2018 we
rolled out our Consistent Quality Approach (CQA) guidelines to make
sure our Site Managers, subcontractors, production and customer
service teams all have a consistent understanding. In 2019 we
intend to produce a customer friendly CQA manual so that customers
are able to understand the standards they should expect from a
Taylor Wimpey home.
In 2019 we also introduced the NHBC Construction Quality Review
(CQR) score as a new KPI. In H1 2019 we scored an average of 4.05
(H1 2018: 4.01) from a possible score of six, making us a top
quartile major housebuilder. We aim to improve this further by
ensuring our quality assurance processes are embedded at every
stage of build and our target is to maintain at least a four rating
on every site.
We have established a new role of Quality Manager that will be
rolled out across the business during 2019. These Quality Managers
will provide additional resource to site management teams to ensure
each home is completed to our high standards. Pilots have shown a
Quality Manager can make a significant difference to a site's CQR
score. We aim to have one Quality Manager in place in each of our
24 business units by the end of the year.
Our pilot roll out of handheld devices to our Site Managers, as
part of our Delivery Excellence programme, is helping to monitor
and log quality inspections on the go. It also has the potential
when work is satisfactorily completed, to allow our Site Managers
to efficiently and directly approve contractor invoices.
Optimising our strong landbank
Changes to the land market have improved the availability of
good-quality land with planning prospects over the last ten years.
Whilst land remains vital and planning remains a long and
complicated process, this improved backdrop enables us to take a
more strategic approach to our landbank. Therefore, one of our key
strategic objectives is to work our existing landbank harder and
smarter and reduce the length of the short term landbank by one
year by 2023. We will do this by taking a more strategic approach
to our build on site, adopting a factory approach, and scaling up
build teams on large sites to align with the market demand and
deliver more homes in the medium term.
Our short term landbank stood at 77,060 plots, as at 30 June
2019, equating to c.5.1 years of supply at current completion
levels. The short term owned and controlled landbank includes 91
large (including 'super large') sites as at 30 June 2019.
We continue to believe that the quality of location is
critically important for our customers and during the first half of
2019, we acquired 3,411 plots (H1 2018: 3,822) in areas that
customers want to live and where we can create thriving
neighbourhoods and communities. In the period, completions from
land acquired since 2009 achieved 0.8% less than acquisition
margins.
We prioritise getting outlets open efficiently and in the right
way for our customers. As at 30 June 2019, we are building on 97%
of our sites with implementable planning.
Our strategic land pipeline stood at c.131k potential plots as
at 30 June 2019 (1 July 2018: c.118k potential plots). During the
first six months of 2019 we worked with landowners and local
communities to convert a further 4,165 plots from the strategic
pipeline to the short term landbank (H1 2018: 3,541 plots). In the
period, 58% of our completions were sourced from the strategic
pipeline (H1 2018: 59%).
The average cost of land as a proportion of average selling
price within the short term owned landbank remains low at 15.3% (H1
2018: 14.6%). The average selling price in the short term owned
landbank in H1 2019 was GBP284k (H1 2018: GBP289k).
Becoming the employer of choice
We believe that our culture is our biggest competitive advantage
and that our people are the key to our success. Our employee
surveys highlight the importance our people place on working for a
company with strong values and an open and supportive culture. We
also know it is important to our employees that they are able to
feel proud of the work they do and the quality of the homes we
build, the communities we create and the company's strategy. 97% of
respondents to our 2019 employee survey believe Taylor Wimpey is
committed to being an ethical and responsible company. Our strong
culture and reputation is equally important in attracting the next
generation of talent, giving us a vital competitive advantage in an
industry that is facing an acute skills shortage.
In our most recent employee survey, we recorded a 93% engagement
rate and 95% of employees said they are proud to work at Taylor
Wimpey. We also received positive feedback from Glassdoor, where
our employees rated us one of the top ten places to work in the UK
in 2019. We believe we can do more, however, and aim to be the
clear employer of choice in the housebuilding industry. Our focus
is on attracting and retaining the best people to establish a
culture that gives all individuals the opportunity and support to
develop to their full potential, regardless of market conditions or
their background.
With 24 regional businesses across the country, we are a
significant local employer, employing on average 5,613 people (H1
2018: 5,239) directly, with thousands more through subcontractors
and suppliers. Our rolling 12 months voluntary employee turnover
rate remained low at 12.9% (H1 2018: 14.6%).
The labour market remains competitive, given the industry wide
skills shortage. We continue to invest in our early talent
management programmes and we are making good progress in
significantly growing our apprenticeship schemes and our own direct
labour force. We directly employed 821 key trades including
apprentices as at 30 June 2019, a 28% increase year on year, and we
are looking to extend this further. In the 12-months to 30 June
2019, we recruited 152 people into our early talent management
schemes, a 14% increase on the 2018 equivalent period (H1 2018 12
months rolling: 133).
After ten successful years, we have updated our approach to our
Sales Academy, following feedback at all levels of the business.
The new Academy sits alongside the Customer Service, Design and
Production Academies, and ensures all new Sales Executives and
Sales Managers get the best possible introduction to Taylor Wimpey.
The course delivers all the knowledge and training they require to
feel confident in their role and to perform effectively in all
market conditions.
We are pleased to report that 66 Taylor Wimpey Site Managers
across the country were recognised in the NHBC Pride in the Job
Awards, achieving a Quality Award (2018: 67).
Health and safety
The health and safety of individuals on our sites will always be
our number one priority. We are committed to providing a safe place
in which our employees and subcontractors can work and our
customers can live, and we will not compromise on ensuring that
everyone leaves our sites safe and well every day. 98% of our
employees agree that Taylor Wimpey takes health and safety in the
workplace seriously.
Our Injury Incidence Rate (IIR) for reportable injuries per
100,000 employees and contractors was 241 on a rolling 12 months
basis to 30 June 2019 (2018 equivalent period: 148). We have
investigated the increase in accidents resulting from slips, trips
and material handling and have actioned a plan with our site
management teams and contractor supervisors to make improvements to
housekeeping and material storage. Although our IIR remains well
below industry levels, we remain committed to reducing it
further.
Board Changes
As previously announced, Kevin Beeston will stand down from the
Board as Chair following the announcement of the Company's full
year results for 2019 (scheduled to take place on 26 February 2020)
and will be succeeded as Chair by Irene Dorner, who will join the
Board as an Independent Non Executive Director and Chair Designate
on 1 December 2019.
As also previously announced, Robert Noel (Chief Executive of
Land Securities Group PLC) will also join the Board as an
Independent Non Executive Director on 1 October 2019.
Best in class efficient engine room
We believe an efficient engine room is needed to protect and
enhance value through the business, and the cycle. As land and
planning has become less of a constraint, the operational capacity
of the industry as a whole has become more constrained through this
cycle. Through structured investment and by developing our skills
and supply chain, we believe we can grow the capacity of our
operational business and our delivery capability while maintaining
and improving quality. It cannot be done overnight, but we are
pleased with the progress made in 2019 and are starting to see
positive results from our focus on this.
Build costs and returns
During the first half of 2019 build cost per unit increased to
GBP152.5k (H1 2018: GBP143.7k). In the period build cost increases
(excluding house type mix impact) stood at c.4% year on year (H1
2018: 3.5%). There continues to be pressure on labour and
materials, reflecting wider industry trends. We anticipate
underlying build cost inflation will be c.5% overall in 2019. Our
central procurement team is targeting improvements in visibility
and availability of materials selection that will help avoid
material shortages and help mitigate future price increases.
As announced previously, we have commenced a comprehensive cost
and efficiency review. The drive for increased cost control is well
understood throughout the business, with the changes driven by the
cost and efficiency programme achieving good buy-in from our
employees. Overall progress has been good, and to date, more than
half of the 15 workstreams have successfully moved from the design
and development phases to the test, pilot or deployment phases.
We achieved an annual return on net operating assets for the
Group of 29.4% in the first half of 2019 (H1 2018: 30.9%). The
annual return on net operating assets for the UK business was 29.2%
in the first half of 2019 (H1 2018: 30.3%).
Our UK net operating asset turn * is similar to the prior year
at 1.42 times (H1 2018: 1.45 times).
Innovation and excellence
We believe that it is important to become more innovative and
creative to progress and develop the housebuilding model. We have a
strong IT platform and integrated systems, which will help support
further growth and learning to drive efficiency. We have a number
of projects ongoing to capture the benefits across all stages of
our business model. We expect these work streams, ranging from
production efficiency to groundworks design, to start delivering
benefits in 2020 and 2021.
Standard house types
We continue to make good progress in 2019, having rationalised
our existing standard house type range from over 100 to around 47
in 2018. This offers tangible benefits in terms of efficiencies,
including subcontractor familiarity with build which saves time and
helps improve right first time quality. The design team has been
working in parallel with central procurement and the Taylor Wimpey
Logistics teams to rationalise the components used in the standard
house types. This has the added benefit of offering us new choices
in how we deliver homes to our customers in a way that serves the
needs of more customers and adds additional value. This year we
will launch our new house type range which will include standard
footplates, improved interior layouts and increased use of
standardised components.
Our new house type range has been updated to reflect recent
consumer trends and incorporate insights from our research. They
also have the benefits of lessons learnt from our Project 2020
prototype homes built in 2018 and 2019, following our design
competition with the Royal Institute of British Architects (RIBA).
The changes include the use of standardised components, additional
storage, re-styled kitchens, and increased integration of fixtures
and fittings. In conjunction with the roll out of our standard
house types, we are also working with our supplier base to
consolidate our options range, in a manner that provides sufficient
choices for the customer but significantly reduces the number of
stock items.
Procurement and logistics
We look to improve the quality and development opportunities for
our suppliers. This aims to improve the quality of our delivered
product as well as creating a clear and consistent understanding of
our quality requirements.
Over 80% of our materials are purchased under central framework
agreements managed by our procurement team. A key part of our
ongoing procurement strategy is ensuring the requirements our
customers expect are being consistently met by our suppliers.
Taylor Wimpey Logistics sources components for the build stages
saving our regional businesses time and resource and offering
greater control and visibility over material quality and
availability. There are a number of cost and logistical benefits of
central procurement including consistent quality, reduced vehicles
onsite and a reduction in waste.
Spain
The Spanish housing market remained stable through the first six
months of 2019 with selling prices rising at a level sufficient to
accommodate rising costs. We completed 109 homes in the first half
of 2019 (H1 2018: 130) at an average selling price of EUR434k (H1
2018: EUR332k). The increase in average selling price reflected the
higher proportion of completions from our operations in Malaga and
Mallorca. The total order book as at 30 June 2019 was 312 homes (1
July 2018: 372 homes). The Spanish business delivered an operating
profit of GBP8.1 million for the first half of 2019 (H1 2018:
GBP9.5 million), with the higher margin developments purchased
immediately after the downturn having largely completed in 2018,
and an operating profit margin of 19.7% (H1 2018: 25.1%).
Total plots in the landbank stood at 2,983 (31 December 2018:
2,479), with net operating assets at GBP82.4 million (31 December
2018: GBP63.0 million).
Looking ahead, we remain positive about trading and performance
for Spain in 2019 and beyond.
Group financial review of operations
The Group uses Alternative Performance Measures (APMs) as key
financial performance indicators to assess underlying performance
of the Group. The APMs used are widely used industry measures, form
the measurement basis of the key strategic KPIs (return on net
operating assets, operating profit margin and cash conversion) and
some are linked directly to executive remuneration. Definitions and
reconciliations to the equivalent statutory measures are included
in note 16 of the financial statements.
Income statement
Group revenue increased by 0.8% to GBP1,732.7 million in the
first half of 2019 (H1 2018: GBP1,719.8 million). This was driven
by an increase of 1.0% in UK volumes to 6,432 completions (H1 2018:
6,367) and an improvement in UK average selling prices, up 1.6% to
GBP261k (H1 2018: GBP257k), partly offset by a reduction in revenue
from land sales. Average selling prices on private completions
increased by 2.0% to GBP301k (H1 2018: GBP295k) in the UK, with
small increases across most of the country from both inflation and
change in mix, with the south east remaining more challenging,
particularly at the higher price points. The UK land cost per
completed unit, at GBP40.6k, was in line with the prior period (H1
2018: GBP40.6k) as a result of a slightly greater mix from
affordable completions together with the continued benefit from our
strategically sourced land. Total UK land cost per completion as a
percentage of selling price reduced to 15.6% (H1 2018: 15.8%).
Blended build cost per unit in the UK increased by 6.1% to
GBP152.5k (H1 2018: GBP143.7k), driven by the impact of build cost
inflation, a greater proportion of completions from our London and
South East Division and our continued focus on quality and
maintaining specification together with house type mix. Other
direct selling expenses per unit increased to GBP6.5k (H1 2018:
GBP6.2k), primarily due to higher sales rates.
UK gross profit per completion decreased to GBP61.2k for the
period (H1 2018: GBP66.6k), as build costs increased, exceeding
house price growth.
Group gross profit of GBP409.6 million (H1 2018: GBP445.0
million) decreased by 8.0% and included a positive contribution of
GBP3.6 million (H1 2018: GBP3.8 million). Positive contribution
represents previously written down inventory allocated to a plot
which has subsequently resulted in a gross profit on completion.
This can be due to revenue outperformance, cost efficiencies or
product mix improvements since the inventory was assessed for its
forecast profitability. These amounts are stated before the
allocation of overheads which are excluded from the Group's net
realisable value exercise.
During the period, completions from joint ventures were 66 (H1
2018: 10), with further volume improvement expected in the second
half as current phases on existing sites start to deliver
completions. The total order book value of joint ventures as at 30
June 2019 was GBP54 million (1 July 2018: GBP42 million),
representing 133 homes (1 July 2018: 75). Our share of results of
joint ventures in the period improved, reflecting the increased
volumes and was a loss of GBP0.2 million (H1 2018: loss of GBP2.1
million).
Group operating profit decreased to GBP311.9 million (H1 2018:
GBP344.3 million), delivering an operating profit margin of 18.0%
(H1 2018: 20.0%). Profit on ordinary activities before finance
costs decreased by 1.4% to GBP312.1 million (H1 2018: GBP316.4
million). This decrease was reduced by the absence of exceptional
charges in the period (H1 2018: GBP30.0 million).
Net finance costs for the period were GBP12.1 million (H1 2018:
GBP13.3 million). The reduction is due to an increase in interest
received and a decrease in the unwinding of discount on land
creditors being partially offset by an increase in the interest
charge on the defined benefit pension scheme deficit. The increase
in the pension scheme interest being a result of the deficit
increasing from GBP63.7 million at December 2017 to GBP133.0
million at December 2018, which drives the following period's
charge.
Profit before tax and exceptional items for the period decreased
by 9.4% to GBP299.8 million (H1 2018: GBP331.0 million). The
pre-exceptional tax charge was GBP57.8 million (H1 2018: GBP61.9
million) with an underlying tax rate of 19.3% (H1 2018: 18.7%) that
largely reflects the statutory tax rate in the UK. This resulted in
a profit before exceptional items, for the half year of GBP242.0
million (H1 2018: GBP269.1 million), 10.1% lower than the prior
year.
Profit before tax for the period was broadly flat at GBP299.8
million (H1 2018: GBP301.0 million) as there were no exceptional
charges in the period (H1 2018: GBP30.0 million). Similarly, profit
after tax for the period was GBP242.0 million, a decrease of 1.0%
on H1 2018 of GBP244.5 million.
Basic earnings per share was 7.4 pence (H1 2018: 7.5 pence). The
adjusted basic earnings per share was also 7.4 pence (H1 2018: 8.2
pence), down 9.8%.
Balance sheet
Net operating assets as at 30 June 2019 were GBP2,981.7 million
(31 December 2018: GBP2,611.9 million), primarily reflecting an
increase of GBP226.8 million (1 July 2018: GBP208.4 million) in the
first half in land and work in progress. Return on net operating
assets was 29.4% (H1 2018: 30.9%). Group net operating asset turn
was 1.42 times (H1 2018: 1.46 times, FY 2018: 1.55 times).
As at 30 June 2019, the UK short term landbank comprised 77,060
plots, with a net book value of GBP2.5 billion. Short term owned
land comprised GBP2.4 billion (31 December 2018: GBP2.3 billion),
representing 54,935 plots (31 December 2018: 53,279). The
controlled short term landbank represented 22,125 plots (31
December 2018: 22,716). The value of long term owned land decreased
by 12% to GBP88 million (31 December 2018: GBP100 million),
representing 30,502 plots (31 December 2018: 32,354), with a
further total controlled strategic pipeline of 100,663 plots (31
December 2018: 95,063). Total potential revenue in the owned and
controlled landbank increased to GBP51 billion in the period (31
December 2018: GBP50 billion), reflecting the overall increase in
the scale of the short term landbank and strategic pipeline.
Average work in progress per UK outlet at 30 June 2019 increased
by 14.8% to GBP6.2 million (31 December 2018: GBP5.4 million) as we
invest to deliver growth in second half volumes. UK work in
progress turn (**) of 2.66 times remains broadly flat with 1 July
2018 of 2.68.
As at the balance sheet date, the Group held certain land and
work in progress that had previously been written down by GBP79.1
million (31 December 2018: GBP83.0 million) to a net realisable
value of GBP74.6 million as development continues (31 December
2018: GBP73.8 million). The balance of written down land and work
in progress in the UK was GBP48.4 million (31 December 2018:
GBP46.6 million), following the associated write-down of GBP36.4
million (31 December 2018: GBP38.7 million) and principally related
to eight locations.
As at 30 June 2019, in the UK, 87.6% of the short term owned and
controlled landbank was purchased after 2009, 56.1% of which was
sourced through our strategic pipeline. This results in a land cost
to average selling price in the short term owned landbank of 15.3%
(31 December 2018: 15.2%).
Land creditors decreased to GBP717.7 million (31 December 2018:
GBP738.6 million) and, combined with net cash, resulted in a higher
adjusted gearing(++++++++) of 10.8% (31 December 2018: 2.9%).
Included within the land creditor balance is GBP75.0 million of UK
land overage commitments (31 December 2018: GBP102.0 million).
GBP354.7 million of Group land creditors are expected to be paid
within 12 months and GBP363.0 million thereafter.
The mortgage debtor balance was GBP40.3 million at 30 June 2019
(31 December 2018: GBP45.3 million), with the decrease due to
redemption receipts of GBP8.0 million, partly offset by movements
in the fair value.
Provisions decreased to GBP145.2 million (31 December 2018:
GBP170.3 million) following utilisation as claims were made and
processed through the ground rent assistance scheme and costs were
incurred on work performed to replace Aluminium Composite Material
(ACM) cladding.
Our net deferred tax asset of GBP35.3 million (31 December 2018:
GBP40.7 million) relates to our pension deficit, employee share
schemes and the temporary differences of our Spanish business,
including brought forward trading losses.
Net assets at 30 June 2019 stood at GBP3,007.6 million (1 July
2018: GBP2,950.6 million, 31 December 2018: GBP3,226.8 million).
The net asset decrease from 31 December 2018 was driven by the
payment of the final ordinary dividend of GBP124.2 million and the
accrual of the special dividend of GBP350.0 million, partially
offset by profits in the period.
Pensions
As previously announced, further to our 31 December 2016
triennial valuation, we agreed a recovery plan with the Trustee to
December 2020. This included a contribution mechanism, tested
quarterly, such that should the Taylor Wimpey Pension Scheme (TWPS)
become fully funded on the Technical provisions funding basis,
further contributions would be suspended and only recommence if the
funding level fell below 96%.
The quarterly funding test for 31 December 2018 showed that the
TWPS funding level had fallen to 94%, as a result the Group
recommenced regular contributions from January 2019. The most
recent funding test at 30 June 2019 showed a deficit of GBP117
million and a funding level of 95%. As a result, regular
contributions will continue. The Group continues to provide a
contribution for Scheme expenses and also makes contributions via
the Pension Funding Partnership. Total Scheme contributions and
expenses are expected to be GBP47.1 million in 2019 (2018: GBP34.1
million), assuming the TWPS remains less than 100% funded.
Retirement benefit obligations of GBP103.6 million at 30 June
2019 (31 December 2018: GBP133.6 million) comprise a defined
benefit pension liability of GBP103.0 million (31 December 2018:
GBP133.0 million) and a post-retirement healthcare liability of
GBP0.6 million (31 December 2018: GBP0.6 million).
The Group continues to work closely with the Trustee in managing
pension risks, including management of interest rate, inflation and
longevity risks.
The underlying volatility of the TWPS remains low due to the
c.GBP200 million buy-in completed in 2014 (covering c.10% of the
liabilities), combined with c.90% liability hedging against
interest rates and inflation risk exposure on the Scheme's long
term, 'self-sufficiency' basis.
Cash flow
Net cash decreased to GBP392.0 million at 30 June 2019 from
GBP644.1 million at 31 December 2018, primarily as a result of a
net cash outflow from operating activities of GBP102.3 million and
dividend payments to shareholders of GBP124.2 million.
The main drivers of the net cash outflow from operating
activities in the first half of 2019 were an increased investment
in land and work in progress of GBP239.9 million, an increase in
other working capital of GBP69.1 million and tax payments of
GBP71.5 million, together more than offsetting the inflow on profit
from ordinary activities before finance costs of GBP312.1
million.
We also paid GBP9.1 million in relation to the exceptional
leasehold provision in the period (H1 2018 GBP8.9 million), with a
further GBP9.2 million paid after period end.
In the 12-months to 30 June 2019 we converted 71.3% of operating
profit into operating cash flow (H1 2018 rolling 12 months:
86.4%).
Financing structure
At 30 June 2019 our committed borrowing facilities were GBP639
million, of which GBP550 million was undrawn. Average net cash for
the half year was GBP290.6 million (H1 2018: GBP360.6 million; FY
2018: GBP259.6 million). At the start of 2019 we extended the term
of the GBP550 million revolving credit facility by a further year
to 2024 resulting in an average maturity of the committed borrowing
facilities of 4.5 years.
Dividends
As announced in May 2018, subject to shareholder approval, the
Company will pay an enhanced ordinary dividend of approximately
7.5% of Group net assets from 2019, which will be at least GBP250
million per annum. This is intended to provide a reliable minimum
annual return to shareholders throughout the cycle and will be paid
equally as a final dividend (in May) and as an interim dividend (in
November). The payment of ordinary dividends will continue to be
supplemented by additional significant special dividends at
appropriate times in the cycle. Our Special Dividend Policy will
pay out to shareholders the free cash generated by the Group after
land investment, all working capital, taxation and other cash
requirements of the business in executing our strategy in the
medium term, and once the Group's ordinary dividends have been
met.
We announce today that we intend to return c.GBP360 million in
special dividends to shareholders in July 2020, equating to c.11.0
pence per ordinary share, subject to shareholder approval at the
2020 AGM. Based on this, in 2020, shareholders will receive a total
dividend of approximately GBP610 million or c.18.6 pence per
share.
On 17 May 2019, we returned GBP124.2 million to shareholders by
way of a 2018 final ordinary dividend, equating to 3.80 pence per
share. In addition, on 12 July 2019, we returned c.GBP350 million
to shareholders by way of a special dividend, equating to 10.70
pence per share.
The Board has declared that a 2019 interim dividend of 3.84
pence per share is to be paid on 8 November 2019 to shareholders on
the register at the close of business on 4 October 2019 (H1 2018
interim dividend: 2.44 pence per share). The 2019 interim dividend
will be paid as a cash dividend, and shareholders are once again
being offered the opportunity to reinvest all of their dividend
under the Dividend Re-Investment Plan (DRIP), details of which are
available from our Registrar and on our website. Elections to join
the Plan must reach the Registrar by 18 October 2019 in order to be
effective for this dividend. Further details can be found on our
website www.taylorwimpey.co.uk/corporate
The Board continues to keep the mechanics of how the Company
will pay special dividends, including the merits of undertaking a
share buyback at some point in the future should it become
appropriate to do so, under regular review.
Principal risks and uncertainties
As with any business, Taylor Wimpey's operational performance
and ability to achieve its strategic objectives are subject to a
number of potential risks and uncertainties. The Board takes a
proactive approach to the management of these and regularly reviews
both internal and external factors to identify and assess their
impact on the business. These risks and uncertainties are then
managed through effective mitigating controls and the development
of action plans, with the continual monitoring of progress against
agreed KPIs as an integral part of the business process and core
activities.
In delivering our strategy of being a customer-centric business,
the quality of our product is fundamental, as is ensuring that we
do things right first time. In an age of ever increasing social
media usage, greater media coverage and an increasing customer and
Government focus on build quality, failure to deliver against our
standards could leave us exposed to significant reputational
damage, as well as reduced demand and increased costs. Furthermore,
as we have previously communicated, the business also faces
potential reputational risk arising from both cyber-security
breaches and the implications of climate change, further detail
around which is contained in our 2018 Sustainability Report which
can be found at www.taylorwimpey.co.uk.
The quality of our product and the strength of our reputation
are key factors in supporting our goal to become a customer-centric
homebuilder. Because of the significance of these risks to the
delivery of the Group's strategy, the Board has identified a new
standalone principal risk of Quality and Reputation; the individual
risk components within this having previously been included as a
subset of the principal risks reported in the 2018 Annual Report,
along with their appropriate mitigations and monitoring. In
separating the risk associated with quality and reputation we are
better able to monitor our performance through a number of metrics
that we already collect and which form part of our key performance
indicators.
Further details of the Group's other principal risks and
mitigations in place are outlined on pages 44 to 51 of the 2018
Annual Report and Accounts, published in March 2019, which is
available at www.taylorwimpey.co.uk. These are summarised below, in
no order of significance, and we believe that they continue to be
principal risks to the business with appropriate ongoing
mitigations and monitoring in place.
-- Government policy and planning regulations
-- Impact of the market environment on mortgage availability and housing demand
-- Material costs and availability of subcontractors
-- Ability to attract and retain high-calibre employees
-- Land purchasing
-- Site and product safety
Finally, as an organisation, we continue to recognise the risks
associated with leaving the EU. The Board views these potential
risks as an integral part of the Company's principal risks rather
than a separate standalone risk. We have identified a potential
impact on our supply chain, labour force and overall economic
market impacting mortgage availability and demand. We continue to
monitor the progress of the negotiations and with this our
assessment of the likely impact together with mitigations.
Cautionary note concerning forward looking statements
This report contains certain forward looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the time of their approval of
this report, and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying such forward looking information.
Taylor Wimpey plc
Condensed Consolidated Income Sheet
For the half year ended 30 June 2019
(Reviewed) (Reviewed) (Audited)
Half Half year Half Half Half Half Year Year Year
year ended year year year year ended ended ended
ended 30 ended ended ended ended 31 December 31 December 31
30 June 2019 30 1 1 1 2018 2018 December
June June July July July 2018
2019 2019 2018 2018 2018
----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Before Before Before
exceptional Exceptional exceptional Exceptional exceptional Exceptional
GBP million Note items items Total items items Total items items Total
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Continuing
operations
Revenue 2 1,732.7 - 1,732.7 1,719.8 - 1,719.8 4,082.0 - 4,082.0
Cost of sales (1,323.1) - (1,323.1) (1,274.8) - (1,274.8) (3,007.5) - (3,007.5)
================ ==== =========== =========== ========= =========== =========== ========= =========== =========== =========
Gross profit
before
positive
contribution 406.0 - 406.0 441.2 - 441.2 1,066.8 - 1,066.8
Positive
contribution
from written
down
inventory 3.6 - 3.6 3.8 - 3.8 7.7 - 7.7
================ ==== =========== =========== ========= =========== =========== ========= =========== =========== =========
Gross profit 409.6 - 409.6 445.0 - 445.0 1,074.5 - 1,074.5
Net operating
expenses 4 (97.5) - (97.5) (98.6) (30.0) (128.6) (199.6) (46.1) (245.7)
Profit on
ordinary
activities
before
finance costs 312.1 - 312.1 346.4 (30.0) 316.4 874.9 (46.1) 828.8
Finance income 5 1.8 - 1.8 1.0 - 1.0 2.9 - 2.9
Finance costs 5 (13.9) - (13.9) (14.3) - (14.3) (26.3) - (26.3)
Share of results
of joint
ventures (0.2) - (0.2) (2.1) - (2.1) 5.3 - 5.3
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- =========== =========== =========
Profit before
taxation 299.8 - 299.8 331.0 (30.0) 301.0 856.8 (46.1) 810.7
Taxation
(charge)/credit 6 (57.8) - (57.8) (61.9) 5.4 (56.5) (162.3) 8.2 (154.1)
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- =========== =========== =========
Profit for the
period 242.0 - 242.0 269.1 (24.6) 244.5 694.5 (37.9) 656.6
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
Basic earnings
per
share 7 7.4p 7.5p 20.1p
Diluted earnings
per share 7 7.4p 7.5p 20.0p
Adjusted basic
earnings
per share 7 7.4p 8.2p 21.3p
Adjusted diluted
earnings per
share 7 7.4p 8.2p 21.2p
---------------- ---- ----------- ----------- --------- ----------- ----------- --------- ----------- ----------- ---------
All of the profit for the period is attributable to the equity
holders of the parent company.
Taylor Wimpey plc
Condensed Consolidated Statement of Comprehensive Income
For the half year ended 30 June 2019
Half year ended 30 Half year ended 1 Year ended
June 2019 July 2018 31 December 2018
GBP million (Reviewed) (Reviewed) (Audited)
--------------------------------------------------------- ------------------ ----------------- -----------------
Items that may be reclassified subsequently to profit or
loss:
Exchange differences on translation of foreign operations (0.6) (0.1) 1.5
Movement in fair value of hedging instruments 0.5 0.1 (0.7)
Items that will not be reclassified subsequently to
profit or loss:
Actuarial gain/(loss) on defined benefit pension schemes 6.7 (22.4) (84.3)
Tax (charge)/credit on items taken directly to other
comprehensive income (0.6) 4.7 14.7
---------------------------------------------------------- ------------------ ----------------- -----------------
Other comprehensive income/(expense) for the period net of
tax 6.0 (17.7) (68.8)
Profit for the period 242.0 244.5 656.6
---------------------------------------------------------- ------------------ ----------------- -----------------
Total comprehensive income for the period 248.0 226.8 587.8
---------------------------------------------------------- ------------------ ----------------- -----------------
All of the comprehensive income for the period is attributable
to the equity holders of the parent company.
Taylor Wimpey plc
Condensed Consolidated Balance Sheet
As at 30 June 2019
30 June 1 July 31 December 2018
GBP million Note 2019 (Reviewed) 2018 (Reviewed) (Audited)
------------------------------- ---- ---------------- ----------------- ----------------
Non-current assets
Intangible assets 5.6 3.5 3.2
Property, plant and equipment 21.2 21.4 21.6
Right-of-use assets 25.7 29.7 27.1
Interests in joint ventures 69.9 70.2 48.3
Trade and other receivables 48.5 60.6 55.7
Deferred tax assets 35.3 31.1 40.7
------------------------------- ---- ---------------- ----------------- ================
206.2 216.5 196.6
------------------------------- ---- ---------------- ----------------- ================
Current assets
Inventories 4,415.0 4,284.1 4,188.2
Trade and other receivables 187.9 155.7 134.7
Tax receivables 0.6 1.7 0.5
Cash and cash equivalents 8 481.3 613.6 734.2
================
5,084.8 5,055.1 5,057.6
------------------------------- ---- ---------------- ----------------- ================
Total assets 5,291.0 5,271.6 5,254.2
------------------------------- ---- ---------------- ----------------- ================
Current liabilities
Trade and other payables (1,044.0) (1,114.0) (1,044.3)
Lease liabilities (6.6) (7.9) (8.2)
Tax payables (52.0) (49.7) (70.4)
Provisions 11 (67.4) (97.0) (76.9)
Accrued dividends 13 (350.0) (340.0) -
(1,520.0) (1,608.6) (1,199.8)
------------------------------- ---- ---------------- ----------------- ----------------
Net current assets 3,564.8 3,446.5 3,857.8
------------------------------- ---- ---------------- ----------------- ----------------
Non-current liabilities
Trade and other payables (473.3) (451.2) (491.3)
Lease liabilities (19.4) (21.7) (19.2)
Bank and other loans 8 (89.3) (88.5) (90.1)
Retirement benefit obligations 9 (103.6) (56.3) (133.6)
Provisions 11 (77.8) (94.7) (93.4)
------------------------------- ---- ---------------- ----------------- ================
(763.4) (712.4) (827.6)
------------------------------- ---- ---------------- ----------------- ================
Total liabilities (2,283.4) (2,321.0) (2,027.4)
------------------------------- ---- ---------------- ----------------- ================
Net assets 3,007.6 2,950.6 3,226.8
------------------------------- ---- ---------------- ----------------- ----------------
Equity
Share capital 288.5 288.5 288.5
Share premium 762.9 762.9 762.9
Own shares (18.0) (13.3) (22.7)
Other reserves 44.9 44.2 45.0
Retained earnings 1,929.3 1,868.3 2,153.1
------------------------------- ---- ---------------- ----------------- ================
Total equity 3,007.6 2,950.6 3,226.8
------------------------------- ---- ---------------- ----------------- ----------------
Taylor Wimpey plc
Condensed Consolidated Statement of Changes in Equity
For the half year ended 30 June 2019
Reviewed half year ended 30 June 2019 Share Own Total
GBP million capital Share premium shares Other reserves Retained earnings
------------------------------------- -------- ------------- ------- -------------- ----------------- -------
Balance as at 1 January 2019 288.5 762.9 (22.7) 45.0 2,153.1 3,226.8
Other comprehensive income for the
period - - - (0.1) 6.1 6.0
Profit for the period - - - - 242.0 242.0
-------------------------------------- -------- ------------- ------- -------------- ----------------- -------
Total comprehensive income for the
period - - - (0.1) 248.1 248.0
Utilisation of own shares - - 4.7 - - 4.7
Cash cost of satisfying share options - - - - (2.1) (2.1)
Share-based payment credit - - - - 4.3 4.3
Tax credit on items taken directly to
statement of changes in equity - - - - 0.1 0.1
Dividends approved and paid - - - - (124.2) (124.2)
Dividends approved - - - - (350.0) (350.0)
-------------------------------------- -------- ------------- ------- -------------- ----------------- -------
Total equity at 30 June 2019 288.5 762.9 (18.0) 44.9 1,929.3 3,007.6
-------------------------------------- -------- ------------- ------- -------------- ----------------- -------
Reviewed half year ended 1 July 2018 Share Own Other Total
GBP million capital Share premium shares reserves Retained earnings
------------------------------------------ -------- ------------- ------- --------- ----------------- -------
Balance as at 1 January 2018 288.5 762.9 (21.3) 44.2 2,063.0 3,137.3
Other comprehensive expense for the period - - - - (17.7) (17.7)
Profit for the period - - - - 244.5 244.5
------------------------------------------- -------- ------------- ------- --------- ----------------- -------
Total comprehensive income for the period - - - - 226.8 226.8
Impact to reserves of IFRS 16 adoption - - - - (1.5) (1.5)
Utilisation of own shares - - 8.0 - - 8.0
Cash cost of satisfying share options - - - - (7.1) (7.1)
Share-based payment credit - - - - 7.7 7.7
Tax charge on items taken directly to
statement of changes in equity - - - - (0.8) (0.8)
Dividends approved and paid - - - - (79.8) (79.8)
Dividends approved - - - - (340.0) (340.0)
------------------------------------------- -------- ------------- ------- --------- ----------------- -------
Total equity at 1 July 2018 288.5 762.9 (13.3) 44.2 1,868.3 2,950.6
------------------------------------------- -------- ------------- ------- --------- ----------------- -------
Audited year ended 31 December Total
2018 Other
GBP million Share capital Share premium Own shares reserves Retained earnings
---------------------------------- ------------- ------------- ---------- --------- ----------------- -------
Balance as at 1 January 2018 288.5 762.9 (21.3) 44.2 2,063.0 3,137.3
Other comprehensive expense for the
year - - - 0.8 (69.6) (68.8)
Profit for the year - - - - 656.6 656.6
----------------------------------- ------------- ------------- ---------- --------- ----------------- -------
Total comprehensive income for the
year - - - 0.8 587.0 587.8
Impact to reserves of IFRS 16
adoption - - - - (1.5) (1.5)
Own shares acquired - - (9.9) - - (9.9)
Utilisation of own shares - - 8.5 - - 8.5
Cash cost of satisfying share
options - - - - (7.0) (7.0)
Share-based payment credit - - - - 12.2 12.2
Tax charge on items taken directly
to statement of changes in equity - - - - (1.1) (1.1)
Dividends approved and paid - - - - (499.5) (499.5)
----------------------------------- ------------- ------------- ---------- --------- ----------------- -------
Total equity at 31 December 2018 288.5 762.9 (22.7) 45.0 2,153.1 3,226.8
----------------------------------- ------------- ------------- ---------- --------- ----------------- -------
Taylor Wimpey plc
Condensed Consolidated Cash Flow Statement
For the half year ended 30 June 2019
Half year ended 30 Half year ended 1 July 2018 Year ended
June 2019 31 December 2018
GBP million Note (Reviewed) (Reviewed) (Audited)
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Operating activities:
Profit on ordinary activities before finance
costs 312.1 316.4 828.8
Adjustments for:
Depreciation and amortisation 6.1 6.8 13.1
Pension contributions in excess of
charge to the income statement (25.1) (31.6) (16.1)
Share-based payment charge 4.3 7.7 12.2
Gain on disposal of property, plant and
equipment - - (0.2)
Net (decrease)/increase in provisions
excluding exceptional payments (4.4) 36.3 32.1
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Operating cash flows before movements in
working capital 293.0 335.6 869.9
Increase in inventories (239.9) (187.0) (1.7)
Increase in receivables (47.8) (36.5) (10.9)
(Decrease)/increase in payables (21.3) 82.9 (41.9)
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Cash generated by operations (16.0) 195.0 815.4
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Payments relating to exceptional charges (11.5) (8.9) (25.9)
Income taxes paid (71.5) (64.1) (139.6)
Interest paid (3.3) (3.8) (8.6)
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Net cash from operating activities (102.3) 118.2 641.3
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Investing activities:
Interest received 1.8 1.0 2.8
Dividends received from joint ventures 0.4 - 14.3
Proceeds on disposal of property, plant and
equipment - - 0.4
Purchase of property, plant and equipment (0.8) (0.5) (2.1)
Purchase of software (3.0) (0.1) (0.3)
Amounts invested in joint ventures (22.2) (21.3) (6.4)
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Net cash (used in)/generated from investing
activities (23.8) (20.9) 8.7
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Financing activities:
Lease capital repayments (4.1) (4.1) (8.3)
Cash received on exercise of share options 2.6 0.9 1.5
Purchase of own shares - - (9.9)
Dividends paid (124.2) (79.8) (499.5)
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Net cash used in financing activities (125.7) (83.0) (516.2)
-------------------------------------------- ---- ------------------ --------------------------- -----------------
Net (decrease)/increase in cash and cash
equivalents (251.8) 14.3 133.8
Cash and cash equivalents at beginning of
period 734.2 600.5 600.5
Effect of foreign exchange rate changes (1.1) (1.2) (0.1)
-------------------------------------------- ---- ------------------ --------------------------- =================
Cash and cash equivalents at end of period 8 481.3 613.6 734.2
-------------------------------------------- ---- ------------------ --------------------------- =================
Taylor Wimpey plc
Notes to the Condensed Consolidated Financial Statements
For the half year ended 30 June 2019
1. Accounting policies
Basis of preparation
The condensed consolidated financial statements have been
prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRSs) as
adopted by the European Union and the disclosure requirements of
the Listing Rules.
The condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting', as adopted by
the European Union. These should be read in conjunction with the
Group's annual financial statements for the year ended 31 December
2018, which have been prepared in accordance with applicable
IFRSs.
The information contained in this report does not constitute
statutory accounts as defined in section 434 of the Companies Act
2006. The condensed consolidated financial statements have been
reviewed but not audited. A copy of the statutory accounts for
year-ended 31 December 2018 has been delivered to the Registrar of
Companies. The auditor reported on those accounts, their report was
unqualified, did not draw attention to any matters by way of
emphasis and did not contain a statement under sections 498 (2) or
(3) of the Companies Act 2006.
The accounting policies and method of computations adopted in
the preparation of these condensed consolidated financial
statements are consistent with those followed in the preparation of
the Group's annual financial statements for the year ended 31
December 2018.
Going concern
The Group continues to be profitable and based on the latest
budgets there are sufficient resources available for the Group to
continue for the foreseeable future. As such the condensed
consolidated financial statements have been prepared on a going
concern basis.
Estimates and judgements
The preparation of a condensed set of financial statements
requires management to make significant judgements and estimates.
Management have considered whether there are any such sources of
estimation or accounting judgements in preparing the condensed
financial statements. In identifying these areas management have
considered the size of the associated balance and the potential
likelihood of changes due to macro-economic factors such as the
United Kingdom leaving the European Union.
In preparing these condensed consolidated financial statements,
the critical judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were principally the same as those applied to the Group's
consolidated financial statements for the year ended 31 December
2018.
2. Revenue
An analysis of the Group's continuing revenue is as follows:
Half year Half year Year ended
ended 30 ended 1 31 December
GBP million June 2019 July 2018 2018
-------------------- ---------- ---------- ------------
Private sales 1,498.1 1,471.0 3,550.5
Partnership housing 220.7 203.7 465.3
Land and other 13.9 45.1 66.2
-------------------- ---------- ---------- ------------
Total revenue 1,732.7 1,719.8 4,082.0
-------------------- ---------- ---------- ------------
3. Operating segments
IFRS 8 'Operating segments' requires information to be presented
in the same basis as it is reviewed internally. The Group operates
in two countries, being the United Kingdom and Spain.
The United Kingdom is split into three geographical divisions,
each managed by a Divisional Chair who sits on the Group Management
Team. In addition, there is a 'Corporate' operating segment which
includes the corporate functions, Major Developments and Strategic
Land.
Segment information about these businesses is presented
below:
Central London
Half year ended 30 June 2019 & South & South
GBP million North West East Corporate Spain Total
-------------------------------------- ------- -------- -------- --------- ------ ---------
Revenue
External sales 648.5 596.5 445.6 1.0 41.1 1,732.7
Result
Profit/(loss) on ordinary activities
before joint ventures, finance costs
and exceptional items 134.4 124.8 71.0 (26.2) 8.1 312.1
Share of results of joint ventures - - 0.2 (0.4) - (0.2)
-------------------------------------- ------- -------- -------- --------- ------ ---------
Profit/(loss) on ordinary activities
before finance costs and exceptional
items 134.4 124.8 71.2 (26.6) 8.1 311.9
Exceptional items (Note 4) - - - - - -
-------------------------------------- ------- -------- -------- --------- ------ ---------
Profit/(loss) before finance costs 134.4 124.8 71.2 (26.6) 8.1 311.9
Net finance costs (12.1)
-------------------------------------- ------- -------- -------- --------- ------ ---------
Profit before taxation 299.8
Taxation (57.8)
-------------------------------------- ------- -------- -------- --------- ------ ---------
Profit for the period 242.0
-------------------------------------- ------- -------- -------- --------- ------ ---------
Central London
As at 30 June 2019 & South & South
GBP million North West East Corporate Spain Total
-------------------------------------- ------- -------- -------- --------- ------ ---------
Assets and liabilities
Segment operating assets 1,325.1 1,372.6 1,575.5 255.8 174.9 4,703.9
Joint ventures 1.6 4.0 61.7 2.6 - 69.9
Segment operating liabilities (388.6) (550.1) (455.4) (305.5) (92.5) (1,792.1)
-------------------------------------- ------- -------- -------- --------- ------ -----------
Net operating assets/(liabilities) 938.1 826.5 1,181.8 (47.1) 82.4 2,981.7
Net current taxation (51.4)
Net deferred taxation 35.3
Accrued dividends (350.0)
Net cash 392.0
-------------------------------------- ------- -------- -------- --------- ------ -----------
Net assets 3,007.6
-------------------------------------- ------- -------- -------- --------- ------ -----------
Central London
Half year ended 1 July 2018 & South & South
GBP million North West East Corporate Spain Total
-------------------------------------- ----- -------- -------- --------- ----- -------
Revenue
External sales 638.3 594.2 449.2 0.3 37.8 1,719.8
Result
Profit/(loss) on ordinary activities
before joint ventures, finance costs
and exceptional items 133.4 150.3 88.7 (35.5) 9.5 346.4
Share of results of joint ventures - - (2.0) (0.1) - (2.1)
-------------------------------------- ----- -------- -------- --------- ----- -------
Profit/(loss) on ordinary activities
before finance costs and exceptional
items 133.4 150.3 86.7 (35.6) 9.5 344.3
Exceptional items (Note 4) - - - (30.0) - (30.0)
-------------------------------------- ----- -------- -------- --------- ----- -------
Profit/(loss) before finance costs 133.4 150.3 86.7 (65.6) 9.5 314.3
Net finance costs (13.3)
-------------------------------------- ----- -------- -------- --------- ----- -------
Profit before taxation 301.0
Taxation (56.5)
-------------------------------------- ----- -------- -------- --------- ----- -------
Profit for the period 244.5
-------------------------------------- ----- -------- -------- --------- ----- -------
3. Operating segments (continued)
Central London
As at 1 July 2018 & South & South
GBP million North West East Corporate Spain Total
----------------------------------- ------- -------- -------- --------- ------- ---------
Assets and liabilities
Segment operating assets 1,270.2 1,270.0 1,578.6 262.8 173.4 4,555.0
Joint ventures 1.9 3.6 61.5 3.2 - 70.2
Segment operating liabilities (408.5) (491.0) (504.4) (327.2) (111.7) (1,842.8)
----------------------------------- ------- -------- -------- --------- ------- ---------
Net operating assets/(liabilities) 863.6 782.6 1,135.7 (61.2) 61.7 2,782.4
Net current taxation (48.0)
Net deferred taxation 31.1
Accrued dividends (340.0)
Net cash 525.1
----------------------------------- ------- -------- -------- --------- ------- ---------
Net assets 2,950.6
----------------------------------- ------- -------- -------- --------- ------- ---------
Central London
Year ended 31 December 2018 & South & South
GBP million North West East Corporate Spain Total
-------------------------------------- ------- -------- -------- --------- ------- ---------
Revenue
External sales 1,418.7 1,347.2 1,210.3 1.6 104.2 4,082.0
Result
Profit/(loss) on ordinary activities
before joint ventures, finance costs
and exceptional items 307.0 344.7 265.3 (71.3) 29.2 874.9
Share of results of joint ventures 0.1 - 5.3 (0.1) - 5.3
-------------------------------------- ------- -------- -------- --------- ------- ---------
Profit/(loss) on ordinary activities
before finance costs and exceptional
items 307.1 344.7 270.6 (71.4) 29.2 880.2
Exceptional items (Note 4) - - - (46.1) - (46.1)
-------------------------------------- ------- -------- -------- --------- ------- ---------
Profit/(loss) before finance costs 307.1 344.7 270.6 (117.5) 29.2 834.1
Net finance costs (23.4)
-------------------------------------- ------- -------- -------- --------- ------- ---------
Profit before taxation 810.7
Taxation (154.1)
-------------------------------------- ------- -------- -------- --------- ------- ---------
Profit for the period 656.6
-------------------------------------- ------- -------- -------- --------- ------- ---------
Central London
As at 31 December 2018 & South & South
GBP million North West East Corporate Spain Total
-------------------------------------- ------- -------- -------- --------- ------- ---------
Assets and liabilities
Segment operating assets 1,213.0 1,290.7 1,504.3 254.0 168.5 4,430.5
Joint ventures 2.0 3.7 40.5 2.1 - 48.3
Segment operating liabilities (375.5) (520.9) (510.0) (355.0) (105.5) (1,866.9)
-------------------------------------- ------- -------- -------- --------- ------- ---------
Net operating assets/(liabilities) 839.5 773.5 1,034.8 (98.9) 63.0 2,611.9
Net current taxation (69.9)
Net deferred taxation 40.7
Net cash 644.1
-------------------------------------- ------- -------- -------- --------- ------- ---------
Net assets 3,226.8
-------------------------------------- ------- -------- -------- --------- ------- ---------
4. Net operating expenses and profit on ordinary activities before finance costs
Profit on ordinary activities before finance costs has been
arrived at after charging/(crediting):
Half year Half year Year ended
ended 30 ended 1 31 December
GBP million June 2019 July 2018 2018
------------------------ ---------- ---------- ------------
Administration expenses 103.6 103.3 212.9
Other expense 0.8 3.6 3.9
Other income (6.9) (8.3) (17.2)
Exceptional items - 30.0 46.1
------------------------ ---------- ---------- ------------
Other income includes profits on the sale of property, plant and
equipment, revaluation of certain shared equity mortgage
receivables, pre-acquisition and abortive costs, and profit/loss on
the sale of part exchange properties.
Half year Half year Year ended
Exceptional items: ended 30 ended 1 31 December
GBP million June 2019 July 2018 2018
------------------------------------------------------ ---------- ---------- ------------
Provision in respect of ACM cladding - 30.0 30.0
Guaranteed Minimum Pension equalisation charge - - 16.1
------------------------------------------------------ ---------- ---------- ------------
- 30.0 46.1
------------------------------------------------------ ---------- ---------- ------------
Tax credit - (5.4) (8.2)
------------------------------------------------------ ---------- ---------- ------------
Net exceptional items charged to the income statement - 24.6 37.9
------------------------------------------------------ ---------- ---------- ------------
Aluminium Composite Materials (ACM) cladding provision
Following the tragic fire at Grenfell Tower, the Group conducted
a detailed review into all legacy and current buildings ACM
cladding and worked with building owners, management companies, and
the Fire Service to implement Government advice on interim
mitigation measures, where applicable. Whilst each situation is
different, and this is an exceptionally complex issue, the Group
has in a number of cases, having regard to all of the relevant
facts and circumstances, agreed to support customers both
financially and practically with removal and replacement of ACM
cladding, even though the buildings concerned met the requirements
of building regulations at the time construction was formally
approved. This decision was taken for buildings recently
constructed by the Group because Management believe that it is
morally right, not because it is legally required.
Uncertainty over the remediation costs will remain until all the
works are fully designed and contracted. Following the creation of
the exceptional provision, the Government issued further guidance
which the Group considered as part of its ongoing review.
Guaranteed Minimum Pension (GMP) equalisation
A High Court judgement handed down in October 2018, relating to
defined benefit pension schemes, held that the GMP element of
pensions accrued by men and women should be comparable and any
additional obligation required to equalise the members' benefits
must be allowed for in the scheme liabilities. The additional
obligation was considered a past service cost and was recognised
through the income statement in accordance with IAS 19.
5. Finance income and finance costs
Half year
Half year ended
Finance income: ended 1 Year ended
30 June July 31 December
GBP million 2019 2018 2018
-------------------- --------- --------- ------------
Interest receivable 1.8 1.0 2.9
-------------------- --------- --------- ------------
Half year Half year
Finance costs: ended ended Year ended
30 June 1 July 31 December
GBP million 2019 2018 2018
-------------------------------------------------- --------- --------- ------------
Interest on overdrafts, bank and other loans 2.4 2.7 5.2
Foreign exchange movements 0.5 0.4 1.0
-------------------------------------------------- --------- --------- ------------
2.9 3.1 6.2
Unwinding of discount on land creditors and other
items 9.0 10.3 18.5
Interest on lease liabilities 0.2 0.2 0.5
Net interest on pension liability 1.8 0.7 1.1
-------------------------------------------------- --------- --------- ------------
13.9 14.3 26.3
-------------------------------------------------- --------- --------- ------------
6. Taxation
Tax (charged)/credited in the income statement is analysed as
follows:
Half year Year ended
Half year ended 31 December
ended 1 2018
30 June July
GBP million 2019 2018
------------ ------------------------------------- --------- --------- ------------
Current
tax:
UK: Current year (51.0) (49.8) (143.4)
Adjustment in respect of prior years - (4.2) (5.3)
Overseas: Current year (1.4) (0.9) (3.6)
Adjustment in respect of prior years (0.7) - -
-------------------------------------------------- --------- --------- ------------
(53.1) (54.9) (152.3)
-------------------------------------------------- --------- --------- ------------
Deferred
tax:
UK: Current year (3.9) (5.8) (4.1)
Adjustment in respect of prior years (0.8) 4.2 3.7
Overseas: Current year - - (1.4)
------------ ------------------------------------- --------- --------- ------------
(4.7) (1.6) (1.8)
-------------------------------------------------- --------- --------- ------------
(57.8) (56.5) (154.1)
-------------------------------------------------- --------- --------- ------------
The effective tax rate for the period is 19.3% (1 July 2018:
18.8%), the tax charge predominantly relating to current tax.
Closing deferred tax on UK temporary differences has been
calculated at the rates expected to apply for the period when the
asset is realised or the liability is settled. Accordingly, the UK
temporary differences have been calculated at rates between 19% and
17% (1 July 2018: 19% and 17%).
7. Earnings per share
Half year ended 1 Year ended
Half year ended 30 June 2019 July 2018 31 December 2018
-------------------------------------------------- ---------------------------- ----------------- -----------------
Basic earnings per share 7.4p 7.5p 20.1p
Diluted earnings per share 7.4p 7.5p 20.0p
Adjusted basic earnings per share 7.4p 8.2p 21.3p
Adjusted diluted earnings per share 7.4p 8.2p 21.2p
Weighted average number of shares for basic
earnings per share - million 3,267.0 3,267.0 3,266.3
Weighted average number of shares for diluted
earnings per share - million 3,275.8 3,277.1 3,275.7
-------------------------------------------------- ---------------------------- ----------------- -----------------
Adjusted basic and adjusted diluted earnings per share, which
exclude the impact of exceptional items and the associated net tax
charges, are shown to provide clarity on the underlying performance
of the Group.
A reconciliation from profit from operations attributable to
equity shareholders used for basic and diluted earnings per share
to that used for adjusted earnings per share is shown below:
Half year ended 1 Year ended
GBP million Half year ended 30 June 2019 July 2018 31 December 2018
-------------------------------------------------- ---------------------------- ----------------- -----------------
Earnings for basic and diluted earnings per share 242.0 244.5 656.6
Exceptional items - 30.0 46.1
Tax on exceptional items - (5.4) (8.2)
-------------------------------------------------- ---------------------------- ----------------- -----------------
Earnings for adjusted basic and adjusted diluted
earnings per share 242.0 269.1 694.5
-------------------------------------------------- ---------------------------- ----------------- -----------------
8. Notes to the cash flow statement
Cash and cash equivalents comprise cash at bank and other short
term highly liquid investments with an original maturity of three
months or less.
Movement in net cash:
Cash and cash equivalents Bank and Total
GBP million other loans net cash
------------------ ------------------------- ------------ ---------
At 1 January 2019 734.2 (90.1) 644.1
Net cash flow (251.8) - (251.8)
Foreign exchange (1.1) 0.8 (0.3)
------------------ ------------------------- ------------ ---------
At 30 June 2019 481.3 (89.3) 392.0
------------------ ------------------------- ------------ ---------
Cash and cash equivalents Bank and Total
GBP million other loans net cash
------------------ ------------------------- ------------ ---------
At 1 January 2018 600.5 (88.7) 511.8
Net cash flow 14.3 - 14.3
Foreign exchange (1.2) 0.2 (1.0)
------------------ ------------------------- ------------ ---------
At 1 July 2018 613.6 (88.5) 525.1
------------------ ------------------------- ------------ ---------
Cash and cash equivalents Bank and Total
GBP million other loans net cash
-------------------- ------------------------- ------------ ---------
At 1 January 2018 600.5 (88.7) 511.8
Net cash flow 133.8 - 133.8
Foreign exchange (0.1) (1.4) (1.5)
-------------------- ------------------------- ------------ ---------
At 31 December 2018 734.2 (90.1) 644.1
-------------------- ------------------------- ------------ ---------
The committed borrowing facilities are currently GBP639.3
million with an average maturity of 4.5 years.
9. Pensions
The 2016 triennial valuation for the Taylor Wimpey Pension
Scheme was completed in February 2018. This committed the Group to
cash contributions of GBP40.0 million per annum plus GBP2.0 million
towards administration costs, together with the GBP5.1 million
distribution from the Pension Funding Partnership. However, the
GBP40.0 million of cash contributions may be paused should the
Scheme become fully funded on a Technical Provisions basis during
the period.
At 30 June 2019, the Scheme was 95% funded and as such cash
contributions will continue under the funding plan agreed in
February 2018. The contributions made by the Group has resulted in
an IAS19 surplus of GBP51.1 million at 30 June 2019 (GBP30.9
million at 31 December 2018).
The terms of the Scheme are such that the Group does not have an
unconditional right to a refund of the surplus and the Group has
recognised an adjustment to it as a result. An IFRIC 14 deficit has
been recognised, which represents the present value of future
contributions under the funding plan together with distributions
from the Pension Funding Partnership. As the Scheme is less than
96% funded, the cash commitments under the funding plan agreed in
February 2018 are included in the calculation of the IFRIC 14
deficit which results in a deficit recognised on the balance sheet
of GBP103.0 million (31 December 2018: GBP133.0 million).
10. Financial assets and liabilities
Carrying amount Fair value
---------------------------- ----------------------------
30 June 1 July 31 December 30 June 1 July 31 December
GBP million 2019 2018 2018 2019 2018 2018
---------------------------- ------- ------ ----------- ------- ------ -----------
Financial assets
Cash and cash equivalents b 481.3 613.6 734.2 481.3 613.6 734.2
Land receivables b 7.7 11.9 9.6 7.7 11.9 9.6
Trade and other receivables b 141.5 95.8 97.8 141.5 95.8 97.8
Mortgage receivables a 40.3 55.4 45.3 40.3 55.4 45.3
---------------------------- ------- ------ ----------- ------- ------ -----------
Financial liabilities
Bank and other loans c 89.3 88.5 90.1 91.0 88.1 90.4
Land creditors b 717.7 668.1 738.6 717.7 668.1 738.6
Trade and other payables b 667.4 751.9 698.0 667.4 751.9 698.0
Lease liabilities b 26.0 29.6 27.4 26.0 29.6 27.4
---------------------------- ------- ------ ----------- ------- ------ -----------
(a) Mortgage receivables relate to sales incentives including
shared equity loans and are measured at fair value through profit
or loss. The fair value is established based on a publicly
available national house price index, being significant other
observable inputs (level 2).
(b) The Directors consider the carrying amounts of financial
assets and financial liabilities recorded at amortised cost in the
condensed consolidated financial statements approximate their fair
values.
(c) The fair value of the EUR100 million fixed rate loan notes
has been determined by reference to external interest rates and the
Directors' assessment of the margin for credit risk (level 2).
Land receivables and trade and other receivables are included in
the balance sheet as trade and other receivables for current and
non-current amounts and include GBP46.9 million (31 December 2018:
GBP37.7 million) of non-financial assets.
Current and non-current trade and other payables includes
non-financial liabilities of GBP132.2 million (31 December 2018:
GBP99.0 million).
The Group has designated a financial liability in the sum of
EUR79.0 million (2018: EUR54.0 million) as a net investment
hedge.
The Group had no financial instruments with fair values that are
determined by reference to significant unobservable inputs (level
3), nor have there been any transfers of assets or liabilities
between levels of the fair value hierarchy. There are no
non-recurring fair value measurements.
11. Provisions
North
ACM cladding Leasehold America
GBP million provision provision disposal Other Total
------------------------ ------------ ---------- --------- ----- ------
At 31 December 2018 29.6 102.1 6.0 32.6 170.3
Additions in the period - - - 0.6 0.6
Utilised (2.6) (18.3) - (4.7) (25.6)
Released - - - (0.1) (0.1)
------------------------ ------------ ---------- --------- ----- ------
At 30 June 2019 27.0 83.8 6.0 28.4 145.2
------------------------ ------------ ---------- --------- ----- ------
30 June 1 July 31 December
GBP million 2019 2018 2018
------------ ------- ------ -----------
Current 67.4 97.0 76.9
Non-current 77.8 94.7 93.4
------------ ------- ------ -----------
145.2 191.7 170.3
------------ ------- ------ -----------
In 2018 the Group established an exceptional provision for the
cost of replacing Aluminium Composite Material (ACM) on a small
number of legacy developments (note 4). The majority of the
provision is expected to be utilised within two years.
In 2017 the Group launched an assistance scheme to help certain
customers restructure their ground rent agreements with their
freeholder and established an associated provision of GBP130.0
million to fund this. The amounts and timing of the outflows depend
largely on the number and rate of eligible applicants to the scheme
and ongoing discussion with freeholders. The Group expects the
scheme will run for several years and anticipates approximately
GBP40.0 million of the provision will be utilised within the next
twelve months.
11. Provisions (continued)
Other provisions consist of a remedial work provision covering
various obligations on a limited number of sites across the Group.
Other provisions also includes amounts for legal claims and other
contract-related costs associated with various matters arising
across the Group, the majority of which are anticipated to be
settled within a three year period; however, there is some
uncertainty regarding the timing of these outflows due to the
nature of the claims and the length of time it can take to reach
settlement.
12. Related party transactions
Transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not
disclosed within the financial statements or related notes.
13. Dividends
Half year Year ended
Half year ended 31 December
ended 1 2018
30 June July
GBP million 2019 2018
===================== ========= ========= ============
Approved and paid 124.2 79.8 499.5
Approved and accrued 350.0 340.0 -
Approved 125.0 80.0 -
Proposed - - 125.0
===================== ========= ========= ============
At the Company's 2019 Annual General Meeting shareholders
approved the special dividend of c.GBP350.0 million paid on 12 July
2019. This dividend was accrued as at the balance sheet date.
The Directors have assessed the Company's performance in the
current period and approved an interim dividend of 3.84 pence per
share in line with the Group's dividend policy. The dividend will
be paid on 8 November 2019 to all shareholders registered at the
close of business on 4 October 2019. This is expected to result in
a payment of c.GBP125.0 million.
In accordance with IAS 10 'Events after the balance sheet date'
the approved interim dividend has not been accrued in the 30 June
2019 balance sheet.
14. Share based payments
The Group recognised a share based payment expense of GBP4.9
million to 30 June 2019 (1 July 2018: GBP7.7 million), which was
composed of GBP4.3 million in relation to equity settled schemes
and GBP0.6 million in relation to dividend equivalents.
15. Seasonality
Weekly sales rates in some of the Group's key markets
historically experience significant seasonal variation, with the
highest levels of reservations occurring in the spring and autumn
in the UK. As such, economic weakness which affects these peak
selling seasons can have a disproportionate impact on the results
for the year.
This pattern of reservations tends to result in higher levels of
home completions towards the end of the financial year. As a
result, the Group's work in progress and debt profile exhibits
peaks and troughs over the course of the financial year.
16. Alternative performance measures
The Group uses a number of Alternative Performance Measures
(APMs) which are not defined within IFRS. The Directors use these
measures in order to assess the underlying operational performance
of the Group and, as such, these measures should be considered
alongside the IFRS measures. The following APMs are referred to
throughout the half year results.
Profit before taxation and exceptional items and profit for the
period before exceptional items
The Directors consider the removal of exceptional items from the
reported results provides more clarity on the performance of the
Group. They are reconciled to profit before taxation and profit for
the period respectively, on the face of the Consolidated Income
Statement.
Operating profit and operating profit margin
Throughout the report operating profit is used as one of the
main measures of performance, with operating profit margin being a
Key Performance Indicator (KPI). Operating profit is defined as
profit on ordinary activities before net finance costs, exceptional
items and tax, after share of results of joint ventures. The
Directors consider this to be an important measure of underlying
performance of the Group. Operating profit margin is calculated as
operating profit divided by total revenue. The Directors consider
this to be a metric which reflects the underlying performance of
the business.
Half year Year ended
Half year ended 31 December
ended 1 2018
30 June July
2019 2018
---------------------------------------------------------- --------- --------- ------------
Profit on ordinary activities before finance costs (GBPm) 312.1 316.4 828.8
Adjusted for:
Share of results of joint ventures (GBPm) (0.2) (2.1) 5.3
Exceptional items (GBPm) - 30.0 46.1
---------------------------------------------------------- --------- --------- ------------
Operating profit (GBPm) 311.9 344.3 880.2
========================================================== ========= ========= ============
Revenue (GBPm) 1,732.7 1,719.8 4,082.0
========================================================== ========= ========= ============
Operating profit margin 18.0% 20.0% 21.6%
========================================================== ========= ========= ============
Rolling 12-month operating profit* (GBPm) 847.8 837.9 880.2
========================================================== ========= ========= ============
* Operating profit for the 6-month period ended 31 December
2017: Profit before interest and tax: GBP490.4m; Share of results
of joint ventures: GBP3.2m; Exceptional items: GBPnil.
Net operating assets
Net operating assets is defined as basic net assets less net
cash, excluding net taxation balances and accrued dividends.
Average net operating assets is the average of the opening and
closing net operating assets of the 12-month period. With return on
net operating assets, the Directors consider this to be an
important measure of the underlying operating efficiency and
performance of the Group.
30 June 1 July 31 December 31 December 2 July
GBPmillion 2019 2018 2018 2017 2017
------------------------------------- -------- -------- ------------ ------------ ---------
Basic net assets (GBPm) 3,007.6 2,950.6 3,226.8 3,137.3 2,778.9
Adjusted for:
Cash (GBPm) (481.3) (613.6) (734.2) (600.5) (516.8)
Borrowings (GBPm) 89.3 88.5 90.1 88.7 87.8
Net taxation (GBPm) 16.1 16.9 29.2 28.6 (3.8)
Accrued dividends (GBPm) 350.0 340.0 - - 300.0
------------------------------------- -------- -------- ------------ ------------ ---------
Net operating assets (GBPm) 2,981.7 2,782.4 2,611.9 2,654.1 2,646.1
------------------------------------- -------- -------- ------------ ------------ ---------
Average basic net assets (GBPm) 2,979.1 2,864.8 3,182.1
------------------------------------- -------- -------- ------------ ------------ ---------
Average net operating assets (GBPm) 2,882.1 2,714.3 2,633.0
------------------------------------- -------- -------- ------------ ------------ ---------
Return on net operating assets
Return on net operating assets is defined as rolling 12-month
operating profit divided by average net operating assets. The
Directors consider this to be an important measure of the
underlying operating efficiency and performance of the Group.
31 December
30 June 2019 1 July 2018 2018
----------------------------------------- ------------ ----------- -----------
Average net operating assets (GBPm) 2,882.1 2,714.3 2,633.0
Rolling 12-month operating profit (GBPm) 847.8 837.9 880.2
----------------------------------------- ------------ ----------- -----------
Return on net operating assets 29.4% 30.9% 33.4%
========================================= ============ =========== ===========
16. Alternative performance measures (continued)
Net operating asset turn
This is defined as total revenue divided by the average of
opening and closing net operating assets, based on a rolling
12-month period. The Directors consider this to be good indicator
of how efficiently the Group is utilising its assets to generate
value for the shareholders.
31 December
30 June 2019 1 July 2018 2018
------------------------------------ ------------ ----------- -----------
Rolling 12-month revenue* (GBPm) 4,094.9 3,957.5 4,082.0
Average net operating assets (GBPm) 2,882.1 2,714.3 2,633.0
------------------------------------ ------------ ----------- -----------
Net operating asset turn 1.42 1.46 1.55
==================================== ============ =========== ===========
* Revenue for the 6-month period ended 31 December 2017:
GBP2,237.7 million
Tangible net assets per share
This is calculated as net assets before any accrued dividends
excluding goodwill and intangible assets divided by the number of
ordinary shares in issue at the end of the period. The Directors
consider this to be a good measure of the value intrinsic within
each ordinary share.
31 December
30 June 2019 1 July 2018 2018
-------------------------------------- ------------ ----------- -----------
Basic net assets (GBPm) 3,007.6 2,950.6 3,226.8
Adjusted for:
Accrued dividends (GBPm) 350.0 340.0 -
Intangible assets (GBPm) (5.6) (3.5) (3.2)
-------------------------------------- ------------ ----------- -----------
Tangible net assets (GBPm) 3,352.0 3,287.1 3,223.6
Ordinary shares in issue (millions) 3,279.8 3,276.7 3,278.1
====================================== ============ =========== ===========
Tangible net assets per share (pence) 102.2 100.3 98.3
====================================== ============ =========== ===========
Net cash
Net cash is defined as total cash less total financing. This is
considered by the Directors to be the best indicator of the
financing position of the Group and is reconciled in Note 8.
Cash conversion
This is defined as cash generated by operations divided by
operating profit, based on a rolling 12-month period. The Directors
consider this measure to be a good indication of how efficiently
the Group is turning profit into cash.
31 December
30 June 2019 1 July 2018 2018
----------------------------------------------- ------------ ----------- -----------
Rolling 12-month cash generated by operations*
(GBPm) 604.4 724.7 815.4
Rolling 12-month operating profit (GBPm) 847.8 837.9 880.2
----------------------------------------------- ------------ ----------- -----------
Cash conversion 71.3% 86.4% 92.6%
=============================================== ============ =========== ===========
* Cash generated by operations for the 6-month period ended 31
December 2017: GBP529.7m.
Adjusted gearing
This is defined as adjusted net debt divided by basic net
assets. The Directors consider this to be a more representative
measure of the Group's gearing levels. Adjusted net debt is defined
as net cash less land creditors.
31 December
30 June 2019 1 July 2018 2018
------------------------------------ ------------ ----------- -----------
Cash (GBPm) 481.3 613.6 734.2
Private placement loan notes (GBPm) (89.3) (88.5) (90.1)
------------------------------------ ------------ ----------- -----------
Net cash (GBPm) 392.0 525.1 644.1
Land creditors (GBPm) (717.7) (668.1) (738.6)
------------------------------------ ------------ ----------- -----------
Adjusted net debt (GBPm) (325.7) (143.0) (94.5)
------------------------------------ ------------ ----------- -----------
Basic net assets (GBPm) 3,007.6 2,950.6 3,226.8
------------------------------------ ------------ ----------- -----------
Adjusted gearing 10.8% 4.8% 2.9%
==================================== ============ =========== ===========
16. Alternative performance measures (continued)
Adjusted basic earnings per share
This is calculated as earnings attributed to the shareholders,
excluding exceptional items and tax on exceptional items, divided
by the weighted average number of shares. The Directors consider
this provides an important measure of the underlying earnings
capacity of the Group. Note 7 shows a reconciliation from basic
earnings per share to adjusted basic earnings per share.
17. Post balance sheet events
There were no material subsequent events affecting the Group
between 30 June 2019 and the date of this announcement that need to
be disclosed.
Taylor Wimpey plc
Statement of Directors' Responsibility
For the half year ended 30 June 2019
The Directors confirm that, to the best of their knowledge,
these condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 'Interim Financial Reporting' as
adopted by the European Union.
The interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R of the Disclosure
and Transparency Rules, namely:
-- an indication of important events that have occurred during
the first half year of the financial year and their impact on the
condensed set of financial statements;
-- a description of the principal risks and uncertainties for
the remaining six months of the financial year; and
-- material related party transactions in the first half year of
the financial year and any material changes in the related party
transactions described in the last Annual Report.
By order of the Board
Kevin Beeston, Chair
Pete Redfern, Chief Executive
30 July 2019
INDEPENT REVIEW REPORT TO TAYLOR WIMPEY PLC
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
half-year ended 30 June 2019 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated balance sheet,
the condensed consolidated statement of changes in equity, the
condensed consolidated cash flow statement and related Notes 1 to
17. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
This report is made solely to the Company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
Company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in Note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the half-year ended 30 June
2019 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Deloitte LLP
Statutory Auditor
London, United Kingdom
30 July 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BCGDRXXXBGCG
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