Half Year Results Presentation for the period ended 29 June 2014 30 July 2014
Disclaimer This presentation is not intended to, and does not constitute or form part of, any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Taylor Wimpey plc or any other invitation or inducement to engage in investment activities, nor shall this presentation (or any part of it) nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. Past performance of Taylor Wimpey plc cannot be relied upon as a guide to its future performance. Certain statements made in this presentation are forward looking statements. Such statements are based on Taylor Wimpey’s current expectations and beliefs concerning future events and are subject to a number of known and unknown risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward looking statements. Such statements are also based on numerous assumptions regarding Taylor Wimpey plc’s present and future strategy and the environment in which it operates, which may not be accurate. Taylor Wimpey plc will not release any updates or revisions to forward looking statements contained in this presentation except as required by law or regulation. 2
Agenda Pete Redfern Operational review Ryan Mangold Financial review Pete Redfern 2015-17 targets and outlook 3
Operational review Pete Redfern Chief Executive 4
Group performance – financial highlights • Operating margin* increased to 16.1% (H1 2013: 13.1%) • Return on net operating assets* of 17.8% (H1 2013: 14.3%) • Tangible net asset value* per share up 9.5% to 73.6p (H1 2013: 67.2p) • 2015 cash return increased to £250m * See definitions slide in the appendix 5
UK performance – operational highlights £224k 21% £45.3k Private average Increase in ASP in Contribution per selling price on private order book to completion completions 29 June 2014 0.71 11.5k 7.2k Private net sales rate Total plots added to Plots converted from (per outlet per week) short term landbank strategic pipeline 6
Taylor Wimpey market performance 2012 2013 2014 Customer interest Sales rate Number of outlets 7
Our UK market performance H1 2014 H2 2013 H1 2013 H2 2012 H1 2012 Average outlets open 307 318 312 317 305 Private sales rate (net) 0.71 0.59 0.67 0.56 0.60 Private sales price 238 227 211 197 195 £000 Cancellation rate 11% 13% 14% 15% 15% (private) • c.39% of total H1 2014 sales using Help to Buy • 54 new outlets opened in H1 2014 (H1 2013: 67) Data based on reservations excluding JVs 8
Land and planning environment • Land market remains most competitive in regions where national / regional competitors have opened new offices – No meaningful new entrants or trends – Overall level of competition remains unchanged • Short term land prices are broadly following the trend of house prices – Returns at point of acquisition remain at same high level as 2013 • Planning environment remains better than previous cycle • Election creates some uncertainty but relatively benign at this point – Await outcome of Lyons Review 9
North Division operating area Scotland Yorkshire West North North & North & North Midlands Division Division East West FY 2013 H1 2014 715 As at 29 June 2014 completions Short term owned and 0.67 sales rate* controlled land 8,523 10,950 7,767 27,365 27,240 portfolio plots Land portfolio years 5.8 5.9 5.5 6.1 5.7 Land portfolio years, 5.3 5.4 4.8 5.3 5.2 three-year view*** 980 completions Cost per plot £000** 24.9 28.3 28.8 27.4 27.2 0.63 sales rate* ASP in short term owned land portfolio 198 177 169 175 183 £000 Average cost as a % 12.6% 16.0% 17.0% 15.7% 14.9% of ASP 745 completions Strategic land plots 20,169 23,453 12,874 56,496 54,466 (> 50% probability) 0.64 sales rate* * Private sales rate (net) ** Based on short term owned plots. NRV is wholly allocated to land, comparable basis to peers *** Based on a three-year forward looking average 10
South Division operating area Eastern South South South London South West & East & Division market † Division Wales London FY 2013 As at 29 June H1 2014 2014 Short term owned and controlled land 12,637 16,910 18,354 43,263 4,467 47,901 portfolio plots Land portfolio years 6.8 8.8 5.9 6.1 4.5 6.9 827 completions Land portfolio years, three-year 6.3 7.9 4.7 5.4 4.5 6.0 0.75 sales rate* view*** 824 Cost per plot £000** 42.1 30.7 54.2 41.6 104.5 40.6 completions 0.73 sales rate* ASP in short term owned land portfolio 208 208 264 220 410.5 229 £000 Average cost as a 20.2% 14.8% 20.5% 18.9% 25.5% 17.7% % of ASP 657 947 completions completions Strategic land plots 15,718 15,560 19,856 51,134 55,508 936 (> 50% probability) 0.73 sales rate* 1.04 sales rate* * Private sales rate (net) ** Based on short term owned plots. NRV is wholly allocated to land, comparable basis to peers *** Based on a three-year forward looking average † London market information shown separately in addition to being included in South East & London. The London market includes the area inside the M25 11
Short term landbank Movements in half year to 29 June 2014 31 December 2013 70,628 Planning status + Plots acquired 4,336 29 June 31 December 2014 2013 + Strategic land conversion 7,195 Detailed planning 43,220 42,640 - Completions (5,766) Outline planning 22,212 20,178 - Land sales (229) Resolution to grant 9,709 7,810 - Scope changes (1,023) Total 75,141 70,628 29 June 2014 75,141 • At 75k plots we have reached the steady state level to achieve strategic goals • Equates to approximately a 5.3 year landbank for 14k completions • Level of strategic success means landbank may continue to grow slightly – but without adverse balance sheet impact 12
Converting our strategic pipeline Movements in half year to 29 June 2014 31 December 2013 109,974 + Plots acquired 9,704 - Strategic land conversion (7,195) - Land sales - - Scope changes (4,853) 29 June 2014 107,630 • Record year for strategic conversions – 7,195 plots in H1, 88% in the South – Conversion rate expected to average 6k per annum • Confident in sourcing 40% of completions from strategic pipeline 13
UK cost and construction environment H1 2014 H2 2013 H1 2013 Total build cost per sq ft (£/sq ft) 110 107 103 Private build cost per sq ft (£/sq ft) 111 109 104 % apartments of private completions 18% 20% 19% Private average sq ft per unit 1,039 1,035 1,043 • National deals and central procurement – Average increase of c.4.5% over last 12 months • We estimate 4-5% like for like inflation (1 Jan 2014 – 31 Dec 2014) • Security of supply key – Brick supply secured around 18 months ahead of build schedule • Internal logistics business helps both price negotiations and managing supply 14
Financial review Ryan Mangold Group Finance Director 15
Summary Group results H1 2013 H1 2014 Change FY 2013 Continuing Group £m Revenue 1,190.1 1,007.1 18.2% 2,295.5 Gross profit 259.4 197.0 31.7% 449.3 Gross margin % 21.8% 19.6% 2.2ppt 19.6% Operating profit* 192.1 132.4 45.1% 312.9 Operating margin* % 16.1% 13.1% 3.0ppt 13.6% Profit before tax and 178.4 109.0 63.7% 268.4 exceptional items Adjusted basic earnings 4.3p 2.7p 59.3% 6.7p per share Tangible NAV per share* 73.6p 67.2p 9.5% 69.6p Return on net operating 17.8% 14.3% 3.5ppt 16.8% assets* * See definitions slide in the appendix 16
UK performance summary H1 2014 H1 2013 Change FY 2013 Legal completions – total 5,766 5,191 11.1% 11,696 Private 4,755 4,229 12.4% 9,423 Affordable 940 930 1.1% 2,124 JVs 71 32 121.9% 149 Ave selling price – total £000 206 188 9.6% 191 Private £000 224 205 9.3% 210 Affordable £000 112 108 3.7% 110 Operating profit £m* 194.0 134.8 43.9% 312.8 Operating margin %* 16.4% 13.5% 2.9ppt 13.8% * See definitions slide in the appendix 17
Indicative movements in UK operating margin Annual change Impact on 2014 profit from 30 June 2013 and loss account H1 2013 to H1 2014 to 29 June 2014 Market inflation 8% 4.8% Build cost 4% (1.8)% Net economic benefit captured 3.0% NRV provision release (1.3)% Net market impact 1.7% Improvement in land mix 2.6% Reduced NRV utilisation (1.7)% Net land improvement 0.9% Affordable housing price 0.7% Other income and overheads (0.4)% Total margin movement 2.9% 18
Growth in Group net assets 12 month Annual £m H1 2014 H2 2013 rolling change Opening net assets 2,251.8 2,172.5 2,172.5 Pre-exceptional net earnings 140.2 127.4 267.6 12.3% Net impact of exceptional items 14.8 (1.1) 13.7 0.6% Profit from discontinued operations - 8.7 8.7 0.4% Profit for the period 155.0 135.0 290.0 13.3% Actuarial gains / (losses) after tax 11.0 (39.8) (28.8) (1.3)% Net share scheme and other movements (2.2) (9.0) (11.2) (0.5)% Closing net assets pre cash return 2,415.6 2,258.7 2,422.5 11.5% Dividends – accrued and paid (64.9) (6.9) (71.8) (3.3)% Closing net assets post cash return 2,350.7 2,251.8 2,350.7 8.2% 19
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