Delivering Quality

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How We Performed This Year

Revenue

£3,965.2m

Revenue graph

Adjusted operating profit*

£841.2m

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Adjusted operating profit graph

Profit before tax

£682.0m

Profit before tax graph

Total dividend paid per share

13.79p

Total Dividend Paid Per Share graph

Return on net operating assets**

32.4%

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Return on net operating assets graph

Year end net cash

£511.8m

Year End Net Cash graph

Tangible net asset value per share

95.7p

Tangiable net assets graph

Adjusted basic earnings per share✝✝

20.2p

Adjusted basic earnings graph

Basic earnings per share

17.0p

Basic earnings graph
Revenue
£3,965.2m
Pound icon
Adjusted operating profit*
£841.2m
Profit before tax
£682.0m
Total dividend paid per share
13.79p
Pound icon
Return on net operating assets**
32.4%
Year end net cash
£511.8m
Tangible net asset value per share
95.7p
Adjusted basic earnings per share✝✝
20.2p
Basic earnings per share
17.0

View From The Top

Kevin Beeston

Chairman

“We are delighted to have delivered another year of growth in shareholder returns in 2017.”

 

Pete Redfern

Chief Executive

“2017 has been another strong year for Taylor Wimpey as we made good progress towards our medium term financial targets and improved our operational performance.”

 
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Where We Operate

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North Division

Our North Division covers our East and West Scotland, North East, North Yorkshire, Yorkshire, North West, Manchester, North Midlands, Midlands and West Midlands regional businesses.

Operating profit*

£294.9m

Map of North Division
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Central and South West Division

Our Central and South West Division covers our East Midlands, South Midlands, East Anglia, Oxfordshire, South Wales, Bristol, Southern Counties and Exeter regional businesses.

Operating profit*

£318.0m

Map of Central and South West Division
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Spain

We build high-quality homes in the popular locations of Costa Blanca, Costa del Sol and the islands of Mallorca and Ibiza.

Operating profit*

£26.8m

Map of Spain
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London and South East Division including Central London

Our London and South East Division includes Central London and covers our East London, North Thames, South East, South Thames and West London regional businesses.

Operating profit*

£271.4m

Map of London and South East Division including Central London
We strive to be the homebuilder of choice
We operate at a local level from 24 regional businesses across the UK, and we also have operations in Spain.

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UK Map Key:

Head office
London market
North Division regional offices
Central & South West Division regional offices
London & South East Division regional offices

Our Strategy

Vision

Working together to build your dreams.

Mission

To create great places to live and deliver excellent service which inspires and delights our customers, our people and our shareholders.

Core values and cultural principles

Be respectful, fair and deliver together

  • Communicate well and collaborate
  • Encourage and embrace diversity
  • Set clear professional standards
  • Develop good relations and behave with integrity

Continuously improve and innovate

  • Be future-focused and drive change
  • Find solutions and don’t accept second best
  • Make informed decisions
  • Be well planned and organised

Build a proud legacy

  • Never compromise on safety
  • Be passionate about customers
  • Deliver right first time and keep promises
  • Commit to a sustainable future

Medium Term Strategic Objectives (2016 - 2018)

Return on net operating assets**
Operating profit* margin
Total dividends paid
Return on net operating assets**

An average annual return on net operating assets** of:

Target (2016 - 2018)

30%

Performance in 2017

32.4%

Download linkDownload Our Strategy and Business Model (PDF 219KB)

Operating profit* margin

An average operating profit* margin of:

Target (2016 - 2018)

c.22%

Performance in 2017

21.2%

Download linkDownload Our Strategy and Business Model (PDF 219KB)

Total dividends paid

Total dividends to be paid in cash to shareholders over the period:

Target (2016 - 2018)

£1.3bn

Performance in 2017

£450.5m

Download linkDownload Our Strategy and Business Model (PDF 219KB)

Our Business Model

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Our people

We aim to be the employer of choice in the housebuilding industry.

What we do

We aim to be the employer of choice in the housebuilding industry, 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.

Why is it important for all our stakeholders?

Individually, and by working together, our employees are crucial to driving our success. We believe that having the right people with the right skills at all levels in our organisation is critical to building a quality, sustainable business and delivering our strategy.

How are we different?

We have a strategic approach to our human resources and have further improved our approach to talent, succession, resourcing and reward, as well as learning and development.


Our KPIs

14.0%

Voluntary employee turnover

Risk link to KPI

D

Progress in 2017

Having introduced many new initiatives and frameworks in 2016 including enhanced flexible benefits, new development programmes and widening our hiring channels, 2017 has focused on ensuring that these are embedded and owned by the business, and seen as ‘business as usual’.

Priorities in 2018

With the ongoing challenge for skills and resources in the housebuilding sector and the targets we have set ourselves, we will continue to focus on how we effectively attract, develop, and retain our people so that they are fully engaged with the company to deliver both our short term targets and longer term strategic goals. In doing so, we aspire to become known in the sector as the ‘employer of choice’.


Case study

Case Study

Apprentice Assistant Site Manager Jone Da Cruz, who works at the Chobham Manor development in East London, was named ‘Ambassador of the Year’ in the Queen Elizabeth Olympic Park Apprenticeship Awards in July 2017. These awards recognise the role of local young people and employers in delivering the legacy of the London 2012 Olympic and Paralympic Games and recognise more than 240 apprentices who have played key roles in the new chapter of the Park, helping transform the former Olympic Stadium into a world-class, multi-use venue.

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Selecting land

We believe that the quality of our landbank is one of the key strengths for Taylor Wimpey.

What we do

Good-quality land with planning is the critical ‘raw material’ for our business. The land that we acquire, together with the planning potential we work with local authorities and communities to create, is key to defining products, locations, target customer base and prices, and underpins our confidence in our future financial performance.

Why is it important for all our stakeholders?

The value we create for our shareholders, communities and customers all starts with land. We add value through planning, allowing us to generate the best quality returns. Land is a scarce resource and we want to make the best use of what is available, select the right sites and transform them into vibrant and thriving communities.

How are we different?

We have a strong short term landbank at c.75k plots. Our investment and scale are based on our view of land quality and capital risk in a cyclical market. We are focused on selecting the right land and developing it in a sustainable manner. We have one of the largest strategic land pipelines in the sector with c.117k potential plots.


Our KPIs

53%

Strategically sourced completions

 

74,849

Owned and controlled plots with planning or resolution to grant planning

Risk link to KPI

AE

Progress in 2017

Our future profitability is underpinned by our short term landbank of c.75k plots with 52% sourced from the strategic land pipeline. In 2017, 53% of completions were built on land previously sourced from the strategic pipeline. We continue to prioritise opening our outlets as efficiently as possible.

Priorities in 2018

Continue to work with land vendors, communities and local authorities to convert land from the strategic pipeline into the short term landbank. Continue to work on ‘land light’ structures and active management as we continue to drive a higher return on capital employed. Continue to focus on selecting the right land and developing it in a sustainable manner.


Case study

Case Study

In August 2017, the Group completed contracts to purchase part of the Mount Pleasant estate, in Central London, from the Royal Mail Group, after enabling works by Royal Mail Group had been completed. The site has a detailed development planning consent, secured by the Royal Mail Group in 2015, to create 681 residential units including affordable housing, retail and office space and public areas.

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Managing the planning and community engagement process

We aim to be the industry leader in managing the planning and community engagement process.

What we do

We aim to be the industry leader in all aspects of planning and to obtain the right planning consents that enable us to respond to a changing market, reflect the desires of our customer base and deliver the quality homes we want to build, whilst meeting our financial objectives.

Why is it important for all our stakeholders?

We believe that local communities should have a say in development. This enables us to achieve the right planning permissions and ensure our developments are valued by their local communities.

How are we different?

We actively seek the views of local communities and other stakeholders. We develop a tailored planning and community engagement strategy for each site and work closely with communities and other local stakeholders throughout all aspects of the planning process. We believe that we have a responsibility to contribute to our local communities and that this responsibility grows with our success.


Our KPIs

7,863

Plots converted from the strategic land pipeline to the short term landbank

Risk link to KPI

A

Progress in 2017

In 2017, we contributed £413 million to the local communities in which we build across the UK via planning obligations, providing, for example, local infrastructure, affordable homes, public transport and education facilities (2016: £363 million). As at 18 February 2018, we are building on 97% of our sites with implementable planning.

Priorities in 2018

Continue to maintain best practice community engagement. Continue to investigate ways to engage with a wider and more diverse range of people within the local communities in which we operate.


Case study

Case Study

At our Newton Farm (Phase 2) development, in our West Scotland business, Taylor Wimpey agreed with South Lanarkshire Council to contribute c.£9.4m and 7.2 net developable acres for the development of a new school as part of the Section 75 (S75) agreement. Construction of the school was the responsibility of South Lanarkshire Council. The Council had a desire to open the new school facility by August 2017 for the new school term. In order to facilitate the school construction programme, and meet our obligations under the S75 agreement, we installed part of the development’s new spine road by December 2015, providing access and a serviced site for the Council. South Lanarkshire Council was therefore able to commence works on site in early 2016, and deliver the school on programme, opening in August 2017. Our West Scotland business maintains engagement with the school, providing health and safety talks, demonstrations and other initiatives.

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Getting the homebuilding basics right

Getting the basics right means effective processes are consistently applied across our regional businesses.

What we do

We work with selected subcontractors and build using carefully sourced materials to ensure that the homes that we sell are of a high quality and are built safely, efficiently, cost-effectively and with minimal impact on the environment.

Why is it important for all our stakeholders?

There is nothing more important to us than providing a safe place in which our employees and subcontractors can work. We are also committed to high standards of environmental management. The building process is carefully managed by our site-based and regional production teams to ensure quality, minimise disruption to residents in the surrounding areas, and to protect and enhance the value of each site.

How are we different?

We believe that quality objectives matter as much as financial objectives. Heath and safety is our non-negotiable top priority. Operating sustainably is both the right thing to do and makes good business sense.


Our KPIs

152

Annual Injury Incidence Rate

Risk link to KPI

ACDF

Progress in 2017

Health and safety on site remains a number one priority and we recorded a reduction in the AIIR rate for the year. We were pleased to receive a higher number of NHBC Pride in the Job Awards and record improved customer satisfaction scores through the year.

We reduced our carbon emissions by 38.7% from 2013, well ahead of our target of 25%.

Priorities in 2018

Health and safety of our people, the build process and customer service will all continue to be of critical focus for the Group in 2018. We also continue to examine potential improvements to the build process whilst also always considering the environmental impacts of our process.


Case study

Case Study

Taylor Wimpey Logistics, our supply chain business, plays an important role in our supply chain management. Around 300 of our sites, managed by 21 of our regional businesses, are supplied with build materials from Taylor Wimpey Logistics. Working on a plot-by-plot basis, the business sources bulk materials directly from manufacturers to prepare ‘just in time’ delivery of build packs for each stage of the building process, ensuring materials arrive on sites at the appropriate times in the build process. This reduces both work in progress on site and the potential for loss or damage of materials, thus driving build efficiency on our schemes.

During peak periods, Taylor Wimpey Logistics pick, package and dispatch up to 100,000 items in 1,500 build packs on around 60 lorries per week.

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Delivering customer service

We remain focused on and are committed to delivering an excellent customer service to all of our customers at every stage of their journey.

What we do

We want to ensure that we always deliver our homes to the quality standard to which we aspire and that our service is always proactive, positive and professional. Our customer vision is to help our customers make our houses their homes.

Why is it important for all our stakeholders?

Whilst we operate in a cyclical market, we strongly believe that a customer-centric approach is needed throughout the cycle. We recognise that buying a home is a major financial and emotional investment and it is critical that we give our customers the right experience.

How are we different?

We are in the process of embedding our new customer approach across the business with our focus on three main areas: our culture, structure and process.


Our KPIs

88%

Customer satisfaction

Risk link to KPI

DEF

KPI link to remuneration

£

Progress in 2017

Having introduced a number of customer service initiatives in recent years, such as the newly created role of Head of Customer Service and the Home Quality Inspection (HQI), a key focus in 2017 has been embedding the new processes and delivering a consistent standard. We are pleased that during 2017 we received a customer satisfaction score of 88%, an improvement on the 85% of last year and just short of our target of 90%. Whilst we have made great strides, we know there is still more to do.

Priorities in 2018

The key priority for 2018 will be to continue to enhance our customer service offering, and we will therefore be aiming for a further increase in our customer satisfaction score and aim to become a five star housebuilder. In 2018, we will also continue the rollout of our customer portal which improves the information flow between our customer facing teams and homebuyers at every stage of their contact with Taylor Wimpey.


Case study

Case Study

Touchpoint, our customer portal and online options system, was officially launched in 2017. After a successful pilot phase, the portal is now being rolled out across the wider business. Touchpoint plays a critical part in improving the information flow between our customer facing teams and homebuyers at every stage of their contact with Taylor Wimpey, from the moment they reserve and throughout the aftercare process. Once a home is reserved, the portal guides our customers through the homebuying process letting them know what they need to do next and giving immediate access to important updates, for example, how the build of their home is progressing, counting down to legal completion and move-in dates. Touchpoint also offers new homeowners useful information about the various appliances and systems in their home and enables them to log any issues there and then through the portal. Touchpoint aims to complement the personal service delivered by our Sales Executives, Site Managers and Customer Relations Managers, offering another more flexible means of communication with Taylor Wimpey.

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Optimising value

We look to optimise the value of each site not only during the initial acquisition process, but throughout the planning and development stages so that the original value is not only protected but enhanced.

What we do

Our ability to constantly increase efficiency and tightly control costs is part of the Taylor Wimpey culture and remains central to delivering enhanced returns. This extends to and encompasses all aspects of our business as we strive to optimise and capture value at every level from procurement through to delivery. We also aim to add value to the charities we support and to our wider partnerships.

Why is it important to our stakeholders?

The discipline of continually reviewing and challenging ourselves to do more ensures we do more than simply protect the business, we enhance the value.

We believe that as a responsible business we must actively contribute to helping others, whether financially, with our time or with our expertise.

How are we different?

We have a relentless focus on value at every stage of our business model and this is ingrained into the Taylor Wimpey mindset. We also balance our desire to improve quality with a focus on making our assets work harder for us and our stakeholders.


Our KPIs

£69.3k

Contribution per legal completion

 

£49.6%

Forward order book as a percentage of completions

Risk link to KPI

ABCDEF

Progress in 2017

In the year, we achieved a 1.7 percentage points margin upside on completions from land acquired since 2009, compared with the expected margin at the point of acquisition. We further increased contribution per completion in 2017. In total, during 2017 we donated and fundraised over £1 million for registered charities (2016: over £875k), in addition to c.£90k for other organisations, such as scout groups and other local community causes (2016: c.£159k).

Priorities in 2018

Continue to actively review every site and optimise new sales outlets prior to opening. Continue to focus on building a strong order book for the future. Continued commitment to supporting charities and local community groups in the areas in which we operate.


Case study

Case Study

Since its creation in 2015, Major Developments has focused on the complex, mostly public land, mixed use opportunities across the UK, specifically with a high return and a lower risk structure. The business works hard to seek acquisition structures that require low upfront capital investment, offering reduced land risk, and therefore reduced exposure to longer term market challenges, enabling us to create additional value, whilst further reducing cyclical risk. In October 2017, the business announced its most recent development which is a joint venture with Wandsworth London Borough Council for the regeneration of Winstanley and York Road Estates that will provide more than 2,200 new homes, in addition to significant new amenities and facilities for the local community.

Our people

See more

Selecting land

See more

Managing the planning and community engagement process

See more

Getting the homebuilding basics right

See more

Delivering customer service

See more

Optimising value

See more

Our Investment Case

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1

Strategy set to manage through the cycle

The housing market is cyclical and so factors such as customer confidence and mortgage cost inevitably have a direct impact on the short term outlook. We believe that a long term view and a proactive and flexible approach are needed to manage through the cycle. Our strategy is built on this and so seeks to protect growth whilst mitigating future downside risk. This applies to all areas of the business, from landbuying to our Dividend Policy.

Download iconDownload Our Investment Case (PDF 28KB)
2

High earnings quality with high margin driven by strong landbank

Steady growth has created a sustainable business focused on good-quality locations where people want to live.

We believe that quality of location is a key determinant of a home purchase and that this remains true through all market conditions.

We have taken a very disciplined approach since we set out the strategy back in 2011. This applies to all areas from the returns we expect to deliver from our sites through to the quality of those locations which we believe will differentiate us irrespective of the cycle.

Download iconDownload Our Investment Case (PDF 28KB)
3

Quality business with further continuous operational improvement

We have always been clear that our quality measures are as important to us as our financial objectives and are key to the way we run our business. We believe that these areas will become more important during this cycle, and will become an area of clear differentiation for Taylor Wimpey and contribute to our long term success. We will maintain a firm focus on health and safety, which will always be our non-negotiable top priority. We will continue to improve the business through our investment in our people, product, processes and systems, through research and development and embedding improvements to our customer service processes.

Download iconDownload Our Investment Case (PDF 28KB)
4

Dual stream dividend underpins value

We are confident that the quality of our short term landbank, with the underpin of our significant strategic land pipeline, combined with a high-quality balance sheet, will mean that we can continue to be cash generative through the cycle, enabling us to sustain a significant ordinary dividend to shareholders on an annual basis, including through a ‘normal’ downturn. We will also supplement this with special dividends at appropriate times in the cycle.

Download iconDownload Our Investment Case (PDF 28KB)