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Taylor Wimpey plc

Taylor Wimpey plc another strong year with good progress against strategic priorities

Taylor Wimpey plc (LON:TW), today announced full year results for the year ended 31 December 2018

Pete Redfern, Chief Executive, commented:

“2018 was another strong year for Taylor Wimpey with good progress against our strategic priorities. We delivered in line with our expectations, achieving a strong sales rate and record revenues. Despite ongoing macroeconomic and political uncertainty, we have made a very positive start to 2019 and are encouraged to see continued strong demand for our homes. We enter the year with a strong order book and a clear strategy in place to deliver long term value for shareholders.

We are very pleased with how our business is adapting to our customer-centred strategy. We are enhancing every step of our customers’ buying and aftercare service so that we become the first choice homebuilder in all market conditions.”

Group financial highlights:

· Growth in Group completions of 2.9% to 15,275 (2017: 14,842) including joint ventures

· Further improvement in operating profit* margin to 21.6% (2017: 21.3%)

· Growth in profit before tax and exceptional items of 5.5% to £856.8 million (2017: £812.0 million)

· Increased profit for the year of £656.6 million (2017: £555.3 million)

· 2018 results in line with expectations with clear progress on strategic goals

· Record net cash‡ of £644.1 million (2017: £511.8 million)

· £499.5 million paid in total dividends in 2018 (2017: £450.5 million)

· As previously announced, c.£600 million declared in total dividends for 2019, subject to shareholder approval

Operational highlights:

· Strong UK forward order book of 8,304 units as at 31 December 2018 (31 December 2017: 7,136)

· UK forward order book value of £1,782 million as at 31 December 2018 (31 December 2017: £1,628 million)

· Achieved over 90% recommend score, as measured by the Home Builders Federation (HBF) 2017 / 18 survey

· Top 10 employer by Glassdoor, as rated by employees

2018

2017

Change

Revenue £m

4,082.0

3,965.2

2.9%

Operating profit* £m

880.2

844.1

4.3%

Profit before tax and exceptional items £m

856.8

812.0

5.5%

Profit before tax £m

810.7

682.0

18.9%

Profit for the year £m

656.6

555.3

18.2%

Adjusted basic earnings per share pence††

21.3

20.2

5.4%

Basic earnings per share pence

20.1

17.0

18.2%

Tangible net asset value per share pence

98.3

95.7

2.7%

Net cash £m

644.1

511.8

25.8%

 

Operating profit* in 2018 was £880.2 million and is up 4.3%, driven by improved performance in both the UK and the Spanish businesses. Profit for the year at £656.6 million is up 18.2% with the improved underlying performance and a reduced post-tax exceptional charge of £37.9 million (2017: £105.0 million).

UK current trading and outlook

We have made a positive start to 2019 and, coming into the spring selling season, customer confidence remains robust. The net private sales rate for the year to date (w/e 24 February 2019) was 0.99 (2018 equivalent period: 0.82). This sales rate includes a forward build and sales contract that was entered into simultaneously with a large land purchase, reducing market risk. The underlying net private sales rate for the year to date, excluding this deal, was 0.90 (2018 equivalent period: 0.82).

We have continued to prioritise building a strong order book for the future, which is particularly important in an uncertain market, whilst ensuring we are managing our customers’ timing and meeting their requirements. As at 24 February 2019, we were c.47% forward sold for private completions for 2019, with a total order book value of £2,170 million (2018 equivalent period: £1,961.0 million), excluding joint ventures. This order book represents 9,622 homes (2018 equivalent period: 8,385), with significant growth coming from affordable homes. In Central London c.50% of private completions for 2019 are forward sold, as at 24 February 2019 (2018 equivalent period: 49%).

In current market conditions, we continue to expect stable volumes in 2019 and for underlying build cost increases during 2019 to be at a similar level to 2018, at around 3-4%.

As previously announced, we will pay a total dividend in 2019 of c.£600 million, subject to shareholder approvals to be sought at the Annual General Meeting (AGM) on 25 April 2019, and confirm our intention to make further material cash returns in 2020 and beyond.

We have made a significant step change in our quality of delivery and customer service over the last four years and are pleased that we have seen material improvements across a number of metrics, including achieving over 90% in the Home Builders Federation (HBF) 2017/2018 survey. Our focus in 2019 is on making good progress on the key priorities that underpin our customer-led strategy. This includes ensuring our right first time approach is adopted consistently through all stages of build, supply chain improvements, ongoing people development and resourcing of future capacity, through our apprentice and our direct labour programmes.

While we are conscious of the wider political and economic risks, particularly as the UK plans its exit from the EU, we are confident that our strong balance sheet, with our high-quality landbank, and a strategy focused on customers makes us a more resilient business. This strategy also gives us the flexibility to increase our pace of build and accelerate growth in 2020, depending on market conditions, while maintaining focus on quality land investment in good locations.