Taylor Wimpey Annual Report 2007

FY2007 Annual Report · Taylor Wimpey

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Taylor Wimpey plc
Annual Report and Accounts 2007

Taylor Wimpey plc is a focused homebuilding company
with operations in the UK, North America, Spain and
Gibraltar. We aim to be the homebuilder of choice for
customers, employees, shareholders and communities.

Financial Highlights

Revenue

Pro forma** operating proﬁt*

Taylor Wimpey
Taylor Woodrow

£4,714m

£3,572m

£667.0m

£892.6m

Taylor Wimpey
Taylor Wimpey

£4,714m

£667.0m

Proﬁt before exceptional items and tax

(Loss)/proﬁt before tax

Taylor Wimpey
Taylor Woodrow

£360.2m

£405.6m

£(19.5)m

Taylor Wimpey
Taylor Woodrow

£405.6m

£360.2m

£(19.5)m

Adjusted basic earnings per share

Basic (loss)/earnings per share

30.8p

378

50.5p

Taylor Wimpey
Taylor Woodrow

(24.2)p

Taylor Wimpey
Taylor Woodrow

xx.x

50.5p

30.8p

(24.2)p

Dividend per share†

Year end gearing

Taylor Wimpey
Taylor Woodrow

15.75p

14.75p

18.6%

38.2%

Taylor Wimpey
Taylor Woodrow

38.2%

* Proﬁt on ordinary activities before ﬁnance costs, exceptional items and amortisation of brands.
**The basis of preparation of pro forma ﬁnancial information is set out on page 104.
† Paid and proposed.

Business Overview

Our business today

UK Housing

Spain & Gibraltar

Regional ofﬁce

Overview
We are one of the largest homebuilders
in the UK, with 34 regional businesses
and ﬁve smaller satellite operations.
We operate two core brands, Bryant
Homes and George Wimpey.

The George Wimpey brand
incorporates modern design and
contemporary living into each home
and offers customers a wide choice
of options to personalise their home.

Bryant Homes properties combine
the best of traditional design with
the convenience of the new to create
safe and secure places to live.

Our G2 brand is speciﬁcally targeted
at ﬁrst time buyers and key workers,
providing quality one and two bedroom
apartments at highly competitive prices.

Overview
We have longstanding operations in
Spain and Gibraltar, both of which
are branded as Taylor Woodrow.

Our business in Spain is primarily
focused on developing sites in popular
locations.

Our Gibraltar business operates in
the luxury apartment market.

14,862

Completions

337

Average outlets

£191,000

Average selling price

212

Completions

Average outlets

For more information visit
www.taylorwimpey.com

113

North America Housing

Construction

Overview
Taylor Woodrow Construction provides
construction and facilities management
services throughout the UK and for
key customers in selected overseas
markets.

The business is focused on selected
growth areas – repeat services for ‘blue
chip’ customers, facilities management,
rail and infrastructure, and engineering.

£1,194m

Order book

Regional ofﬁce

Overview
Our business in North America has
operations in both the US and in Canada.

In the United States we sell homes under
the Taylor Morrison brand in Arizona,
California, Colorado, Florida, Nevada and
Texas. We also have a land development

business which sells lots to other
homebuilders using the Taylor Woodrow
Communities brand.

Our business in Canada trades in Ottawa
and Toronto under the Monarch brand.

5,197

Completions

183

Average outlets

£182,000

Average selling price

Principal Operating Addresses

Registered in England and Wales number 296805

Taylor Wimpey plc

80 New Bond Street

London

W1S 1SB

Tel: +44 (0)20 7355 8100

Fax: +44 (0)20 7355 8196

Email: twplc@taylorwimpey.com

www.taylorwimpey.com

Taylor Wimpey UK Ltd.

Gate House

Turnpike Road

High Wycombe

Buckinghamshire

HP12 3NR

Tel: +44 (0)1494 558323

Fax: +44 (0)1494 885663

41 Clarendon Road

Watford

Hertfordshire

WD17 1TR

Tel: +44 (0)1923 478 400

Fax: +44 (0)1923 478 401

Taylor Woodrow Construction Ltd.

Spain and Gibraltar

Taylor Woodrow de España S.A.

C/Aragon, 223-223A

07008 Palma de Mallorca

Mallorca

Spain

Tel: +00 (34)971 706 570

Fax: +00 (34)971 706 565

Taylor Woodrow (Gibraltar) Ltd.

17 Bayside Road

Gibraltar

Tel: +00 (350) 78780

Fax: +00 (350) 75529

North America

Taylor Morrison, Inc.

8430 Enterprise Circle, Ste. 100

Bradenton

FL 34202

Tel: +00 (1)941 554 2000

Fax: +00 (1)941 554 3005

Details of all our operating locations

are available on our website

www.taylorwimpey.com

Published by Black Sun Plc

Printed by Royle Corporate Print

Taylor Wimpey plc Annual Report and Accounts 2007 113

Contents

Group Overview

Business Overview
Financial Highlights
Delivering merger benefits

2 03

Business Review

Governance

Financial Statements

Chairman’s Statement
Group Chief Executive’s Review

Our strategy
Our focus
Our principal risks and uncertainties
Our corporate responsibility approach

UK Housing
North America Housing
Spain and Gibraltar Housing
Construction
Group Financial Review

Board of Directors
Directors’ Report
Corporate Governance
Remuneration Report

Consolidated Income Statement
Consolidated Statement of

Recognised Income and Expense

Consolidated Balance Sheet
Consolidated Cash Flow Statement
Notes to the Consolidated
Financial Statements

Independent Auditors’ Report
Company Balance Sheet
Notes to the Company
Financial Statements

Independent Auditors’ Report
Particulars of Principal

Subsidiary Undertakings

Five Year Review
Additional Pro Forma Unaudited

Financial Information

Shareholder Information

Notice of Meeting
Shareholder Information
Principal Operating Addresses

Merger benefits
We are making strong progress on
integration and remain on track to
deliver synergy savings in line with the
previously stated value and timetable.

Acting responsibly
We are committed to
playing our part in
building increasingly
sustainable homes
and communities.

UK Housing
Our objective is to drive relative
improvement in the operating margin.
Excellent progress has already been
made, driven by the changes in land
strategy, the drive to reduce costs and
the impact of an improved sales
strategy.

More online

www.taylorwimpey.com
Our website contains a wide variety of
additional information about the Group,
along with links to our sites for home
buyers. A fully interactive version of this
report is also available.

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105
112
113

Taylor Wimpey plc Annual Report and Accounts 2007

Delivering merger beneﬁts

One Group
uniquely positioned

Norman Askew
Chairman

Pete Redfern
Group Chief Executive

Welcome to the ﬁrst Annual Report
of Taylor Wimpey plc.

Following our successful merger and
rapid integration to create the new Taylor
Wimpey Group, we are well placed to
deliver business improvement. This
improvement will be made through our
land and planning strategy, build cost
efﬁciency, improved sales and customer
care and the delivery of signiﬁcant
synergy beneﬁts.

Over the next nine pages we will give
you a clear overview of how we plan to
move forward in these key areas and
demonstrate that the combined
strengths of the new business put
Taylor Wimpey in an excellent position
for the future.

www.taylorwimpey.com

Land and
planning

Build cost
efficiency

The merger delivered a better
balance to our landbanks in
both the UK and North America.
This provides the opportunity to
add value through planning and
development and a more stable
base for the future.

As the UK’s largest homebuilder
and with increased scale in North
America, Taylor Wimpey has
signiﬁcant opportunities for both
procurement efﬁciencies and
design and engineering savings.

Sales and
customer care

Our enlarged business gives a
greater ability to manage sales
rates in order to maximise margin
performance. We continue to
strive to deliver high quality
homes and excellent levels
of customer service.

Synergy
beneﬁts

We are committed to delivering
synergy exit rates of £70m by
the end of 2008 and £100m
by the end of 2009. One-off
merger related restructuring
costs of £60m have been
charged in 2007.

Taylor Wimpey plc Annual Report and Accounts 2007

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Land is the lifeblood of our business.
Combining Taylor Woodrow’s strong
strategic landbank and George Wimpey’s
well sourced short term land has delivered
a well balanced landbank that puts
Taylor Wimpey in an excellent position
for the future.

www.taylorwimpey.com

1
Strategic land
In the UK, land with an implementable planning
consent remains a scarce resource. Competition
for such land is intense resulting in relatively
high purchase prices. Our strategic land team
is dedicated to identifying sites which do not
currently have planning consent, but have good
potential for future development. We would
typically agree a purchase option arrangement
with the landowner and then work together to
promote the site through the planning process.
Purchase options generally provide us with the
ability to purchase the land at a discount to
open market value when suitable planning
consents are obtained. We aim to increase the
proportion of our UK home completions that are
built on strategically sourced land over time.

2
Brownﬁeld land
During 2007, 68% of our homes in the UK were
built on ‘brownﬁeld’ or previously developed land.
This classiﬁcation incorporates a wide variety of
former uses. For example, our Axis development in
Coventry is on the site of the former Peugeot
works; our Grand Union Village development in
West London is on the site of the former Taylor
Woodrow head ofﬁce; and our Modern Ice
development in San José, California, is on the site
of a former refrigeration and cold storage unit. We
regularly turn disused, neglected or contaminated
land into thriving new communities. Many of our
developments integrate green spaces or wildlife
areas and involve conservation work.

3
Developing communities
Planning skills are a key element of our success.
The ability to develop sustainable communities is
a key factor in winning land bids and also ensures
that the ﬁnished developments are attractive and
vibrant communities where people want and can
afford to live. More detail on this aspect of our
business is provided in our separate Corporate
Responsibility Report.

4
Taylor Woodrow Communities
Our land development business in North America,
Taylor Woodrow Communities, identiﬁes and
acquires land suitable for housing. We then
masterplan the community and put in place the
required infrastructure to support the building of
homes. Having identiﬁed the plots that best suit
our product range, we sell on the remaining plots
to other homebuilders.

Taylor Wimpey plc Annual Report and Accounts 2007

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Our merger provides us with tremendous
opportunities to learn from the best
practices of each of the legacy businesses
and to beneﬁt from the increased scale of
our combined operations.

www.taylorwimpey.com

1
Speciﬁcation
We have reviewed the housetype ranges of the
two legacy businesses in the UK in order to
identify opportunities to reduce build costs. A
review of similar housetypes from the two ranges
has identiﬁed signiﬁcant opportunities for cost
saving arising from differences in the underlying
speciﬁcations. For example, changes to the design
of the plumbing in some of our housetypes will
result in reduced materials and installation costs.

2
Subcontractors
Our increased scale means that we are able to
offer subcontractors greater volumes of work and
more certainty of future work. This has enabled
us to work collaboratively with many of our
subcontractors to ﬁnd ways to reduce costs.

3
Build process
We have undertaken a thorough review of the
build processes used by the legacy businesses
in both the UK and North America to identify
the optimal approach for the combined business
moving forward. As an example, we have identiﬁed
an opportunity to deliver signiﬁcant potential
savings on scaffolding costs by amending the
build process to reduce the length of time that
it is required on each plot.

4
Materials
Our increased scale brings with it opportunities
for cost savings on our material purchases. In the
ﬁrst instance, we have undertaken an exercise to
compare the prices paid for materials by each of
the legacy businesses in order to take advantage
of the best deals for future completions. Beyond
this, our scale enables us to work with our
suppliers to establish how we can take costs out
of the process of supplying our raw materials, to
the beneﬁt of both parties.

Taylor Wimpey plc Annual Report and Accounts 2007

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In more challenging market conditions
sales and marketing becomes an
increasingly important element of our
business. The quality of our product and
the standard of our customer care are
essential to the success of our business.

www.taylorwimpey.com

1
Outlets
In the UK we reached our challenging target of
having 500 active sales outlets by the end of
2007. Having a larger number of outlets gives us
greater ﬂexibility in the way in which we manage
our business. In more subdued market conditions,
having a larger number of outlets means that we
can accept a lower sales rate at each outlet and
therefore prioritise margin over volume. Having
more outlets also gives us a greater degree of
protection against the risk of planning delays on
new outlets.

2
Dual branding
Operating with two core brands in the UK (Bryant
Homes and George Wimpey) enables us to offer
a wider choice to customers at our larger sites.
It also enables us to use our land more efﬁciently,
as we can build and sell homes more quickly on
these sites once planning is obtained.

3
Quality
Quality is fundamental to everything we do and
is essential for our reputation and our proﬁtability.
Moving home can be a stressful experience and
the last thing that a customer wants is to move
into a new home and discover a problem. It is also
much cheaper to get something ‘right ﬁrst time’
than to go back and rectify a fault.

4
Customer care
We aim to provide the highest levels of customer
care. Following the merger we have reviewed the
systems and processes in place in each of the
legacy businesses to identify best practices for
implementation during 2008.

In 2007, Monarch Homes was named the number
one builder in terms of customer satisfaction in
Ottawa, Canada, by the inﬂuential JD Power and
Associates survey.

Taylor Wimpey plc Annual Report and Accounts 2007

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We remain on course to deliver our synergy
target exit rates of £70 million by the end of
2008 and £100 million by the end of 2009.
These incorporate some of the build cost
efﬁciencies outlined on pages 6 and 7,
along with a number of other initiatives.

www.taylorwimpey.com

1
Procurement
In addition to savings on site costs, we are
reviewing the agreements in place for business
services such as company cars and van ﬂeets,
media and ofﬁce supplies.

2
Sales efﬁciencies
There are a number of areas where the merger
will enable us to deliver savings on our combined
selling costs. A key component of this will be our
advertising costs, where our enlarged scale gives
us better bargaining power and enables us to
make more efﬁcient use of the advertising space
that we buy.

3
Headcount
In the UK we now expect a total of 593 roles
to be removed from the business as a result of
duplication. We retained 37% of employees from
ofﬁce closures and found them jobs elsewhere.
We did our best to make relocation as
straightforward, ﬂexible and ﬁnancially viable as
possible. In North America, the overall headcount
reduction is of a similar scale, but this also
includes actions taken as a result of the ongoing
weakness in the US market.

4
Property costs
The merger will deliver reductions in property costs
in both the UK and North America as we optimise
our business structure. In the UK, we are closing
the former Taylor Woodrow head ofﬁce in Solihull
and have closed four regional ofﬁces. In North
America, we now have nine fewer divisions than
the two legacy businesses combined.

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Chairman’s Statement

A rapid and successful integration

A year of transformation
The 2007 merger of Taylor Woodrow plc
and George Wimpey Plc has already realised
signiﬁcant beneﬁts. It has changed the face
of, and the opportunities for the business.
The beneﬁts of the merger are as valid today
as they were in July. This is especially true
in the difﬁcult market conditions that we
currently face.

2007 performance
Our UK Housing business has delivered a
strong performance against a backdrop of
more subdued market conditions, particularly
in the second half of 2007. We took the
decision to prioritise margin improvement
over volume and have exceeded our target
to achieve pro forma operating margins**
of 14%.

Markets in North America have remained
extremely challenging throughout 2007.
Whilst our Canadian operations have taken
advantage of a robust environment to deliver
another good set of results, our business
in the US has returned a loss for the year
after recording signiﬁcant exceptional items.
Total pre-tax exceptional items for the year are
£379.7 million of which £321.3 million relate
to the North America Housing business.

In Spain and Gibraltar, oversupply in the market
in mainland Spain has had a negative effect on
our performance, despite relatively stable
market conditions in Mallorca and Gibraltar.

The performance of our Construction business
has been good in the UK but has been
hampered by losses on a small number of
overseas road construction projects.

This approach has been illustrated by the
commencement of a £750 million share
buyback programme during the year. At the
year end we had completed the purchase
of 94.8 million shares, at a total cost of
£250 million. Given the uncertainty in the
UK housing market, the Board has decided
to suspend the buyback programme
temporarily until conditions improve. In order
to maintain ﬂexibility we will be seeking the
usual authority at the forthcoming Annual
General Meeting (AGM) on 17 April 2008
to purchase up to 10% of our shares.

We are pleased to conﬁrm the continuation of
our progressive dividend policy, by which we
intend to grow dividends in line with earnings
over the medium term whilst maintaining
prudent levels of proﬁt and cash cover.

In line with this policy, the Board
recommends an increase in the ﬁnal dividend
to 10.25 pence per share from 9.75 pence in
2006. This, together with the interim dividend
of 5.5 pence paid on 1 November 2007,
makes a total dividend for the year of
15.75 pence, an increase of 6.8%.

Subject to shareholder approval at the AGM,
the dividend will be paid on 1 July 2008, to
shareholders on the register at close of
business on 23 May 2008.

This dividend will be paid as a conventional
cash dividend but shareholders are once
again being offered the opportunity to
reinvest some or all of their dividend under
the Dividend Re-Investment Plan, details of
which are contained in the Shareholder
Information section.

Creating value for our shareholders
Taylor Wimpey plc continues the focus on
long term value creation that was adopted
by both Taylor Woodrow plc and George
Wimpey Plc.

Corporate governance
Following the merger, we have taken the
opportunity to review our approach to
corporate governance to ensure that we
incorporate the best practices from both of

** The basis of preparation of pro forma financial

information is set out on page 104.

Norman Askew
Chairman

www.taylorwimpey.com

Operational summary

• Successful and rapid integration to

create the new Taylor Wimpey Group

• Strong growth in pro forma UK
operating margins** to 15.2%,
ahead of target

• Actions in place to achieve full
synergy targets with further
progress expected

• Net operating assets for North

America Housing reduced to 15%
of total Group

For more information visit
www.taylorwimpey.com

the legacy businesses. A full report on our
corporate governance activities can be found
on pages 43 to 45.

Corporate responsibility management
Following the merger we set up a new
Board-level Corporate Responsibility
Committee. The Committee is made up of
Independent Non Executive and Executive
Directors and is chaired by Non Executive
Director Katherine Innes Ker.

The Committee is responsible for
recommending the Company’s corporate
responsibility strategy, policies, reporting and
performance monitoring to the Board. The
Committee’s remit includes ensuring that
corporate responsibility strategy and activity
is adequately resourced, has appropriate
standing within the Company and is aligned
to the needs of the business.

Our key areas of focus in terms of corporate
responsibility are the homes and communities
that we build for our customers and the way
that we operate as a business in terms of
human resources, health and safety,
environment and supply chain management.

Board and operational changes
On behalf of the Board, I would like to record
my thanks for the contributions made by the
outgoing Board members.

In the case of Taylor Woodrow plc, Ian Smith
and Vernon Sankey resigned from the Board
at the time of the merger. John Landrum
left the Board with effect from 31 July 2007
following which Sheryl Palmer has operational
responsibility for the North American
business. Sheryl has 18 years of experience
in the homebuilding and land development
industry, much of it with Pulte Homes and
Del Webb, prior to joining Morrison Homes
in early 2006.

The Board would also like to take this
opportunity to thank John Robinson, Andrew
Carr-Locke, Steve Parker, Robert Sharpe and
Christine Cross who resigned from the George
Wimpey Plc board at the time of the merger.

Our people
It is an unfortunate fact that many of the
savings achieved through mergers come
as a result of redundancies. We would like
to record our thanks for the expertise and
dedication of all of our employees and, in
particular, for the professionalism of those
employees who no longer have a continuing
role within the combined business.

Approach to reporting
The results within this Annual Report and
Accounts are presented under the acquisition
accounting convention, including alignment of
accounting policies, fair value adjustments on
the George Wimpey net assets acquired and
the recognition of other intangibles including
goodwill. The results of the former George
Wimpey Plc business are incorporated from
3 July 2007, when the merger completed.

Shareholder information
Full details of the facilities available to
shareholders can be found on page 112
of this Annual Report and Accounts and
at www.taylorwimpey.com.

Norman Askew
Chairman

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Group Chief Executive’s Review

Achieving business beneﬁts

Following the successful completion of the
largest ever merger in the UK homebuilding
industry, we are making excellent progress
with our integration plans.

At the time of the merger, we outlined a
series of business beneﬁts that would be
delivered as a result of the transaction and I
would like to take this opportunity to update
you on the advances that we are making in
each of these areas.

Improving margin growth in the UK
The UK Housing businesses of both Taylor
Woodrow and George Wimpey were
operating in the bottom quartile of the listed
peer group in terms of margin performance
prior to the merger. However, the reasons for
this underperformance were fundamentally
different. Whilst Taylor Woodrow had a very
strong long term landbank, it had higher than
average build costs and was not converting
all of the value through the build and sales
processes. In contrast, George Wimpey’s
cost efﬁciency was amongst the best in the
sector, but its landbank mainly comprised
of more expensive, short term land.

The merger has given us a well balanced
land portfolio, a position that neither legacy
business would have been able to achieve in
such a short period of time as a standalone
entity. This brings with it the ability to beneﬁt
from the lower land costs associated with
strategic land, whilst mitigating the risk of
planning delay through the use of short term
land to ﬁll in any ‘gaps’ in the land pipeline.

** The basis of preparation of pro forma financial

information is set out on page 104.

By bringing these two businesses together
we have had the opportunity to blend the
best practices of each operation to create
the foundations for a more competitive
organisation moving forward. For example, we
have performed a review of similar housetypes
from the Bryant Homes and George Wimpey
product ranges to identify improvements to
quality and reductions in cost that can be
rolled out across future developments.

We have also been able to optimise our
business structure, with the result that
overheads going forward will represent a
smaller percentage of overall sales than
was the case for either legacy business.

Both legacy businesses were operating with
higher sales rates per outlet than the industry
average prior to the merger. We have taken
the decision to prioritise margin over volume
and have therefore reduced sales rates since
the merger. In the more subdued market
conditions that we have experienced in the
UK this has meant that we have not had to
chase sales and therefore that we can be
more selective with regard to the incentives
that are offered to secure a sale.

I am delighted by the progress that has been
made by the UK Housing business over the
last six months. More detail is provided on
pages 22 to 27, but the evidence of our
success can be seen in the increase in the
pro forma operating margin** from 12.8%
in 2006 to 15.2% in 2007.

Pete Redfern
Group Chief Executive

www.taylorwimpey.com

Our strategy

Vision and goal

Taylor Wimpey plc is a focused homebuilding company
with operations in the UK, North America, Spain and Gibraltar.
We aim to be the homebuilder of choice for customers,
employees, shareholders and communities.

Looking at our largest businesses in more detail:

Focused strategy

North America

• Goal to be the leading
homebuilder in the UK

• Goal to be the homebuilder of
choice in each of our markets

• Current priority is relative margin

• Current focus on managing

improvement, followed by:

• Volume growth from increased

outlets

tough conditions – ‘cash and
costs’, followed by:

• Reinvestment at lower cost

as market turns

Merger beneﬁts

Both businesses are strengthened by the merger

• Strengthened landbank

• Increased build cost efﬁciency

• Improved sales and customer care strategy

• Signiﬁcant synergy beneﬁts

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Group Chief Executive’s Review continued

www.taylorwimpey.com

Economies of scale in the UK
Bringing together two businesses brings
with it opportunities to beneﬁt from the
increased size of the combined operations.
For our UK Housing business, these
opportunities lie in three main areas:
procurement and supply chain; overhead
efﬁciency; and land management.

Whilst both legacy businesses had already
put in place a number of initiatives to ensure
the efﬁciency of their purchasing and supply
chain processes, the increased scale of
the combined business provides further
opportunities for improvement. For example,
following the merger, we have undertaken
an exercise to compare the prices paid for
materials by each of the legacy businesses.
As a result, we have been able to ensure
that we take advantage of the best deals
for future completions.

However, our size enables us to go beyond
this approach. We are currently working
with our major suppliers to establish how
we can take costs out of the process of
supplying our raw materials to the beneﬁt of
both ourselves and our suppliers. Examples
might include sharing more detailed forecast
information with our suppliers to enable them
to anticipate key periods of demand for their
products and analysing the location of our
sites to minimise transport costs.

We have structured our UK Housing business
in such a way as to optimise overhead costs.
The UK Housing head ofﬁce, based in High
Wycombe, is a lean team providing support
and specialist guidance to our 34 regional
businesses. Each of these regional businesses
is staffed in accordance with the expected
number of completions. The optimal size of
a region is around 650 completions and, once
a region approaches this scale, we will create
a new ‘satellite’ operation to facilitate ongoing
growth. To maintain overhead efﬁciency,
these satellites will receive support from their
originating region until such time as the level of
completions merits an increase in the size of
the team.

Our increased scale also enables us to adapt
our approach to land buying in the UK. The
strength of our balance sheet and the skills
of our land and planning teams will enable
us to participate in projects that our legacy
businesses might not have been able to
consider. We are also able to invest
proportionately more money into strategic
land, which brings with it the potential for
higher proﬁts on sites that are successfully
promoted through the planning process.

A stronger business in North America
Market conditions remain exceptionally
challenging in North America, but the merger
brings beneﬁts which leave us better placed
than the legacy businesses would have been
on their own.

There was an excellent geographical ﬁt
between the two legacy businesses in the
US. Both Taylor Woodrow and Morrison
Homes had operations in Arizona, California,

Our focus

Group key performance indicators

Proﬁt before tax
We strive to achieve the highest level of proﬁt before
tax in the housebuilding sector.

Return on average capital employed
We aim to deliver a return on capital employed above
the level of our cost of funding.

Proﬁt on ordinary activities, excluding exceptional
items and before charging tax.

Earnings per share
We seek to provide continuous growth in earnings
per share.

The basic earnings per share based upon the
proﬁt attributable to ordinary shareholders, before
exceptional items, divided by the average number
of shares in issue during the year.

Proﬁt on ordinary activities before ﬁnance costs,
exceptional items and amortisation of brands divided
by the average of opening and closing capital
employed (excluding goodwill and brands).

Dividend per share
We aim to deliver an attractive progressive dividend.

The sum of the interim dividend per share and the
ﬁnal proposed dividend per share for the year.

Staff attrition
We endeavour to attract and retain the highest calibre
of employees and strive to be a company that people
want to work for.

Following the merger, new systems and processes
are being introduced and the staff attrition key
performance indicator will be introduced in the 2008
Annual Report.

UK Housing/North America Housing/Spain and Gibraltar Housing key performance indicators

Operating margin
We aim to deliver industry leading operating margins
in each of our businesses.

Average outlet numbers
We aim to increase the average number of outlets
over time in order to grow our business.

Health and safety
We want to send our employees and sub-contractors
home safely and uninjured day after day.

Proﬁt on ordinary activities before ﬁnance costs,
exceptional items and amortisation of brands divided
by revenue.

Order b ook as a percentage of revenue
We aim to hold an appropriate level of order book to
give us visibility of proﬁts for the forthcoming year.

Year end order book divided by revenue for that year.

Weighted average number of outlets open over the
course of a year.

Customer satisfaction
We strive to maintain and improve our customer
satisfaction scores.

The basis used for this score across our business
varies by geography. Please see the corporate
responsibility section on our website for detailed
information.

Sales rates
We aim to achieve an appropriate sales rate per week
to prioritise operating margin over completion volumes.

Annual gross reservations divided by the average
number of sites, divided by 52.

Construction key performance indicators

Order book
We aim to hold an appropriate level of order book to
give us visibility of proﬁts for the forthcoming year.

Proﬁt on ordinary activities before ﬁnance costs,
exceptional items and amortisation of brands divided
by revenue.

Health and safety
We strive to maintain and improve our customer
satisfaction scores.

Value of the year end order book (excluding any
orders from other Group companies).

Operating margin
We aim to deliver industry leading operating margins
in each of our businesses.

Customer satisfaction
We strive to maintain and improve our customer
satisfaction scores.

The basis used for this score across our business
varies by geography. Please see the corporate
responsibility section on our website for detailed
information.

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Group Chief Executive’s Review continued

Florida and Texas. Combining these
operations has enabled us to increase our
scale in these key States, bringing with it
overhead efﬁciencies, increased buying
power, greater market presence and
marketing efﬁciencies.

The combination of the two businesses
has brought us a broader product offering,
appealing to a wider range of consumer
preferences. Whilst the legacy Morrison
Homes business was focused on the
mid-market, the Taylor Woodrow business
also had experience of building luxury homes.
We go forward with a product range catering
to buyers from entry level apartments to
luxury country club homes. We also have a
land development business which sells lots to
other homebuilders, as well as supplying our
own operations.

We are also better placed to take advantage
of future market recovery in the US as a result
of the merger.

The increased strength of our business, both
in North America and at a Group level, leaves
us well positioned to take advantage of land
acquisition opportunities as the market starts
to recover. However, it remains too early to
make signiﬁcant land purchases in the US.

Material annual synergies
At the time of the announcement of the
merger, we indicated that we expected to
deliver an exit rate of at least £70 million of
pre-tax synergies by the end of 2008. We
anticipated one-off costs associated with the
merger of around £60 million to be incurred
primarily during 2007.

We subsequently increased our synergy
estimates at the Interim Results in July. This
was a result of the additional work that we
were able to do as the merger progressed.
We have actions in place to deliver these
increased exit rate targets of £70 million by
the end of 2008 and £100 million in
aggregate by the end of 2009, with further
progress expected. The one-off costs
associated with the merger were in line with
the expected £60 million and have been
recognised in the 2007 accounts.

These synergies are in excess of the previously
announced cost savings of £25 million in
George Wimpey’s UK business and combined
savings in excess of US$20 million in the
legacy businesses in North America. I am very
pleased to be able to conﬁrm that both of
these targets were also achieved during 2007.

People
We were able to take advantage of the fact
that the transaction was an agreed merger
to make signiﬁcant progress on integration
planning before the deal completed. When
we announced the merger we were also able
to announce the proposed structure of the
combined Board.

We set up integration teams, comprising
employees from both legacy businesses,
which were tasked with putting together
detailed plans that could be put into effect as
soon as the merger completed. These teams
worked together exceptionally well, enabling
us to hit the ground running on 3 July 2007.

Since the merger, I have spent a lot of
my time visiting the different parts of our

combined business and I have been very
impressed by the positive attitude of
the people that I have met and by their
determination to make the merger work.

Corporate responsibility
Corporate responsibility is an integral part
of corporate governance and one of the
hallmarks of a well managed company. We are
committed to being a responsible company
and to playing our part in building increasingly
sustainable homes and communities.

We also believe that corporate responsibility
makes sound commercial sense. It helps
us to:
(cid:129) Demonstrate high standards of governance
to stakeholders whose opinions and actions
can have an impact on our business
(cid:129) Meet our customers’ current and future

needs and wants

(cid:129) Attract and retain high calibre employees
(cid:129) Save money, reduce business risk and
protect our reputation by managing our
business effectively, rather than engaging
in expensive or damaging remedial action

(cid:129) Win competitive tenders that are

increasingly based on sustainability criteria

(cid:129) Respond to the growing sustainability

requirements of governments in the regions
in which we operate

(cid:129) Identify opportunities for business

development and innovation

(cid:129) Anticipate and comply promptly with

new legislation

www.taylorwimpey.com

Our principal risks and uncertainties

As with any business, Taylor Wimpey faces a number of risks and uncertainties in the course of its
day to day operations. By effectively identifying and managing these risks, we are able to improve
our returns, thereby adding value for shareholders.

Economic and market environment
Demand is heavily dependent on
consumer conﬁdence in the wider
economy, which is inﬂuenced by factors
such as unemployment levels, availability
of credit and interest rates, which are
outside the Group’s control.

We use the detailed knowledge of our
local teams to select the locations and
home designs that best meet existing
customer demand. We minimise the level
of speculative build that we undertake by
opening a sales outlet at an early stage of
development.

Land purchasing
Land is the major ‘raw material’ for the
Group and, as such, mis-priced or poor
quality land would have a detrimental
impact on our proﬁtability.

To mitigate this risk, we operate an
investment appraisal process for
signiﬁcant land purchases, which ensures
that such projects are subject to
appropriate review and authorisation
dependent on the proposed scale of
expenditure.

Availability of sub-contractors
The vast majority of the work carried out
on site is performed by sub-contractors.
If they are not able to recruit sufﬁcient
numbers of skilled employees, our
developments may suffer from delays
or quality issues.

We vet all suppliers thoroughly prior to
working with them to ensure that they
meet our requirements for environmental
impact, health and safety, quality and

ﬁnancial stability. We also play our part in
addressing the skills shortage in the
building industry through apprenticeship
schemes and membership of the
Construction Industry Training Board.

Site safety
Building sites are inherently dangerous
places and our management of health and
safety issues is of paramount importance
to us.

We want all of our people – whether
employee or sub-contractor – to go home
at the end of the day safe and healthy. We
have a comprehensive HSE management
system, supported by policies and
procedures to ensure that we live up to
our intention of providing a safe and
healthy working environment.

Construction process
Construction, both of homes and other
projects, can be subject to delays for a
wide variety of reasons. These include
adverse ground conditions, changes to the
original design once build has commenced
and adverse weather.

We target the type of work that we bid for
selectively, choosing not to participate in
projects where we consider that the risks
are too great. We maintain detailed risk
registers, ensuring that risks are identiﬁed,
priced or hedged and approved at the
appropriate level before taking on a
project. These registers are maintained
throughout the life of the project and
reviewed following the completion of the
job to identify any key learning points for
future projects. We also actively promote

developments in areas such as off-site
manufacturing which have the potential
to reduce the risk of delay.

Government regulations
The number of homes that we are able
to build in the course of a ﬁnancial year
is dependent on the granting of suitable
planning permissions. Due to the time
taken to obtain planning permissions
on land, we hold a landbank to provide
greater certainty of the number of plots to
be developed in the following 12 months.
We also look to use options to control
land, with ownership not being taken
until planning is more certain.

Delays to the expected timescale for
receipt of planning on a site may result in
a reduction in the number of homes that
we have available for sale. Planners may
also impose conditions within planning
consents, which may lead to additional
costs of developing a site. Our land
specialists mitigate these risks by working
closely with the relevant planning
authorities and through the structure of
land purchase agreements.

In the UK, planning permissions can be
very speciﬁc, including the density, types
of housing and availability of car parking
spaces. If the views of the planners do not
coincide with our customers’ aspirations
there will be an impact on demand for
our product. We work closely with the
Government, both directly and as a
member of industry groups, to highlight
such potential issues.

For more information visit
www.taylorwimpey.com

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Group Chief Executive’s Review continued

Since the merger of George Wimpey and
Taylor Woodrow in July 2007, we have
focused on learning from the experience
and expertise within each of our legacy
businesses with a view to integrating best
practice for the future.

During 2007, we focused on analysing our
legacy companies’ approach in all business
areas, engaging with internal and external
stakeholders to identify best practice and
deciding on how best to move forward. We
are now updating our policies, procedures
and systems and, once this process is
complete, we will focus on implementing
and embedding these new approaches.

Sustainability performance
George Wimpey and Taylor Woodrow had
a strong track record in terms of corporate
responsibility performance. The Next
Generation 2007 sustainability benchmark
placed both companies in the top three of
the UK’s 20 largest housebuilders. Taylor
Woodrow and George Wimpey scored 73%
and 72% respectively in the benchmark, in
comparison with an average sector score of
39%. We were two of just three companies
to score over 70% in this WWF, Insight
Investment and Housing Corporation
benchmark. We are also included in the
FTSE4Good and Dow Jones Sustainability
Group indices.

Our involvement in developments such as the
Design for Manufacture site at Oxley Woods
and the Millennium Communities in Greenwich,
Telford and Manchester are a further testament
to our sustainability performance.

Outlook
The Group is well placed following the merger
to beneﬁt from a strengthened landbank,
operational efﬁciencies, ongoing cost savings
programmes and a strong ﬁnancial position.
We have continued to identify additional
areas for further savings and efﬁciencies.

In the UK, although sales and cancellation
rates have improved in the early part of 2008,
they remain weaker than seasonal norms.
Our order book at the end of February 2008
is £1.3 billion with a greater than historical
weighting towards affordable homes.
We anticipate that the current subdued
conditions will continue, with interest
rates and mortgage availability being key
determinants of customer conﬁdence.
Our focus is on preserving value through
maintaining a steady, but reduced, sales
rate and controlling land and work in
progress spend tightly. We anticipate that
these actions will result in signiﬁcant cash
generation, particularly in the second half
of 2008.

In North America, we do not expect market
conditions in the US to improve signiﬁcantly
during 2008. In the short term, our strategy
remains to focus on managing out existing
sites and reducing the cost base. We are well
placed to take advantage of land acquisition
opportunities as they arise in the future.

Pete Redfern
Group Chief Executive

www.taylorwimpey.com

Our corporate responsibility approach

Aim

2007 achievements

2008 targets

Our approach

To operate responsibly
and build sustainable
homes and communities

Taylor Woodrow and George
Wimpey were two of only three
housebuilders to score over 70%
in a sustainability benchmark

Our high level Corporate
Responsibility Committee will
continue to ensure that the
Company maintains high
standards of corporate
responsibility

Supporting local
communities

To be a good neighbour in
the communities in which
we operate

Won 10 awards from the
Considerate Constructors
Scheme for building in a
considerate manner

Seek to further improve
community engagement and
implement our new charitable
policies

Better by
design

To use design to enhance
the homes and communities
we build

Received a series of high profile
awards for design and innovation

Improve design and build
quality in all regions in which
we operate

Environmental
sustainability

To build environmentally
friendly homes and
communities

Integrated a wide range of
environmental features into our
developments

Improve the energy and
water efficiency of the
homes we build

Enhancing
economic
growth

To contribute to the local
economies in which we
operate

Contributed over £89.5 million in
UK planning obligations as well as
providing affordable housing and
employment opportunities

Further develop our G2
brand of low cost, high
quality housing aimed at
first time buyers

Customer care

To provide the highest levels
of customer care

Developed new Taylor Wimpey
systems and processes

Implement and embed our
new customer care practices

Employees

To attract, develop and retain
the highest calibre of
employees

Focused on open and fair
treatment of employees during
the merger process

Bring the culture of our
former businesses together
to create industry leading
employee teams

Health, safety and
environmental (HSE)
management

Supply chain
management
(SCM)

To provide safe and healthy
workplaces and minimise
environmental impact

Integrated systems and processes
and introduced a comprehensive
new UK HSE manual

Implement and embed our
HSE management systems

To maintain effective and
fair SCM procedures

Analysed historical approaches
to SCM to identify best practice
going forward

Integrate our systems and
processes as well as reviewing
green procurement practices

Katherine Innes Ker
Corporate Responsibility
Committee Chairman

For more information visit
www.taylorwimpey.com

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
UK Housing

Delivering strong progress

UK Housing strategy
• Goal to be the leading homebuilder in the UK
• Current priority is relative margin improvement, followed by volume growth

from increasing outlet numbers

UK key performance indicators
Pro forma operating margin**
Operating margin*
Order book as a percentage of 2007 revenue
Average outlet numbers
Customer satisfaction Bryant Homes
Customer satisfaction George Wimpey
Health and safety injury frequency rate
(per 100,000 hours worked)
Private sales rate (per outlet per week)

2007
15.2%
13.7%
35%
337
87%
87%
0.315

0.55

UK relative margin improvement opportunities
• Strong landbank and potential for increased conversion of strategic land
• Roll out of build cost best practice and procurement efﬁciencies
• Tighter control of sales incentives and strong forward selling

UK housing market
The UK housing market continues to exhibit
a structural undersupply of new housing
against Government projections of household
formation, providing support to the market in
the long term.

After a ﬁrst half of solid market conditions
in the UK, the market was subdued in the
normally strong Autumn selling season as
a result of a combination of factors:

Ian Sutcliffe
Chief Executive, Taylor Wimpey UK

www.taylorwimpey.com

• Availability of credit and lender restrictions

• Adverse media coverage of the

housing market

• Loss of consumer conﬁdence

Despite these more subdued conditions,
pricing has remained stable during the
second half of 2007. We have not
experienced any signiﬁcant geographic
differentials, although the Midlands and
North experienced the downturn earliest.

The UK’s new Prime Minister has made
housing one of his key priorities. Taylor Wimpey
supports the Government’s objectives on
housing provision as set out in the Housing
Green Paper and the focus on affordability,
supply, sustainability and design.

• Affordability: This is a priority issue. We

are developing a business called G2, solely
aimed at giving ﬁrst time buyers a foothold
on the property ladder and continue
George Wimpey’s strong support for
English Partnerships’ First Time Buyer
Initiative. We are working to develop shared
equity products and have invested in a
strong affordable housing specialist team,
dedicated to delivering high quality
affordable housing for all tenures.

• Supply: We are committed to playing our

role in delivering the Government’s housing
targets. When suitable planning consent is
available we will commence development
at an appropriate rate to enable safe
development of quality homes.

• Sustainability: We have a proven track

record of moving sustainability forward via

innovative developments, such as Oxley
Woods in Milton Keynes, and are actively
seeking industry-wide solutions to deliver
sustainable homes.

• Design: We have a dedicated design team
in place to work with external bodies and
leading architects to continue to improve
the design of our homes and communities.

We expect the Government’s objectives to
be challenging, particularly given an uncertain
economic outlook, although we believe
them to be achievable provided that all
stakeholders work in partnership.

Strategy and integration
We have already made excellent progress
on improving our UK Housing margin. We
have achieved pro forma operating margin**
growth of 2.4 percentage points to 15.2%,
exceeding the 14% target set for the
combined UK business for 2007 at our
Interim Results in July. The key drivers of this
margin improvement are changes in land
strategy, a focus on reducing costs and the
impact of an improved sales strategy.

The business has a strong land base, with a
good mix of both short term and long term
land. Over the last six months, we have
reviewed the combined landbank in detail,
and sold a number of sites that did not
meet our ongoing requirements. These sales
include sites where the two businesses had
duplicate holdings, or where the nature of
the site did not meet our ongoing strategy.

We have also focused on our outlet opening
programme, which is key to driving sales
volumes without damaging pricing. We are

* Profit on ordinary activities before finance costs,
exceptional items and amortisation of brands.

** The basis of preparation of pro forma financial

information is set out on page 104.

UK housing market at a glance

Key drivers
• Continuing undersupply of new
homes against Government
projections of household formation

• Strong cultural preference towards
home ownership rather than rental

Potential risk factors
• Continuing problems of credit

availability impacting on consumer
confidence

• Changing economic environment

leading to increasing interest rates
or unemployment

• First time buyers becoming priced

out of the market

• Changes in investor sentiment

leading to increased supply in the
secondary market

Taylor Wimpey performance
• Exceeded 14% pro forma operating

margin** target

• Delivering merger synergies ahead

of planned timetable

• 90% of forecast 2008 completions

are on sites which are already
actively selling

For more information visit
www.taylorwimpey.com

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
UK Housing continued

UK Housing private development price points

s
n
o
i
t
e
p
m
o
c
%

51-100

101-150

151-200

201-250

251-300

301-500

500+

price points (£000’s)

extremely pleased that we have achieved our
stretch target of 500 active outlets at the year
end, including over 100 new outlets which
were opened in the fourth quarter of 2007.

Synergy savings as a result of the merger will
result in lower overhead costs per home sold,
and we also have signiﬁcant opportunities
to reduce build costs over time. Our work
comparing standard housetypes from the two
historic product ranges suggests that savings
of as much as £8,000 per home could be
achievable. The ﬁrst of these savings will
start to come through in 2008.

Prior to the merger, George Wimpey
announced a target of £25 million of build
cost savings to be achieved in 2007. This
target, which is in addition to the synergy

savings outlined above, has been exceeded
during the year.

We have successfully implemented a revised
sales strategy to complement our focus on
margin improvement, rather than driving
volume. As a result, we have been able to
manage sales incentives tightly during the
more subdued market conditions of the
second half of 2007.

We continue to make excellent progress
on our internal integration targets. The UK
Housing management team and their direct
reports were in place on the date of
completion of the merger and the majority of
head ofﬁce staff are now based at our ofﬁce in
High Wycombe.

The four regional ofﬁces identiﬁed for closure
at the time of the merger have now been
closed, with the responsibility for all of their
sites transferred to neighbouring regions.
Following the merger, we are now operating
through 34 regions across the UK, with a
further ﬁve satellite regions providing
additional geographic coverage.

Wherever possible we sought to redeploy
staff following the merger. However, a total of
593 roles will be removed from the business
due to duplication. 323 roles were removed
by the end of 2007.

We have been able to accelerate our progress
on achieving synergies in both build and
overhead costs. Against an overall target exit
rate of £70 million for the UK by the end of
2009, we have already identiﬁed speciﬁc
savings in excess of this, and expect around
£50 million of synergies to ﬂow through in 2008.

www.taylorwimpey.com

UK Housing key performance indicators

Operating margin*

Private sales rate

Order book as a percentage of revenue

Taylor Wimpey
Taylor Woodrow

13.7%

12.7%

13.7%

Taylor Wimpey
Taylor Woodrow

0.55

0.79

35%

30%

Taylor Wimpey
Taylor Woodrow

35%

Average outlet numbers

Customer satisfaction

Health and safety

337

207

Taylor Wimpey
Taylor Woodrow

337

120

87%

108

Percentage of customers who
would recommend Bryant Homes
and George Wimpey to their friends
and family

120

0.315

108

Injury incident rate per 100,000
hours worked

Financial review
UK housing revenue increased by 73.6%
to £3,053.8 million (2006: £1,759.2 million),
primarily reﬂecting the inclusion of the legacy
George Wimpey business for the second half
of 2007.

Exceptional items of £47.9 million were
charged during the year. These related to
one time restructuring costs associated
with delivering synergy beneﬁts (£37.9 million)
and the write down of the Laing brand
(£10.0 million).

Operating proﬁt* was £418.2 million, an
increase of 86.7% against the previous year
(2006: £224.0 million).

The operating margin* for 2007 was 13.7%
(2006: 12.7%).

Sales, completions and pricing
Whilst sales and cancellation rates were
steady year on year for the ﬁrst half of 2007,
second half sales levels were around 15%
lower than the equivalent period in 2006.

* Profit on ordinary activities before finance costs,
exceptional items and amortisation of brands.

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
UK Housing continued

Cancellation rates in the second half of 2007
were running above 30%, compared to a
long run average of around 20%.

This reﬂected the more subdued market
conditions being experienced across the UK,
particularly in the fourth quarter of 2007.

We completed 14,862 homes in 2007,
an increase of 79.2% on the prior year
(2006: 8,294).

The average selling price of our homes
in 2007 was £191,000 (2006: £193,000).
The average selling price of a private home
was £208,000 (2006: £210,000), whilst the
average selling price of an affordable home
was £105,000 (2006: £100,000).

The estimated underlying cost inﬂation of labour
and materials has been running at around 3%
per annum during 2007. The initiatives underway
as a result of the merger are expected to
more than offset inﬂationary increases.

Our year end order book stood at
£1,064 million (2006: £534 million).

Product range and branding
Following the merger, we are operating with
two core brands in the UK, Bryant Homes
and George Wimpey. We have identiﬁed a
number of ways to differentiate our brands
to offer customers more choice on our sites,
whilst retaining a shared set of ‘core values’.
Some of these differentiating factors, such

www.taylorwimpey.com

UK Housing landbank

Plots

Detailed planning

Outline planning

Resolution to grant

Sub total

Allocated strategic

Non allocated strategic

Total

Owned

42,459

26,148

4,109

72,716

3,717

25,514

101,947

2007

Controlled

Pipeline

2,435

5,123

5,881

13,439

8,477

64,347

86,263

267

881

3,756

4,904

301

536

Total

45,161

32,152

13,746

91,059

12,495

90,397

2006

Total

19,369

16,897

7,432

43,698

7,300

64,650

5,741

193,951

115,648

as the range of optional extras that can be
purchased, are already being rolled out.
Other factors, such as changes to the design
of the housetype portfolio, will take time to
come into effect.

In addition, we are continuing to develop the
G2 brand, with a product and price range
speciﬁcally targeted at ﬁrst time buyers. We
built our second G2 development during
2007 and 70% of the homes were sold
within one day.

We offer a wide range of products from
apartments to ﬁve bedroom houses, with
prices ranging from under £100,000 to over
£500,000. During 2007, the majority of our
homes were priced within a range from
£100,000 to £200,000.

Quality and customers
We remain committed to delivering high
quality homes for all of our customers.

Our key performance indicator for customer
satisfaction during 2007 was the percentage
of customers who would recommend us.
Both Bryant Homes and George Wimpey
recorded scores of 87%, although different
methodologies had been used by the legacy
businesses. Going forward, we will be using
a new measurement system administered by
the National House-Building Council (NHBC).

We have once again been well represented in
the NHBC Pride in the Job awards, looking at
build quality, with our UK site managers
winning 65 Quality Awards, 20 Seals of
Excellence and four Regional Awards.

As a result of the strength of our landbank,
and given an uncertain UK market, we have
been able to be increasingly selective in our
land purchasing since the start of October
2007 and we expect to continue with this
policy into 2008.

Going forward
Although sales and cancellation rates have
improved in the early part of 2008, they
remain weaker than seasonal norms.

We anticipate that the current subdued
conditions will continue, with interest rates
and mortgage availability being key
determinants of customer conﬁdence.

Our focus is on preserving value through
maintaining a steady, but reduced, sales rate
and controlling land and work in progress
spend tightly. We anticipate that these actions
will result in signiﬁcant cash generation,
particularly in the second half of 2008.

Landbank
Combining Taylor Woodrow’s strong strategic
landbank and George Wimpey’s short term
land has delivered a well balanced portfolio
that puts Taylor Wimpey in an excellent
position for future home completions. At the
year end, all plots required for forecast 2008
completions had detailed planning consents in
place and 90% of forecast completions were
on sites which were already actively selling.

We have undertaken a number of land sales
in the second half of 2007, following our review
of the combined landbank. For the year as a
whole, land sales have generated £130.9 million
of revenue (2006: £194.6 million) and
contributed £40.1 million of operating proﬁt after
allocation of overheads (2006: £25.6 million).

As part of the review of landbank, we have
reviewed in detail our disclosure and, as
a result, have provided more information on
the structure of the landbank. This includes
both the actual stage of planning and a greater
breakdown of the way in which the land is
held. Our UK short term landbank,
representing owned or controlled land with
planning, or a resolution to grant planning,
stood at 86,155 plots at 31 December 2007
(2006: 39,077 plots).

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
North America Housing

Focusing on the basics

North America strategy
• Goal to be the homebuilder of choice in each of our markets
• Current priority is cash management and cost control, followed by growing

operations to scale in existing markets

North America key performance indicators
Pro forma operating margin**
Operating margin*
Order book as a percentage of 2007 revenue
Average outlet numbers
Customer satisfaction Morrison Homes
Customer satisfaction Taylor Woodrow
Health and safety injury frequency rate
(per 100,000 hours worked)
Sales rate (per outlet per week)

North America approach to challenging markets
• Drive sensible sales rates for each site
• Deliver additional build cost and overhead savings
• Further reduce investment in land and work in progress

2007
5.1%
6.8%
53.6%
183
93%
82%
0.212

0.78

North America housing market
Markets in the US have proved to be
extremely challenging throughout 2007,
with initial signs of stabilisation in the ﬁrst
quarter being overtaken by worsening
credit conditions from April onwards.
Of our markets, Texas has remained the
least affected, although credit issues have
had an increasing impact in the fourth
quarter of 2007.

Whilst Arizona still exhibits good
demographic and employment trends, it
continues to suffer from an over supply of
homes. California has seen a sharp increase
in the number of foreclosures, although
markets in the San Francisco Bay area have
proved to be more resilient to date than those
in the south of the State.

Florida remains the worst of our markets, with
high levels of housing inventory and potential

Sheryl Palmer
President and CEO, North America Housing

www.taylorwimpey.com

buyers continuing to delay their purchasing
decisions in the expectation of further price falls.

In marked contrast, our Canadian business
continues to beneﬁt from a robust Ontario
operating environment. Inventory levels
remain in line with normal conditions and the
market has seen stable volumes and modest
price increases over the last 12 months.

Strategy and integration
Our markets in North America beneﬁt from
signiﬁcant inward migration and job growth
and our long term strategy remains to grow
the business. However, current conditions in
the US require us to focus in the short to
medium term on cost reductions and cash
management, whilst preserving the inherent
value in our long term land positions.

We are closely monitoring sales rates at
each of our sites, actively adjusting our
pricing and incentive packages to ensure
that we remain competitive in local markets.
Where we have high quality land holdings
in areas of current market weakness we are
opting to postpone production in order to
preserve longer term value.

Both the legacy Taylor Woodrow and
Morrison Homes businesses had already
achieved signiﬁcant build cost and overhead
cost reductions prior to the merger in
response to the slowdown in 2006. As this
has continued through 2007 we have
increased our savings in these areas through
renegotiation with suppliers and rationalisation
of our operations.

We are not currently approving further new
land acquisitions in the US and we are

exercising our right to exit option deals where
the price is no longer attractive. We are also
reducing the amount of cash invested in work
in progress through a number of initiatives
to lower the level of inventory homes in
our operations.

These short term actions will both maintain
the underlying value of the business and put
us in the best position to reinvest in new sites
as value becomes available.

The merger provides the North American
business with:

North America housing market
at a glance

Key drivers
• Job growth

• Migration between States

• Customer confidence

Potential risk factors
• Further reduction in credit availability

• Further increase in inventory levels

• Strong geographical overlap, with critical

• Ongoing house price deflation

Taylor Morrison performance
• Excellent integration progress

• Delivery of market related cost
savings, in addition to merger
related savings

• Land and work in progress write
downs of £283.4 million taken
during 2007

For more information visit
www.taylorwimpey.com

mass in more of its markets;

• A broader product offering;

• Synergy savings; and

• Combined homebuilder/land developer

business model.

We are now operating as a combined
business, with four regions and a total of
13 divisions. All of the personnel decisions
were taken by 31 July 2007, with all property
moves completed by 30 September 2007.
An implementation programme for a common
integrated suite of business systems is
underway and is expected to be complete
by early 2009.

We remain on target to deliver merger related
cost savings at an exit rate of £20 million by
the end of 2009, in addition to the market
related savings outlined above. The majority
of these savings are expected to impact
on 2008.

* Profit on ordinary activities before finance costs,
exceptional items and amortisation of brands.

** The basis of preparation of pro forma financial

information is set out on page 104.

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
North America Housing continued

Taylor Morrison inventory against US total inventory

2,500

2,000

1,500

1,000

500

Dec 06

Jan 07

Feb 07

Mar 07

Apr 07

May 07

Jun 07

Jul 07

Aug 07

Sep 07

Oct 07

Nov 07

Dec 07

Taylor Morrison inventory

US (total) month’s supply

Source: US Census Bureau and
Taylor Morrison inventory

Financial review
North America Housing revenue decreased by
15.7% to £986.8 million (2006: £1,170.2 million),
as the weaker market conditions outweighed
the inclusion of the legacy Morrison Homes
business for the second half of 2007.

Sales, completions and pricing
The business operated with an average
of 183 outlets during 2007 (2006: 108).

Total home completions were 5,197
(2006: 4,492).

Operating proﬁt* was £67.5 million (2006:
£222.6 million). Exceptional items were
£321.3 million (2006: £ nil).

The operating margin* for 2007 was 6.8%
(2006: 19.0%).

Due to the ongoing weakness in market
conditions experienced during the year,
we have conducted regular reviews of the
carrying value of our land holdings. As a result
of these reviews, we have taken land and
work in progress write downs totalling
£283.4 million during 2007.

The average selling price of our North
American homes in 2007 was £182,000
(2006: £233,000), reﬂecting the weaker
market conditions and also a shift in sales
away from higher priced products in Florida
and California.

Our year end order book stood at
£529 million (2006: £436 million).

Product range
We offer a wide range of homes to our
customers in North America, ranging from
entry level to luxury homes. Our product
range includes high rise apartments, single

family homes, townhomes and full service
country club properties. At present our only
upcoming high rise projects are in the
Canadian market.

Our US homebuilding operations are now
trading under the Taylor Morrison brand, with
land development branded Taylor Woodrow
Communities, whilst our Canadian business
continues to operate as Monarch.

Quality and customers
Quality is a key focus for all of our operations
and we are particularly proud of our Canadian
business, which was rated as the number
one in Ottawa in the JD Power & Associates
customer satisfaction survey for 2007.

Similar to our UK business, our key performance
indicator for customer satisfaction was the
percentage of customers who would
recommend us. Both legacy businesses
recorded scores exceeding 80% during 2007,
although different survey methodologies had
been used. Going forward, we will be using a
new measurement system administered by an
independent, third party organisation.

We are running a series of best practice
conferences to learn from the customer
care experience of our legacy businesses.
This consultation process will inform the
development of core practices and guidelines.

Landbank
We remain extremely cautious with regard to
land purchases in the US, although we have
continued to invest in land for our Canadian
operations and renegotiate existing terms
on option contracts in Florida, California
and Arizona.

www.taylorwimpey.com

North America Housing key performance indicators

Operating margin*

Sales rate

Order book as a percentage of revenue

19.0%

6.8%

Taylor Wimpey
Taylor Woodrow

6.8%

Taylor Wimpey
Taylor Woodrow

0.78

0.75

53.6%

37.2%

Taylor Wimpey
Taylor Woodrow

53.6%

Average outlet numbers

Customer satisfaction

Health and safety

108

183

Taylor Wimpey
Taylor Woodrow

183

At the year end, we had a landbank of
40,603 plots (2006: 31,353 plots).

Net operating assets in the US stood at
£574.3 million at 31 December 2007.

Going forward
We do not expect market conditions in the
US to improve signiﬁcantly during 2008.
In the short term, our strategy remains to
focus on managing out existing sites and
reducing the cost base.

We are well placed to take advantage of
land acquisition opportunities as they arise
in the future.

* Profit on ordinary activities before finance costs,
exceptional items and amortisation of brands.

120

108

93% Morrison Homes
82% Taylor Woodrow

120

0.212

108

Injury frequency rate per
100,000 hours worked

Customers who would recommend
us to friends and family

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Spain and Gibraltar Housing

Adapting to challenging markets

Spain and Gibraltar strategy
• Deliver high quality homes in popular locations in Spain that appeal

to both foreign and Spanish buyers

• Service the luxury apartment market, selling off plan well in advance

of construction

Spain and Gibraltar key performance indicators
Operating margin*
Order book as a percentage of 2007 revenue
Average outlet numbers
Customer satisfaction Spain
Health and safety Spain (incident rate per 1,000
employees and subcontractors)
Health and safety Gibraltar (incident rate per 1,000
employees and subcontractors)
Sales rate (per outlet per week)

Spain and Gibraltar opportunities
• Build on successful UK marketing operations
• Increase proportion of Spanish buyers

2007
3.4%
129%
29
83%
0.67

0.1

Javier Ballester
Managing Director, Spain

Trevor Thomas
Managing Director, Gibraltar

Spain and Gibraltar housing market
Market conditions in Gibraltar and Mallorca
remained relatively stable during 2007,
supported by strong demand and relatively
limited supply.

Our markets in mainland Spain continued to
suffer from oversupply of new properties and
also experienced reduced demand from
British purchasers.

at an average selling price of £279,000
(2006: £205,000).

Our year end order book stood at £83 million
(2006: £100 million).

Operating proﬁt* of £2.2 million, was below
the £26.8 million achieved in 2006 as a result
of the weaker market conditions and a one-
off land sale in the Malaga area undertaken
during 2006.

We achieved an operating margin* of 3.4%
(2006: 29.1%).

We have undertaken a review of the carrying
value of our landbank in Spain, which has
resulted in a land and work in progress write
down of £6.3 million (2006: nil).

Going forward
Market conditions are expected to remain
weak in mainland Spain during 2008.

Performance
In Spain and Gibraltar we completed a
total of 212 homes in 2007 (2006: 379)

The landbank has remained at similar levels
to last year as we have become increasingly
cautious in our approach to land purchases.

www.taylorwimpey.com

Business Review
Construction

Quality reputation

Tim Peach
Managing Director, Taylor Woodrow Construction

Construction strategy
• Provide construction and facilities management services to high growth
industry sectors throughout the UK and for key customers in selected
overseas markets

Construction key performance indicators
Operating margin*
Order book
Customer satisfaction
Health and safety (incident rate per 1,000
employees and subcontractors)

2007
0.6%
£1,194m
88%
6.8

Construction growth opportunities
• Secure repeat business by building strong relationships with blue chip clients
• Continue to grow our facilities management business

Performance
Revenue increased by 10.7% in 2007
to £609.3 million (2006: £550.6 million),
delivering an operating proﬁt* of £3.5 million
(2006: £9.6 million). This fall is primarily due
to the losses on a small number of road
construction contracts in Ghana. We have
no further similar contracts. The UK business
delivered a strong performance, recording
an operating proﬁt of £17.8 million (2006:
£6.8 million).

The year end order book stood at £1.19 billion
(2006: £1.17 billion), reﬂecting a steady ﬂow
of contract awards in our chosen sectors. In
particular, our facilities management operations
have secured a number of new contracts from
blue chip customers.

Going forward
Our strong forward order book gives us
conﬁdence in our abilities to grow proﬁts
in 2008.

* Profit on ordinary activities before finance costs,
exceptional items and amortisation of brands.

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Financial Review

A solid platform

Group summary
In a year of very signiﬁcant change, the
Group has sought to maximise beneﬁts
from the merger of Taylor Woodrow plc
and George Wimpey Plc, while seeking
to mitigate the effects of the continuing
weakness of the US markets. We have
positioned the UK business in anticipation
of reduced housing demand in 2008.

£90.0 million relate to restructuring costs and
the write off of the Morrison Homes and Laing
brands. After charging for these items and net
ﬁnance costs of £112.1 million, the Group has
returned a loss before tax of £19.5 million.
The tax charge was £177.2 million, bringing
the loss for the year to £196.7 million. Net
assets total £3.7 billion, with net tangible
assets amounting to £2.9 billion.

The merger, which was effected on 3 July
2007, has resulted in a business with greater
ﬁnancial capability which will provide signiﬁcant
beneﬁts to shareholders in the form of
improved relative margins and capital returns.

A 5% increase in the ﬁnal dividend is proposed,
reﬂecting our continuing conﬁdence in the
future of the Group. If approved, this will bring
the full year dividend to 15.75 pence per share
(2006: 14.75 pence) a full year increase of 6.8%.

Group results
The results set out in this commentary are
based on the statutory accounts. Additional
information is provided on a pro forma** basis
in the preliminary results presentations which
are available on the Company’s website.

Group revenue rose by 32.0% to £4.7 billion
(2006: £3.6 billion). Group completions grew
by 54.0% to 20,271 (2006: 13,165) reﬂecting
the completion of the merger and the
subsequent inclusion of the results of the
legacy George Wimpey business from
3 July 2007.

Group proﬁt before tax and exceptional items
amounted to £360.2 million for the year to
31 December 2007 (2006: £405.6 million).
The UK Housing business performed well
in 2007, returning a pro forma operating
margin** in excess of 15%, signiﬁcantly
ahead of the performance of both legacy
UK businesses.

Continuing material weakness in the Group’s
US and Spanish markets has resulted in
land and work in progress write downs of
£289.7 million. Other exceptional provisions of

In July we set out the conclusions of our
review of capital requirements and balance
sheet targets, including the plan to return
£750 million of capital to shareholders
through a share buyback programme.
£250 million of this programme was carried
out during 2007. The purpose of the review
was to ensure that our requirements for
growth are balanced by a suitable and
efﬁcient capital structure.

We remain committed to this strategy, however
given the uncertainty in the UK housing market,
the Board has decided to suspend the
buyback programme temporarily.

UK Housing
Revenue increased by 73.6% to £3,053.8 million
(2006: £1,759.2 million). This was primarily the
result of a 79.2% increase in completions to
14,862 (2006: 8,294) as a consequence of the
merger. Average selling prices were slightly
lower at £191,000 (2006: £193,000).
Operating proﬁt* has grown by 86.7% to
£418.2 million (2006: £224.0 million), with
strong growth in the operating margin* to
13.7% (2006: 12.7%).

Peter Johnson
Group Finance Director

www.taylorwimpey.com

Group results

Completions

Operating profit* (£m)

Operating margin*

Pre-exceptional
profit before tax (£m)

Exceptional items (£m)

Loss before tax (£m)

Tax (£m)

Loss for the year (£m)

Adjusted earnings per share

Dividends per share

UK Housing
14,862

418.2

13.7%

North America
Housing
5,197

67.5

6.8%

Spain and
Gibraltar
Housing
212

2.2

3.4%

Construction

3.5

0.6%

Group

360.2

(379.7)

(19.5)

(177.2)

(196.7)

30.8p

15.75p

The £379.7 million of pre-tax exceptional items
consist of restructuring costs post merger, brand
impairments and land and work in progress write
downs. £321.3 million of the exceptionals relate
to North America Housing, £47.9 million to the
UK Housing, £6.3 million to Spain and Gibraltar
Housing and £4.2 million to Corporate.

The tax charge includes an exceptional write off
of deferred tax of £70.2 million.

North America Housing
Revenue fell by 15.7% to £986.8 million (2006:
£1,170.2 million), as the enlarged scale of the
business following the merger was outweighed
by the effect of continuing weakness in our US
markets. Completions rose to 5,197 (2006:
4,492), whilst average selling prices decreased
to £182,000 (2006: £233,000) reﬂecting the
difﬁcult environment. As a result of the ongoing
weakness of markets in the US in 2007, we
have recognised land and work in progress
write downs of £283.4 million. These
provisions are based on management’s
assessment of the net selling prices required to
achieve a normal sales rate and are shown as
an exceptional item in the Group Consolidated
Income Statement. Our markets in Canada
remain robust.

Operating proﬁt* fell by 69.7% to £67.5 million
(2006: £222.6 million). The operating margin*
was 6.8% (2006: 19.0%), reﬂecting the difﬁcult
conditions experienced during the year.

As disclosed in the 2007 interim results, we
had provided £15.5 million during the ﬁrst half
of 2007 against a potential liability arising
from a legal case in Florida. During the
second half of the year the case was settled
at £5.2 million and the balance of the
provision has been released.

Spain and Gibraltar Housing
Revenue from our operations in Spain
and Gibraltar was £64.4 million (2006:
£92.1 million), with completions of 212
homes (2006: 379). Markets in mainland

Spain remained challenging. However, average
selling prices were higher at £279,000 (2006:
£205,000), reﬂecting an increased proportion
of completions from our Gibraltar business.

Operating proﬁt* was £2.2 million (2006:
£26.8 million) with an operating margin of 3.4%.

We have undertaken a review of the carrying
value of our land and work in progress in
Spain and have recognised an exceptional
write down of £6.3 million in December 2007.

Construction
Revenue grew to £609.3 million (2006:
£550.6 million) with operating proﬁt*
of £3.5 million (2006: £9.6 million). The
performance of the Construction business
has been adversely affected by contract
losses in Ghana. This business made an
operating loss* of £14.3 million in 2007
(2006: operating proﬁt of £2.8 million).
UK Construction operating proﬁt in 2007
was £17.8 million (2006: £6.8 million).

Net ﬁnance costs
Finance costs, net of interest receivable of
£9.7 million (2006: £9.1 million), for 2007
were £112.1 million (2006: £64.2 million).
Within this, interest on borrowings from
ﬁnancial institutions totalled £93.3 million
(2006: £64.1 million). Other items included
in ﬁnance costs are a pension charge of
£3.8 million (2006: £2.7 million), a mark to
market loss on interest rate derivatives of
£5.4 million (2006: nil) and a total of
£19.3 million (2006: £6.5 million) charged
for imputed interest on land creditors.

Average net debt levels for 2007 were
£1,197.1 million (2006: £837.8 million).

* Profit on ordinary activities before finance costs,
exceptional items and amortisation of brands.

** The basis of preparation of pro forma financial

information is set out on page 104.

Taylor Wimpey plc Annual Report and Accounts 2007

Business Review
Financial Review continued

Tax
The pre-exceptional Group tax rate for 2007
was 29.7% (2006: 28.4%). In addition, there
has been a signiﬁcant exceptional tax charge
of £70.2 million, principally being the write off
of deferred tax assets due to the weakening of
the US markets in the second half of the year.

It is our preference to manage market risks
without the use of derivatives but they will
be used where necessary and appropriate
to reduce the levels of volatility to both income
and equity. The use of derivatives is strictly
controlled and they are not permitted to be
used for speculative or trading purposes.

In total, the Group has unrecognised potential
deferred tax assets in the US of £189.4 million
as at 31 December 2007 primarily due to the
reduced opportunities in the US to utilise
inventory provisions in the near future against
taxable income.

Earnings per share
Pre-exceptional basic earnings per share were
30.8 pence (2006: 50.5 pence), reﬂecting the
lower level of proﬁts and the increase in shares
in issue following the merger.

The basic loss per share after exceptional items
is 24.2 pence (2006: earnings of 50.5 pence).

Balance sheet and cash ﬂow
Net assets were at £3.7 billion (2006:
£2.1 billion) equivalent to 352.3 pence
per share (2006: 364.7 pence per share).

The Group’s cash outﬂow from operating
activities was £163.3 million (2006: inﬂow
£57.0 million). Year end net debt
levels rose from £391.3 million in 2006 to
£1,415.4 million in 2007, an increase of
£1,024.1 million.

Treasury management and funding
The Group operates within policies and
procedures approved by the Board. These
are set out more fully in note 22 of the
ﬁnancial statements.

Both the term debt comprising private
placements and derivatives of George
Wimpey Plc were retained following the
merger. The term debt is mostly borrowed in
US$ and used to ﬁnance the investment in the
US business. It was also designated as a net
investment hedge of the US$ denominated
assets. This hedge has been maintained
following the merger. The interest derivatives
while not satisfying the strict requirements for
hedge accounting continue to hedge interest
cost volatility in the merged company.

As a result of the merger all existing revolving
credit facilities were replaced with new
facilities totalling £1,900 million on identical
terms and conditions, mostly committed for
ﬁve years. During the second half of 2007 the
terms and conditions of George Wimpey’s
private placements were renegotiated to
conform to the terms and conditions of
existing private placements.

Liquidity is the most important ﬁnancial risk
to manage for a housebuilder. Taking into
account term borrowings and committed
facilities the Group has access to funding in
excess of £2.7 billion, most of which is
committed for at least four years. At the year
end £1,193 million (2006: £630 million) was
committed but undrawn. The total capital
available provides adequate ﬁnancial
resources to fund the business in this

difﬁcult ﬁnancial environment. The Group
continues to operate well within its ﬁnancial
covenants and limits of available funding and
has no need to reﬁnance or obtain additional
funding in the near future.

Merger accounting and fair value
The fair value of consideration paid by
Taylor Woodrow as a consequence of the
merger was £2,093.9 million. The fair value
of the George Wimpey net assets acquired
excluding goodwill was £1,757.2 million.
The fair value of the brands acquired was:

George Wimpey: £110 million with an
expected life of 15 years;

Morrison Homes: £20 million with an
expected life of 10 years; and

Laing Homes: £10 million with an expected
life of 10 years.

Subsequent to the merger it was determined
that the Laing brand would currently no
longer be used and accordingly the full value
of £10 million was written off.

Towards the end of the year it was agreed
that the US brand would change to Taylor
Morrison in line with the results of a review
in the US. Accordingly, the full value of the
Morrison brand of £20 million was written off.

US inventories were written down by
£154.2 million and UK inventories were
written down by £33.9 million. Other assets
and liabilities were valued down by £4 million.

Following the merger the Company has aligned
all accounting policies to provide a consistent
accounting basis for the 2007 accounts.

www.taylorwimpey.com

Group key performance indicators

Proﬁt before exceptional items and tax

Return on average capital employed

Dividend per share

Taylor Wimpey
Taylor Woodrow

£360.2m

£405.6m

14.8%

22.6%

15.75p

14.75p

Taylor Wimpey
Taylor Woodrow

£360.2m

14.8%

15.75p

Pensions
Details relating to the pension schemes of the
Group are presented in the ﬁnancial statements
in note 23.

The fair value of the assets less the present
value of obligations of the Group’s deﬁned
beneﬁt schemes based on assumptions
established in accordance with IAS 19
result in a gross deﬁcit of £216.4 million
(2006: £205.9 million). Full actuarial valuations
for each deﬁned beneﬁt scheme are carried
out on a triennial basis. The main Taylor
Woodrow scheme is currently undertaking
such a valuation. The next valuation of the
George Wimpey Staff Pension Scheme is due
to be valued as at 31 March 2008.

Pursuant to prior agreements the Company
continues to make additional contributions to
the respective schemes in order to increase
deﬁcit reductions. These contributions are, for
the Taylor Woodrow scheme, £20 million per

annum for an initial 10 year period and for the
George Wimpey scheme £15 million per annum.

Accounting standards
The Consolidated Financial Statements
have been produced in accordance with
International Financial Reporting Standards
(IFRS) as endorsed and adopted for use in
the EU. The Financial Statements are also
in compliance with IFRS as issued by the
International Accounting Standards Board.
There have been no changes to International
Accounting Standards this year that have a
material impact on the Group results.

Peter Johnson
Group Finance Director

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Board of Directors

Norman Askew
Chairman
Appointed a Director and Chairman in July 2003. He
chairs the Nomination Committee and is a member
of the Corporate Responsibility Committee. His current
appointments include the Chairmanships of IMI plc,
Derby Cityscape and of the Board of Governors of the
University of Manchester. Age 65.

Pete Redfern
Group Chief Executive
Appointed a Director and Group Chief Executive in July
2007. He is a member of the Nomination and Corporate
Responsibility Committees. Previously Chief Executive of
George Wimpey Plc, he was appointed Group Chief
Executive of the Company following the merger. He was
previously Finance Director of Rugby Cement and
successively Finance Director, Managing Director and
Chief Executive of George Wimpey’s UK housing
business. Age 37.

David Williams
Senior Independent Director
Appointed a Director in July 2007. He is the Senior
Independent Director. He is a member of the Audit,
Remuneration and Nomination Committees. David was
Finance Director of Bunzl plc until January 2006 and a
non executive director of George Wimpey Plc. He is the
Senior Independent Director at Mondi PLC and a non
executive director of Meggitt PLC, DP World Ltd, a
Dubai quoted company, and Tullow Oil plc. Age 62.

Mike Davies
Independent Non Executive Director
Appointed a Director in October 2003. He was the
Senior Independent Director until 3 July 2007. He is a
member of the Audit, Remuneration and Nomination
Committees. In March 2007 Mike was appointed as
Chairman of The Royal Mint. He is also Chairman
of Marshalls plc and a non executive director of
Pendragon plc. He was formerly a director of
Williams Holdings plc. Age 60.

Baroness Dean of Thornton-le-Fylde
Independent Non Executive Director
Appointed a Director in July 2007. She is a member
of the Remuneration, Nomination and Corporate
Responsibility Committees. She is a member of the
House of Lords, a member of the House of Lords
Appointments Commission and is active in a number
of public areas. She is Chairman of the New Covent
Garden Market Authority, a Partnership Director of
National Air Trafﬁc Services and a non executive director
of Dawson Holdings PLC. She was previously a non
executive director of George Wimpey Plc. Age 64.

Andrew Dougal
Independent Non Executive Director
Appointed a Director in November 2002. A Chartered
Accountant, he is Chairman of the Audit Committee
and a member of the Nomination and Corporate
Responsibility Committees. He is a director of Premier
Farnell plc and Creston plc. He was formerly Group
Finance Director of Hanson, the conglomerate, until its
demerger and subsequently Group Chief Executive of
Hanson Plc, the international building materials
company, and a non executive director of BPB plc.
Age 56.

www.taylorwimpey.com

Katherine Innes Ker
Independent Non Executive Director
Appointed a Director in July 2001. She is Chairman of
the Corporate Responsibility Committee and a member
of the Remuneration and Nomination Committees.
Katherine has considerable experience as a ﬁnancial
analyst in the media sector. She is Chairman of
Shed Productions plc and a non executive director
of Ordnance Survey and recently stood down as a
non executive director of Gyrus Group plc. Age 47.

Anthony Reading MBE
Independent Non Executive Director
Appointed a Director in July 2007. He is Chairman of
the Remuneration Committee and a member of the
Audit and Nomination Committees. Tony was previously
a director of Tomkins Plc and Chairman and Chief
Executive of Tomkins Corp. USA, and a non executive
director of George Wimpey Plc. He is a non executive
director of The Laird Group Plc, Spectris Plc and e2v
Technologies plc. Age 64.

James Jordan
Group Company Secretary and
General Counsel
Appointed in July 2007. James a solicitor, is the Taylor
Wimpey plc Group Company Secretary and General
Counsel. He was the Group Company Secretary and
General Counsel of George Wimpey Plc and had held
that position since appointment in February 2002.
Age 46.

Peter Johnson
Group Finance Director
Appointed a Director in November 2002. Peter is
an experienced ﬁnancial executive with a strong
background in ﬁnancial services and property
investment, in the UK and North America. He is also
a non executive director of Shanks Group plc and
Oriel Securities Limited. Age 53.

Ian Sutcliffe
Chief Executive, Taylor Wimpey UK
Appointed a Director in July 2007. He is a member
of the Corporate Responsibility Committee. Ian was
appointed Chief Executive, Taylor Wimpey UK following
the merger. He was previously Managing Director of
George Wimpey’s UK Housing business and prior to
that held a number of senior positions within Royal
Dutch Shell plc. Age 48.

Audit Committee
Current members: Andrew Dougal (Committee Chairman),
Mike Davies, Anthony Reading and David Williams.
Corporate Responsibility Committee
Current members: Katherine Innes Ker (Committee
Chairman), Norman Askew, Brenda Dean, Andrew Dougal,
Pete Redfern and Ian Sutcliffe.
Nomination Committee
Current members: Norman Askew (Committee
Chairman), Mike Davies, Brenda Dean, Andrew Dougal,
Katherine Innes Ker, Anthony Reading, Pete Redfern
and David Williams.
Remuneration Committee
Current members: Anthony Reading (Committee
Chairman), Mike Davies, Brenda Dean, Katherine Innes Ker
and David Williams.

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Directors’ Report

Introduction
Company law requires the Directors to prepare a
report to shareholders on various matters affecting
the Company and the Group during the reporting year,
together with the general outlook for the Group in the
context of the markets and business environment in
which it operates.

Certain matters required to be included in this report
appear elsewhere in the Report and Accounts as
detailed below:

(cid:129) A detailed review of the Group’s principal activities,

the development of its businesses, a review of ﬁnancial
and non-ﬁnancial key performance indicators and a
description of the principal risks and uncertainties
facing the Group, are contained in the reports and
reviews on pages 2 to 37.

(cid:129) A detailed review of the progress achieved to date
following the merger of Taylor Woodrow plc and
George Wimpey Plc on 3 July 2007 (the ‘Merger’)
appears in the reports and reviews on pages 2 to 37.

(cid:129) A list of the subsidiary and associated undertakings,

including branches outside the UK, principally affecting
the proﬁts or net assets of the Group in
the year appears on page 102.

(cid:129) Changes in asset values are set out in the consolidated
balance sheet on page 58 and in notes 11 to 33 on
pages 71 to 89.

(cid:129) The Group’s proﬁt before taxation and the proﬁt
after taxation and minority interests appear in the
consolidated income statement on page 56 and in
notes 3 to 10 on pages 64 to 71.

(cid:129) Detailed statements of the Company’s corporate

governance principles, the Group’s systems of internal
control and the going concern conﬁrmation are set outin
the Corporate Governance Report on pages 43 to 45.

(cid:129) A detailed statement of the Group’s treasury

management and funding is set out in note 22
on page 78.

Directors
The following ﬁve Directors held ofﬁce throughout
the year:

Norman Askew, Chairman
Peter Johnson, Group Finance Director
Mike Davies, Non Executive Director
Andrew Dougal, Non Executive Director
Katherine Innes Ker, Non Executive Director

Pete Redfern and Ian Sutcliffe, formerly Executive
Directors of George Wimpey Plc, were appointed as
Directors upon completion of the Merger and hold the
roles of Group Chief Executive and Chief Executive,
Taylor Wimpey UK respectively.

Brenda Dean, Anthony Reading and David Williams,
formerly Non Executive Directors of George Wimpey Plc,
were appointed as Non Executive Directors upon
completion of the Merger.

Ian Smith was appointed a Director (Group Chief
Executive) on 2 January 2007 and resigned from the
Board upon completion of the Merger.

www.taylorwimpey.com

Substantial Interests: Beneﬁcial and non-beneﬁcial interests
in the Company’s shares

Name

Beneficial interests
JP Morgan Chase & Co.

Legal & General Group Plc

Toscafund Asset Management LLP

Legal & General Assurance (Pensions
Management) Limited and
Legal & General Investment Management (Holdings) Limited

Barclays PLC

Prudential plc and The Prudential Assurance Company Limited

Aviva plc

Britannic Asset Management Limited

Non-beneficial interest
AXA SA

Number of
shares held
(millions)

Percentage of
issued voting
share capital

53.62

48.94

47.52

43.18

21.78

38.68

32.25

16.95

4.68

4.64

4.15

4.09

3.78

3.37

3.06

166.65

15.79

John Landrum was appointed a Director upon
completion of the Merger, in the capacity of President
and CEO – North America. He stood down from the
Board on 31 July 2007 but remained an employee
until 31 October 2007.

Vernon Sankey resigned from the Board as a Non
Executive Director upon completion of the Merger.

Graeme McCallum, an Executive Director, resigned
from the Board on 16 January 2007.

The Directors together with their biographical information
are shown on pages 38 and 39. With regard to those
Directors who are the subject of election or re-election
at the Annual General Meeting (as set out below)
biographical information is also set out on page 106.

With regard to the retirements and re-election of the
Directors, the Company is governed by its Articles
of Association (‘Articles’), the Combined Code on
Corporate Governance (the ‘Combined Code’), the
Companies Act and related legislation. The Articles may
be amended by special resolution of the shareholders
and certain changes are being proposed at the Annual
General Meeting on 17 April 2008, details of which are
set out in the Notice of Meeting on pages 105 to 111.
The powers of the Directors are described in the
Corporate Governance Report.

Retirement and re-election of Directors
In accordance with the Articles, at the Annual General
Meeting, Pete Redfern, Brenda Dean, Anthony Reading,
Ian Sutcliffe and David Williams, who were all appointed
as Directors during the year by the Board upon
completion of the Merger, will retire and, being eligible,
seek election by shareholders.

Peter Johnson retires by rotation and will, being eligible,
offer himself for re-election at the Annual General
Meeting in accordance with the Articles.

Andrew Dougal retires in accordance with the Combined
Code which requires each Director to seek re-election
every three years. Being eligible, Andrew Dougal will
seek re-election at the Annual General Meeting.

Each of the Directors proposed for election or re-election
at the Annual General Meeting is being unanimously
recommended by all of the other members of the
Board. This recommendation follows the completion
of the evaluation process which included a detailed
performance appraisal of the Board, its Committees
and in respect of each Director. Further information
relating to the evaluation is set out in the Corporate
Governance Report.

In line with the Combined Code, Katherine Innes Ker,
having been appointed as an independent Non
Executive Director in July 2001, has been subject to a
rigorous evaluation as she has held this position for a
period of in excess of six years. Following the evaluation
both the Nomination Committee and the Board were
entirely satisﬁed with Katherine Innes Ker’s performance
and contribution as a Non Executive Director and her
ongoing independence of character and judgement.
As part of this review the Board took into account the
requirement of the Combined Code to refresh the Board
from time to time: as a result of the changes to the
Board made at the time of the Merger as set out earlier
in this Report, it was concluded that this requirement
had been met.

Audit and auditors
Each Director at the date of approval of this Report
conﬁrms that:

So far as each Director is aware, there is no relevant
audit information of which the Company’s auditors are
unaware. In addition, each Director has taken all the
steps that he/she ought to have taken as a Director in
order to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditors
are aware of that information.

This conﬁrmation is given and should be interpreted in
accordance with the provisions of section 234ZA of the
Companies Act 1985.

No person has any special rights of control over the
Company’s share capital and all issued shares are
fully paid.

Following a competitive tender conducted after
completion of the Merger, and in respect of which further
details are set out in the Corporate Governance Report,
Deloitte & Touche LLP were conﬁrmed as external
auditors of the Company. Deloitte & Touche have
conﬁrmed their willingness to continue in ofﬁce as
auditors of the Company and a resolution to re-appoint
them will be proposed at the Annual General Meeting.

Deloitte & Touche LLP also provide non-audit services to
the Group within a policy framework which is described
in the Corporate Governance Report.

Annual General Meeting
The Annual General Meeting will be held at 11.00 am
on 17 April 2008 at The Royal College of Physicians,
11 St. Andrews Place, Regent’s Park, London NW1 4LE.
Formal notice of the meeting including details of special
business is set out in the Notice of Annual General
Meeting on page 105 and on the Company’s website
www.taylorwimpey.com.

Registrar
The Company’s registrar is Capita Registrars. Their
details, together with information on facilities available to
shareholders, are set out in the Shareholder Information
section on page 112.

Treasury shares
The Company was authorised at the Annual General
Meeting on 2 May 2007 to purchase a maximum of
59,415,008 of its own shares, and at the Extraordinary
General Meeting on 29 May 2007 to purchase up to a
further 55,276,873 of its own shares. The latter authority
remains valid at 31 December 2007. All purchases
pursuant to that authority, and the earlier authority given
at the 2007 Annual General Meeting, were made on
the market.

During the year the Company purchased 94.8 million of
its shares on the market which are held in treasury. The
Company sold 4 million treasury shares to its employee
share ownership trusts for issuance to participants on
the exercise of rights in certain of the Company’s
employee share plans.

Capital structure
Details of the authorised and issued share capital,
together with details of the movements in the
Company’s issued share capital during the year are
shown in note 25 on page 87. The Company has one
class of ordinary shares which carry no right to ﬁxed
income. Each share carries the right to one vote at
general meetings of the Company.

There are no speciﬁc restrictions on the size of a holding
nor on the transfer of shares, which are both governed
by the Articles of Association and prevailing legislation.
The Directors are not aware of any agreements
between holders of the Company’s shares that may
result in restrictions on the transfer of securities or
on voting rights.

Details of employee share schemes are set out in note
25 on page 87. The Employee Share Ownership Trusts
abstain from voting in respect of shares held by them.

Substantial interests
The persons set out in the table on page 40 have notiﬁed
the Company pursuant to Rule 5 of the Disclosure and
Transparency Rules of their interests in the ordinary share
capital of the Company.

At 5 March 2008, no change in these holdings had been
notiﬁed nor, according to the register of members, did
any other shareholder at that date have a disclosable
holding of the issued share capital.

Directors’ interests, including interests in the Company’s
shares, are shown in the Remuneration Report.

Dividend
Information relating to the recommended 2007 ﬁnal
dividend is set out in the Chairman’s Statement on page
12 and in the notes to resolution 2 on page 106 in the
Notice of Annual General Meeting.

The Company operates a Dividend Re-Investment Plan,
details of which are available from Capita Registrars and
are also available on the Company’s website
www.taylorwimpey.com.

The right to receive any dividend has been waived in
part by the trustee of the Company’s two Employee
Share Ownership Trusts over those Trusts’ combined
holding of 4,469,331 shares and in full on the
Company’s holding of 102,732,927 treasury shares.
An appropriate amount of shares held in the Trusts are
set aside to meet commitments under the Company’s
employee share plans. Shares held in treasury resulting
from the acquisition of the Company’s own shares in
2004 and 2007 provide the Company with additional
ﬂexibility in the management of its capital base.

Corporate Responsibility
Corporate responsibility is a high priority throughout
the Taylor Wimpey Group. We draw our corporate
responsibility practices, policies and case studies
together in our ﬁrst Taylor Wimpey Corporate
Responsibility Report which is being published and will
be circulated to all shareholders and other designated
stakeholders. The Report can also be found on the
Group’s website www.taylorwimpey.com.

The Group’s commitment to advancing corporate
responsibility within Taylor Wimpey is demonstrated
by the formation upon completion of the Merger of
the Corporate Responsibility Committee, a formal
Committee of the Board. The Committee is chaired
by Katherine Innes Ker and it is also comprised of the
Chairman of the Board, two further independent Non
Executive Directors and two Executive Directors as
detailed in the Corporate Governance Report.

Research and development
The Company remains committed to investing in
research and development projects where there are
clearly-deﬁned business beneﬁts.

In the UK a main component of our research and
development relates to the improvement of knowledge,
practice and testing of materials and technology for
use in our approach to ‘zero carbon homes in 2016’.

We already have a number of housing sites which are
exploring the options available to enable us to deliver
solutions which we could utilise in our development
portfolio for 2016, including build methodologies,
structural solutions, design approaches and renewable
energy components. Recently we have introduced
various technologies with good environmental beneﬁts
including the use of biomass boilers, solar hot water
systems and photovoltaic panels together with ground
and air source heat pumps. Following technical and cost
evaluation of these we will further develop our housing
portfolio in order to bring the very latest technology to
our home owners.

Employee involvement and communication
The Company is committed to ensuring open and regular
communication throughout the Group on both business
related issues and issues of general interest. Intranet
systems are continually updated which provides a
valuable communication tool across the Group and an
important facility for providing employees with access to
a wide range of information. Information is regularly
cascaded throughout the group via electronic
communication and by management presentations.
There are also internal magazines which are widely
circulated across the Group.

The Company continues to promote all employee share
plans and save as you earn share scheme as widely as
possible across the Group.

Equal Opportunities
The Company remains committed to equality of
opportunity in all of its employment practices, policies
and procedures across the Group. To this end, within the
framework of applicable law, we are committed, wherever
practicable, to achieving and maintaining a workforce
which broadly reﬂects that of the local catchment area
within which we operate. No employee or potential
employee will receive less favourable treatment due to
their race, creed, colour, nationality, ethnic origin, religion,
political or other opinion, afﬁliation, gender, sexual
orientation, marital status, family connections, age,
membership, or non membership of a trade union, or
disability, unless justiﬁable in exceptional circumstances,
for example due to health and safety considerations.

Employment of disabled persons
It is our policy that people with disabilities should have
fair consideration for all vacancies within the Group.
The Company is therefore committed, where possible,
to ensuring that people with disabilities are supported
and encouraged to apply for employment and to achieve
progress once employed. They will be treated so that
they have an equal opportunity, so far as it is justiﬁable,
to be selected, trained and promoted. In addition, every
reasonable effort is made for disabled persons to be
retained in the employment of the Group by investigating
the possibility of making reasonable adjustments to the
job, workplace or equipment.

Charitable donations
During the year, Group companies donated £371,000
(2006: £198,000) to various charities, £193,000 (2006:
£63,000) in the UK and Europe and £178,000 (2006:
£135,000) in North America. Further information on the
Group’s donations, activities and initiatives can be found
in the 2007 Corporate Responsibility Report.

Taylor Wimpey plc Annual Report and Accounts 2007

Directors’ Responsibilities
The Directors are responsible for preparing the Annual
Report and Accounts and the ﬁnancial statements. The
Directors are required to prepare accounts for the Group
in accordance with International Financial Reporting
Standards (IFRS) and have elected to prepare Company
ﬁnancial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (UK GAAP).

In the case of UK GAAP accounts, the Directors are
required to prepare ﬁnancial statements for each ﬁnancial
year which give a true and fair view of the state of affairs
of the Company and of the proﬁt or loss of the Company
for that period. In preparing these ﬁnancial statements,
the Directors are required to:

(cid:129) Select suitable accounting policies and then apply

them consistently;

(cid:129) Provide additional disclosures when compliance with
the speciﬁc requirements in International Financial
Reporting Standards is insufﬁcient to enable users to
understand the impact of particular transactions, other
events and conditions on the entity’s ﬁnancial position
and ﬁnancial performance; and

(cid:129) Prepare the accounts on a going concern basis unless,
having assessed the ability of the Company to continue
as a going concern, management either intends to
liquidate the entity or to cease trading, or has no
realistic alternative but to do so.

The Directors are responsible for the maintenance and
integrity of the Company website. Legislation in the
United Kingdom governing the preparation and
dissemination of ﬁnancial statements differ from
legislation in other jurisdictions.

(cid:129) Make judgments and estimates that are reasonable

and prudent;

This Report of the Directors was approved by the
Board of Directors on 5 March 2008.

James Jordan
Group Company Secretary and General Counsel
Taylor Wimpey plc

(cid:129) State whether applicable accounting standards have
been followed, subject to any material departures
disclosed and explained in the ﬁnancial statements;

(cid:129) Prepare the ﬁnancial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.

The Directors are responsible for keeping proper
accounting records which disclose with reasonable
accuracy at any time the ﬁnancial position of the
Company, for safeguarding the assets, for taking
reasonable steps for the prevention and detection of
fraud and other irregularities and for the preparation
of a Directors’ Report and Directors’ Remuneration
Report which comply with the requirements of the
Companies Acts.

In the case of IFRS accounts International Accounting
Standard 1 requires that ﬁnancial statements present
fairly for each ﬁnancial year the Company’s ﬁnancial
position, ﬁnancial performance and cash ﬂows.
This requires the faithful representation of the effects
of transactions, other events and conditions in
accordance with the deﬁnitions and recognition criteria
for assets, liabilities, income and expenses set out in
the International Accounting Standards Board’s
‘Framework for the Preparation and Presentation of
Financial Statements’. In virtually all circumstances, a
fair presentation will be achieved by compliance with
all applicable IFRS. Directors are also required to:

(cid:129) Properly select and apply accounting policies;

(cid:129) Present information, including accounting policies, in
a manner that provides relevant, reliable, comparable
and understandable information;

Governance
Directors’ Report continued

Political donations
The Company did not make any donations to political
parties during 2007 (2006: £nil). Business subscriptions
were paid in the ordinary course of business to the
following trade organisations: Home Builders Federation
of £311,000 (2006: £192,000) and Homes for Scotland
of £20,000 (2006: £20,000). Both organisations are active
in supporting the interests of the housebuilding sector.
Although a matter of interpretation, these payments could
fall within the meaning of ‘EU Political Expenditure’ as
deﬁned by section 347A of the Companies Act 1985 in
the case of payments made before 1 October 2007 or,
the meaning of ‘political expenditure’ in section 365 of
the Companies Act 2006 in the case of payments made
on or after 1 October 2007.

Policy on payment of suppliers
The nature of the Group’s operations means that there
is no single Group standard in respect of payment terms
to suppliers. Generally, subsidiaries are responsible for
establishing payment terms with suppliers when entering
into each transaction or series of linked transactions. In
the absence of dispute, valid payment requests are met
as expeditiously as possible within such terms. This
policy continues to apply in 2008.

Trade creditor days for the Group for the year ended
31 December 2007 were 43 days (2006: 32 days). This
is based on the ratio of year-end Group trade creditors
(excluding sub-contract retentions and unagreed claims
of £23.8 million (2006: £13.2 million) and land creditors,
see note 21 to the consolidated ﬁnancial statements)
to amounts invoiced during the year by trade creditors.
The Company had no signiﬁcant trade creditors at
31 December 2007.

Agreements
Pursuant to the Takeovers Directive (Interim
Implementation) Regulations 2006, the Company is
required to disclose whether there are any signiﬁcant
agreements to which the Company is a party that take
effect after, or terminate upon, a change of control of
the Company following a takeover bid, and the effects
of any such agreements.

Apart from a small number of borrowing agreements
pursuant to which the Company borrows or is able to
borrow money and which could potentially be terminated
by the other party upon a change of control of the
Company, there are no signiﬁcant contracts or
agreements which take effect, alter or terminate
upon a change of control of the Company.

Important events since the year end
There have been no important events affecting the
Company or any of its subsidiary undertakings since
31 December 2007.

www.taylorwimpey.com

Governance
Corporate Governance Report

Corporate Governance statement
The Board is fully committed to high standards of
corporate governance and corporate responsibility
throughout the Group. The Board supports the principles
of corporate governance contained in the 2006 Combined
Code on Corporate Governance which is appended to
the Listing Rules of the Financial Services Authority (the
‘Combined Code’). The Combined Code sets out the
governance rules which apply to all UK companies which
are listed on the London Stock Exchange. This Report on
Corporate Governance together with the Remuneration
Report on pages 46 to 55 are intended to explain how
the Company has applied the principles of the Combined
Code and provide an insight into how the Board and
management run the business for the beneﬁt of
shareholders. The Chairman’s Statement and the Group
Chief Executive’s Review seek to present a balanced
assessment of the Company’s position and prospects.

Statement of compliance
For the year ended 31 December 2007, the Company
complied with all the provisions of the Combined Code
including the Principles set out in Section 1.

The Board and its Committees
At the date of this Report the Board consists of ten
Directors: the Chairman, three Executive Directors and
six independent Non Executive Directors. Their names,
responsibilities and other details appear on pages 38 and
39. Upon completion of the merger of Taylor Woodrow
plc and George Wimpey Plc on 3 July 2007 (the ‘Merger’)
a number of Board changes took place as set out below:

Three new Executive Directors were appointed:
Pete Redfern (Group Chief Executive), Ian Sutcliffe
(Chief Executive, Taylor Wimpey UK) and John Landrum
(President and CEO, North America). On 31 July 2007,
John Landrum stood down as a Director but remained
as an employee until 31 October 2007;

Three new Non Executive Directors were appointed:
Brenda Dean, Anthony Reading and David Williams;

Ian Smith stood down as Group Chief Executive and
Vernon Sankey stood down as a Non Executive Director;

With effect from the Merger, David Williams became the
Senior Independent Director in place of Mike Davies.

Norman Askew (Chairman), Mike Davies (Independent
Non Executive Director), Andrew Dougal (Independent
Non Executive Director), Katherine Innes Ker
(Independent Non Executive Director) and Peter Johnson
(Group Finance Director) each held these positions
throughout the year.

Graeme McCallum resigned from the Board on
16 January 2007.

During the year the Board met on 10 occasions in total.
Prior to the Merger, the Board met on six occasions and
there were no absences except that Mike Davies missed
one meeting. Post the Merger the Board met on four
occasions and there were no absences.

The Board discharges its responsibilities by providing
strategic and entrepreneurial leadership of the Company,
within a framework of prudent and effective controls,
which enables risk to be assessed and managed. It sets
the Company’s strategic aims, ensures that the
necessary ﬁnancial and human resources are in place for

the Company to meet its objectives and reviews
management performance. It also deﬁnes the
Company’s values and standards and ensures that its
obligations to its shareholders and other stakeholders
are clearly understood and met.

Following the Merger the documents listed below were
reviewed and adopted by the Board – they outline the
way in which the Board and its Committees operate
and will be regularly reviewed by the Board:

(cid:129) Schedule of matters speciﬁcally reserved for the

decision of the Board;

(cid:129) Board policies covering operational matters,

compliance and stakeholder policies;

(cid:129) Terms of Reference of the the Board Committees:

Audit, Nomination and Remuneration, which outline
their objectives and responsibilities and which deﬁne
a programme of activities to support the discharge of
those responsibilities. New terms of reference were also
put in place for the Corporate Responsibility Committee
which was created at the time of the Merger. Each
Committee’s Terms of Reference is available on our
website www.taylorwimpey.com.

All Directors have access to the advice and services of
the Group Company Secretary and General Counsel.

The Board has an established procedure whereby
Directors may take independent professional advice at
the Company’s expense where they judge it necessary
to discharge their responsibilities as Directors.

Board and Committee balance, independence
and effectiveness
It is the Company’s policy that appointments to the
Board are made on merit and through a formal, rigorous
and transparent process against objective criteria
recommended by the Nomination Committee. The
Committee also guides the Board in arranging orderly
succession for appointments to the Board and to senior
management. The work of all Board Committees is
described later in this Report.

As part of the post Merger review of procedures, the
Board undertook a detailed review of responsibilities and
authorities at all levels of the Group. It has adopted a
framework of delegated commercial and operational
authorities, which deﬁne the scope and powers of the
Group Chief Executive and of operating management.
The roles and responsibilities of the Chairman and the
Group Chief Executive have been reviewed by the Board
and in line with the Combined Code, have been clearly
deﬁned and are set out in writing.

The Board will continue to review the governance
framework including delegated commercial and
operational authorities to ensure that they meet the
requirements of the Group going forward.

Following the Merger the Board also undertook a review
of the interests of each Director outside of the Company.
The Board is satisﬁed that the commitments of each
Director do not detract from the extent or quality of time
which they are able to devote to the Company.

During the three years up to and including the 2008
Annual General Meeting, every Director will have sought
re-election at least once and Directors appointed during

2007 by the Board, namely, upon completion of the
Merger, will be subject to election by shareholders at the
Annual General Meeting. The Board has reviewed and
re-afﬁrmed that it considers all of the Non Executive
Directors to be independent in character and judgement
and that there are no relationships which could affect the
Director’s judgement. The Chairman, at the time of his
appointment, met the independence criteria as set out
in the Combined Code. In line with the Combined Code,
there will be a rigorous review of any Non Executive
Director wishing to hold ofﬁce for more than six years
with such review taking into account the need to
progressively refresh the Board. Katherine Innes Ker was
appointed to the Board on 1 July 2001 and accordingly
a rigorous review has taken place. Following the review,
both the Nomination Committee and the Board were
entirely satisﬁed with Katherine Innes Ker’s performance
and contribution as a Non Executive Director and also
with her ongoing independence of character and
judgement. As part of this review the Board took into
account the requirement of the Combined Code to
refresh the Board from time to time: as a result of the
changes to the Board made at the time of the Merger as
set out earlier in this Report, it was concluded that this
requirement of the Combined Code had been met.

Whenever any Director considers that he or she is or
may be interested in any contract or arrangement to
which the Company is or may be a party, the Director
gives due notice to the Board in accordance with the
Articles of Association. During the year no such interests
have arisen in respect of any Director.

The Board considers that its Directors possess an
appropriate balance of skills and experience for the
requirements of the business.

The Board and its Committees operate within a
framework of scheduled core meetings and additional
ad hoc meetings are held as required. All Directors visit
Group operations on a regular basis, engaging with
employees at all levels in order to foster and maintain an
understanding of the business. Board visits are arranged
each year to operations in both the UK and elsewhere
within the Group.

The Group Company Secretary and General Counsel
acts as Secretary to the Board and its Committees and
he attends all meetings. There is a policy that formal
agendas and reports for Board and Committee meetings
are provided to Directors one week prior to the
meeting in order to allow sufﬁcient time for detailed
review and consideration beforehand.

Information and professional development
The Company has procedures whereby Directors
(including Non Executive Directors) receive formal
induction. This includes training and continuing
familiarisation about the Company’s business, operations
and systems, the principles underlying the discharge of
their duties as Directors and wider issues relating to the
housing and construction sector.

Performance evaluation of the Board,
its committees and other functions
In line with the Combined Code, a formal annual
evaluation of the performance and effectiveness of the
Board and its Committees and of individual Directors
was carried out. The evaluation was carried out by the

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Corporate Governance continued

Chairman and the Group Company Secretary. The
process consisted of a bespoke questionnaire which
was sent by the Group Company Secretary to all
Directors for completion. The questionnaire focused
on the performance of: the Board, the four Board
Committees, the performance of each Director (by way
of self assessment plus conﬁdential evaluation by the
Chairman) and the performance of the Chairman. The
Secretary collated all of the responses and produced
a summary in respect of each performance area.
The Chairman and the Secretary then reviewed the
summaries that had been prepared in respect of the
Board, each Board Committee and each Director (other
than the Chairman) and reported the ﬁndings to the
Board on a non-attributable basis. Following this, a set
of actions were agreed designed to increase further the
overall effectiveness of the Board. A speciﬁc action item
will be to arrange for Non Executive Directors to make
additional visits to operations across the Group.

The Non Executive Directors, led by the Senior
Independent Director, undertook the evaluation of the
Chairman’s performance. The evaluation was based on
the non attributable summary prepared by the Secretary
of the feedback from the Non Executive and Executive
Directors. The summary was reviewed by the Non
Executive Directors in the absence of the Chairman,
following which David Williams in his capacity as the
Senior Independent Director provided feedback direct
to the Chairman.

In line with the Combined Code, the Chairman also holds
meetings with the Non Executive Directors without the
Executive Directors present.

Internal Audit:
A formal evaluation of the Group Internal Audit (‘GIA’)
function was carried out by the Audit Committee which
took into account views from Executive Directors, senior
management and the external auditors.

The external auditors:
A comprehensive formal competitive tender process with
regard to the carrying out of the 2008 external audit was
carried out during the year. The process was conducted
by a specially appointed Audit Tender Panel consisting of
the Chairman of the Audit Committee, the Group Chief
Executive and the Group Finance Director. The Panel
also involved the Group Financial Controller, Head of
Internal Audit and Group Company Secretary who each
interface with the external auditors as part of their
responsibilities. The Panel reviewed the tenders before
making its recommendation to the Audit Committee
which in turn made a recommendation to the Board.
This resulted in Deloitte & Touche LLP being selected
as external auditors to the Company. Deloitte & Touche
LLP will therefore be proposed for re-appointment as the
Company’s auditors at the Annual General Meeting.

Board Committees and their work
Remuneration Committee and remuneration
The Board’s policy and approach to the setting of
remuneration for Directors and senior executives and the
activities of the Remuneration Committee are described
in detail in the Directors’ Remuneration Report on pages
46 to 55. The Committee is constituted in accordance
with the Combined Code and its members are set out
on page 46.

During the year the Remuneration Committee met on
eight occasions. Prior to the Merger the Committee met
on four occasions and there were no absences except
that Mike Davies missed one meeting. Post the Merger
there were no absences except Mike Davies and David
Williams who each missed one meeting. Consistent
with policy, each Director was however consulted prior
to the meeting taking place and was able to provide his
detailed input on the agenda items.

Nomination Committee
The Committee is chaired by the Chairman of the
Board and is comprised of a majority of Non Executive
Directors as required by the Combined Code. Prior
to the Merger the Committee was comprised of the
Chairman, Mike Davies, Andrew Dougal, Katherine
Innes Ker, Vernon Sankey and Ian Smith. Following the
Merger the Committee was comprised of the Chairman,
Mike Davies, Brenda Dean, Andrew Dougal, Katherine
Innes Ker, Tony Reading, Pete Redfern and David
Williams. The Committee has processes in place with
regard to the appointment of new Directors to the Board
in order to ensure that appointments are made on merit.
For the appointment of non executive directors, the use of
an external search agency will usually be incorporated as
part of the process.

The Nomination Committee is responsible for succession
planning for the Board and senior management and
assesses the balance of the Board’s composition. The
Committee met on two occasions during the year at
which there was full attendance.

Audit Committee and auditors
Prior to the Merger the Committee was comprised of
Andrew Dougal (Committee Chairman), Mike Davies and
Vernon Sankey. Following the Merger the Committee
was comprised of Andrew Dougal who continued to
Chair the Committee, Mike Davies, Tony Reading and
David Williams. All members are independent Non
Executive Directors. The Board has determined that
Andrew Dougal, who is a member of the Institute of
Chartered Accountants of Scotland, has recent and
relevant ﬁnancial experience as have other members of
the Committee including Anthony Reading and David
Williams. The Chairman of the Company and other
Non Executive Directors, the Chief Executive, Group
Finance Director, Head of Internal Audit, Group Financial
Controller and other senior executives attend meetings
of the Committee by invitation. Deloitte and Touche LLP
are invited to attend meetings of the Audit Committee.

During the year the Audit Committee met on six
occasions in total. Prior to the Merger, the Committee
met on two occasions and there were no absences
except that Mike Davies missed one meeting. Post the
Merger the Committee met on four occasions and there
were no absences.

The Committee’s remit includes reviewing the internal
control framework, the internal audit process, the
ﬁnancial reporting practices and the external audit
process. It ensures that the Board regularly assesses
business risks, and their management and mitigation.
In doing so, the Committee places reliance on regular
reports from executive management. In monitoring
the ﬁnancial reporting practices the Audit Committee
reviewed accounting policies, areas of judgement,

the going concern assumption and compliance with
accounting standards and the requirements of the
Combined Code. During the year, post Merger, the
Committee was required to undertake two major
reviews namely, the review of the fair value process
which required the Company under IFRS to fair value the
consideration given and the assets acquired of George
Wimpey Plc as a result of the Merger and secondly an
accounting policy alignment as between the Company
and George Wimpey Plc. The Committee also reviewed,
prior to publication, the interim and annual ﬁnancial
statements and other major statements affecting the
Group concerning price sensitive information.

Appointment of the auditors for non
audit services
The Audit Committee has approved a policy on
employing the auditors to provide services other than
audit services, which is to require a competitive tender
except in narrowly-deﬁned circumstances where the
Company considers that for conﬁdentiality, past
knowledge or other reasons, there is an advantage
in using a single tender procurement procedure.

The Committee has determined that the following
assignments should not be undertaken by the auditors:

(cid:129) the provision of internal audit services;

(cid:129) advice on major IT systems.

The Board is satisﬁed that this policy is conducive to the
maintenance of auditor independence and objectivity.

Corporate Responsibility Committee
Following the Merger, the Corporate Responsibility
Committee was established as a formal Committee of
the Board. The Committee is chaired by Katherine Innes
Ker and the other members are Norman Askew, Pete
Redfern, Brenda Dean, Andrew Dougal and Ian Sutcliffe.

The Corporate Responsibility Committee met on two
occasions and there were no absences except that
Brenda Dean missed one meeting.

The Company’s corporate responsibility practices outline
its approach to the challenge of sustainable development.
Our policies and practices help the business to
demonstrate high standards of governance, reduce
risk and comply with current and future legislation.

The Committee is responsible for recommending the
Company’s corporate responsibility strategy, policies,
reporting and performance monitoring to the Board.

The Committee’s remit includes ensuring that the
Company’s corporate responsibility strategy and activity
are adequately resourced, have appropriate standing
within the Company and are aligned to the needs of the
business. The Board regards corporate responsibility as
an integral part of good governance.

Full details of the Company’s achievements and initiatives
in these areas during 2007 and going forward are set out
in Taylor Wimpey’s ﬁrst Corporate Responsibility Report
which is published separately and is also available in
electronic form on the Group’s website
www.taylorwimpey.com.

www.taylorwimpey.com

Internal control
The Board has applied Principle C.2 of the Combined
Code by establishing a continuous process for
identifying, evaluating and managing the signiﬁcant
risks the Group faces. The Board regularly reviews its
application of the Revised Turnbull Guidance on Internal
Control to ensure the process of internal control remains
effective and appropriate. The process, which has been
in place from the start of the year to the date of approval
of this Report is in accordance with Internal Control:
Guidance for Directors on the Combined Code. The
Board is responsible for the Group’s system of internal
control and for reviewing its effectiveness. Such a
system is designed to manage rather than eliminate the
risk of failure to achieve business objectives, and can
only provide reasonable and not absolute assurance
against material mis-statement or loss.

In compliance with provision C.2.1 of the Combined
Code, the Board regularly reviews the effectiveness
of the Group’s system of internal control. The Board’s
monitoring covers all controls, including ﬁnancial,
operational and compliance controls and risk
management. This process is based principally on
reviewing reports from management to consider whether
signiﬁcant risks are identiﬁed, evaluated, managed and
controlled and whether any signiﬁcant weaknesses are
promptly remedied and indicate a need for more
extensive monitoring. The Board has also performed
a speciﬁc assessment for the purpose of this Report
and Accounts. This assessment considers all signiﬁcant
aspects of internal control arising during the period
covered by the report including the work of Internal
Audit. The Audit Committee assists the Board in
discharging its review responsibilities. Key elements
of the system of internal control are detailed below.

A Group-level review is carried out to identify the major
risks facing the Group and to develop and implement
appropriate initiatives to manage those risks. This
process applies across the Group.

Key operational and ﬁnancial risks are identiﬁed and
assessed at the operating process level, while strategic
risks are identiﬁed as a part of the business planning
process. Strategic risk reviews are carried out in each of
the operating divisions to identify business risk, evaluate
existing controls and develop strategies to manage the
risks that remain, the results of which form part of the
Board’s assessment. Updates to these risk assessments
are reported to the Board.

The Executive Committee, chaired by the Group Chief
Executive, oversees the risk and control framework of
the Group. The Head of Group Internal Audit regularly
attends the Executive Committee which meets monthly.
The Group Chief Executive reports on the key elements
arising from each Executive Committee meeting at the
next Board Meeting and the minutes from such meetings
are routinely included in each Board pack of documents.

During 2007 the Audit Committee assessed the Group’s
risk management and the internal control framework,
particularly in the light of the integration process
post-Merger. It also reviewed business change issues
and GIA activities across the Group.

As a result of these reviews the Board has
acknowledged that inevitably, there have been issues in
bringing together different legacy procedures. Controls
have been identiﬁed, appropriately prioritised and are
being actively managed.

The annual employee performance appraisal process
is objective-based, with individual objectives cascaded
down from the appropriate business objectives.
Development reviews identify training needs to support
achievement of objectives.

Management
The Group Chief Executive has responsibility for
preparing and reviewing strategic plans for the Group
and its divisions and the annual budgets. These are
subject to formal approval by the Board. Budgets are
re-examined in comparison with business forecasts
throughout the year to ensure they are sufﬁciently robust
to reﬂect the possible impact of changing economic
circumstances. The Group Chief Executive and the
Board conduct regular reviews of actual results and
future projections with comparison against budget and
prior year, together with various treasury reports.

Disputes that may give rise to signiﬁcant litigation or
contractual claims are monitored quarterly by the Board.

The Group has clearly deﬁned policies, processes and
procedures governing all areas of the business which will
continue to be reviewed and reﬁned in order to meet the
requirements of the business post Merger.

Deﬁned authority limits are in place. In particular, any
investment in land, property and other signiﬁcant assets,
including acquisitions and disposals, require detailed
appraisals and are subject to deﬁned authorisation levels
and post-investment review procedures. Investment
decisions, projects, and tenders for contracts are subject
to approval by the Board, the Group Chief Executive or
subsidiary operating management, depending on the
value and nature of the investment or contract.

There is a clearly identiﬁable organisational structure
and a framework of delegated authority approved by
the Board within which individual responsibilities of senior
executives of Group companies are identiﬁed and can
be monitored. These activities are reinforced through
process compliance and other audits conducted by GIA.

The GIA function reviews the effectiveness and efﬁciency
of the systems of internal control in place to safeguard
the assets, to quantify, price, transfer, avoid or mitigate
risks and to monitor the activities of the Group in
accomplishing established objectives. Regular reports
from these reviews are provided to the Board and
reported to the Group Chief Executive, Audit Committee,
the Executive Committee and senior management,
who consider them on a regular basis. The Head of the
GIA function has direct access to the Chairman of the
Audit Committee, the Chairman and the Group Chief
Executive. A database of audit recommendations and
improvement initiatives is maintained. Follow up routines
ensures that such improvements are implemented in a
timely manner.

Throughout the year the Board continually considers
the effectiveness of the Group’s internal control systems.
On 5 March 2008 it completed the annual assessment
for the year to 31 December 2007 by reviewing reports
submitted to the Audit Committee and by taking account
of events since the year end.

Whistleblowing
The Group’s whistleblowing policy is supported by
a clear process that includes an externally-facilitated
hotline through which employees of the Company
may, in conﬁdence, raise concerns about possible
improprieties in ﬁnancial reporting, other operational
matters or inappropriate personal behaviours in the
work place.

All whistleblowing cases are investigated by the Head
of GIA, Group HR Director and/or the Group Company
Secretary. Whistleblowing incidents and their outcome
are reported to the Audit Committee. Whistleblowing is
a standing item on each Audit Committee agenda which
allows the Committee to regularly review the adequacy
of the policy in line with its requirements to do so under
the Combined Code.

Relations with shareholders
The Board actively seeks and encourages engagement
with major institutional shareholders and other
stakeholders and has put in place arrangements
designed to facilitate contact about business,
governance, remuneration and other issues. This
provides the opportunity for meetings with the Chairman,
the Senior Independent Director as well as the Group
Chief Executive, Group Finance Director and other
Executives in order to establish a mutual understanding
of objectives. The Company also operates a structured
programme of investor relations, based on formal
announcements and publications covering the full year
and interim results. There are associated brieﬁngs for
stockbroking analysts and investors, the presentation
material for which is published on the Company’s
website www.taylorwimpey.com.

All Directors receive formal reports and brieﬁngs
during the year about the Company’s investor relations
programme and receive detailed feedback through
surveys, direct contact and other means, through which
they are able to develop an understanding of the views
of major shareholders about the Company.

The Board encourages all shareholders to participate
in the Annual General Meeting which is attended by all
Directors. Information about the Company, including full
year and interim results and other major announcements,
is published on the Company’s website
www.taylorwimpey.com.

Going concern
After making enquiries, the Directors have formed a
judgement at the time of approving the ﬁnancial
statements, that there is a reasonable expectation that
the Group and the Company have adequate resources
to continue in operational existence for the foreseeable
future. For this reason, the Directors continue to adopt the
going concern basis in preparing the ﬁnancial statements.

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Remuneration Report

Introduction
The Remuneration Committee (sometimes referred
to in this Report as the ‘Committee’) has adopted the
principles of good governance relating to Directors’
remuneration as set out in the 2006 Combined Code
on Corporate Governance (the ‘Combined Code’).
This Report has been prepared in accordance with
the Companies Act 1985 (the ‘Act’) and meets the
requirements of the Directors’ Remuneration Report
Regulations 2002 and the Listing Rules of the Financial
Services Authority.

It is a requirement that the Company’s auditors report
to shareholders on certain parts of this Report and state
whether in their opinion those parts of it have been
properly prepared in accordance with the above
regulations. Accordingly, the Report has been divided
into separate sections consisting of unaudited and
audited information.

As required by the Act, a resolution to approve this
Report will be proposed at the Annual General Meeting
of the Company on 17 April 2008.

This Report has been prepared by the Remuneration
Committee on behalf of the Board.

Part 1: Unaudited Information:
Remuneration Committee
The Remuneration Committee has clearly deﬁned
terms of reference which are reviewed annually by the
Board and are available on the Company’s website at
www.taylorwimpey.com. The key remit of the Committee
is to recommend to the Board the remuneration strategy
and framework for Executive Directors and senior
management. Within this framework the Committee’s
main role and responsibilities are to:

(cid:129) determine the remuneration, including pension

arrangements of the Executive Directors and the
Group Company Secretary and General Counsel;

(cid:129) monitor and make recommendations in respect of

remuneration for the tier of senior management one
level below that of the Board;

(cid:129) approve annual and long term incentive arrangements

together with their targets and levels of awards;

(cid:129) determine the level of fees for the Company Chairman.

The Committee comprises ﬁve independent Non
Executive Directors. On 3 July 2007, following
completion of the merger between Taylor Woodrow plc
and George Wimpey plc (the ‘Merger’), Anthony Reading
was appointed as Committee Chairman. The other
members of the Committee are Katherine Innes Ker
(Committee Chairman until the Merger), Mike Davies,
as well as Brenda Dean and David Williams who were
appointed on completion of the Merger. Vernon Sankey
was a member of the Committee until completion of
the Merger. Details of attendance at Remuneration
Committee meetings held during 2007, are set out in
the Corporate Governance Report on page 44.

No Director is involved in any decisions about his/her
own remuneration.

Advice to the Company
The Committee keeps itself fully informed on
developments and best practice in the ﬁeld of
remuneration and it seeks advice from external advisers
when appropriate. During the year, the Committee
received material advice from New Bridge Street

www.taylorwimpey.com

Proportion of ﬁxed to performance based remuneration (%)

CEO

UK Based Directors

100

Salary (Annual)
Bonus and Long Term Incentives

Consultants LLP and KPMG LLP. It also received legal
advice from Slaughter and May. Around the time of the
Merger, the Committee undertook a detailed review
of its remuneration related advisers following which it
appointed Mercer. As a result the Committee has
received material advice from Mercer on establishing
a new Remuneration Policy and Philosophy (as set
out below) and in relation to Executive Directors’
remuneration and share schemes. Separately, Mercer
also provides actuarial advice to the trustees of the
George Wimpey Pension Scheme.

In addition, the Company Chairman, Group Chief
Executive, Group Company Secretary and General
Counsel and Group Human Resources Director provided
input to the Committee on remuneration matters except
in relation to their own individual remuneration.

Policy and philosophy
Following the Merger, the Committee in conjunction
with Mercer, undertook a comprehensive review of the
existing remuneration and reward structures in place
within both Taylor Woodrow plc and George Wimpey Plc.
The prime objective of the review was to ensure that
executive compensation practices actively support the
attainment of the Company’s strategic objectives. The
review addressed a number of key areas including:

(cid:129) the development of a new remuneration philosophy;

(cid:129) an evaluation of Executive Directors’ base salaries

in order to ensure competitive positioning;

(cid:129) the alignment of short term incentives with market

practice; and

(cid:129) the development of long term incentive plan

arrangements designed to support strategic goals,
motivate and incentivise key executives and align their
interests with those of shareholders;

Following the review the Committee adopted the
following remuneration philosophy;

(cid:129) remuneration arrangements must help attract, motivate
and retain the management talent required to meet the
Company’s strategic objectives;

(cid:129) Taylor Wimpey will be committed to fostering a

performance culture that effectively aligns individuals’
reward with increased corporate performance and
shareholder value creation;

(cid:129) a signiﬁcant proportion of each executive’s total

compensation should be delivered through
performance related pay;

(cid:129) incentive arrangements should be capable of

providing upper quartile total payment if outstanding
performance is achieved.

Going forward, within the principles of good governance,
the Committee will regularly review its remuneration
strategy. The prime objective will be to ensure that the
Company is in the best possible position to attract and
retain highly skilled and motivated people who will be key
to ensuring the long term success of Taylor Wimpey.

Details of the changes to the remuneration framework
following the review are set out in this Report. Following
consultation with our major shareholders and with
shareholder bodies it is proposed to introduce two new
long term incentive plans namely, the Taylor Wimpey
Performance Share Plan and the Taylor Wimpey Share
Option Plan. These proposed plans will be subject to
shareholder approval and will be considered at the 2008
Annual General Meeting. Further details are set out on
page 48 and 49 of this Report and also in the Notice of
Meeting section on pages 105 to 107 and in Appendices
1 and 2 thereto. If approved, these will replace the
long term incentive plans currently in place.

As previously announced in connection with the Merger,
the Company is committed in its focus on driving out
costs from the business by delivering on its efﬁciency
targets, rationalising corporate costs and improving the
collective procurement process which is expected to lead
to pre-tax synergies signiﬁcantly in excess of £70 million
by the end of 2008 on an annual exit rate basis. As part
of the consultation process referred to above, major
shareholders were also advised that following the
remuneration review the Committee had concluded that
a temporary increase in the short term incentive plan to
reward the achievement of synergies arising out of the
Merger should be introduced for 2008 and 2009.
Achieving the synergies is of critical importance in both
the short term and for providing a basis for future value
creation for the Company. Accordingly, in order to ensure
that the Executive Directors and other senior executives
including the UK and North American leadership teams
are appropriately incentivised to achieve the targeted
synergies, a bonus arrangement has been introduced in
respect of which further details are set out on page 48.
Prior to the Merger, George Wimpey Plc had announced
a target of £25 million of build cost savings to be
achieved in 2007 in the UK and $20 million in the US.
These savings have been achieved and are not part of
this bonus arrangement.

Prior to the Merger, the remuneration packages of the
Executive Directors and senior management in both Taylor

Woodrow and George Wimpey included a signiﬁcant
element of performance related incentive remuneration,
set against challenging business performance objectives.
This remains a key component of the new Remuneration
Policy and Philosophy. The chart opposite shows the
proportion of ﬁxed to performance based remuneration
for 2007 and 2008. Fixed remuneration comprises base
salary. Performance based remuneration comprises an
annual cash bonus and long term incentive plan. The
chart illustrates the mix of remuneration assuming target
levels of annual bonus (including the synergy bonus) are
met and the annualised expected value of long term
incentive provision.

Non Executive Director positions
Subject to Board approval and provided that such
appointments are in accordance with the requirements of
the Combined Code, Executive Directors are permitted
to take on non executive positions with other companies.
Executive Directors are permitted to retain their fees in
respect of such positions. During 2007, Peter Johnson
was a non executive director of (i) Shanks Group plc and
received fees of £40,000 and (ii) Oriel Securities Limited
where he received fees of £25,000. Ian Smith (a Director
of the Company until the Merger) was a non-executive
director of Galiform plc where he received fees of
£40,000 up to the date of the Merger. As set out in the
Corporate Governance report the Board has recently
reviewed the external interests of all Directors.

Base salary
The Committee reviewed the base salaries of Executive
Directors at the time of the Merger in order to align
salaries competitively with external market practice and
ensure that Executive Directors were fairly compensated
against FTSE peers. As part of this process the
Committee took detailed advice from Mercer who
provided specialist advice as well as benchmarking data
to the Committee based on relevant peer groups. The
review also took into account the personal performance
of each Director and the additional size and complexity
of the combined business following the Merger.

As part of the review, the Remuneration Committee
considered market data from two peer groups as
described below with regard to both base salaries and
remuneration practices generally:

(cid:129) Sector Based Peer Group: this Group is used in order
to enable the Committee to track compensation policy
and structures so as to assist it with design decisions
primarily around incentive structures and performance
measures. Sector Based Peers are selected based on
comparability of ﬁnancial proﬁle (using sales and asset
ratios) and business activities;

(cid:129) Size Based Peer Group: this cross sector Group is

used in order to assist the Committee with decisions
on appropriate compensation quantum in order to
reﬂect the importance of Company size on executive
compensation levels. Size based peers are selected
based on market capitalisation and sales and asset
ratios in order to ensure similar business proﬁle.

Following the review, Pete Redfern’s base salary was
increased with effect from the Merger from £480,000 to
£700,000 per annum, Peter Johnson’s base salary was
increased from £406,000 to £440,000 per annum and
Ian Sutcliffe’s was increased from £320,000 to £400,000
per annum. This positioned Executive Director base
salary levels to fall within a range of 96 per cent to
103 per cent of market median at the time of the review,

with the base salary level for Pete Redfern set marginally
below the market median. This positioning on base
salaries is considered appropriate in order to ensure that
the Company continues to be able to attract and retain
the talent required to drive the business forward.

The Remuneration Committee will review the two Peer
Groups on a regular basis in order to ensure changes
both within the business and the external market
environment are accurately reﬂected in Taylor Wimpey’s
compensation practices.

The Committee will review salaries on an annual basis with
increases normally to take effect on 1 January. Due to the
post Merger review, the Committee, at the request of the
Executive Directors, decided in December 2007, not to
implement any increases for the Executive Directors for
2008.

Executive Directors’ contracts of service, which include
details of their remuneration, will be available for
inspection at the Annual General Meeting and also
available as described in the Notice of 2008 Annual
General Meeting.

Other beneﬁts, including beneﬁts-in-kind
The Executive Directors receive additional beneﬁts
including a Company provided car or an allowance
in lieu, life assurance and private medical insurance.
Beneﬁts-in-kind are not pensionable.

Bonus arrangements
The Company offers Executive Directors and senior
managers the opportunity to earn performance related
bonuses. Following the Merger, the Committee undertook
a full review of short term incentive arrangements in place
within Taylor Woodrow and George Wimpey.

The Committee concluded that the bonus arrangements
already in place for Executive Directors should apply for
the period 1 January 2007 to 30 June 2007 with the half
year performance of each legacy business measured
against targets previously established in respect of each
for the year as a whole and pro rated.

Therefore, for the ﬁrst half of the year, the bonus
arrangements for Peter Johnson and Ian Smith (a
Director until 3 July 2007) were based on the ﬁrst half
performance of Taylor Woodrow in respect of the targets
summarised below. Similarly, Iain Napier who left the
Company on 30 April 2007, was paid a pro rated bonus
based on his leaving date calculated by reference to the
ﬁrst half performance of Taylor Woodrow. The bonus
structure in place for this period within Taylor Woodrow
incorporated a target bonus of 50% of base salary and
a maximum bonus of 100%.

Targets for Messrs Johnson, Smith and Napier for the
period 1 January to 30 June 2007:

(cid:129) Achievement of specified levels of profit before tax
with a significant element of the bonus dependent
on this target;

(cid:129) Achievement of improvement in health and safety

performance, measured through safety management
performance and site inspection results;

(cid:129) Achievement of speciﬁed customer satisfaction ratings;

(cid:129) Other important and relevant business measures,
including return on capital employed, divisional
operating proﬁt and speciﬁc personal objectives.

For Messrs Redfern and Sutcliffe for the period

1 January 2007 to 30 June 2007, the applicable scheme
was the George Wimpey Plc annual incentive scheme,
pro rated for that period. The structure of this scheme is
based on a target bonus of 60 per cent of base salary
and a maximum bonus opportunity of 150 per cent of
base salary, with a compulsory three year deferral of
50 per cent of any bonus into shares of the Company.
There is no share matching element. With regard to
Pete Redfern, the scheme established stretching targets
relating to the George Wimpey Group PBT and speciﬁc
personal objectives. In the case of Ian Sutcliffe, his
performance targets were based on speciﬁc George
Wimpey UK housing division targets consisting of:
growth in PBIT, volume of houses sold, number of plots
achieved with planning permission and customer care.

For the period from 1 July 2007 to 31 December 2007
bonuses for the Executive Directors were aligned and
based on the performance of Taylor Wimpey for the year
as a whole. The structure consists of a target bonus of
60 per cent of base salary and a maximum bonus
opportunity of 150 per cent of base salary, with a
compulsory three year deferral into shares requirement of
50 per cent of any bonus payment. There is no share
matching element. This replaced the previous structure
within Taylor Woodrow as outlined above in relation to
Peter Johnson. For Pete Redfern and Peter Johnson
their bonuses for this period were based on stretching
targets for Group pre exceptional pro-forma proﬁt before
tax and personal objectives (20 per cent). Ian Sutcliffe’s
bonus for this period was based on the combined Taylor
Wimpey UK housing division and linked to stretching
targets relating to PBIT (40 per cent), operating margin
(40 per cent) and plots with planning permission (20 per
cent).

Bonus awards for Executive Directors for 2007 ranged
from 61 per cent to 67 per cent of basic 2007 salary
(2006: 92 per cent to 99 per cent). For other senior
executives who are members of the Executive
Committee but who are not Directors, namely the Group
Company Secretary and General Counsel and the
President and CEO of Taylor Morrison, bonuses ranged
from 83 per cent to 251 per cent of basic 2007 salary
(2006: 79 per cent to 97 per cent). Bonuses for the ﬁrst
half of the year were based on base salaries in place as
at 1 January 2007 and for the second half of the year
were based on the base salaries that were put
in place upon completion of the Merger.

For 2008, bonus targets for Pete Redfern and Peter
Johnson have been set by the Committee based on
Group PBT, UK operating margins, average capital
employed and personal objectives. The targets for
Ian Sutcliffe are similar except that they are all based
on the performance of the Taylor Wimpey UK housing
division and relate to PBIT, operating margins, average
capital employed and customer care. Following
consultation with major shareholders, the Remuneration
Committee has determined that performance targets that
are non ﬁnancial in nature should not exceed 20 per cent
of the maximum bonus potential.

In line with the Association of British Insurers’ Guidelines
on Responsible Investment Disclosure the Remuneration
Committee will ensure that the incentive structure for
Executive Directors and senior management will not raise
environmental, social or governance (‘ESG’) risks by
inadvertently motivating irresponsible behaviour. More
generally, with regard to the overall remuneration
structure there is no restriction on the Committee which
prevents it from taking into account ESG matters.

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Remuneration Report continued

Temporary short term incentive for
synergy achievement
The core bonus remains focused on key ﬁnancial and
operational objectives which are limited to a maximum
bonus potential of 150% of base salary. In order to
drive the achievement of exceptional ﬁnancial savings
levels set out in the Merger documentation sent to
shareholders, a limited number of executives will be
eligible for an incremental bonus based upon the
achievement of the exceptional targets as set out below
over two twelve month performance periods.

For 2008, the target is the achievement of £70 million of
synergies by the end of 2008 on an annual exit rate basis.

For 2009, the target is the achievement of £100 million of
synergies (in aggregate) by the end of 2009 on an annual
exit rate basis.

In addition to the achievement of the above synergy
performance targets, there must also be relative
operating margin growth in the UK measured against
other listed housebuilders in each year based on
statutory reported operating margins but excluding the
impact of land sales. For North American participants

any bonus payment will be subject to the achievement
of a growth of operating proﬁt for that business year
on year.

Eligibility to participate in this bonus arrangement will be
limited to 24 key executives consisting of the Executive
Committee (namely, Executive Directors, the President
and CEO North America and, the Group Company
Secretary and General Counsel) and the UK and North
America leadership teams.

The bonus payable will be 50 per cent of base salary in
respect of each of the two bonus years subject to the
synergy targets being achieved. If targets are not achieved,
no bonus is payable. To illustrate, if £70 million of synergies
is not achieved by the end of 2008 on an annual exit rate
basis then no synergy bonus will be payable for that year.
If £100 million of synergies is achieved in aggregate on an
annual exit rate basis, by the end of 2009 then 50 per cent
of base salary will become payable. Prior to the Merger,
George Wimpey Plc had announced a target of £25 million
of build cost savings to be achieved in the UK and
$20 million to be achieved in the US in 2007. These savings
have been achieved and are not part of this bonus
arrangement.

The Board reviews the achievement of synergies against
targeted objectives at each Board meeting. The
Remuneration Committee will rigorously test the
achievement of the synergies at the end of 2008 and
2009 in order to ensure that they have been
appropriately measured and are beneﬁcial to the Group.
The Committee will also require veriﬁcation of the
synergies achieved by the Company’s auditors prior to
any payment being made. Information relating to the
achievment of synergies, operating margins and
operating proﬁt in North America will be set out in the
2008 and 2009 Remuneration Reports.

No bonus or deferred bonus payments under any bonus
arrangement are pensionable.

Deferred Bonus Plan share matching award
The Remuneration Committee considers that share
ownership by Executive Directors and senior executives is
important as it provides a clear alignment of interests with
those of shareholders. This alignment has previously been
assisted through the deferred bonus plan pursuant to
which Peter Johnson and selected senior executives had
the opportunity of investing some or all of their pre-tax
bonus in the purchase of shares in the Company on

Proposed New Taylor Wimpey Share Plans

Taylor Wimpey Performance Share Plan
Relative performance

Taylor Wimpey Share Option Plan
Absolute performance

Plan Focus

Eligibility

All Executive Directors
North American President
Senior Managers

Performance Measures

Executive Directors:
Group measures: 50% TSR / 50% EPS

Senior Management:
At Remuneration Committee discretion,
a mix of Group and business unit /
individual specific measures

3 years

Executive Directors:
Up to 2x Base Salary
Others:
Up to 3x Base Salary

All Executive Directors
North American President
Senior Managers

Executive Directors:
Group measures: 100% ROCE > COC
(ROCE = Return on Capital Employed)
(COC = Cost Of Capital)
Senior Management:
At Remuneration Committee discretion,
a mix of Group and business unit /
individual specific measures

3 years

Executive Directors:
Up to 2x Base Salary
Others:
Up to 3x Base Salary

Under the Taylor Wimpey Performance Share Plan the Remuneration Committee may make awards to Executive
Directors up to 2x salary. If the Committee elects to make awards under both Plans to an Executive Director then the
award under the TW Performance Share Plan will be reduced by one share for each option awarded under the TW
Share Option Plan. (The Remuneration Committee will retain discretion to determine, in exceptional circumstances
(such as attracting new hires), an award quantum for Executive Directors in excess of the above maximum quantum.
Enhanced awards made pursuant to this discretion will not exceed 3x base salary).

EPS growth at least RPI plus 3% p.a. – 25% of EPS-
measure award element vests

EPS growth at least RPI plus 8% p.a. – 100% of EPS-
measure award element vests

50th percentile TSR performance to peer group – 25%
of TSR-measure award vests

75th percentile TSR performance to peer group – 100%
of TSR-measure award vests

ROCE > COC - 25% of award vests
ROCE > COC + 3% - 100% of award vests
Straight line vesting between COC thresholds.

Performance Period

Award Quantum

Combined Quantum

Vesting Quantum

Straight line vesting between EPS and TSR thresholds
Peer Group for 50% of TSR measure Barratt, Bellway, Berkeley Group, Bovis Homes Group,
Galliford Try, Kier, Marshalls, Persimmon, Redrow, SIG,
Travis Perkins, Wolseley

Peer Group for 50% of TSR measure

FTSE 100

www.taylorwimpey.com

The Taylor Woodrow Performance Share Plan

BASIC AWARDS

The Company’s EPS outperforms the UK Index
of Retail Prices (RPI) by 3 per cent per annum
compound over three years

The Company’s EPS outperforms the UK Index
of Retail Prices (RPI) by 6 per cent per annum
compound over three years

50 per cent of award vests

100 per cent of award vests

ENHANCED AWARDS

Vesting of enhanced awards is dependent on the basic award earnings criterion of 3 per cent ﬁrst
being satisﬁed

Median TSR performance
relative to the sector peer
group

Better than median TSR
performance relative to the
sector peer group

Upper quartile TSR
performance relative to the
sector peer group

Nil vesting

40 per cent of the enhanced
awards vest

100 per cent of the
enhanced awards vest

There is a sliding scale between the respective targets. There will be no re-testing of the
performance condition.

either a gross or net voluntary basis. If these shares
remain undrawn for a period of three years, the Company
matches them on a one for one basis, provided that
Group Earnings Per Share (‘EPS’) shall have grown by at
least three per cent compound in real terms during the
ﬁnancial years 2007—2009. EPS is calculated using the
adjusted basic earnings per share as shown in note 10
to the consolidated ﬁnancial statements.

For 2008, the voluntary nature of the deferral will cease
to apply and there will be no matching. Instead, as
mentioned above in the Bonus arrangements section
of this Report, there will be a requirement for Executive
Directors to defer 50% of any cash received under the
bonus plan into Taylor Wimpey shares for a period of
three years.

Proposed New Taylor Wimpey Share Plans –
Taylor Wimpey Performance Share Plan and
the Taylor Wimpey Share Option Plan
Subject to shareholder approval at the 2008 Annual
General Meeting, two new long term incentive plans
proposed by the Remuneration Committee will
supersede all existing long term incentive arrangements
in place within the Company. They will also supersede
the long term arrangements that were in place within
George Wimpey prior to the Merger.

The two proposed plans are the Taylor Wimpey
Performance Share Plan (‘TW Performance Share Plan’)
and the Taylor Wimpey Executive Share Option Plan
(‘TW Share Option Plan’), collectively (‘Plans’).

The Committee believes that use of two complementary
plans will enable incentives to be linked to both relative
and absolute performance. Details of the two Plans and
how they will work in practice are summarised in the
table opposite.

The Remuneration Committee considers that the two
new Plans will offer ﬂexibility to align long term incentives
both with the long term interests of shareholders and
also with strategic priorities, whilst also being directly
linked to external benchmarking of performance.

Following the Company's consultation with its major
shareholders it was agreed that the Remuneration
Report would set out how the Company will calculate
Return on Capital Employed (ROCE) and Cost of Capital
(COC) with regard to the proposed TW Share Option
Plan. Full details are set out in Appendix 2 of the Notice
of Meeting and will be set out fully in the TW Share
Option Plan rules. In brief, ROCE will be calculated by
reference to earnings before interest, tax and
amortisation divided by average operating assets
employed. COC will be calculated by reference to a
formula which is based on the cost of debt plus the cost
of equity divided by average operating assets employed.

Full details of the proposed new Plans, which will be
presented to shareholders are set out in the Notice of
Meeting and in Appendices 1 and 2 thereto.

Executive share-based reward plans in place
at the time of the Merger
The Performance Share Plan
In order to incentivise Executive Directors and other
senior executives, the Company has operated the Taylor
Woodrow Performance Share Plan (the ‘PSP’). The
Remuneration Committee is responsible for supervising
the PSP and for the granting or recommending of
awards under it. Conditional awards of shares are made
to participants, entitling them to receive shares in the
Company at no direct cost. Vesting occurs on the third
anniversary of the award, provided that the performance
criterion is fulﬁlled.

The current plan rules have an overriding limit for awards
of 200 per cent of basic salary per annum. The policy
adopted by the Committee has generally been to restrict
awards to 125 per cent of base salary, other than in
exceptional circumstances, such as senior level
recruitment.

The current PSP contains two elements: basic awards,
which under current policy are restricted to a current
maximum of 75 per cent of basic salary and additional
enhanced awards, which under current policy are
restricted to a current maximum of 50 per cent of basic

salary. The enhanced awards, introduced in 2005, are
made on a discretionary basis to senior executives,
including the Executive Directors.

In 2007, conditional awards were made to 294
participants (2006: 286), including two Executive
Directors, in respect of a total of 1,558,367 shares
(2006: 2,120,036). Of these,1,455,801 were basic
awards (2006: 1,910,642) and 102,566 were enhanced
awards (2006: 209,394).

The vesting criteria for these awards are as set out in the
table above.

The performance criteria were chosen on the basis
that EPS is considered to be an appropriate indicator of
management’s success in advancing the performance
of the business. EPS is calculated as described in
note 10 to the consolidated ﬁnancial statements.
Total Shareholder Return (‘TSR’) was selected in order
to incentivise improvement in performance relative to the
PSP peer group, whilst continuing to focus on earnings
growth. The peer group for this purpose consists of:
Barratt, Bellway, Berkeley, Bovis, Crest Nicholson,
McCarthy & Stone, Persimmon and Redrow.

The Company’s performance against these criteria is
calculated from audited EPS and published RPI data
and veriﬁed by the Remuneration Committee. The
conditional awards made to Executive Directors in 2005
did not meet the relevant EPS tests and they have
accordingly lapsed.

If the proposed new Taylor Wimpey Performance Share
Plan and Taylor Wimpey Share Option Plan are approved
at the Annual General Meeting, no further awards will be
made under the PSP.

Executive Share Option Plan
The Taylor Woodrow Executive Share Option Plan was
suspended on 9 October 2003 and is now closed for
new awards.

Former George Wimpey Plans
George Wimpey Long Term Incentive Plan
Pete Redfern and Ian Sutcliffe are participants in the
George Wimpey Long Term Incentive Plan (‘GWLTIP’),
under which conditional awards of George Wimpey Plc
shares were awarded to Executive Directors and to a
small number of key executives. Awards do not vest
under the GWLTIP unless predetermined performance
conditions are satisﬁed over a three year performance
period. The key performance condition is the
measurement of the Company’s TSR against a speciﬁc
comparator group of listed housebuilders and building
materials related companies as set out below:

Barratt
Bellway
Berkeley
Bovis
Galliford Try

Gleeson (MJ)
Heywood Williams
Kier

Marshalls
Persimmon
Redrow
SIG
Taylor Woodrow
(prior to the Merger)
Travis Perkins
Wolseley

During the year, Baggeridge Brick, Crest Nicholson,
Taylor Woodrow (post the Merger) and Wilson Bowden
were removed from the group due to corporate
transactions completed during the year.

For awards to vest in full, the TSR performance over
the the three year plan cycle must equal or exceed the
75th percentile performance of the comparator group.
No portion of the award will vest if the TSR performance

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Remuneration Report continued

is less than the 50th percentile. Partial vesting
(25 per cent of the award) will take place if the TSR
performance is equal to the 50th percentile with straight
line vesting for levels of performance between the 50th
and 75th percentiles. There is also a requirement that the
Company’s underlying ﬁnancial performance must be
satisfactory before vesting can take place. Following
consultation with shareholders, this will be based on
the Company’s EPS performance.

Prior to the completion of the Merger, the Remuneration
Committee of George Wimpey Plc in consultation with the
Company determined that although a technical change
of control of George Wimpey Plc would take place as a
result of the transaction, that no GWLTIP awards would
vest as a result of it. Instead, and in accordance with
appropriate guidance in relation to such schemes, the
conditional awards of George Wimpey shares were
‘rolled over’ into conditional awards of Taylor Wimpey
shares but remain subject to the rules of the GWLTIP
including performance criteria and performance periods.

Total shareholder return (£)

400

300

200

100

Taylor Wimpey plc

Peer group

FTSE 100

FTSE 350

This graph has been prepared from information obtained through Datastream. It shows the theoretical growth in the value of a shareholding in
the company and in FTSE 350 companies over the specified period, assuming that dividends are re-invested to purchase additional units of
equity at the closing price applicable on the ex-dividend date. Historical data are based on the constituent companies at each given date.
The peer group consists of the companies as set out in Appendix 1 with respect to the proposed Taylor Wimpey Performance Share Plan.

At the date of the Merger, awards over the shares of
Taylor Wimpey plc were as follows:

been rolled over into shares in Taylor Wimpey. They
remain subject to the rules of the Scheme.

Pete Redfern

Ian Sutcliffe

2005
200,068

2006
179,007

2007
231,940

(143,789)

(128,653)

(166,696)

222,480

154,626

(159,897)

(111,130)

Note: Original awards over George Wimpey Plc shares are shown in
brackets.The increase is due to the application of the Merger ratio of
1.3914 Taylor Wimpey shares for each George Wimpey share.

The TSR performance condition for the three year period
to 31 December 2007 relating to the 2005 GWLTIP
awards was not met and those awards to Pete Redfern
have accordingly lapsed.

If the proposed new TW Performance Share Plan and
TW Share Option Plan, details of which appear on
page 48, are approved at the Annual General Meeting,
no further awards will be made under the GWLTIP.

George Wimpey Executive Incentive Scheme –
Deferred Shares
Pete Redfern was a participant in the George Wimpey
Executive Incentive Scheme (‘EIS’) under which the UK
based Executive Directors of George Wimpey Plc were
required to defer 50 per cent of bonus into shares of
George Wimpey Plc, to be held in trust for three years.

As required by the rules of the EIS, and as previously
disclosed and announced, at the date of the Merger
and subsequently, due to the Merger the Remuneration
Committee of George Wimpey Plc was required to make
a recommendation to the trustee of the EIS for
the release of the shares held on behalf of Pete Redfern.
Accordingly, shortly after the Merger he received
19,629 ordinary shares (as adjusted by the merger ratio
of 1.3914 shares for each George Wimpey share) in the
Company as a result of the release by the trustee. Pete
Redfern has retained all of the released shares as part
of his shareholding in the Company.

George Wimpey Executive Share Option Scheme
George Wimpey operated an Executive Share Option
Scheme in which designated UK employees, mainly
UK based regional board directors were invited to
participate. At the time of the Merger no Executive
Directors of George Wimpey participated in this Scheme.
Interests in shares of George Wimpey did not become
exerciseable or vest at the time of the Merger and have

www.taylorwimpey.com

Following the Merger, no further options will be granted
under this Scheme.

All-employee share plans
United Kingdom
The Company operates a Sharesave Plan under which
all UK employees with at least three months’ service can
save up to £250 per month and receive three or ﬁve year
options to acquire the Company’s shares priced at a
discount of up to 20 per cent of market value. During
2007, 1,912 employees (22 per cent of those eligible)
(2006: 1,063) applied to join the Plan. Options were
granted over 2,640,216 shares (2006: 1,409,702) at an
option price of 265.4p per share. Post the Merger, the
Plan was rolled out to enable all UK based George
Wimpey employees to participate. Peter Johnson holds
conditional award of 625 shares under the plan.

During the year the Company also operated a UK Share
Purchase Plan, under which UK employees with at least
three months’ service are permitted to invest up to
£1,500 per annum of their pre-tax earned income in the
purchase of partnership shares of the Company. Such
shares, if held for a period of three years, attract an
award of free matching shares. Currently participants
receive one matching share for each partnership share
purchased. During 2007, 1,394 participants contributed
to the Plan (2006: 1,213) and purchased 365,577 shares
(2006: 303,313). During 2008, this Plan will be extended
so as to allow all relevant employees who joined the
Group from the George Wimpey Plc group of companies
to participate.

Overseas plans
The Company has all-employee stock purchase plans
in the United States and in Canada which are broadly
equivalent to those operated in the UK. No Executive
Director is, or was at any time during 2007, a member
of either of these plans. During 2008, the US plan will
be extended so as to allow all relevant employees who
joined the Group from Morrison Homes to participate.

George Wimpey Sharesave Scheme
George Wimpey operated a Savings-Related Share
Option Scheme which was open to all its UK employees,
including UK Executive Directors of George Wimpey Plc,
with over six months’ service.

Following the Merger, the interest of Ian Sutcliffe in 2,451
share options held under the George Wimpey Sharesave
Scheme was rolled over into an interest in shares of the
Company so that based on the Merger ratio, he now
has an interest in 3,410 shares at an option price of
276.9872 pence per share.

Following the Merger, no further invitations will be made
to participate in this Scheme post the Merger.

Performance graph
The graph above shows the Company’s performance,
measured by TSR for the ﬁve-year period to
31 December 2007, compared with the performance
of the FTSE 350 and FTSE 100 Share Indexes also
measured by TSR. The FTSE 350 Share Index has been
selected for this comparison due to the fact that use of
this index enables comparison of Company performance
against a relevant and consistent index for the full year
measurement period. The FTSE 100 Share index has
been added this year as the Company joined that Index
in September 2007.

Other matters affecting share plans
The rules of the Company’s share plans referred to
above provide for the early vesting or exercise of share
entitlements in the event of a participant’s death,
disability, redundancy or normal retirement. In the event
of cessation of employment because of a change of
control, the rules are ABI guideline compliant and in
addition, any vesting would be subject to the judgement
and discretion of the Remuneration Committee.

In accordance with the plan rules and as indicated in
previous Directors’ Remuneration Reports, EPS ﬁgures
for the purpose of performance measurement of share
incentive schemes are restated in accordance with
International Financial Reporting Standards.

Details of the sources of shares issued or transferred
during the year to meet maturing or vesting rights under
the Company’s share-based reward schemes, and the
potential further requirement for shares to satisfy options
and awards outstanding at the end of the year, are shown
in note 25 to the consolidated ﬁnancial statements. Share
plans are also compliant with ABI dilution guidelines.

The Company’s current intention is that any further
requirement for shares in respect of share plans will
substantially be met by utilising treasury shares, sold at
market price to its Employee Share Ownership Trusts.

The Directors’ accrued pensions in 2007 are shown
on page 55.

George Wimpey Stakeholder Scheme
Ian Sutcliffe is not a member of the Scheme and instead,
the Company pays an amount equal to 29% of his
salary into the George Wimpey designated stakeholder
scheme. Payments of £57,000 (2006: Nil) were paid into
the stakeholder scheme on his behalf for the period from
when he was appointed to the Board on 3 July 2007 to
the end of the year (the total amount paid into the
scheme for the year was £57,000 (2006: Nil)).

Where there are relatively small requirements for shares,
mainly for overseas plans, these will continue to be met
for administrative convenience from other sources,
including new issue and market purchase.

Share retention and target Director
shareholdings
In 2007, following the Merger, the Remuneration
Committee approved new guidelines relating to target
shareholdings in the Company. The Committee also
introduced share retention requirements in respect
of shares received under long term incentive plans.
The purpose of the guidelines is to align the interests
of Directors and senior management with those of
shareholders through the creation of a community
of interest. The guidelines and requirements are set
out below:

1. Within ﬁve years of 1 January 2008 or from the date

of appointment if later:

(cid:129) Executive Directors will be expected to build up
a shareholding in Taylor Wimpey broadly equal
to 1x base salary;

(cid:129) Other Executive Committee members will be

expected to build up a shareholding broadly equal
to 0.5x base salary.

2. Executive Directors and members of the Corporate,
UK and NA leadership teams who participate in the
proposed Performance Share Plan (‘PSP’) and/or the
proposed Share Option Plan (‘SOP’) are expected to
retain shares for one year as set out below:

(cid:129) 50 per cent of the net amount of any shares that vest
under the PSP in the case of Executive Directors and
25 per cent in the case of other participants;

(cid:129) 50 per cent of the net gain of shares following the
exercise of any executive share options under the
SOP and 25 per cent in the case of other
participants.

3. The above retention requirements will also apply to

shares received by the above categories of executive
under the Taylor Woodrow Performance Share Plan
and the George Wimpey Long Term Incentive Plan.

4. Shares that vest or are received following the exercise
of any option, count towards the targets set out in
paragraph 1 above. Subject to the Model Code and
any other applicable rules governing dealings in shares
and subject to the retention policy set out in
paragraph 2 above, such shares may be sold
provided that the target holdings are met within the
applicable timeframe.

5. Shares that are held on trust for any executive

pursuant to the deferred bonus scheme will count
towards the target shareholding.

6. The Chairman and the Non Executives Directors are
expected to hold shares in the Company in order to
align their interests with those of shareholders.

Pension arrangements
Details of the Group’s principal UK pension schemes
are given in note 23 on page 83 to the consolidated
ﬁnancial statements.

Taylor Woodrow Group Pension and Life
Assurance Fund
The Fund was closed to new entrants from 31 March
2002. With effect from 1 September 2004, a restriction

was applied so as to limit the amount of any increase in
pensionable salary of members of this scheme to the
lesser of the actual increase in basic salary or the RPI,
subject to a maximum of 5 per cent per annum. The Fund
ceased accrual of beneﬁts on 30 November 2006 and
from 1 December 2006 existing active Fund members
were invited to participate in the PCP, referred to below
and to which members and the company contribute.

Taylor Woodrow Personal Choice Plan
With effect from 1 April 2002 the Company introduced
the PCP, a deﬁned contribution Pension Scheme which
all new eligible UK team members are invited to join.

During the year, Peter Johnson was a member of the
PCP. The Company contributed to his plan at the rate
of 34.5 per cent of his basic salary for the year and he
contributed at the rate of 5 per cent.

Iain Napier, who retired from the Board on 31 December
2006, remained an employee until 30 April 2007. Graeme
McCallum retired from the Board on 16 January 2007 and
left the Company on this date. Their pension entitlements
remain unchanged from those previously reported.

Denis Mac Daid retired from the Board on 30 June 2005.
The Company is paying to him by monthly instalments
the difference between beneﬁts calculated at his
assumed retirement date of 5 April 2006 and his actual
date of retirement. The annual equivalent of this payment
is £20,000 (2006: £19,000).

No other arrangements were made during the year for
the provision of pensions for former Directors.

George Wimpey Pension Plan
George Wimpey Staff Pension Scheme
Pete Redfern is a member of the Executive section of
the George Wimpey Staff Pension Scheme (‘Scheme’).
The Scheme (now closed to new members) is a funded,
Inland Revenue approved, ﬁnal salary occupational
pension scheme. Members contribute between 5 per cent
and 10 per cent of salary. Executive members of the
Scheme cease to contribute once they have achieved
30 years’ pensionable service. Pensions in payment are
guaranteed to increase in line with the Retail Price Index
to a maximum of 5 per cent per annum (2.5 per cent for
all service earned after 6 April 2006).

The Scheme provides executive members with a pension
of up to two thirds of pensionable salary (this is capped
for members who joined after April 1989) on retirement
at age 65, subject to the member having completed
30 years’ pensionable service.

Life assurance of up to four times basic salary and a
pension of two thirds of the member’s entitlement for
spouses on their death in service, or in retirement, are
provided, together with a children’s allowance of up to
100 per cent of the dependant’s pension for three or
more children.

Pensionable salary excludes all bonuses, beneﬁts in kind
and incentive related remuneration. For early retirement,
after age 50 but prior to age 65, pensions will be
reduced by an appropriate actuarial factor.

Pete Redfern has a pension allowance through additional
payments to him, amounting to 25% of the difference
between his basic salary and the pension schemes
earnings cap. For the period 3 July to 31 December
2007 a total of £80,000 (2006: Nil) was paid. Pension
allowances do not count towards the calculation of any
bonus awards which are based only on base salary.

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Remuneration Report continued

Directors’ contracts
It is the Company’s policy that Executive Directors should have contracts of employment providing for a maximum of one year’s notice.

Service contracts for all Executive Directors and letters of appointment for all Non Executive Directors are available for inspection as described in the Notice of 2008 Annual
General Meeting.

Details of the Directors’ contracts are summarised in the table below:

Name
Pete Redfern*

Peter Johnson*

Ian Sutcliffe*

Date of
contract

13 October 2004

1 November 2002

23 January 2006

Unexpired term
(months)
12

Notice periods
by Company
(months)
12

Notice periods
by Director
(months)
12

Normal
retirement
age
60

Current
age
37

* Proposed for re-election at the Annual General Meeting.
Following the Merger, the service agreements in place between George Wimpey Plc and Messrs Redfern and Sutcliffe were amended so that each agreement is now between
the Company and the Executive. It is the Company’s policy that liquidated damages should not automatically apply on the termination of an Executive Director’s contract. In
accordance with this approach, payment for early termination of contract (without cause) by the Company is, in the case of each of the Executive Directors, to be determined
having regard to normal principles of English law, which requires mitigation of liability on a case-by-case basis. Any such payment would typically be determined by reference to
the main elements of a Director’s remuneration, namely: salary; bonus entitlement; beneﬁts-in-kind; and pension entitlements. The service agreement of Ian Sutcliffe contains a
provision which allows him to terminate the agreement within 6 months of a change of ownership of the Company by 3 months’ notice. In such a case, Ian Sutcliffe would be
entitled to receive a payment of 12 months’ notice and beneﬁts. Treatment of awards under any long term incentive plan would be subject to the rules of the applicable plan which
are compliant with guidelines issued by institutional shareholder bodies with regard to their treatment in the event of a change of control. Since the Merger, the Company has
re-conﬁrmed its policy that service agreements for Executive Directors who join the Board will not contain any change of control provisions.

Non Executive Directors

No Non Executive Director has a service contract, as their terms of engagement are regulated by letters of appointment as follows:

Norman Askew

Mike Davies

Brenda Dean*

Andrew Dougal*

Katherine Innes Ker*

Anthony Reading*

David Williams*

Date of appointment
as a director
29 July 2003

Date of initial letter
of appointment
25 July 2003

Term of
appointment
3 year, reviewed annually

13 October 2003 29 September 2003

3 year, reviewed annually

3 July 2007

21 November 2007

3 year, reviewed annually

18 November 2002

31 October 2002

3 year, reviewed annually

1 July 2001

21 May 2001

3 year, reviewed annually

3 July 2007

21 November 2007

3 year, reviewed annually

3 July 2007

21 November 2007

3 year, reviewed annually

Notice period by
Company
(months)
6

Notice period by
Director
(months)
6

* Proposed for re-election at the Annual General Meeting. Brenda Dean, Anthony Reading and David Williams were appointed to the Board upon completion of the Merger and each entered into a new contract for service. All

three Directors were formerly Directors of George Wimpey Plc. Following the Merger the notice periods of the Chairman and the Non Executive Directors were standardised at 6 months either way.

The fees of Non Executive Directors were determined by the Board in their absence taking into account the research carried out by Mercer of fees paid to Non Executive Directors
of similar sized companies and the Sector Based Peer Group. Non Executive Director fees are subject to the aggregate annual limit of £1,000,000 imposed by the Articles of
Association and will be reviewed annually.

The basic fees of each Non Executive Director were reviewed following the Merger and were standardised at £50,000 per annum from £45,000. The Senior Independent Director
receives an additional payment of £10,000 in respect of this role. The standard fee for chairing a Board Committee (Audit, Remuneration and Corporate Responsibility) is £10,000.

The Chairman’s fees were increased with effect from the Merger from £170,000 to £270,000 per annum and will be reviewed annually. His fees were reviewed by the Remuneration
Committee and approved by the Board in his absence taking into account the research carried out by Mercer of fees paid to chairmen of similar sized companies and the Sector
Based Peer Group. The Chairman receives no additional fee for chairing the Nomination Committee.

Neither the Chairman nor the Non Executive Directors participate in any of the Company’s share plans or bonus plans and are not eligible to join the Company’s pension scheme.

www.taylorwimpey.com

Part 2: Audited Information
Directors’ emoluments

Basic
salary/fees
£000

Salary
supplement in
lieu of pension
£000

Benefits-
in-kind
£000*

Bonus in
respect of 2007
£000

Executive
Pete Redfern (Appointed 3 July 2007)

Peter Johnson

Ian Sutcliffe (Appointed 3 July 2007)

Ian Smith (Resigned 3 July 2007)†

John Landrum (3 July 2007 – 31 July 2007)‡

Graeme McCallum (Resigned 16 January 2007)

Iain Napier (Former Director)Ø

Non Executive
Norman Askew

Mike Davies

Brenda Dean (Appointed 3 July 2007)

Andrew Dougal

Katherine Innes Ker

Anthony Reading (Appointed 3 July 2007)

David Williams (Appointed 3 July 2007)

Vernon Sankey (Resigned 3 July 2007)††

346

423

198

313

–

219

–

100

–

558

282

450

–

Aggregate emoluments

1,817

285

1,290

2006:

Aggregate emoluments of the Executive Committee (excluding Executive Directors)

Other
benefits
£000

–

1,451

813

–

1,083

–

3,358

2007
total
£000

1,011

807

663

1,873

838

1,083

2006
total
£000

–

761

–

696

1,452

Basic salary/fee
p.a. with effect
from 1.1.2008
£000

700

440

400

–

219

170

270

6,802

–

3,255

–

Basic
salary
£000
1,715

Salary
supplement in
lieu of pension
£000
71

Benefits-
in-kind
£000
81

Bonus in
respect of 2007
£000
1,044

Company
contribution
to pension
£000
962

Other
benefits
£000
2,321

2007
total
£000ﬂﬂ

6,194

2006
total
£000ﬂﬂ

3,388

Basic salary
p.a. with effect
from 1.1.2008
£000
634**

10 members

Notes
* Includes non-cash payments.

The above salary details in respect of Messrs Redfern and Sutcliffe reflect the salaries paid for the period 3 July 2007 to 31 December 2007.

The above bonus details are in respect of the full year 2007.

For the period 1 January to 3 July 2007, Pete Redfern’s base salary received from George Wimpey Plc was £480,000 per annum and Ian Sutcliffe’s base salary was £320,000 per annum. With effect from 3 July 2007, their
salaries were increased to £700,000 and £400,000 respectively per annum.

† Ian Smith received a base salary at the rate of £610,000 p.a. for the period 1 January 2007 to completion of the Merger on 3 July 2007 plus bonus for 2007 to that date as shown above. On leaving, he also received

contractual payments for loss of office of one year’s salary and an amount equal to his target bonus which together amounted to £1,451,000 (2006: £0).

‡ John Landrum who was a Director for the period 3 July 2007 to 31 July 2007 had a base salary of $650,000 (£325,000) at the time of his resignation. He left the Company on 31 October 2007, following which he was paid the

sum of $1,625,824 (£812,912) by way of a termination payment consisting principally of 12 months salary in lieu of notice (paid monthly) and an amount equal to 1.5x salary in respect of his bonus arrangements.

Ø Iain Napier left the Board on 31 December 2006 and remained an employee until 30 April 2007. He received contractual pay, benefits-in-kind, salary supplement in lieu of pension and 2006 performance bonus aggregating
£918,000 (2006 £1,452,000 as shown above). During the second half of 2007 he also received a contractual payment of £165,340 being a pro rata bonus for the period 1 January 2007 to his date of leaving in April 2007.
See page 51 for further details. (2006: £0).

†† Vernon Sankey received a contractual payment for loss of office of £11,000 (2006: £0) following completion of the Merger.

ØØ In addition, a charge of £30,000 (2006: £467,000) was booked in respect of share based payments.

‡‡ Contractual payments for loss of office, targeted bonus, redundancy and ex-gratia payments for those members of the Executive Committee who left as a result of the Merger.

** There are only two members of the Executive Committee going forward other than the Executive Directors.

No expense allowances are paid.

Taylor Wimpey plc Annual Report and Accounts 2007

Governance
Remuneration Report continued

Directors’ share-based reward and options
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company and any other share-based reward
granted to or held by the Directors. Details of the options exercised during the year are:

Name of Director
Peter Johnson

Plan
Performance Share Plan

Number of
option shares
exercised
65,376

Bonus Plan

52,636

Executive Share Option

–

Exercise
price
(pence)
–

Market price at
exercise date
(pence)
486

–

502

–

Gains on
exercise 2007
£
317,727

264,232

–

581,959

Gains on
exercise 2006
£
0

186,203

Details of options and conditional awards over shares held by Directors who served during the year are as follows:

Name of Director
Peter Johnson Sharesave

Plan

Bonus Plan:

Matching award

1 January
2007d
8,037

52,636

9,858

Granted
(number)
–

Lapsed
(number)
–

Exercised
(number)
–

31 December
2007
8,037

–

59,253a

–

52,636(j)

–

19,529

118,012

384,905

Performance Share Plan

84,905

Performance Share Plan

132,410

Performance Share Plan

92,406

Performance Share Plan

–

Total

John Landrum Performance Share Plan

Total

Graeme

Sharesave

McCallum

Performance Share Plan

380,252

–

4,177

80,862

Performance Share Plan

100,078

Total

185,117

Pete Redfern

Long Term Incentive Plan

131,217e

Long Term Incentive Plan

200,068cg

Long Term Incentive Plan

179,007g

Long Term Incentive Plan

231,940ch

Total

Ian Sutcliffe

Sharesave

742,232

3,410ci

Long Term Incentive Plan

222,480cg

Long Term Incentive Plan

156,626ch

Total

382,516

–

82,941b

142,194

59,672b

59,672

–

19,529

65,376(k)

–

131,217

–

131,217

–

9,858

59,253

–

132,410

92,406

82,941

59,672

4,177

80,862

100,078

185,117

–

200,068

179,007

231,940

611,015

3,410

276.9827

222,480

156,626

382,516

–

Exercise
price
(pence)
197.2

–

226.8

–

Date of
Grant
7.10.03

2.4.04

7.4.06

10.4.07

10.5.04

7.9.05

12.4.06

2.4.07

Dates
from which
exercisable
1.12.08

2.4.07

7.4.09

10.4.10

10.5.07

7.9.08

12.4.09

2.4.10

Expiry date
31.5.09

1.4.14

6.4.12

9.4.13

9.5.09

6.9.10

11.4.11

1.4.12

2.4.07

2.4.10

1.4.12

7.10.04

10.5.04

7.9.05

26.5.04

25.5.05

23.5.06

2.4.07

21.9.06

23.5.06

2.4.07

16.1.07

15.7.07

1.3.07

–

26.5.07

25.5.08

23.5.09

2.4.10

1.12.11

23.5.09

2.4.10

–

25.5.09

24.5.10

22.5.11

1.4.12

31.5.12

22.5.11

1.4.12

a. Market value per share on date of grant 10 April 2007 was 518.5p
b. Market value per share on date of grant 2 April 2007 was 492p. These conditional awards lapsed on 31 October 2007
c. Taylor Wimpey shares after roll over as part of the Merger and application of the Merger ratio of 1.3914 Taylor Wimpey shares for each George Wimpey share entitlement
d. Or date of appointment
e. Market-value per George Wimpey ordinary share on date of award 26 May 2004 was 371.25p
f. Market-value per George Wimpey ordinary share on date of award 25 May 2005 was 414.25p
g. Market-value per George Wimpey ordinary share on date of award 23 May 2006 was 456.5p
h. Market-value per George Wimpey ordinary share on date of award 2 April 2007 was 575.9p
i. Market-value per George Wimpey ordinary share on date of award 21 Sept 2006 was 481.75p
j Market-value per share on date of exercise 4 April 2007 was 502p
k Market-value per share on date of vesting 11 May 2007 was 486p

There have been no variations to the terms and conditions or performance criteria for outstanding share options during the ﬁnancial year.

The performance criteria relating to the Deferred Bonus Plan appear earlier in this Directors’ Remuneration Report. These plans replaced the Executive Bonus Plan and Executive
Share Option Plan, which were subject to EPS–related performance conditions.

Awards vesting under the Executive Bonus Plan in 2007 achieved the EPS-related performance conditions and were consequently able to be exercised in full. Awards vesting
under the Performance Share Plan in 2007 were scaled back to 77 per cent of the original award.

Awards made pursuant to the George Wimpey LTIP are conditional and do not vest in whole or part unless predetermined performance conditions are satisﬁed over a three year period.
The performance conditions are explained in detail on page 49. The number of awards made to each participant is calculated with reference to a formula based on a maximum of 2 x
salary as at 1 January in each year and the average closing share price for each dealing day within a 90 day period ending on the day before the award is made. For 2004, 2005, 2006
and 2007, the relevant share prices were 403.4 pence, 437.1 pence, 544.1 pence and 575.9 pence. The TSR Performance in respect of those shares conditionally awarded under the
2005 George Wimpey LTIP was not met. No vesting has taken place and the award has now lapsed. These shares are however indexed in the ﬁnal column above for Pete Redfern.

www.taylorwimpey.com

The market price of the ordinary shares at 31 December 2007 was 203.25 pence and the range during the year was 182 pence to 518.5 pence.

Directors’ interests in shares of the Company
Directors’ interests in 25 pence ordinary shares held (fully paid):

Norman Askew

Pete Redfern

Peter Johnson

Ian Sutcliffe

Mike Davies

Brenda Dean

Andrew Dougal

Katherine Innes Ker

Anthony Reading

David Williams

Executive Directors’
share interests at
31 December 2007
expressed as a
percentage of
basic salary

27%

149%

at 1.1.07
25p ordinary
shares†
9,974

57,526†

94,407*

0†

5,000

8,348†

5,000

1,000

14,107†

8,269†

at 31.12.07
25p ordinary
shares
15,674

92,705

322,443*

5,341

15,000

8,348

5,000

1,000

20,000

8,269

† or date of appointment and after applying the Merger ratio of 1.3914 Taylor Wimpey shares for each George Wimpey share.

* Includes 1,250 ordinary shares held by Halifax Corporate Trustees Limited under the Taylor Wimpey 2004 Share Purchase Plan.

Directors’ pension entitlements
Deﬁned beneﬁt schemes
George Wimpey Staff Pension Scheme

Pete Redfern is a member of the George Wimpey Staff Pension Scheme. The following table sets out the transfer value of his accrued beneﬁts under the Scheme calculated in a
manner consistent with ‘Retirement Beneﬁt Schemes – Transfer Values (GN11)’ published by the Institute of Actuaries and the Faculty of Actuaries.

Accrued pension
as at
31 December
2006
£
14,480

Increase in accrued
pension from
31 December 2006
to 31 December
2007
£
3,067

Accrued pension
as at
31 December

Transfer value
gross of Directors’
contributions at 31

Increase in
transfer value from
Transfer value 31 December 2006 to
31 December 2007
less Directors’
contributions (3)

gross of Directors’
contributions at 31

2007 (1) December 2007 (2) December 2006 (2)

£
17,547

£
162,100

£
127,300

£
23,690

Increase in accrued

Transfer value of
pension from accrued pension
increase less
director’s
contribution(4)

31 December 2006
to 31 December 2007
less inflation
£
2,502

£
9,578

Notes
1. Pension accrual shown is the amount which would be paid annually on retirement based on service to 31 December 2007.
2. Transfer values have been calculated in accordance with version 9.2 of the actuarial guidance note GN11.
3. The increase in the transfer value includes the effect of fluctuations in the transfer value due to factors beyond the control of the Company and Directors, such as stock market movements.
4. The transfer value of accrued pension increase less Director’s contribution represents the incremental value to the Director of his service during the period, calculated on the assumption service terminated at the year end. It is

based on the increase in accrued pension (less inflation) after deducting the Director’s contribution

Money purchase schemes
Peter Johnson is a member of a money purchase scheme, to which contributions were paid by the Company as follows:

Peter Johnson

Non-Group Pension Arrangements
Ian Sutcliffe has non-Group pension arrangements, to which contributions were paid by the Company as follows:

Ian Sutcliffe

Approval

2007
£

2006
£

146,395

98,833

2007
£
104,265

2006
£
–

This Remuneration Report was approved by the Board of Directors on 5 March 2008 and signed on its behalf by the Remuneration Committee Chairman:

Anthony Reading
5 March 2008

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Consolidated Income Statement
for the year to 31 December 2007

Continuing Operations

Revenue
Cost of sales

Gross profit
Net operating expenses
Share of results of joint ventures

Profit on ordinary activities before finance costs
and amortisation of brands
Amortisation of brands

Profit on ordinary activities before finance costs
Interest receivable
Finance costs

(Loss)/profit on ordinary activities before taxation
Taxation

(Loss)/profit for the year

Attributable to:
Equity holders of the parent
Minority interest

Proposed/paid dividends per ordinary share

Interim
Final

(Loss)/earnings per ordinary share – basic
(Loss)/earnings per ordinary share – diluted

Before
exceptional
items
2007
£m

4,714.3
(3,975.9)

738.4
(289.5)
23.4

476.0
(3.7)

472.3
9.7
(121.8)

360.2
(107.0)

253.2

Exceptional
items*
2007
£m

–
(289.7)

(289.7)
(90.0)
–

(349.7)
(30.0)

(379.7)
–
–

(379.7)
(70.2)

(449.9)

Note

5
14

9
9
10
10

Total
2007
£m

2006
£m

4,714.3
(4,265.6)

3,572.1
(2,933.4)

448.7
(379.5)
23.4

126.3
(33.7)

92.6
9.7
(121.8)

(19.5)
(177.2)

(196.7)

(197.9)
1.2

(196.7)

5.5p
10.25p
(24.2p)
(24.2p)

638.7
(191.0)
22.1

469.8
–

469.8
9.1
(73.3)

405.6
(115.0)

290.6

289.5
1.1

290.6

5.0p
9.75p
50.5p
50.1p

*The current period items relate to restructuring costs, brand impairments and land and work in progress write-downs (note 5). There were no exceptional items in 2006.

www.taylorwimpey.com

Financial Statements
Consolidated Statement of Recognised Income and Expense
for the year to 31 December 2007

Exchange differences on translation of foreign operations
Actuarial gains/(losses) on defined benefit pension schemes
Surplus on revaluation
Tax on items taken directly to equity

Net income/(expense) recognised directly in equity
(Loss)/profit for the year

Total recognised (expense)/income for the year

Attributable to:
Equity holders of the parent
Minority interests

2007
£m

21.7
91.3
–
(28.5)

84.5
(196.7)

(112.2)

(113.4)
1.2

(112.2)

2006
£m

(49.0)
(1.6)
1.0
0.5

(49.1)
290.6

241.5

240.4
1.1

241.5

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Consolidated Balance Sheet
at 31 December 2007

Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Interests in joint ventures
Trade and other receivables
Deferred tax assets

Current assets
Inventories
Trade and other receivables
Tax receivables
Cash and cash equivalents

Total assets

Current liabilities
Trade and other payables
Tax payables
Debenture loans
Bank loans and overdrafts
Provisions

Net current assets

Non-current liabilities
Trade and other payables
Debenture loans
Bank loans
Retirement benefit obligation
Deferred tax liabilities
Provisions

Total liabilities

Net assets

Equity
Share capital
Share premium account
Merger relief reserve
Revaluation reserve
Own shares
Share-based payment tax reserve
Capital redemption reserve
Other reserve
Translation reserve
Retained earnings

Note

11
12
13
14
18
15

16
18

20
19
24

21
20
19
23
15
24

25
26
27
28
29
30
31

32
33

Equity attributable to equity holders of the parent
Minority interests

Total equity

The ﬁnancial statements were approved by the Board of Directors and authorised for issue on 5 March 2008. They were signed on its behalf by:

N B M Askew
Director

www.taylorwimpey.com

P T Johnson
Director

2007
£m

699.8
120.5
39.0
59.9
76.4
117.7

1,113.3

6,017.8
391.3
16.8
130.0

6,555.9

7,669.2

(1,540.3)
(154.4)
(1.4)
(12.2)
(48.2)

2006
£m

363.1
–
25.5
56.2
56.0
95.4

596.2

2,946.5
294.9
19.7
236.5

3,497.6

4,093.8

(926.0)
(74.1)
(2.5)
(12.3)
–

(1,756.5)

(1,014.9)

4,799.4

2,482.7

(388.4)
(823.3)
(708.5)
(219.1)
(29.8)
(38.4)

(2,207.5)

(3,964.0)

(123.1)
(610.6)
(2.4)
(208.6)
(0.8)
(27.9)

(973.4)

(1,988.3)

3,705.2

2,105.5

289.6
758.1
1,934.2
0.5
(282.0)
5.6
31.5
4.8
3.7
957.1

3,703.1
2.1

3,705.2

148.5
758.8
–
1.5
(45.0)
8.2
31.5
4.8
(19.1)
1,214.3

2,103.5
2.0

2,105.5

Financial Statements
Consolidated Cash Flow Statement
for the year to 31 December 2007

Net cash (used in)/from operating activities

Investing activities
Interest received
Dividends received from joint ventures
Amounts invested in software development
Proceeds on disposal of property, plant and investments
Purchases of property, plant and investments
Amounts invested in joint ventures
Amounts repaid by joint ventures
Acquisition of George Wimpey Plc
Net cash inflow on acquisition of remaining 50% of North Central Management Limited

Net cash from investing activities

Financing activities
Dividends paid
Dividends paid by subsidiaries to minority shareholders
Proceeds on issue of ordinary share capital
Proceeds from sale of own shares
Purchase of own shares
New bank loans raised
New debenture loans raised
Repayment of debenture loans
Repayment of bank loans
Increase/(decrease) in bank overdrafts

Net cash used in financing activities

Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes

Cash and cash equivalents at end of year

Note

2007
£m

(163.3)

2.3
24.4
(0.4)
17.3
(13.6)
(3.1)
10.6
28.1
2.9

68.5

(117.3)
(1.1)
–
4.7
(251.6)
2,083.8
256.2
(52.1)
(1,944.6)
0.5

(21.5)

(116.3)
236.5
9.8

130.0

2006
£m

57.0

9.1
22.6
–
48.0
(6.7)
(9.2)
5.3
–
–

69.1

(79.7)
(0.1)
3.3
15.9
(12.4)
608.7
–
(4.3)
(600.9)
(2.7)

(72.2)

53.9
197.3
(14.7)

236.5

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements
for the year to 31 December 2007

1. Signiﬁcant accounting policies
Basis of accounting
The consolidated ﬁnancial statements have been prepared in accordance with
applicable International Accounting Standards (IAS), International Financial Reporting
Standards (IFRS) as adopted for use in the European Union, IFRIC interpretations
and those parts of the Companies Act 1985 applicable to companies reporting
under IFRS. The Group has applied all accounting standards and interpretations
issued by the International Accounting Standards Board and International Financial
Reporting Interpretations Committee relevant to its operations and effective for
accounting periods beginning on 1 January 2007.

The consolidated ﬁnancial statements have been prepared on the historical cost
basis, except where stated below. The principal accounting policies adopted,
which have been applied consistently unless otherwise stated, are set out below.

Basis of consolidation
The consolidated ﬁnancial statements incorporate the ﬁnancial statements of the
company and entities controlled by the company (its subsidiaries) made up to 31
December each year. Control is achieved where the company has the power to
govern the ﬁnancial and operating policies of an investee entity so as to obtain
beneﬁts from its activities. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether
the Group controls another entity.

On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are
measured at their fair values at the date of acquisition. Any excess of the cost of
acquisition over the fair values of the identiﬁable net assets acquired is recognised
as goodwill. Any deﬁciency of the cost of acquisition below the fair values of the
identiﬁable net assets acquired (i.e. discount on acquisition) is credited to the
income statement in the period of acquisition. The interest of minority shareholders
is stated at the minority’s proportion of the fair values of the assets and liabilities
recognised. Subsequently, any losses applicable to the minority interest in excess
of the minority interest are allocated against the interests of the parent.

The results of subsidiaries acquired or disposed of during the year are included in
the consolidated income statement from the effective date of acquisition or up to the
effective date of disposal, as appropriate. Where necessary, adjustments are made
to the ﬁnancial statements of subsidiaries to bring the accounting policies used into
line with those used by the Group. All intra-Group transactions, balances, income
and expenses are eliminated on consolidation.

Joint ventures
Undertakings are deemed to be a joint venture when the Group has joint control
via either voting rights or a formal agreement which includes that unanimous
consent is required for strategic, ﬁnancial and operating decisions. Joint ventures
are consolidated under the equity accounting method. On transfer of land and/or
work in progress to joint ventures the Group recognises only its share of any
proﬁts or losses, namely that proportion sold outside the Group.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition
over the Group’s interest in the fair value of the identiﬁable assets and liabilities of
a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill
is initially recognised as an asset at cost and is subsequently measured at cost less
any accumulated impairment losses. Goodwill which is recognised as an asset is
reviewed for impairment at least annually. Any impairment is recognised immediately
in proﬁt or loss and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to cash-generating
units. The allocation is made to those cash-generating units that are expected to
beneﬁt from the business combination in which the goodwill arose. Cash-generating
units to which goodwill has been allocated are tested for impairment annually, or
more frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the carrying amount of
the unit, the impairment loss is allocated ﬁrst to reduce the carrying amount of any
goodwill allocated to the unit and then to the other assets of the unit pro-rata on
the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or jointly-controlled entity, the attributable amount
of goodwill is included in the determination of the proﬁt or loss on disposal.

Segmental reporting
The Group is divided into ﬁve operating divisions for management reporting
and control:

(cid:129) Housing United Kingdom
(cid:129) Housing North America
(cid:129) Housing Spain and Gibraltar
(cid:129) Construction
(cid:129) Corporate

The Corporate component has been added in 2007 to reﬂect better the way the
Group is managed following the acquisition of George Wimpey Plc. Corporate costs
of £19.6m (including exceptional restructuring costs) have been separately identiﬁed
in 2007 (2006: £13.2m).

These divisions make up the primary segmental analysis in the ﬁnancial statements.
A secondary segmental analysis is provided by geographical split.

Revenue
Revenue comprises the fair value of the consideration received or receivable, net of
value added tax, rebates and discounts and after eliminating sales within the Group.

Revenue and proﬁt are recognised as follows:

(a) Private housing development properties and land sales
Revenue is recognised in the income statement when the signiﬁcant risks and
rewards of ownership have been transferred to the purchaser. Revenue in respect
of the sale of residential properties is recognised at the fair value of the consideration
received or receivable on legal completion.

(b) Cash incentives
Cash incentives are considered to be a discount from the purchase price offered
to the acquirer and are therefore accounted for as a reduction to revenue.

(c) Contracting work
Where the outcome of a construction contract can be estimated reliably, revenue
and costs are recognised by reference to the stage of completion of the contract
activity at the balance sheet date. This is normally measured by surveys of work
performed to date. Variations in contract work, claims and incentive payments are
included to the extent that it is probable that they will result in revenue and they are
capable of being reliably measured.

Where the outcome of a construction contract cannot be estimated reliably, contract
revenue is recognised to the extent of contract costs incurred that it is probable will
be recoverable. Contract costs are recognised as expenses in the period in which
they are incurred. When it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense immediately.

Exceptional items
Exceptional items are deﬁned as items of income or expenditure which, in the
opinion of the Directors, are material and unusual in nature and of such signiﬁcance
that they require separate disclosure on the face of the income statement in
accordance with IAS1 Presentation of ﬁnancial statements.

Foreign currencies
The individual statements of each Group company are presented in the currency
of the primary economic environment in which it operates (its functional currency).
Transactions in currencies other than the functional currency are recorded at the
rates of exchange prevailing on the dates of the transactions. At each balance sheet
date, monetary assets and liabilities that are denominated in foreign currencies other
than the functional currency are retranslated at the rates prevailing on the balance
sheet date. Non-monetary assets and liabilities carried at fair value that are
denominated in foreign currencies are translated at the rates prevailing at the date
when the fair value was determined. Gains and losses arising on retranslation are
included in net proﬁt or loss for the period.

On consolidation, the assets and liabilities of the Group’s overseas operations
are translated at exchange rates prevailing on the balance sheet date. Income
and expense items are translated at an appropriate average rate for the year.
Exchange differences arising are classiﬁed as reserves and transferred to the
Group’s translation reserve. Such translation differences are recognised as
income or as expenses in the period in which the operation is disposed of.

Goodwill arising on acquisitions before the date of transition to IFRSs has been
retained at the previous UK GAAP amounts subject to being tested for impairment
at that date. Goodwill written off to reserves under UK GAAP prior to 1998 has
not been reinstated and is not included in determining any subsequent proﬁt or
loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the closing
rate. The Group has elected to treat goodwill and fair value adjustments arising
on acquisitions before the date of transition to IFRS as assets and liabilities
denominated in the functional currency of the company in which they arise.

www.taylorwimpey.com

1. Signiﬁcant accounting policies continued
The Group enters into forward contracts in order to hedge its exposure to certain
foreign exchange transaction risks relating to the functional currency in accordance
with Group policy. It also uses foreign currency borrowings and currency swaps to
hedge its net investment exposure to certain overseas subsidiaries (see below for
details of the Group’s accounting policies in respect of such derivative ﬁnancial
instruments).

Operating leases
The Group as lessee
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease. Beneﬁts received and receivable (and costs
paid and payable) as an incentive to enter into an operating lease are also spread
on a straight line basis over the lease term.

Impairment of tangible and intangible assets
excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash ﬂows that are independent
from other assets, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash ﬂows are discounted to their
present value using a pre-tax discount rate that reﬂects current market assessments
of the time value of money and the risks speciﬁc to the asset for which the estimates
of future cash ﬂows have not been adjusted.

The Group as lessor
Rental income from operating leases is recognised on a straight-line basis over the
term of the relevant lease. Initial direct costs incurred in negotiating and arranging
an operating lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be
less than its carrying amount, the carrying amount of the asset (or cash-generating
unit) is reduced to its recoverable amount. An impairment loss is recognised as an
expense immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.

Other intangible assets
Brands
Internally generated brands are not capitalised. Brands that have been acquired are
capitalised as intangible assets. Acquired brand values are calculated based on the
Group’s valuation methodology, which is based on valuations of discounted cash
ﬂows. The George Wimpey brand is considered to have a ﬁnite life and is therefore
amortised over its estimated useful life of 15 years on a straight line basis.

Software development costs
Costs that are directly associated with the production of identiﬁable and unique
software controlled by the Group, and that generate economic beneﬁts beyond
one year, are recognised as intangible assets. Computer software development
costs recognised as assets are amortised on a straight-line basis over three to
ﬁve years from the time of implementation

Property, plant and equipment
Land and buildings held for use in the production or supply of goods or services,
or for administrative purposes, are stated in the balance sheet at their revalued
amounts, being the fair value at the date of revaluation, determined from market-
based evidence by appraisal undertaken by professional valuers, less any
subsequent accumulated depreciation and subsequent accumulated impairment
losses. Revaluations are performed with sufﬁcient regularity such that the carrying
amount does not differ materially from that which would be determined using fair
values at the balance sheet date.

Any revaluation increase arising on the revaluation of such land and buildings is
credited to the properties revaluation reserve, except to the extent that it reverses
a revaluation decrease for the same asset previously recognised as an expense,
in which case the increase is credited to the income statement to the extent of
the decrease previously charged. A decrease in carrying amount arising on the
revaluation of such land and buildings is charged as an expense to the extent that
it exceeds the balance, if any, held in the properties revaluation reserve relating
to a previous revaluation of that asset.

On the subsequent sale or retirement of a revalued property, the attributable
revaluation surplus remaining in the properties revaluation reserve is transferred
directly to retained earnings.

Plant and equipment is stated at cost less depreciation.

Depreciation is charged so as to write off the cost or valuation of assets over their
estimated useful lives. Depreciation is charged, where material, on buildings over
the expected useful life of the asset. Other assets are depreciated using the
straight-line method, on the following bases:

Plant, ﬁxtures and equipment 20 - 25 per cent; and

Computer equipment 33 per cent.

The gain or loss arising on the disposal or retirement of an asset is determined as
the difference between the sale proceeds and the carrying amount of the asset and
is recognised in proﬁt or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years. A reversal of an impairment loss is recognised
as income immediately, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.

Financial instruments
Financial assets and ﬁnancial liabilities are recognised on the Group’s balance sheet
when the Group becomes a party to the contractual provisions of the instrument.

Trade receivables and other receivables
Trade receivables on normal terms excluding derivative ﬁnancial instruments do not carry
any interest and are stated at their nominal value as reduced by appropriate allowances
for estimated unrecoverable amounts. Trade receivables on extended terms, particularly
in respect of land, are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the effective interest rate.
Derivative ﬁnancial instruments are measured at fair value.

Financial liabilities and equity instruments
Financial liabilities and equity instruments are classiﬁed according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that
evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Equity instruments issued by the company are recorded at the proceeds received, net
of direct issue costs.

Borrowings
Interest bearing bank loans and overdrafts are recorded at the proceeds received,
net of direct issue costs. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are accounted for on an accruals
basis to the income statement using the effective interest method and are added to
the carrying amount of the instrument to the extent that they are not settled in the
period in which they arise.

Trade payables
Trade payables on normal terms are not interest bearing and are stated at their
nominal value. Trade payables on extended terms, particularly in respect of land, are
recorded at their fair value at the date of acquisition of the asset to which they relate.
The discount to nominal value is amortised over the period of the credit term and
charged to ﬁnance costs. Derivative ﬁnancial instruments are measured at fair value.

Derivative ﬁnancial instruments and hedge accounting
The Group uses forward exchange contracts to hedge transactions denominated in
foreign currencies. The Group also uses foreign currency borrowings and currency
swaps to hedge its net investment exposure to movements in exchange rates on
translation of certain individual ﬁnancial statements denominated in foreign
currencies other than sterling which is the functional currency of the parent
company. Interest rate derivatives are used to manage interest rate risk in respect of

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

1. Signiﬁcant accounting policies continued

borrowings. The Group does not use derivative ﬁnancial instruments for speculative
purposes.

The use of ﬁnancial derivatives is governed by the Group’s policies approved by
the Board of Directors, which provide written principles on the use of ﬁnancial
derivatives.

Changes in the fair value of derivative ﬁnancial instruments that are designated and
effective as hedges of net investments in foreign operations are recognised directly
in reserves and the ineffective portion, if any, is recognised immediately in the
income statement.

For an effective hedge of an exposure to changes in the fair value, the hedged
item is adjusted for changes in fair value attributable to the risk being hedged
with the corresponding entry in proﬁt or loss. Gains or losses from re-measuring
the derivative, or for non-derivatives the foreign currency component of its
carrying amount, are also recognised in proﬁt or loss.

Changes in the fair value of derivative ﬁnancial instruments that do not qualify
for hedge accounting are recognised in the income statement as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold,
terminated, or exercised, or no longer qualiﬁes for hedge accounting. At that time,
any cumulative gain or loss on the hedging instrument recognised in reserves is
retained in reserves until the forecasted transaction occurs. If a hedged transaction
is no longer expected to occur, the net cumulative gain or loss recognised in
reserves is transferred to the income statement for the period.

Customer deposits
Customer deposits are recorded as a liability within ‘other payables’ on receipt
and released to the income statement as revenue upon legal completion.

Provisions
Provisions are recognised when the Group has a present obligation as a result of a
past event, and it is probable that the Group will be required to settle that obligation.
Provisions are measured at the Directors’ best estimate of the expenditure required
to settle the obligation at the balance sheet date and are discounted to present
value where the effect is material.

Inventories
Inventories are initially stated at cost or at the fair value at acquisition date when
acquired as part of a business combination and then held at the lower of this initial
amount and net realisable value. Cost comprises direct materials and, where
applicable, direct labour costs and those overheads that have been incurred in
bringing the inventories to their present location and condition. Net realisable value
represents the estimated selling price less all estimated costs of completion and
costs to be incurred in marketing, selling and distribution. Land is recognised in
inventory when the signiﬁcant risks and rewards of ownership have been
transferred to the Group.

Non refundable land option payments are initially recognised in inventory. They are
reviewed regularly and written off to the income statement when it is not probable
that they will be exercised.

Tender costs for construction
Signiﬁcant tender costs are treated as recoverable once the Directors consider that
it is probable that the contract will be won. This is presumed to be when preferred
bidder status is awarded.

Taxation
The tax charge represents the sum of the tax currently payable and deferred tax.

generally recognised for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable proﬁts will be available
against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the tax proﬁt nor the accounting proﬁt.

Deferred tax liabilities are recognised for taxable temporary differences arising on
investments in subsidiaries and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the forseeable future.

Deferred taxation is measured on a non-discounted basis using the tax rates and
laws that have then been enacted or substantially enacted by the balance sheet
date and are expected to apply when the related deferred income tax asset is
realised or the deferred tax liability is settled.

The carrying amount of deferred tax assets is reviewed at each balance sheet date
and reduced to the extent that it is no longer probable that sufﬁcient taxable proﬁts
will be available to allow all or part of the asset to be recovered. Deferred tax is
calculated at the tax rates that are expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited directly to reserves,
in which case the deferred tax is also dealt with in reserves.

Share-based payments
The Group has applied the requirements of IFRS 2 Share-based payments. In
accordance with the transitional provisions, IFRS 2 has been applied to all grants of
equity instruments after 7 November 2002 that were unvested as of 1 January 2005.

The Group issues equity-settled and cash-settled share-based payments to certain
employees.

Equity-settled share-based payments are measured at fair value at the date of grant.
The fair value is expensed on a straight line basis over the vesting period, based on
the Group’s estimate of shares that will eventually vest after adjusting for the effect
of non-market vesting conditions.

A liability equal to the portion of the goods or services received is recognised at the
current fair value determined at each balance sheet date for cash-settled, share-
based payments.

Employee beneﬁts
The Group accounts for pensions and similar beneﬁts under IAS 19 Employee beneﬁts.
In respect of deﬁned beneﬁt plans, obligations are measured at discounted present
value whilst plan assets are recorded at fair value. The operating and ﬁnancing costs
of such plans are recognised separately in the income statement; service costs are
spread systematically over the lives of employees and ﬁnancing costs are recognised in
the periods in which they arise. Actuarial gains and losses are recognised immediately
in the statement of recognised income and expense.

Payments to deﬁned contribution schemes are charged as an expense as they fall due.

Key sources of estimation uncertainty and critical
accounting judgments
Site valuations and work in progress
Internal site valuations are carried out at regular intervals throughout the year.
The valuations will include an estimation of the costs to complete and remaining
revenues, in order to determine the proﬁt that the Group is able to recognise on
the proportion of completions in the period, for each development. In addition,
the carrying value of land and work in progress can involve considerable judgment
around future margins from sites in assessing whether any impairment provisions
need to be recognised.

Current tax
The tax currently payable is based on taxable proﬁt for the year. Taxable proﬁt differs
from net proﬁt as reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group’s liability for current
tax is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date.

Impairment of goodwill
The determination of whether goodwill is impaired requires an estimation of the value
in use of the cash-generating units to which goodwill has been allocated. The value
in use calculation requires an estimate of the future cash ﬂows expected to arise
from the cash generating unit, the future growth rate of revenue and costs and a
suitable discount rate. The carrying amount of goodwill at the balance sheet date
was £699.8m (2006: £363.1m).

Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the ﬁnancial statements
and the corresponding tax bases used in the computation of taxable proﬁt, and is
accounted for using the balance sheet liability method. Deferred tax liabilities are

Contracting work
Proﬁts in respect of contracts will be recognised by reference to the stage of
completion when an estimate of a proﬁtable outcome can be measured reliably.
Determining the outcome of a contract will require a survey. This includes an
estimate of the value of costs to complete and in certain instances estimates
of the contract price as well as any variations in the contract work.

www.taylorwimpey.com

1. Signiﬁcant accounting policies continued
Pensions
The value of plan assets and liabilities is determined based on various actuarial
assumptions. Note 23 details the main assumptions made for the accounting of the
Group’s deﬁned beneﬁt pension schemes.

Tax
Aspects of tax accounting require management judgment and interpretation of tax
legislation across many jurisdictions.

an asset. It also explains how the pension asset or liability may be affected by a
statutory or contractual minimum funding requirement. The Group will apply IFRIC
14 from 1 January 2008, but it is not expected to have any impact on the Group’s
accounts.

Interpretations to existing standards that are not yet effective and not relevant for the
Group’s operations:
IFRIC 12 Service concession arrangements; and
IFRIC 13 Customer loyalty programmes.

2. General information
Taylor Wimpey plc is a company incorporated in the United Kingdom under the
Companies Act 1985. The address of the registered ofﬁce is given on page 113.
The nature of the Group’s operations and its principal activities are set out in
note 4 and in the Chief Executive’s Review on pages 14 to 21.

These ﬁnancial statements are presented in pounds sterling because that is the
currency of the primary economic environment in which the Group operates.
Foreign operations are included in accordance with the policy set out on page 60.

Deferred tax
In determining the carrying amounts of deferred tax assets management is required to
assess the timing of the utilisation of provisions for tax purposes and the extent to
which sufﬁcient taxable proﬁt will be available to enable the asset to be recovered.

Acquisition accounting
On acquisition, the assets, liabilities and contingent liabilities are measured at their fair
values on the date of acquisition. On the merger with George Wimpey Plc, particular
judgment was required around the valuation of inventory and brands (see note 35).

Adoption of new and revised standards and interpretations
Standards, amendments and interpretations effective in 2007
IFRS 7, Financial instruments: Disclosures, and the complementary amendment to IAS 1,
‘Presentation of ﬁnancial statements – Capital disclosures’, introduces new disclosures
relating to ﬁnancial instruments and does not have any impact on the classiﬁcation and
valuation of the Group’s ﬁnancial statements, or the disclosures relating to taxation and
trade and other payables.

IFRIC 8, Scope of IFRS 2, requires consideration of transactions involving the issuance of
equity instruments, where the identiﬁable consideration received is less than the fair value of
the equity instruments issued in order to establish whether or not they fall within the scope
of IFRS 2. This standard does not have any impact on the Group’s ﬁnancial statements.

IFRIC 10, Interim ﬁnancial reporting and impairment, prohibits the impairment losses
recognised in an interim period on goodwill and investments in equity instruments and in
ﬁnancial assets carried at cost to be reversed at a subsequent balance sheet date. This
standard does not have any impact on the Group’s ﬁnancial statements.

Standards, amendments and interpretations effective in 2007 but not relevant
The following standards, amendments and interpretations to published standards are
mandatory for accounting periods beginning on or after 1 January 2007 but they are not
relevant to the Group’s operations:

IRFS 4, Insurance contracts;

IFRIC 7, Applying the restatement approach under IAS 29, ﬁnancial reporting in
hyper-inﬂationary economies; and

IFRIC 9, Re-assessment of embedded derivatives.

Standards and interpretations in issue but not yet effective
Standards, amendments and interpretation to existing standards that are not yet
effective and have not been early adopted by the Group
IAS 23 (Amendment) Borrowing costs (effective from 1 January 2009). The amendment
to the standard is still subject to endorsement by the European Union. It requires an
entity to capitalise borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset (one that takes a substantial period of time to get
ready for use or sale) as part of the cost of that asset. The option of immediately
expensing borrowing costs is removed. The Group will apply the amendment from the
annual period commencing 1 January 2009 and its impact is currently being assessed.

IFRS 8 Operating segments (effective from 1 January 2009). IFRS 8 amends the
current segmental reporting requirements of IAS 14 and requires ‘management
approach’ to be adopted so that segment information is presented on the same basis
as that used for internal reporting purposes. This standard will apply from the annual
period commencing 1 January 2009 and is expected to impact the Group by requiring
additional disclosures in the ﬁnancial statements.

IFRIC11, IFRS 2 – Group and treasury share transactions (effective for annual periods
beginning on or after 1 March 2007). IFRIC 11 provides guidance on whether share-
based transactions involving treasury shares or Group entities should be accounted for
as equity-settled or cash-settled share-based payment transactions in the stand alone
accounts of the parent and Group companies. This interpretation does not have an
impact on the Group’s ﬁnancial statements.

IFRIC 14, IAS 19 – The limit on a deﬁned beneﬁt asset, minimum funding requirements
and their interaction (effective from 1 January 2008). IFRIC 14 provides guidance on
assessing the limit in IAS 19 on the amount of the surplus that can be recognised as

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

3. Revenue
An analysis of the Group’s revenue is as follows:

Housing
Construction
Land sales

Consolidated revenue
Interest receivable

2007
£m

3,947.5
609.3
157.5

4,714.3
9.7

4,724.0

2006
£m

2,716.6
550.6
304.9

3,572.1
9.1

3,581.2

Housing revenue includes £180.9m (2006: £171.0m) in respect of the value of properties accepted in part exchange by the Group.

4. Business and geographical segments

Business segments
For management purposes, the Group is currently organised into ﬁve operating divisions – Housing United Kingdom, Housing North America, Housing Spain and Gibraltar,
Construction and Corporate. These divisions are the basis on which the Group reports its primary segment information.

Segment information about these businesses is presented below.

2007

Revenue:
External sales
Inter-segment sales
Eliminations

Total revenue

Result:
Operating profit/(loss) before joint ventures, brand amortisation and
exceptional items
Share of results of joint ventures

Profit/(loss) on ordinary activities before finance costs, exceptional
items and amortisation of brands
Brand amortisation
Exceptional items

Profit/(loss) on ordinary activities before finance costs

Finance costs (net)
Taxation

Loss for the year

Housing
United

Housing
Kingdom North America
£m

£m

Housing
Spain and
Gibraltar
£m

Construction
£m

Corporate Consolidated
£m

£m

3,053.8
–
–

3,053.8

409.1
9.1

418.2
(3.7)
(47.9)

366.6

986.8
–
–

986.8

53.3
14.2

67.5
–
(321.3)

(253.8)

64.4
–
–

64.4

2.2
–

2.2
–
(6.3)

(4.1)

609.3
34.5
(34.5)

609.3

3.4
0.1

3.5
–
–

3.5

–
–
–

–

4,714.3
34.5
(34.5)

4,714.3

(15.4)
–

(15.4)
–
(4.2)

(19.6)

452.6
23.4

476.0
(3.7)
(379.7)

92.6

(112.1)
(177.2)

(196.7)

Inter-segment Construction and Housing revenue relates to contracts conducted on an arm’s-length basis.

www.taylorwimpey.com

4. Business and geographical segments continued

2007

Asset and liabilities:
Segment assets
Joint ventures
Segment liabilities

Net operating assets/(liabilities)*

Goodwill
Current taxation (net)
Deferred taxation (net)
Net debt

Net assets

Housing
United

Housing
Kingdom North America
£m

£m

5,350.1
39.6
(1,548.7)

3,841.0

976.7
20.0
(316.4)

680.3

Housing
Spain and
Gibraltar
£m

182.1
0.2
(66.7)

115.6

Construction
£m

Corporate Consolidated
£m

£m

96.6
0.1
(232.0)

(135.3)

39.5
–
(70.6)

(31.1)

6,645.0
59.9
(2,234.4)

4,470.5

699.8
(137.6)
87.9
(1,415.4)

3,705.2

* The Group is unable to allocate the defined benefit pension scheme assets and liabilities of the Taylor Woodrow Group Pension and Life Assurance Fund on an actuarial basis by entity. However,
for the purposes of the segmental analysis above the Group has allocated the deficit on the basis of members in the plan. This allocation is performed solely for the purposes of providing a more
meaningful segmental analysis and is not an appropriate apportionment in accordance with IAS 19 Retirement benefits. The assets and liabilities of the George Wimpey Staff Pension Scheme have
been allocated in their entirety to UK Housing.

2007

Other information:
Property, plant and equipment additions
Amortisation of intangibles*
Depreciation – plant and equipment

Other non-cash expenses:
Provisions provided

Housing
United

Housing
Kingdom North America
£m

£m

6.2
15.7
3.3

48.7

5.8
20.0
3.6

28.7

Housing
Spain and
Gibraltar
£m

0.3
–
0.1

0.6

Construction
£m

Corporate
£m

Consolidated
£m

1.3
–
1.3

–

–
–
–

–

13.6
35.7
8.3

78.0

* The amortisation of intangibles includes impairment losses of £10.0m on the Laing Homes brand (Housing United Kingdom) and £20.0m on the Morrison Homes brand (Housing North America)

following their current retirements.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

4. Business and geographical segments continued

2006

Revenue:
External sales
Inter-segment sales
Eliminations

Total revenue

* Restated see note 1.

2006

Result:
Operating profit/(loss) before joint ventures
Share of results of joint ventures

Profit/(loss) on ordinary activities before finance costs
Finance costs, net
Taxation

Profit for the year

* Restated see note 1.

2006

Assets and liabilities:
Segment assets
Joint ventures
Segment liabilities

Net operating assets/(liabilities)†

Goodwill
Current taxation (net)
Deferred taxation (net)
Net debt

Net assets

* Restated see note 1.

Housing
United
Kingdom*
£m

1,759.2
4.1
(4.1)

1,759.2

Housing
North America*
£m

Housing
Spain and
Gibraltar*
£m

Construction*
£m

Corporate*
£m

Consolidated
£m

1,170.2
–
–

1,170.2

92.1
–
–

92.1

550.6
60.8
(60.8)

550.6

–
–
–

–

3,572.1
64.9
(64.9)

3,572.1

Housing
United
Kingdom*
£m

Housing
North America*
£m

Housing
Spain and
Gibraltar*
£m

Construction*
£m

Corporate*
£m

Consolidated
£m

215.4
8.6

224.0

209.1
13.5

222.6

26.8
–

26.8

9.6
–

9.6

(13.2)
–

(13.2)

447.7
22.1

469.8
(64.2)
(115.0)

290.6

Housing
United
Kingdom*
£m

2,160.0
33.5
(609.5)

1,584.0

Housing
North America*
£m

865.0
19.4
(318.9)

565.5

Housing
Spain and
Gibraltar*
£m

173.7
–
(82.2)

91.5

Construction*
£m

Corporate*
£m

Consolidated
£m

106.1
3.3
(249.1)

(139.7)

18.1
–
(25.9)

(7.8)

3,322.9
56.2
(1,285.6)

2,093.5

363.1
(54.4)
94.6
(391.3)

2,105.5

† The Group is unable to allocate the defined benefit pension scheme assets and liabilities of the Taylor Woodrow Group Pension and Life Assurance Fund on an actuarial basis by entity. However, for the
purposes of the segmental analysis above, the Group has allocated the deficit on the basis of members in the plan. This allocation is performed solely for the purposes of providing a more meaningful
segmental analysis and is not an appropriate apportionment in accordance with IAS 19 Retirement benefits.

Housing
United
Kingdom*
£m

Housing
North America*
£m

Housing
Spain and
Gibraltar*
£m

Construction*
£m

Corporate*
£m

Consolidated
£m

2.5
1.1

1.7
1.1

11.2

10.2

0.3
0.1

0.3

2.2
5.4

–

–
–

–

6.7
7.7

21.7

2006

Other information:
Property, plant and equipment additions
Depreciation – plant and equipment

Other non-cash expenses:
Provisions provided

* Restated see note 1.

www.taylorwimpey.com

4. Business and geographical segments continued

Geographical segments
The Group’s operations are located primarily in the United Kingdom and North America. The Group’s Housing divisions are already segmented geographically above.
The Construction division is primarily located in the United Kingdom.

The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods/services:

United Kingdom
North America
Rest of the world

Sales revenue by
geographical market

2007
£m

3,614.7
986.8
112.8

4,714.3

2006
£m

2,243.6
1,170.1
158.4

3,572.1

The following is an analysis of the carrying amount of segment assets, and additions to property and plant, analysed by the geographical area in which the assets are located:

United Kingdom
North America
Rest of the world

Carrying amount of
segment assets

Additions to property
and plant

2007
£m

6,205.9
1,231.8
231.5

7,669.2

2006
£m

2,854.9
1,012.3
226.6

4,093.8

2007
£m

6.9
5.8
0.9

13.6

2006
£m

2.6
1.7
2.4

6.7

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

5. Net operating expenses and proﬁt on ordinary activities before ﬁnance costs

Net operating expenses:

Administration expenses
Net other income
Exceptional items

Net other income includes profits on the sale of property, plant & equipment and broker fees from mortgage origination services.

Exceptional items:

Restructuring costs
Brand impairments
Land and work in progress write-downs

Exceptional items

2007
£m

302.4
(12.9)
90.0

379.5

60.0
30.0
289.7

379.7

2006
£m

200.1
(9.1)
–

191.0

–
–
–

–

The exceptional charge in respect of restructuring costs arose following the merger with George Wimpey Plc on 3 July 2007. It consists of costs relating to the reorganisation
and restructuring of the UK and US Housing businesses, including redundancy costs.

Proﬁt on ordinary activities before ﬁnancing costs has been arrived at after charging/(crediting):

Cost of inventories recognised as expense in cost of sales
Specific write-downs of inventories
Reversal of specific write-downs of inventories
Depreciation – plant and equipment
Amortisation – intangibles*
Minimum lease payments under operating leases recognised in income for the year

2007
£m

4,148.0
289.7
–
8.3
35.7
6.1

2006
£m

2,903.8
35.3
(5.7)
7.7
–
13.6

*The amortisation of intangibles includes impairment losses of £10.0m on the Laing Homes brand and £20.0m on the Morrison Homes brand following their current retirements.

The remuneration paid to Deloitte & Touche LLP, the Group’s principal auditors, is as follows:

Fees payable to the company’s auditors for the audit of the company’s annual accounts and consolidated financial statements
The audit of the company’s subsidiaries pursuant to legislation

Total audit fees

Other services pursuant to legislation
Tax services
Corporate finance services
Other services

Total non-audit fees

Total fees

Corporate finance services include reporting accountants’ work performed in connection with the merger.

2007
£m

2006
£m

0.3
0.7

1.0

0.1
0.3
0.7
0.1

1.2

2.2

0.3
0.4

0.7

0.1
0.1
–
0.1

0.3

1.0

www.taylorwimpey.com

6. Staff costs

Average number employed
Housing United Kingdom including Corporate
Housing North America
Housing Spain and Gibraltar
Construction

United Kingdom
Overseas

Remuneration
Wages and salaries
Redundancy costs
Social security costs
Other pension costs

2007
Number

2006
Number

4,744
1,173
171
3,639

9,727

6,175
3,552

9,727

2,658
1,108
157
4,235

8,158

4,079
4,079

8,158

£m

314.2
15.4
34.0
16.3

379.9

245.6
–
23.3
15.2

284.1

Key management comprises the Board and other employees who serve on the Executive Committee. The Executive Committee advises the Chief Executive on issues
pertaining to the business and the implementation of Board policy.

The information required by the Companies Act 1985 and the Listing Rules of the Financial Services Authority is contained on pages 46 to 55 in the Directors’ Remuneration
Report.

7. Finance costs

Interest on bank overdrafts and loans
Interest on debenture loans
Movement on interest rate derivatives

Amortisation of discount on land creditors
Notional interest on pension liability (note 23)

2007
£m

45.9
47.4
5.4

98.7
19.3
3.8

121.8

2006
£m

22.9
41.2
–

64.1
6.5
2.7

73.3

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

8. Tax

Current tax:

UK corporation tax:

Relief for foreign tax
Foreign tax:

Deferred tax:
UK:

Foreign:

Current year
Prior years

Current year
Prior years
Current year
Prior years

2007
£m

88.9
(9.8)
(5.0)
18.0
16.9

2006
£m

58.8
(9.9)
(8.3)
80.4
(8.3)

109.0

112.7

(9.1)
6.3
80.9
(9.9)

68.2

(3.0)
(0.2)
(4.8)
10.3

2.3

177.2

115.0

Corporation tax is calculated at 30 per cent (2006: 30 per cent) of the estimated assessable proﬁt for the year in the UK.
Taxation outside the UK is calculated at the rates prevailing in the respective jurisdictions.
Deferred tax recognised in the Group statement of recognised income and expense is due to actuarial gains on post-retirement liabilities at the prevailing rate in the relevant
jurisdiction. This includes the effect of the change in the UK rate of corporation tax from 30 per cent to 28 per cent from 1 April 2008.

The charge for the year can be reconciled to the proﬁt per the income statement as follows:

(Loss)/profit before tax

Tax at the UK corporation tax rate of 30% (2006: 30%)
Under/(over) provision in respect of prior years
Tax effect of share of results of joint ventures
Tax effect of expenses that are not deductible in determining taxable profit
Non taxable income
Effect of higher rates of tax of subsidiaries operating in other jurisdictions
Losses not recognised
Net reduction in US tax assets recognised
Other

Tax charge for the year

2007
£m

(19.5)

(5.9)
3.5
(2.6)
14.0
(18.9)
(14.5)
12.1
189.4
0.1

177.2

2006
£m

405.6

121.7
(8.1)
(4.8)
4.8
(22.5)
19.8
–
–
4.1

115.0

The tax charge for the year includes an amount in respect of exceptional items of £70.2m. This is made up of a credit of £14.9m in respect of UK tax and a net charge of
£85.1m in respect of US tax.
The charge in the US reﬂects a write-off of US deferred tax assets held by the Group which are not seen as capable of usage in the forseeable future primarily due to the
signiﬁcant weakening of the US market in the second half of 2007.

9. Dividends

Amounts recognised as distributions to equity holders in the year:
Final dividend for the year ended 31 December 2006 of 9.75p (2005: 8.9p) per share
Interim dividend for the year ended 31 December 2007 of 5.5p (2006: 5.0p) per share

Proposed final dividend for the year ended 31 December 2007 of 10.25p (2006: 9.75p) per share

2007
£m

56.6
60.7

117.3

107.7

2006
£m

51.0
28.7

79.7

56.6

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

www.taylorwimpey.com

10. Earnings per share

From continuing operations

Basic

Diluted

Adjusted basic

Adjusted diluted

2007

(24.2p)

30.8p

30.7p

2006

50.5p

50.1p

50.5p

50.1p

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.

The calculation of the basic and diluted earnings per share is based on the following data:

Earnings:

Earnings for basic earnings per share and diluted earnings per share
Add exceptional items (note 5)
Add tax effect of exceptional items

Earnings for adjusted basic and adjusted diluted earnings per share

Weighted average number of shares:

For basic earnings per share
Weighted average of dilutive options
Weighted average of dilutive awards under bonus plans

For diluted earnings per share

11. Goodwill

Cost and carrying amount
At 1 January 2006
Changes in exchange rates

At 31 December 2006
Changes in exchange rates
Acquired on acquisition of George Wimpey Plc

At 31 December 2007

2007
£m

(197.9)
379.7
70.2

252.0

2007
m

818.5
2.5
–

821.0

2006
£m

289.5
–
–

289.5

2006
m

572.9
5.0
0.5

578.4

£m

363.9
(0.8)

363.1
(0.1)
336.8

699.8

The Group tests goodwill annually for impairment or more frequently if there are indicators that goodwill might be impaired.

Goodwill of £694.3m (2006: £357.5m) is allocated to the UK Housing business. Goodwill of £5.5m (2006: £5.6m) is allocated to the US Housing business. The recoverable
amount in respect of UK Housing has been determined on the basis of the business’ value in use. The value in use is the present value of the future cash flows expected to be
derived from the cash-generating unit over the next 20 years. Key assumptions used in the calculation are:

(i) Gross margins are based upon past experience and latest forecasts which incorporate expectations of future changes in the market.
(ii) Growth rate applied for the period beyond three years is 0 per cent.
(iii) A pre-tax discount rate of 12 per cent based on the Group’s weighted average cost of capital.

As a result of this review no impairment was recorded.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

12. Other intangible assets

Cost
At 1 January 2006 and 31 December 2006
Acquired on acquisition of George Wimpey Plc
Additions
Changes in exchange rates

At 31 December 2007

Amortisation

At 1 January 2006 and 31 December 2006
Impairment loss for the period (note 5)
Charge for the period
Changes in exchange rates

At 31 December 2007

Carrying amount

31 December 2007

31 December 2006

13. Property, plant and equipment

Cost or valuation
At 1 January 2006
Additions
Disposals
Net surplus on revaluation
Changes in exchange rates

At 31 December 2006
Acquired on acquisition of George Wimpey Plc
Additions
Disposals
Changes in exchange rates

At 31 December 2007

Comprising:
Properties valued
Cost
Net surplus

Valuation in 2006
Plant and equipment – cost

Accumulated depreciation
At 1 January 2006
Disposals
Charge for the year
Changes in exchange rates

At 31 December 2006
Disposals
Charge for the year
Changes in exchange rates

At 31 December 2007

www.taylorwimpey.com

Software
development
costs
£m

–
15.8
0.4
–

16.2

–
–
(2.0)
–

(2.0)

14.2

–

Brands
£m

–
140.0
–
0.2

140.2

–
(30.0)
(3.7)
(0.2)

(33.9)

106.3

–

Freehold land
and buildings
£m

Plant and
equipment
£m

7.2
–
–
2.4
–

9.6
1.2
–
(1.5)
–

9.3

8.8
0.5

9.3
–

9.3

–
–
–
–

–

59.6
6.7
(2.0)
–
(0.7)

63.6
15.2
13.6
(13.3)
0.3

79.4

–
–

–
79.4

79.4

42.4
(2.0)
7.7
(0.4)

47.7
(6.5)
8.3
0.2

49.7

£m

–
155.8
0.4
0.2

156.4

–
(30.0)
(5.7)
(0.2)

(35.9)

120.5

–

Total
£m

66.8
6.7
(2.0)
2.4
(0.7)

73.2
16.4
13.6
(14.8)
0.3

88.7

8.8
0.5

9.3
79.4

88.7

42.4
(2.0)
7.7
(0.4)

47.7
(6.5)
8.3
0.2

49.7

13. Property, plant and equipment continued

Carrying amount

At 31 December 2007

At 31 December 2006

Freehold land
and buildings
£m

Plant and
equipment
£m

9.3

9.6

29.7

15.9

Total
£m

39.0

25.5

The fixed asset properties of the Group were valued as at 31 December 2006 by Knight Frank LLP, independent valuers not connected with the Group, on a fair value basis in
accordance with RICS valuation methodology, and that valuation was £9.6m. The prior year income statement was credited with £1.4m of the £2.4m net surplus on revaluation
in line with prior years’ deficit treatment.

The revaluation surplus arises in a subsidiary and cannot be distributed to the parent due to legal restrictions in the United Kingdom.

14. Interests in joint ventures

Aggregated amounts relating to share of joint ventures
Non-current assets
Current assets

Total assets

Current liabilities
Non-current liabilities

Total liabilities

Carrying amount
Loans to joint ventures

Total interests in joint ventures

Share of post tax profits from joint ventures
Revenue
Cost of sales

Gross profit
Net operating expenses

Profit on ordinary activities before finance costs
Finance costs

Profit on ordinary activities before tax
Taxation

Share of joint ventures’ post tax results for the year

The Group has ﬁve (2006: four) principal joint ventures.

Particulars of principal joint ventures are as follows:

Country of incorporation

Great Britain

USA

Name of joint venture equity accounted
in the consolidated accounts
(*interest held by subsidiary undertakings)

Greenwich Millennium Village Limited*
GN Tower Limited*
Falcon Wharf Limited*
Academy Central Limited Liability Partnership*
Taylor Woodrow Communities/Steiner Ranch Limited*

2007
£m

–
101.6

101.6

(40.9)
(27.6)

(68.5)

33.1
26.8

59.9

81.3
(51.4)

29.9
(1.6)

28.3
(0.6)

27.7
(4.3)

23.4

2006
£m

30.0
80.7

110.7

(46.5)
(23.6)

(70.1)

40.6
15.6

56.2

106.9
(76.3)

30.6
(1.0)

29.6
(3.9)

25.7
(3.6)

22.1

Taylor Wimpey plc
interest in the issued
ordinary share capital

50%
50%
50%
62%
50%

GN Tower Limited, Falcon Wharf Limited and Academy Central Limited Liability Partnership were acquired as part of the George Wimpey plc merger on the 3 July 2007. In the
same transaction the Group acquired the remaining 50% shareholding of North Central Management Limited (NCM) which is now accounted for as a subsidiary. The book
value of the assets and liabilities of NCM approximates the fair value as at the date of acquisition.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

15. Deferred tax
The following are the major deferred tax assets and liabilities recognised by the Group and movements thereon during the current and prior reporting year.

At 1 January 2006
Credit / (charge) to income
Credit / (charge) to equity
Changes in exchange rates

At 31 December 2006
Acquired on acquisition of a subsidiary
Credit / (charge) to income
Credit / (charge) to equity
Changes in exchange rates

At 31 December 2007

Capital
allowances
£m

Short-term
timing
differences
£m

Brands
£m

Inventory
adjustments
£m

Retirement
benefit
obligations
£m

1.5
1.6
–
–

3.1
0.7
0.4
–
–

4.2

32.3
(16.6)
(1.4)
(0.3)

14.0
12.8
(15.0)
(2.6)
0.8

10.0

–
–
–
–

–
(41.2)
11.4
–
–

(29.8)

–
8.9
–
–

8.9
85.6
(54.9)
–
0.5

40.1

66.5
1.6
0.5
–

68.6
34.5
(10.1)
(29.6)
–

63.4

Total
£m

100.3
(4.5)
(0.9)
(0.3)

94.6
92.4
(68.2)
(32.2)
1.3

87.9

The recognition of deferred tax assets on short-term timing differences and inventory write-downs takes into account the reduced expected usage in the US in future years,
which has been assessed in light of the weakening market conditions in the second half of 2007.

In addition the total asset has reduced by £3.9m due to the re-evaluation of share schemes yet to vest at the end of 2007. £2.6m of this has been recorded as a reduction in
the share-based payment tax reserve, (see note 30).

Deferred tax on the UK timing differences has been calculated at the rate of 28 per cent (2006: 30 per cent). The effect of the reduction in the UK corporation tax rate from
30 per cent to 28 per cent from 1 April 2008 has resulted in a reduced net deferred tax asset at the end of 2007 of an amount of £2.5m. Of this £2.5m, £2.3m has been
charged directly to the statement of recognised income and expense.

The net deferred tax balance is analysed into assets and liabilities as follows:

Deferred tax assets
Deferred tax liabilities

2007
£m

117.7
(29.8)

87.9

2006
£m

95.4
(0.8)

94.6

At the balance sheet date the Group has unused UK capital losses of £418.0m (2006: £187.2m), of which £296.8m (2006: £62.5m) are agreed available for offset against
future capital proﬁts. No deferred tax asset has been recognised in respect of these losses because the directors do not consider that these capital losses will be utilised in
the foreseeable future. In addition some of the capital losses would be further restricted as to offset dependent on the source within the enlarged Group of any gains and
previous losses.

The Group has not recognised potential deferred tax assets of £189.4m (2006: £nil) (primarily relating to inventory adjustments) in respect of the US and a further £9.7m (2006:
£3.9m) (relating to tax losses) in other jurisdictions. These are not recognised principally due to the uncertainty of future proﬁts against which to offset such potential deductions
and losses.

Temporary differences arising in connection with interests in associates and joint ventures are insigniﬁcant.

16. Inventories

Raw materials and consumables
Finished goods and goods for resale
Residential developments

Land*
Development and construction costs

Commercial, industrial and mixed development properties

* Details of land creditors are in note 21.

2007
£m

2.3
106.4

3,879.4
2,019.6
10.1

6,017.8

2006
£m

2.3
58.7

1,857.2
999.1
29.2

2,946.5

The Directors consider all inventory to be current in nature. The operational cycle is such that the majority of inventory will not be realised within 12 months. It is not possible to
determine with accuracy when speciﬁc inventory will be realised, as this will be subject to a number of issues such as consumer demand and planning permission delays.

Non-refundable land option payments of £59.6m (2006: £28.2m) are recorded within Residential developments:Land.

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17. Construction contracts

Contracts in progress at the balance sheet date:
Amounts due from contract customers included in trade and other receivables
Amounts due to contract customers included in trade and other payables

Contract costs incurred plus recognised profits less recognised losses to date.
Less: progress billings

At 31 December 2007, retentions held by customers for contract work amounted to £11.1m (2006: £12.6m).

2007
£m

57.3
(39.1)

18.2

2006
£m

65.2
(26.1)

39.1

3,684.8
(3,666.6)

3,571.4
(3,532.3)

18.2

39.1

18. Other ﬁnancial assets

Trade and other receivables

Trade receivables
Joint ventures
Currency and interest rate derivatives
Other receivables

Current

Non-current

2007
£m

257.1
9.0
–
125.2

391.3

2006
£m

210.0
9.6
–
75.3

294.9

2007
£m

41.9
–
19.9
14.6

76.4

2006
£m

37.8
–
15.2
3.0

56.0

The average credit period taken on sales is 15 days (2006: 15 days). An allowance has been made for estimated irrecoverable amounts from trade receivables of £2.2m
(2006: £3.7m). This allowance has been determined by reference to past default experience.

Cash and cash equivalents

2007
£m

130.0

2006
£m

236.5

Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less. The carrying amount of these
assets approximates their fair value.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

19. Bank loans and overdrafts

Bank overdrafts repayable on demand
Bank loans

Amount due for settlement within 12 months

Amount due for settlement after 12 months

Analysis of borrowings by currency:
31 December 2007
Sterling
Canadian dollars
Ghanaian cedis
US dollars

31 December 2006
Sterling
Canadian dollars
Ghanaian cedis
US dollars

2007
£m

12.2
708.5

720.7

12.2

708.5

2006
£m

0.2
14.5

14.7

12.3

2.4

Bank overdraft
£m

Bank loans
£m

0.7
8.0
3.5
–

12.2

0.2
–
–
–

0.2

295.0
–
–
413.5

708.5

–
8.4
3.9
2.2

14.5

Bank borrowings are arranged at ﬂoating rates of interest, from 5.25 per cent to 18.0 per cent (2006: 1.95 per cent to 20.6 per cent).

Secured bank loans and overdrafts totalled £4.5m (2006: £14.5m). Secured bank loans and overdrafts are secured on certain ﬁxed asset properties and land.

At 31 December 2007, the Group had available £1,192.9m (2006: £629.5m) of undrawn committed revolving credit facilities.

There were no defaults or breaches of loan terms during the current or preceding period.

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20. Debenture loans

Unsecured
6.59% US $81m notes 2008
Floating rate notes 2008
9.00% US $35m notes 2009
5.73% US $110m notes 2009
5.53% US $75m notes 2011
6.625% £250m guaranteed bonds 2012*
6.21% US $70m notes 2012
6.80% £30m notes 2012
4.72% US $28m notes 2013
6.31% US $110m notes 2014
6.03% US $175m notes 2014
4.98% US $38m notes 2015
6.72% US $30m notes 2017
5.29% US $30m notes 2018
6.375% £200m bonds 2019
Secured
Other secured loans

* The guarantee in respect of the 6.625% £250m guaranteed bonds due 2012 was released on th 16 January 2004.

Repayable
Total falling due in more than one year

Within one year or on demand

Interest rates and currencies of debenture loans:

31 December 2007
Sterling
US dollars

31 December 2006
Sterling
US dollars
Canadian dollars

2007
Book value
£m

2007
Fair value
£m

2006
Book value
£m

2006
Fair value
£m

–
1.4
18.5
55.2
37.6
245.8
35.4
30.0
13.2
55.4
87.7
17.7
15.4
13.9
197.5

–

824.7

–
1.4
19.0
56.5
38.7
253.0
36.5
30.6
13.6
57.1
90.0
18.0
15.6
13.9
194.0

–

837.9

41.3
2.0
–
–
38.2
243.6
–
–
–
–
89.0
–
–
–
197.3

1.7

613.1

2007
£m

823.3

1.4

41.8
2.0
–
–
38.2
257.0
–
–
–
–
89.2
–
–
–
199.0

1.8

629.0

2006
£m

610.6

2.5

Fixed rate debt

Floating
rate
£m

Weighted
average interest
rate
%

Fixed rate
£m

Weighted
average
time until
maturity
years

1.4
–

1.4

2.0
–
–

2.0

473.3
350.0

823.3

440.9
168.5
1.7

611.1

6.53
6.05

6.33

6.7
6.1
11.4

6.5

7.2
5.4

6.4

8.6
5.3
3.0

7.7

Interest on debenture loans of £100.0m (2006: £100.0m) has been swapped from 6.625 per cent to ﬂoating rates based on US$ LIBOR applicable to periods of three months.
The above table does not reﬂect the impact of these swaps.

Charges for secured loans have been given principally on certain development properties.

There were no defaults or breaches of loan terms during the current or preceding period.

Taylor Wimpey plc Annual Report and Accounts 2007

2006
£m

122.7
–
–
0.4

123.1

2006
£m

252.0
121.0

373.0

2006

£m

239.7
57.9
24.9
50.5

373.0

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

21. Trade and other payables

Trade payables
Joint ventures
Currency and interest rate derivatives
Other payables

Current

Non-current

2007
£m

920.6
3.4
1.5
614.8

1,540.3

2006
£m

608.4
2.8
9.1
305.7

926.0

2007
£m

376.6
–
–
11.8

388.4

Trade payable days were 43 days (2006: 32 days), based on the ratio of year-end trade payables (excluding sub-contract retentions and unagreed claims of
£23.8m (2006: £13.2m) and land creditors) to amounts invoiced during the year by trade creditors.

Other payables include customer deposits for reserving plots of £90.1m (2006:£84.2m).

Land creditors (included within trade payables) are due as follows:

Due within one year
Due in more than one year

Land creditors are denominated as follows:

Sterling
US dollars
Canadian dollars
Euros

2007
£m

453.7
375.3

829.0

2007

£m

711.0
42.4
38.4
37.2

829.0

Land creditors of £570.9m (2006: £350.4m) are secured against land acquired for development.

22. Financial instruments

Capital management
The Group operates within policies and procedures approved by the Board. The Group’s capitalisation policy established last year sets overall parameters for the consolidated
capital structure designed to maintain a strong credit rating and an appropriate funding structure.

The Group seeks to match long term assets with long term funding and short term assets with short term funding. Equity, retained proﬁts and long term ﬁxed interest debt are
used primarily to ﬁnance intangible assets, ﬁxed assets and land. Short term borrowings are required primarily to ﬁnance net current assets, other than landbank assets of more
than one year, and work in progress. Cash balances made available by our construction business are used to reduce our short term borrowing requirements.

Net debt as a percentage of equity was 38.2% (2006: 18.6%) however, the Group aims to maintain a strong credit rating by seeking to keep year end modiﬁed net gearing
(deﬁned as borrowings less cash or cash equivalents as a percentage of tangible net assets adjusted for deferred tax assets and retirement beneﬁt obligations) between 40%
and 60% and interest cover greater than 5 times but less than 7 times. The forecast numbers are reviewed regularly. Modiﬁed net gearing on this basis was 46.9% (2006:
21.1%). Interest cover (proﬁt on ordinary activities before exceptional items and ﬁnance costs divided by ﬁnance costs less interest receivable) was 4.2 (2006: 7.3).

www.taylorwimpey.com

22. Financial instruments continued

Financial assets and ﬁnancial liabilities
Categories of ﬁnancial assets and ﬁnancial liabilities are as follows:

Financial assets

Derivative financial instruments:

Designated as effective hedging instruments
Held for trading
Loans and receivables:

Cash and cash equivalents
Land receivables
Trade and other receivables
Joint ventures

2007
Carrying
value
£m

17.7
2.2

130.0
108.6
192.3
26.8

477.6

2006
Carrying
value
£m

15.2
–

236.5
121.2
124.7
15.6

513.2

(a)
(a)

(b)
(b)
(b)
(b)

Land receivables and trade and other receivables are included in the balance sheet as trade and other receivables for current and non current amounts.

Current and non-current trade and other receivables, as disclosed, in note 18 include £146.9m (2006: £89.9m) of non ﬁnancial assets.

Financial liabilities

Held for trading:

Derivative financial instruments

Amortised cost:

Bank loans and overdrafts
Land creditors
Trade and other payables
Debentures

Note

(a)

(b)
(b)
(b)
(c)

2007
Carrying
value
£m

2006
Carrying
value
£m

1.5

9.1

720.7
829.0
892.0
824.7

14.7
373.0
560.3
613.1

3,267.9

1,570.2

Land creditors and trade and other payables are included in the balance sheet as trade and other payables for current and non current amounts.

Current and non current trade and other payables, as disclosed in note 21, include £206.2m (2006: £106.7m) of non ﬁnancial liabilities.

(a) Derivative ﬁnancial instruments are carried at fair value. The fair values are calculated using quoted market prices relevant for the term, currency and instrument.

(b) The Directors consider that the carrying amount recorded in the ﬁnancial statements approximates their fair values.

The Group has the following types of derivatives:

Designated as held for trading:
Floating £ to fixed £ interest
Fixed US$ to floating US$ interest
Floating US$ to fixed US$ interest
Fixed US$ to fixed £ interest

Designated as hedging instruments:

US$160.5m floating US$ to fixed £ interest

2007
Notional
amount

£235.0m
US$145.0m
US$50.0m
–

2007
Weighted
average
ﬁxed

5.10%
5.16%
5.63%
–

2006
Notional
amount

£35.0m

–
–

US $(81.0)m
£49.5m

2006
Weighted
average
fixed

5.80%
–
–
6.59%
7.04%

£100.0m

6.63%

£100.0m

6.63%

In addition, forward contracts have been entered into to hedge transaction risks and intra Group loans to buy or (sell) against £, US$55m, €(70.9m) and C$90.0m (2006:
US$(2.2m), €(16.0m) and C$ nil). The fair values of the forward contracts are not material as they were entered into on or near the 31 December 2007 and mature not more
than one month later.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

22. Financial instruments continued

Proﬁt before tax has been arrived at after charging/(crediting) the following gains and losses:

Changes in fair value of financial liabilities designated as effective hedged items
Change in fair value of derivatives designated as effective hedging instruments
Change in fair value of derivatives classified as held for trading
Net foreign exchange (gains)/losses on financial liabilities at amortised cost

2007
£m

1.7
(1.7)
5.4
–

5.4

2006
£m

(3.7)
3.7
4.0
(5.8)

(1.8)

Market risk
The Group’s activities expose it to the ﬁnancial risks of changes in both foreign currency exchange rates and interest rates. The Group aims to manage the exposure to these
risks by the use of ﬁxed or ﬂoating rate borrowings, foreign currency borrowings and derivative ﬁnancial instruments.

(a) Interest rate risk management
The Group is exposed to interest rate risk as the Group borrows funds at both ﬁxed and ﬂoating interest rates. The exposure to these borrowings varies during the year due to
the seasonal nature of cash ﬂows relating to housing sales and the less certain timing of land acquisitions. A combination of ﬁxed rate borrowings and interest rate swaps are
used to manage the volatility risk such that at the year end, taking all interest rate derivatives into account, ﬁxed rate borrowings are not more than 70% of total borrowings
but not less than 50%.

In order to measure the risk, ﬂoating rate borrowings and the expected interest cost for the year is forecast on a monthly basis and compared to budget using management’s
expectations of a reasonably possible change in interest rates. Interest expense volatility remained within acceptable limits throughout the year. Group policy does not allow
the use of derivatives to speculate against changes to future interest rates and they are only used to manage exposure to volatility.

The Group’s exposure to, and the way in which it manages interest rate risk, has not changed from the previous year.

Hedge accounting
Hedging activities are evaluated periodically to ensure that they are in line with policy.

The cross currency, ﬁxed to ﬂoating interest rate swaps have been bifurcated for hedging purposes and designated as fair value hedges such that the Group receive interest
at a ﬁxed rate of 6.625% based on a nominal of £100m matching the underlying borrowing and pay US$ ﬂoating rates on a nominal of US$160.5m. During the period the
hedge was 100% effective (2006: 100%) in hedging the fair value exposure to interest rate movements and as a result the carrying amount of the loan was increased by
£1.7m (2006: reduced by £3.7m) which was included in the income statement offsetting the fair value movement of the bifurcated interest rate swap.

As a result of the merger in July 2007 the Group acquired a number of derivatives which, while providing an economic hedge to the volatility of interest rates, do not satisfy
the strict requirements for hedge accounting and are therefore designated as held for trading.

Interest rate sensitivity
The effect on both income and equity determined based on exposure to non derivative ﬂoating rate instruments at the balance sheet date for a 1% rise in interest rates is
£(5.8)m (2006: £2.3m), before tax, a 1% fall in interest rates gives the same but opposite effect. For derivatives the fair values have been calculated based on market quoted
rates adjusted for the sensitivity as shown in the tables below.

Due to seasonal ﬂuctuations the level of net borrowings at the ﬁnancial year end are not representative of net borrowings during the year and therefore interest rate sensitivity
before tax for a reasonably possible 1% rise in ﬂoating rate instruments as shown below is based on a monthly average for the current period. The table assumes all other
variables remain constant and in accordance with IFRS 7 does not attempt, for example, to include the effects of any resultant change in exchange rates.

1% increase in interest rates

Derivatives
Non derivatives (based on average for the year)

1% decrease in interest rates

Derivatives
Non derivatives (based on average for the year)

Income
sensitivity
2007
£m

Equity
sensitivity
2007
£m

5.3
(4.6)

0.7

1.8
(4.6)

(2.8)

Income
sensitivity
2007
£m

Equity
sensitivity
2007
£m

(5.6)
4.6

(1.0)

(1.9)
4.6

2.7

Income
sensitivity
2006
£m

1.6
(1.8)

(0.2)

Income
sensitivity
2006
£m

(2.1)
1.8

(0.3)

Equity
sensitivity
2006
£m

(2.7)
(1.8)

(4.5)

Equity
sensitivity
2006
£m

2.4
1.8

4.2

(b) Foreign currency risk management
The Group’s overseas activities expose it to the ﬁnancial risks of changes in foreign currency exchange rates primarily to US dollars, Canadian dollars and the Euro.

The Group is not materially exposed to transaction risks as nearly all Group companies conduct their business in their respective functional currencies. Construction has certain
contracts in non functional currencies and aims to match its expenditure in the same currency to reduce risk and these risks are not material in relation to the Group. Group
policy requires that transaction risks are hedged to the functional currency of the subsidiary using foreign currency borrowings or derivatives where appropriate.

The Group is also exposed to the translation risk of accounting for both the income and the net investment held in functional currencies other than £. The net investment risk is
partially hedged using foreign currency borrowings and derivatives. Assets and liabilities denominated in non functional currencies are retranslated each month using the latest

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22. Financial instruments continued
exchange rates and resultant exchange gains or losses monitored each month. Income is also measured monthly using the latest exchange rates and compared to a budget
held at historic exchange rates. Other than the natural hedge provided by foreign currency borrowings the translation risk of income is not hedged using derivatives. The policy
is kept under periodic review.

The Group’s exposure to, and the way in which it manages, exchange rate risk has not changed from the previous year.

Hedge accounting
The Group designates the bifurcated cross currency swaps such that the nominal amount of US$160.5m (2006: US$160.5m) is used to hedge part of the Group’s net
investment in US$ denominated assets and liabilities.

The Group has also designated the carrying value of US$982.5m (2006: US$250.0m) borrowings as a net investment hedge of part of the Group’s investment in US$
denominated assets.

During the period the hedges were 100% effective (2006: 100%) and as a result the change in the carrying amount of the derivatives and the change in the carrying value of
the borrowings offset the exchange movement on the Group’s US dollar net investment and are therefore included in the translation reserve.

Foreign currency sensitivity
The Group is primarily exposed to US dollars, Canadian dollars and the Euro. The following table details how the Group’s income and equity would increase (decrease) on a
before tax basis, to a 10% increase in the respective currencies against £ and in accordance with IFRS 7 all other variables remaining constant. A 10% decrease in the value
of £ would have an equal but opposite effect.

The 10% change represents a reasonably possible change in the speciﬁed foreign exchange rates in relation to £.

US$
Canadian $
Euro

Income
sensitivity
2007
£m

Equity
sensitivity
2007
£m

Income
sensitivity
2006
£m

(15.1)
0.2
0.2

(14.7)

(20.2)
(15.6)
0.2

(35.6)

(0.1)
–
–

(0.1)

Equity
sensitivity
2006
£m

16.2
(13.5)
–

2.7

The sensitivity analysis does not extend to the retranslation of the Group’s US dollar net investments as had such changes been included they would have offset equity
sensitivity in respect of the hedging instruments included above.

Credit risk
Credit risk is the risk of ﬁnancial loss where counterparties are not able to meet their obligations.

Surplus cash, when not used to repay borrowings, is placed on deposit with banks in accordance with a policy that speciﬁes the minimum acceptable credit rating and the
maximum exposure to each counterparty. Credit risk on derivatives where the fair value is positive is closely monitored and remains within acceptable limits.

Land receivables arise from sales of surplus land on deferred terms. A policy is in place such that if the risk is not acceptable then the deferred payment must have adequate
security either by the use of an appropriate guarantee or a charge over the land. The fair value of any land held as security is considered by management to be in excess of
the carrying amount of the receivable to which it relates. No amounts outstanding are past due.

Trade and other receivables comprise mainly amounts receivable from various housing associations and other housebuilders. Management consider that the credit quality
of the various debtors is good in respect of the amounts outstanding and therefore credit risk is considered to be low. No material amounts are past due and there is no
signiﬁcant concentration risk. A small allowance for credit losses against sundry debtors is held, however, the balance is not material in relation to the gross carrying value
of this particular class of ﬁnancial asset.

Loans made to joint ventures are in most cases part of the investment and carry equity like risk. Other loans to joint ventures are made on normal arms length terms which will
include security where appropriate and are usually repayable from sales proceeds.

There has been no change in the Group’s exposure to credit risk or how that risk is managed from the prior year. The merger with George Wimpey Plc did not create any new
classes of ﬁnancial asset with different risk proﬁles for the Group.

The carrying amount of ﬁnancial assets, as detailed above, represents the Group’s maximum exposure to credit risk at the reporting date assuming that any security held has
no value.

Liquidity risk
Liquidity risk is the risk that the Group does not have sufﬁcient ﬁnancial resources available to meet its obligations as they fall due. The Group manages liquidity risk by
continuously monitoring forecast and actual cash ﬂows, matching the expected cash ﬂow timings of ﬁnancial assets and liabilities and through the use of term borrowings,
overdrafts and committed revolving credit facilities with a range of maturity dates to ensure continuity of funding. Future borrowing requirements are forecast on a monthly
basis and funding headroom is maintained above forecast peak requirements to meet unforeseen events.

There have been no adverse changes in the Group’s exposure to liquidity risk or how it is managed from the prior year.

In addition to term borrowings and on demand overdraft facilities the Group has access to committed revolving credit facilities. The total unused committed amount is
£1,192.9m (2006: £629.5m) and management believe it is adequate to meet both forecast and unforseen requirements.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

22. Financial instruments continued

Liquidity risk continued
The maturity proﬁle of the anticipated future cash ﬂows including interest where using the latest applicable relevant rate based on the earliest date on which the Group can be
required to pay ﬁnancial liabilities on an undiscounted basis is as follows:

Financial liabilities

On demand
Within one year
More than one year and less than two years
More than two years and less than five years
In more than five years

31 December 2007

Financial liabilities

On demand
Within one year
More than one year and less than two years
More than two years and less than five years
In more than five years

31 December 2006

Bank loans
and overdraft
£m

Land creditors
£m

Other trade
payables
£m

Debenture
loans
£m

12.3
40.8
42.2
809.6
–

904.9

–
444.3
250.3
143.5
30.6

868.7

848.6
8.3
3.8
–

860.7

–
54.1
124.7
430.6
514.8

1,124.2

Bank loans
and overdraft
£m

Land creditors
£m

Other trade
payables
£m

Debenture
loans
£m

12.3
0.8
0.1
1.8
–

15.0

–
252.0
86.9
42.1
5.8

386.8

–
541.2
0.4
0.2
0.4

542.2

–
39.9
81.2
80.2
651.5

852.8

Total
£

12.3
1,387.8
425.5
1,387.5
545.4

3,758.5

Total
£

12.3
833.9
168.6
124.3
657.7

1,796.8

The following table represents the undiscounted cash ﬂow proﬁle of the Group’s derivative ﬁnancial instruments and has been calculated using implied interest rates and
exchange rates derived from the respective yield curves. Interest rate swaps are settled net and foreign currency swaps and forward contracts are settled gross.

Net settled
derivatives
net amount
£m

Gross settled
derivatives
receivable
£m

Gross settled
derivatives
payable
£m

2.0
0.1
(1.4)
–

0.7

132.1
6.6
119.9
–

258.6

(130.8)
(4.5)
(96.4)
–

(231.7)

Net settled
derivatives
£m

Gross settled
derivatives
receivable
£m

Gross settled
derivatives
payable
£m

(0.1)
(0.1)
(0.6)
(0.3)

(1.1)

14.6
48.6
19.9
106.6

189.7

(14.7)
(56.2)
(17.8)
(84.6)

(173.3)

Total
£m

3.3
2.2
22.1
–

27.6

Total
£m

(0.2)
(7.7)
1.5
21.7

15.3

Derivatives

Within one year
More than one year and less than two years
More than two years and less than five years
In more than five years

31 December 2007

Derivatives

Within one year
More than one year and less than two years
More than two years and less than five years
In more than five years

31 December 2006

www.taylorwimpey.com

23. Retirement beneﬁt schemes
Retirement beneﬁt obligation comprises gross pension liability of £216.4m (2006: £205.9m) and gross post-retirement health care liability of £2.7m (2006: £2.7m).

The Group operates Deﬁned Beneﬁt and Deﬁned Contribution pension schemes. In the UK the Taylor Woodrow Group Pension and Life Assurance Fund (TWGP&LAF), the
George Wimpey Staff Pension Scheme (GWSPS) and the Taylor Woodrow NHS Pension Scheme (TWNHSPS) are funded Deﬁned Beneﬁt schemes. The TWGP&LAF merged
with the Bryant Group Pension Scheme (BGPS) on 24 June 2002 and with the Wilson Connolly Holdings Pension Scheme (WCHPS), the Wainhomes Ltd Pension Scheme
(WHLPS) and the Prestoplan Pension Scheme (PPS) on 27 August 2004. These schemes are managed by Boards of trustees. With the exception of the TWNHSPS, the
Deﬁned Beneﬁt schemes are closed to new entrants. The TWGP&LAF was closed to future pension accrual with effect from 30 November 2006. An alternative Deﬁned
Contribution arrangement, the Taylor Woodrow Personal Choice Plan, is offered to new employees and from 1 December 2006 to employees who previously accrued beneﬁts
in the TWGP&LAF. Legacy George Wimpey staff are members of a UK Stakeholder arrangement. Contributions of £11.2m (2006: £6.7m) were charged to income in respect
of deﬁned contributions schemes. The Group also operates a number of overseas pension schemes of the deﬁned beneﬁt and deﬁned contribution type.

The pension scheme assets of TWGP&LAF, GWSPS and TWNHSPS are held in a separate trustee-administered fund to meet long term pension liabilities to past and present
employees. The trustees of the schemes are required to act in the best interests of the schemes’ beneﬁciaries. The appointment of trustees is determined by each scheme’s
trust documentation. The Group has a policy that at least one-third of all trustees should be nominated by members of the scheme, including at least one member by current
pensioners.

The most recent formal actuarial valuation of the TWGP&LAF was carried out at 1 June 2004 and updated to 1 September 2004 to take account of subsequent mergers.
The TWNHSPS commenced in December 2003 and the Actuary completed his initial valuation with an effective date of 31 December 2003. The most recent formal actuarial
valuation of the GWSPS was carried out at 31 March 2005. The projected unit method was used in all valuations and assets were taken into account using market values.

The next formal valuations of the TWGP&LAF, TWNHSPS and GWSPS are taking place at 1 June 2007, 31 December 2006 and 31 March 2008 respectively. These will
be undertaken in accordance with new legislation and have not yet been completed.

The statutory funding objective is that each scheme has sufﬁcient and appropriate assets to pay its beneﬁts as they fall due. The general principles adopted by the trustees
will be that the assumptions used, taken as a whole, will be sufﬁciently prudent for pensions and beneﬁts already in payment to continue to be paid, and to reﬂect the
commitments which will arise from members’ accrued pension rights.

As part of the discussions with the Trustees of the TWGP&LAF around the closure of the scheme to future accrual, the Group has agreed to increase deﬁcit reduction
payments to £20m p.a. for 10 years. These payments will be reviewed at each valuation. The ﬁrst such payment was made on 19 December 2006.

Following the valuation of the GWSPS as at 31 March 2005, the ordinary contribution rate increased to 15.7% of pensionable salaries. The Group has agreed with the
trustees it will aim to eliminate the deﬁcit over the next 16 years by means of contributions of £15m per annum paid monthly.

The contribution rate to the TWNHSPS has been agreed as 18% of pensionable salaries.

The main ﬁnancial assumptions, which were used for the triennial funding valuation and are all relative to the inﬂation assumption, are as set out below:

Assumptions

RPI Inflation
Discount rate – pre/post retirement
General real pay inflation
Real pension Increases

Valuation results

Market value of assets
Past service liabilities
Scheme funding levels

TWGP&LAF

2.5% p.a.
5.0/3.0% p.a.
N/A
0% p.a.

TWGP&LAF

£563.3m
£627.9m
90%

TWNHSPS

2.5% p.a.
3.0/3.0% p.a.
1.0% p.a.
0% p.a.

TWNHSPS

£0.05m
£0.09m
58%

GWSPS

2.75% p.a.
4.25/2.25% p.a.
2.0% p.a.
0% p.a.

GWSPS

£591.0m
£739.0m
80%

The valuations of the Group’s pension schemes have been updated to 31 December 2007 and the position of overseas schemes has been included within the IAS 19
disclosures. The principal actuarial assumptions used in the calculation of the disclosure items are as follows:

As at 31 December
Discount rate for scheme liabilities
Expected return on scheme assets
General pay inflation
Deferred pension increases

Pension increases

United Kingdom

North America

2007

2006

2007

2006

5.80%
6.20-6.25%
4.60%
3.10%

5.10% 5.30-5.80% 5.0-5.7%
5.87% 5.50-6.60% 5.5-6.6%
2.60% 3.5-4.0%
2.75%
0% 2.5-3.5%
3.00%

2.25-3.35%

2.75%

0-3.00% 3.5-4.0%

The basis for the above assumptions are prescribed by IAS 19 and do not reﬂect the assumptions that may be used in future funding valuations of the Group’s pension
schemes.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

23. Retirement beneﬁt schemes continued
The current life expectancies (in years) underlying the value of the accrued liabilities for the main UK plans are:

Life expectancy at age 65

Member currently age 65
Member currently age 45

Male

19.4
20.3

Female

22.2
23.1

The fair value of assets and present value of obligations of the Group’s deﬁned beneﬁt pension schemes are set out below:

31 December 2007
Assets:
Equities
Bonds/Gilts
Other assets

Present value of defined benefit obligations

Surplus/(deficit) in schemes recognised as non-current liability

31 December 2006
Assets:
Equities
Bonds/Gilts
Other assets

Present value of defined benefit obligations

Surplus/(deficit) in schemes recognised as non-current liability

Expected rate
of return
% p.a

United
Kingdom
£m

North
America
£m

Total plans
£m

Percentage
of total plan
assets held

8.1%
5.8/4.6%
5.5%

8%
5.1%/4.5%
5.12%

488.0
836.0
97.5

1,421.5

1,638.7

(217.2)

346.9
376.4
14.7

738.0
(944.4)

(206.4)

8.3
4.4
–

12.7

11.9

0.8

7.5
4.0
0.2

11.7
(11.2)

0.5

496.3
840.4
97.5

1,434.2

1,650.6

(216.4)

354.4
380.4
14.9

749.7
(955.6)

(205.9)

35%
58%
7%

100%

47%
51%
2%

100%

To develop the expected long-term rate of return on assets assumption, the Group considered the current level of expected returns on investments (particularly government
bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns of each asset
class was then weighted based on the asset allocation to develop the expected long-term rate of return on assets assumption for the portfolio.

The expected return on scheme assets is based on market expectations at the beginning of the ﬁnancial period for returns over the life of the related obligation. The expected
yield on bond investments with ﬁxed interest rates can be derived exactly from their market value. Some of these bond investments are issued by the UK Government. The
risk of default on these is very small. The trustees also hold bonds issued by public companies. There is a more signiﬁcant risk of default on these which is assessed by
various rating agencies.

The trustees also have a substantial holding of equity investments. The investment return related to these is variable, and they are generally considered ‘riskier’ investments.
It is generally accepted that the yield on equity investments will contain a premium ‘the equity risk premium’ to compensate investors for the additional risk of holding this
type of investment. There is signiﬁcant uncertainty about the likely size of this risk premium.

A summary of the target asset allocations of the major deﬁned beneﬁt schemes are shown below:

TWGP&LAF

GWSPS

15%
30%
15%
10%
25%
5%

18%
12%
30%
20%
20%
0%

UK Equities
Non-UK Equities
Index-Linked Gilts
Fixed-Interest Gilts
Other UK bonds
Property

www.taylorwimpey.com

23. Retirement beneﬁt schemes continued

Amount (charged against)/credited to income:
Current service cost
Curtailment gain
Settlement loss

Operating cost

Expected return on scheme assets
Interest cost on scheme liabilities

Finance charges

2007
£m

(5.1)
–
–

(5.1)

66.1
(69.9)

(3.8)

(8.9)

2006
£m

(10.3)
2.4
(1.2)

(9.1)

40.1
(42.8)

(2.7)

(11.8)

Of the charge for the year, £1.0m (2006:£6.8m) has been included in cost of sales and £4.1m (2006: £3.5m) has been included in administrative expenses. The actual return
on scheme assets was £53.4m (2006:£64.3m)

Actuarial (losses)/gains in the statement of recognised income and expenses:
Difference between actual and expected return on scheme assets
Experience gains arising on scheme liabilities
Changes in assumptions

Total gains/(loss) recognised in the statement of recognised income and expense

Movement in present value of defined benefit obligations
1 January
Changes in exchange rates
Service cost
Curtailment gain
Plan settlements
Benefits paid and expenses
Contributions
Interest cost
Acquisition of George Wimpey Plc
Actuarial (gains)/losses

31 December

Movement in fair value of scheme assets
1 January
Changes in exchange rates
Expected return on scheme assets and expenses
Contributions
Benefits paid
Plan settlements
Acquisition of George Wimpey Plc
Actuarial gains/(losses)

31 December

2007
£m

(12.7)
26.7
77.3

91.3

2007
£m

955.6
0.4
5.1
–
–
(58.6)
1.2
69.9
781.0
(104.0)

1,650.6

2007
£m

749.7
0.8
63.6
31.2
(56.1)
–
657.7
(12.7)

1,434.2

2006
£m

24.2
0.2
(26.0)

(1.6)

2006
£m

925.9
(1.6)
10.3
(2.4)
(5.9)
(41.3)
2.0
42.8
–
25.8

955.6

2006
£m

706.1
(1.6)
36.7
29.3
(37.9)
(7.1)
–
24.2

749.7

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

23. Retirement beneﬁt schemes continued

History of experience gains and losses:
Fair value of scheme assets
Present value of defined benefit obligations

Deficit in the scheme

Difference between actual and expected return on scheme assets

Amount
Percentage of scheme assets

Experience adjustments on scheme liabilities

Amount
Percentage of scheme liabilities

2007
£m

2006
£m

2005
£m

2004
£m

2003
£m

1,434.2
(1,650.6)

(216.4)

(12.7)
1%

26.7
2%

749.7
(955.6)

(205.9)

24.2
3%

0.2
0%

706.1
(925.9)

(219.8)

61.4
9%

(32.6)
4%

627.0
(769.5)

(142.5)

22.0
4%

(6.5)
0.8%

581.6
(764.7)

(183.1)

44.9
8%

(43.6)
5.7%

The estimated amounts of contributions expected to be paid to the TWGP&LAF during 2008 is £20.0m, to the GWSPS is £19.9m and to the TWNHSPS is £0.3m.

The Group liability is the difference between the scheme liabilities and the scheme assets. Changes in the assumptions may occur at the same time as changes in the market
value of scheme assets. These may or may not offset the change in assumptions. For example, a fall in interest rates will increase the scheme liability, but may also trigger an
offsetting increase in the market value so there is no net effect on the company liability.

Assumption

Discount rate
Rate of inflation
Rate of pay inflation
Rate of mortality

Change in assumption

Impact on scheme liabilities £m

Increase by 0.1% p.a.
Increase by 0.1% p.a.
Increase by 0.1% p.a.
Members assumed to live 1 year longer

Decrease by 25.2
Increase by 23.3
Increase by 1.6
Increase by 45.7

The projected liabilities of the deﬁned beneﬁt scheme are apportioned between members’ past and future service using the projected unit actuarial cost method. The deﬁned
beneﬁt obligation makes allowance for future earnings growth. If all active members were assumed to leave the company and the allowance for future earnings growth was
replaced by an allowance for statutory revaluation, the liabilities would reduce by £22m.

An alternative measure of liability is the cost of buying out beneﬁts at the balance sheet date with a suitable insurer. This amount represents the amount that would be required
to settle the scheme liabilities at the balance sheet date rather than the Group continuing to fund the on-going liabilities of the scheme. The Group estimates the amount
required to settle the schemes’ liabilities at the balance sheet date is £1,177m in excess of the assets held by the schemes.

The gross post-retirement liability also includes £2.7m at 31 December 2007 (2006: £2.7m) in respect of continuing post-retirement health care insurance premiums for retired
long-service employees. The liability is based upon the actuarial assessment of the remaining cost by a qualiﬁed actuary on a net present value basis at 31 December 2007.
The cost is calculated assuming a discount rate of 5 per cent per annum and an increase in medical expenses of 10 per cent per annum. The premium cost to the Group in
respect of the retired long-service employees for 2007 was £0.2m (2006:£0.2m).

24. Provisions

At 1 January 2006
Additional provision in the year
Utilisation of provision
Changes in exchange rates

At 31 December 2006
Acquired on acquisition of George Wimpey Plc
Additional provision in the year
Utilisation of provision
Changes in exchange rates

At 31 December 2007

Amount due for settlement within 12 months
Amount due for settlement after 12 months

31 December 2007

Housing
maintenance
£m

Restructuring
£m

Other
£m

30.8
21.7
(22.3)
(2.3)

27.9
5.8
23.5
(18.7)
–

38.5

–
–
–
–

–
–
52.8
(19.2)
–

33.6

–
–
–
–

–
13.9
1.7
(1.2)
0.1

14.5

Total
£m

30.8
21.7
(22.3)
(2.3)

27.9
19.7
78.0
(39.1)
0.1

86.6

£m

48.2
38.4

86.6

The housing maintenance provision arises principally from warranties and other liabilities on housing sold. Whilst such warranties extend to a period of ten years, payment of
these costs is likely to occur within a period of two years. The Group has a restructuring provision relating to the redundancies and relocation costs which arise as a result of the
George Wimpey Plc merger. It is anticipated that the majority of this provision will be utilised in 2008. Other provisions consist of a remedial work provision and rental guarantee
provision. The remedial work provision covers various obligations, including aftercare at Springﬁeld Environmental Limited which has a legal responsibility of a long term nature
for the management of old, completed sites and provisions for losses on construction contracts for which responsibility was retained by George Wimpey Plc group following an
asset swap with Tarmac Plc in 1996.

www.taylorwimpey.com

25. Share capital

Authorised:
2,000,000,000 (2006: 780,000,000) ordinary shares of 25p each

Issued and fully paid:
1 January 2006
Options exercised
US Employee Stock Purchase Plan
Long service awards

31 December 2006
Acquisition of George Wimpey Plc
Options exercised
US Employee Stock Purchase Plan

31 December 2007

2007
£m

2006
£m

500.0

195.0

Number of shares

£m

591,891,384
2,227,950
30,573
189

594,150,096
563,919,759
194,175
30,678

1,158,294,708

148.0
0.5
–
–

148.5
141.0
0.1
–

289.6

During the year, options were exercised on 4,347,240 (2006: 8,562,360) ordinary shares of which 194,175 (2006: 2,227,950) were new issues with the balance coming from
Treasury/ESOT at varying prices from 125.2p to 278.8p and shares were issued for a total consideration of £4.2m (2006: £1.6m). Additionally nil (2006: 189) ordinary shares
were issued and awarded to employees for twenty-ﬁve or forty years’ long service. Under the Group’s senior executives’ share option scheme and executive share option
plan, employees held options at 31 December 2007 to purchase 855,810 shares (2006:1,821,306 ) at prices between 153.0p and 252.8p per share exercisable up to
8 October 2013. Under the Group’s savings related share option schemes, employees held options at 31 December 2007 to purchase 7,043,437 shares (2006: 5,135,009) at
prices between 127.2p and 278.8p per share exercisable up to 31 May 2013. Under the Group’s cash bonus deferral plan and executive bonus plan, employees held options
at 31 December 2007 in respect of 716,604 shares (2006: 991,217) at nil p per share exercisable up to 1 April 2014. Under the Group’s performance share plan employees
held conditional awards at 31 December 2007 in respect of 4,512,837 shares (2006: 6,750,224) at nil p per share exercisable up to 30 June 2010. Under the Group’s share
purchase plan employees held conditional awards at 31 December 2007 in respect of 871,812 shares (2006: 687,045) at nil p per share. The former George Wimpey plans
were acquired as part of the merger. The awards were adjusted by the merger ratio of 1.3914 shares for each George Wimpey share. Under the George Wimpey Sharesave
Scheme, employees held options at 31 December 2007 to purchase 3,378,282 shares at prices between 164.2p and 277.0p per share exercisable up to 31 May 2012.
Under the George Wimpey Executive Option Scheme, employees held awards at 31 December 2007 in respect of 4,182,473 shares at prices between 212.6p and 456.7p
per share exercisable up to 2 April 2017. Under the George Wimpey Long Term Incentive plan, employees held awards at 31 December 2007 in respect of 3,990,182 shares
at nil p per share exercisable up to 2 April 2017.

26. Share premium account

Balance at 1 January 2006
Amortisation of debt transferred from retained earnings
Premium on ordinary shares issued during the year less expenses of issues

Balance at 31 December 2006
Amortisation of debt transferred from retained earnings

Balance at 31 December 2007

27. Merger relief reserve

Balance at 1 January 2006 and 31 December 2006
Premium on ordinary shares issued on acquiring 100% equity in George Wimpey Plc

Balance at 31 December 2007

£m

756.2
(0.7)
3.3

758.8
(0.7)

758.1

£m

–
1,934.2

1,934.2

In accordance with Section 131 of the Companies Act 1985, the premium on ordinary shares issued on the merger with George Wimpey Plc was recorded as a merger relief
reserve. The reserve is not distributable but can be used to:

(cid:129) Make a bonus issue of fully paid shares;

(cid:129) Transfer to the proﬁt and loss account reserve an amount equal to the amount that has become realised by virtue of either:

- The disposal of the related investment; or
- An amount written off the related investment and charged against the proﬁt and loss account.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

28. Revaluation reserve

Balance at 1 January 2006
Net surplus on revaluation

Balance at 31 December 2006
Transfer to retained earnings

Balance at 31 December 2007

The revaluation reserve is not a distributable reserve until realised.

29. Own shares

Balance at 1 January 2006
Acquired in the year
Disposed of on exercise of options

Balance at 31 December 2006
Acquired in the year
Disposed of on exercise of options

Balance at 31 December 2007

£m

0.5
1.0

1.5
(1.0)

0.5

£m

53.9
8.1
(17.0)

45.0
251.6
(14.6)

282.0

The own shares reserve represents the cost of shares in Taylor Wimpey plc purchased in the market and held as treasury shares and held by the Taylor Wimpey plc Employee
Beneﬁt Trust to satisfy options under the Group’s share options schemes.

During the year Taylor Wimpey plc purchased 94.8m of its shares consistent with the announcement of the share buy back program in July 2007.

These comprise ordinary shares of the company:
Treasury shares
Shares held in trust for bonus, option and performance award plans

2007
Number

2006
Number

102.7m
4.5m

107.2m

12.2m
5.1m

17.3m

Employee Share Ownership Trusts (‘ESOTs’) are used to hold the company’s shares (‘shares’) which are either acquired on the market or (during 2007) transferred out of
the company’s holding of shares in Treasury. These shares are used to meet the valid exercise and/or vesting of conditional awards (under the DBP and PSP) and options
(under the Savings-Related, Executive Share Option, George Wimpey LTIP and Executive Bonus Plans) over shares, and the matching award of shares under the Share
Purchase Plan.

During 2007, 4.3m shares were transferred out of the company’s Treasury holding to the ESOTs for this purpose.

The ESOTs’ entire holding of shares at 31 December 2007, aggregating 4.5m shares, was covered by outstanding options and conditional awards over shares at that date.

30. Share-based payment tax reserve

Balance at 1 January 2006
Increase for the year

Balance at 31 December 2006
Decrease for the year

Balance at 31 December 2007

£m

4.0
4.2

8.2
(2.6)

5.6

As explained in the statement of accounting policies, an expense is recorded in the Group’s income statement over the period from the grant date to the vesting date of share
options granted to employees. As there is a temporary difference between the accounting and tax bases, a deferred tax asset is recorded. The deferred tax asset arising is
calculated by comparing the estimated amount of tax deduction to be obtained in the future (based on the company’s share price at the balance sheet date) with the
cumulative amount of the expense recorded in the income statement. If the amount of estimated future tax deduction exceeds the cumulative amount of the remuneration
expense at the statutory tax rate, the excess is recorded directly in equity, in this share-based payment tax reserve.

A decrease for the year has been recorded as a result of the revaluation of share schemes at the end of 2007. This has resulted in a smaller amount of tax relief obtained and
expected than previously considered. This decreases the amount of the deferred tax asset held in respect of share schemes yet to vest as indicated in note 15.

www.taylorwimpey.com

31. Capital redemption reserve

Balance at 31 December 2007 and 31 December 2006

32. Translation reserve

Balance at 1 January 2006
Exchange differences on translation of overseas operations
Increase in fair value of hedging derivatives

Balance at 31 December 2006
Exchange differences on translation of overseas operations, net of tax
Increase in fair value of hedging derivatives

Balance at 31 December 2007

£m

31.5

£m

29.9
(61.2)
12.2

(19.1)
22.0
0.8

3.7

Translation reserve consists of exchange differences arising on the translation of overseas operations. It also includes changes in fair values of hedging derivatives where such
instruments are designated and effective as hedges of investment in overseas operations.

33. Retained earnings

Balance at 1 January 2006
Dividends paid
Transfers to share premium account
Share-based payment credit
Cash cost of satisfying share options
Actuarial losses net of deferred tax
Net profit for the year

Balance at 31 December 2006
Dividends paid
Transfers to share premium account
Share-based payment credit
Cash cost of satisfying share options
Actuarial gain net of deferred tax
Transfer from revaluation reserve
Replacement options granted on acquisition of George Wimpey Plc
Net loss for the year

Balance at 31 December 2007

34. Reconciliation of movements in consolidated equity

Total recognised income for the year
Dividends on equity shares
New share capital subscribed
Replacement options granted on acquisition of George Wimpey Plc
Disposal of own shares
Purchase of own shares
(Decrease)/Increase in share-based payment tax reserve
Share-based payment charge
Cash cost of satisfying share options
Decrease in other reserve
Dividends to minority shareholders

Net increase in equity
Opening equity

Closing equity

£m

1,006.8
(79.7)
0.7
6.1
(8.0)
(1.1)
289.5

1,214.3
(117.3)
0.7
0.6
(8.9)
61.7
1.0
2.9
(197.9)

957.1

2006
£m

241.5
(79.7)
3.8
–
15.0
(6.1)
4.2
6.1
(8.0)
(0.6)
–

176.2
1,929.3

2,105.5

2007
£m

(112.2)
(117.3)
2,075.3
2.9
14.6
(251.6)
(2.6)
0.6
(8.9)
–
(1.1)

1,599.7
2,105.5

3,705.2

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

35. Merger with George Wimpey Plc
On 3 July 2007, Taylor Woodrow plc and George Wimpey Plc merged their operations. Taylor Woodrow plc (subsequently renamed Taylor Wimpey plc) acquired 100% of the
share capital of George Wimpey Plc for a total consideration of £2,093.9m. George Wimpey Plc is the parent company of a group of companies involved in housebuilding in
the UK and USA. This transaction has been accounted for using the purchase method of accounting. The book values, fair value adjustments and provisional fair values are
set out in the table below.

Goodwill
Brand values
Other intangible assets
Property, plant and equipment
Joint ventures
Deferred tax (net)
Inventories
Trade and other receivables
Current tax (net)
Derivative financial instruments (net)
Cash and cash equivalents
Financial liabilities
Trade and other payables
Deficit on defined benefit pension schemes
Provisions

Goodwill

Satisfied by:–
Issue of Taylor Woodrow plc shares

– issued
– to be issued

Directly attributable costs

Net cash inflow arising on acquisition

Cash and cash equivalents
Directly attributable costs

Book
value
£m

Fair value
adjustments
£m

Provisional fair
value
£m

5.4
–
20.0
16.1
28.7
70.3
3,208.6
120.8
(102.0)
6.9
43.9
(569.8)
(917.1)
(123.3)
(19.7)

1,788.8

(5.4)
140.0
(4.2)
0.3
–
22.1
(188.1)
–
–
–
–
1.1
2.6
–
–

–
140.0
15.8
16.4
28.7
92.4
3,020.5
120.8
(102.0)
6.9
43.9
(568.7)
(914.5)
(123.3)
(19.7)

(31.6)

1,757.2

336.7

2,093.9

2,075.2
2.9
15.8

2,093.9

43.9
(15.8)

28.1

Taylor Woodrow plc issued 563,919,759 shares of 25p nominal value to shareholders of George Wimpey Plc. The fair value of the shares issued was £2,075.2m, which was
determined using the opening mid-market price of Taylor Woodrow plc on 3 July 2007. In addition, at 3 July 2007, the company has a liability to issue shares with a fair value
using the Monte Carlo method of £2.9m for the period up to 3 July to satisfy the remaining George Wimpey share option holders. The number of shares issuable under share
options is 12,463,543. The directly attributable costs relate chieﬂy to legal and banking costs.

The most signiﬁcant fair value adjustments comprise:

(cid:129) £140.0m related to the valuation of the George Wimpey, Laing Homes and Morrison Homes brands. The valuations were £110m, £10m and £20m respectively. See note 5.

(cid:129) A £188.1m reduction in inventories to reﬂect the fair value of land and work in progress. Of this amount, £154.2m relates to the US and £33.9m to the UK.

(cid:129) The adjustment to deferred tax mainly relates to the brand values and adjustments to inventory referred to above.

The total provisional goodwill arising is £336.7m and reﬂects anticipated synergy beneﬁts from the merger. This includes build cost efﬁciencies, rationalisation of
operating divisions, greater operational ﬂexibility from a larger landbank, elimination of duplication in head ofﬁce functions, an expanded portfolio of strategic land and beneﬁts
from merging the skills and experience of the Taylor Woodrow and George Wimpey workforce.

George Wimpey Plc contributed £1,647m of revenue and £65m (after charging restructuring costs of £15m and brand impairments of £30m) to the Group’s proﬁt before tax
for the period between the date of acquisition and the balance sheet date.

It is not practicable to restate George Wimpey’s results to 3 July because of the impact of fair value adjustments. However, if the acquisition of George Wimpey Plc had been
completed on the ﬁrst day of the ﬁnancial year Group revenue for the period on a pro forma basis would have been £5,887.5m and Group proﬁt on ordinary activities before
taxation and exceptional items on a pro forma basis, would have been £535.6m. The pro forma basis combines George Wimpey Plc’s adjusted interim results and the full year
results of Taylor Wimpey plc.

The operating review gives details of how the Taylor Woodrow and George Wimpey businesses have been combined together following the merger, including details of certain
regional ofﬁces which have been closed.

www.taylorwimpey.com

36. Notes to the cash ﬂow statement

Profit on ordinary activities before finance costs
Adjustments for:

Amortisation of brands
Amortisation of software development costs
Depreciation of plant and equipment
Share-based payment charge
Gain on disposal of property and plant
Share of joint ventures’ operating profit
Increase in provisions

Operating cash flows before movements in working capital

Increase in inventories
Decrease/(increase) in receivables
(Decrease)/increase in payables
Pension contributions in excess of charge

Cash generated by operations

Income taxes paid
Interest paid

Net cash (used in)/from operating activities

2007
£m

92.6

33.7
2.0
8.3
0.6
(5.7)
(23.4)
38.6

146.7
(26.3)
38.9
(81.6)
(30.0)

47.7

(127.3)
(83.7)

(163.3)

2006
£m

469.8

–
–
7.7
6.1
(9.1)
(22.1)
8.5

460.9
(347.5)
(37.2)
174.4
(27.3)

223.3

(95.2)
(71.1)

57.0

Cash and cash equivalents (which are presented as a single class of assets on the face of the balance sheet) comprise cash at bank and other short-term highly liquid
investments with an original maturity of three months or less.

Net debt
Cash and cash equivalents
Bank overdrafts and bank loans
Debenture loans

Net debt

2007
£m

2006
£m

130.0
(720.7)
(824.7)

(1,415.4)

236.5
(14.7)
(613.1)

(391.3)

37. Contingent liabilities and capital commitments

General
The company and certain subsidiary undertakings have, in the normal course of business, given guarantees and entered into counter-indemnities in respect of bonds relating
to the Group’s own contracts and given guarantees in respect of the Group’s share of certain contractual obligations of joint ventures.

Provision is made for the Directors’ best estimate of all known legal claims and all legal actions in progress. The Group takes legal advice as to the likelihood of success of
claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to succeed or a sufﬁciently reliable estimate of the
potential obligation cannot be made.

The Group has no material capital commitments as at 31 December 2007 (2006: £nil).

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Consolidated Financial Statements continued
for the year to 31 December 2007

38. Operating lease arrangements

The Group as lessee
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Within one year
In more than one year but not more than five years
After five years

Operating lease payments principally represent rentals payable by the Group for certain ofﬁce properties and vehicles.

The Group as lessor
At the balance sheet date, the Group had contracted with tenants for the following future minimum lease payments:

Within one year
In more than one year but not more than five years
After five years

2007
£m

16.1
44.1
17.4

77.6

2007
£m

1.5
5.0
3.7

10.2

2006
£m

14.6
41.1
30.7

86.4

2006
£m

1.5
5.5
5.2

12.2

Operating lease receipts represent rental income in respect of certain ofﬁce and commercial properties.

39. Share-based payments

Equity-settled share option plan
Details of all equity-settled share-based payment arrangements in existence during the year are set out in the paragraphs on ‘Executive share-based reward’ in the Directors’
Remuneration Report on pages 46 and 55.

Schemes requiring consideration from participants:

Outstanding at beginning of period
Granted during the period
Lapsed during the period
Exercised during the period
Acquired with subsidiary
Outstanding at the end of the period
Exercisable at the end of the period

2007

2006

Weighted
average
exercise price
(in £)

2.28
2.65
(2.94)
(2.00)
2.93
2.72
2.04

Options

6,956,315
2,640,216
(421,974)
(2,142,532)
8,427,977
15,460,002
3,222,426

Options

15,279,832
1,409,702
(1,726,908)
(8,006,311)
–
6,956,315
3,358,276

Weighted
average
exercise price
(in £)

2.10
2.79
(2.16)
(2.06)
–
2.28
1.78

The weighted average share price at the date of exercise for share options exercised during the period was £3.30 (2006: £3.74). The options outstanding at 31 December
2007 had a range of exercise prices from £1.27 to £4.57 (2006: £1.25 to £2.79) and a weighted average remaining contractual life of 4.8 years (2006: 4.4 years).

Schemes not requiring consideration from participants:

2007

2006

Weighted
average
exercise price
(in £)

–
–
–
–
–
–
–

Weighted
average
exercise price
(in £)

–
–
–
–
–
–
–

Options

7,364,498
2,652,653
(1,032,616)
(556,049)
–
8,428,486
31,592

Options

8,428,486
2,062,377
(2,230,286)
(2,204,708)
4,035,566
10,091,435
88,538

The options outstanding at 31 December 2007 had a weighted average remaining contractual life of 4.2 years (2006: 1.7 years).

Schemes not requiring consideration from participants include the George Wimpey Long Term Incentive Plan and the Performance Share Plan.

For share options with non-market conditions granted during the current and preceding year the fair value of those options at grant date were determined using the Binomial
model. The inputs into that model were as follows:

www.taylorwimpey.com

39. Share-based payments continued

Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield

2007

2006

£2.81
£3.74
£2.65
£1.02
30% 27.0%-29.3%
3/5 years
4.5%-4.8%
4.1%

3/5 years
5.1%
3.6%

The weighted average fair value of share options granted during the year is £0.69 (2006: £2.56).

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the expected term.

For share options with market conditions granted during the current year, the fair value of these options were determined using the Monte Carlo simulation model. The inputs
into that model were as follows:

Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield

2007

£4.92
£nil
26%
3 years
5.4%
3.6%

2006

£3.82
£nil
27%
3 years
4.5%
4.1%

The weighted average fair value of share options granted during the year is £4.35 (2006: £1.01).

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the expected term. The expected life used in the model is based on
historic exercise patterns.

The Group recognised total expenses of £0.6m and £6.1m related to equity-settled share-based payment transactions in 2007 and 2006 respectively. Although there was a
modiﬁcation to certain Performance Share Plan awards during the year following the merger with George Wimpey Plc, no incremental fair value charge has been recognised
as an additional cost as a result of the modiﬁcation. The company does not currently expect the performance vesting criteria to be met, causing the awards to lapse at the
end of the speciﬁed period.

40. Related party transactions
Transactions between the company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Transactions
between the Group and its joint ventures are disclosed below. Transactions between the company and its subsidiaries and joint ventures are disclosed in the company’s
separate ﬁnancial statements.

Trading transactions
During the year, Group companies’ purchases from joint ventures totalled £21.4m (2006: £30.7m). Purchases were based on open market values.

Remuneration of key management personnel
Details of the remuneration of the directors and members of the Executive Committee, who are the key management personnel of the Group, are contained in the audited
part of the Remuneration Report on pages 46 to 55 and form part of these ﬁnancial statements.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Independent Auditors’ Report
to the members of Taylor Wimpey plc

We have audited the group ﬁnancial statements of Taylor Wimpey plc for the year
ended 31 December 2007 which comprise the Consolidated Income Statement,
the Consolidated Statement of Recognised Income and Expense, the Consolidated
Balance Sheet, the Consolidated Cash Flow Statement and the related notes
1 to 40 and the reconciliation of changes in shareholders’ equity. These group
ﬁnancial statements have been prepared under the accounting policies set out
therein. We have also audited the information in the Directors’ Remuneration
Report that is described as having been audited.

We have reported separately on the parent company ﬁnancial statements of
Taylor Wimpey plc for the year ended 31 December 2007.

This report is made solely to the company’s members, as a body, in accordance
with section 235 of the Companies Act 1985. Our audit work has been undertaken
so that we might state to the company’s members those matters we are required to
state to them in an auditors’ 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 and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing
(UK and Ireland) issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures
in the group ﬁnancial statements and the part of the Directors’ Remuneration
Report to be audited. It also includes an assessment of the signiﬁcant estimates
and judgments made by the directors in the preparation of the group ﬁnancial
statements, and of whether the accounting policies are appropriate to the
group’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufﬁcient
evidence to give reasonable assurance that the group ﬁnancial statements and
the part of the Directors’ Remuneration Report to be audited are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our
opinion we also evaluated the overall adequacy of the presentation of information in
the group ﬁnancial statements and the part of the Directors’ Remuneration Report
to be audited.

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report, the Directors’
Remuneration Report and the group ﬁnancial statements in accordance with
applicable law and International Financial Reporting Standards (IFRSs) as adopted
by the European Union are set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the group ﬁnancial statements in accordance with
relevant legal and regulatory requirements and International Standards on Auditing
(UK and Ireland).

We report to you our opinion as to whether the group ﬁnancial statements give
a true and fair view, whether the group ﬁnancial statements have been properly
prepared in accordance with the Companies Act 1985 and Article 4 of the IAS
Regulation and whether the part of the directors’ remuneration report described as
having been audited has been properly prepared in accordance with the Companies
Act 1985. We also report to you whether in our opinion the information given in the
Directors’ Report is consistent with the group ﬁnancial statements. The information
given in the Directors’ Report includes that speciﬁc information presented in the
Chief Executive’s Review that is cross referred from the Business Review section
of the Directors’ Report.

Opinion
In our opinion:

• the group ﬁnancial statements give a true and fair view, in accordance with
IFRSs as adopted by the European Union, of the state of the group’s affairs
as at 31 December 2007 and of its loss for the year then ended;

• the group ﬁnancial statements have been properly prepared in accordance

with the Companies Act 1985 and Article 4 of the IAS Regulation;

• the part of the directors’ remuneration report described as having been audited
has been properly prepared in accordance with the Companies Act 1985; and

• the information given in the Directors’ Report is consistent with the group

ﬁnancial statements.

Separate opinion in relation to IFRSs
As explained in the accounting policies note to the group ﬁnancial statements,
the group in addition to complying with its legal obligation to comply with IFRSs
as adopted by the European Union, has also complied with the IFRSs as issued
by the International Accounting Standards Board.

In addition we report to you if, in our opinion, we have not received all the
information and explanations we require for our audit, or if information speciﬁed
by law regarding director’s remuneration and other transactions is not disclosed.

In our opinion the group ﬁnancial statements give a true and fair view, in accordance
with IFRSs, of the state of the group’s affairs as at 31 December 2007 and of its loss
for the year then ended.

We review whether the Corporate Governance Statement reﬂects the company’s
compliance with the nine provisions of the 2006 Combined Code speciﬁed for our
review by the Listing Rules of the Financial Services Authority, and we report if it
does not. We are not required to consider whether the board’s statements on
internal control cover all risks and controls, or form an opinion on the effectiveness
of the group’s corporate governance procedures or its risk and control procedures.

We read the other information contained in the Annual Report as described in the
contents section and consider whether it is consistent with the audited group
ﬁnancial statements. We consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the group ﬁnancial
statements. Our responsibilities do not extend to any further information outside the
Annual Report.

Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London, UK
5 March 2008

www.taylorwimpey.com

Financial Statements
Company Balance Sheet
at 31 December 2007

Fixed assets
Investment in group undertakings

Current assets
Debtors
Cash at bank and in hand

Creditors: amounts falling due within one year

Net current assets

Total assets less current liabilities
Creditors: amounts falling due after one year

Net assets

Capital and reserves
Called-up share capital
Share premium account
Merger relief reserve
Capital redemption reserve
Translation reserve
Profit and loss account
Own shares

Shareholders’ funds

Note

2007
£m

2006
£m

10
11
12
13
14
15
16

2,629.1

2,202.4

2,344.4
30.4

2,374.8
(678.7)

1,696.1

4,325.2
(1,275.7)

965.4
72.0

1,037.4
(655.5)

381.9

2,584.3
(568.1)

3,049.5

2,016.2

289.6
758.1
934.2
31.5
(50.5)
1,368.5
(281.9)

148.5
758.8
–
31.5
(44.9)
1,167.1
(44.8)

3,049.5

2,016.2

The ﬁnancial statements were approved by the Board of Directors and authorised for issue on 5 March 2008. They were signed on its behalf by:

N B M Askew
Director

P T Johnson
Director

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Company Financial Statements
for the year 31 December 2007

1. Signiﬁcant accounting policies
The following accounting policies have been used consistently, unless otherwise
stated, in dealing with items which are considered material.

loss account. Unrealised exchange differences on inter-company long-term loans and
foreign currency borrowings, to the extent that they hedge the company’s investment
in overseas investments, are taken to translation reserve.

Basis of preparation
The ﬁnancial statements have been prepared in accordance with applicable United
Kingdom accounting standards under the historical cost convention. As permitted
by the Companies Act 1985 the company has not presented its own proﬁt and
loss account.

Under Financial Reporting Standard 1, the company is exempt from the requirement
to prepare a cash ﬂow statement on the grounds that its consolidated ﬁnancial
statements, which include the company, are publicly available.

Note 23, on pages 83 to 86, and note 39, on pages 92 to 93, to the Taylor Wimpey
plc consolidated ﬁnancial statements form part of these ﬁnancial statements.

The principal accounting policies adopted are set out below.

Group undertakings
Investments are included in the balance sheet at cost less any provision for
permanent diminution in value.

Deferred taxation
Deferred taxation is provided in full on timing differences that result in an obligation at the
balance sheet date to pay more tax, or a right to pay less tax, at a future date, at rates
expected to apply when they crystallise based on current tax rates and law. Timing
differences arise from the inclusion of income and expenditure in taxation computations
in periods different from those in which they are included in the ﬁnancial statements.

Deferred tax assets are recognised to the extent that it is regarded as more likely than
not that they will be recovered. Deferred tax assets and liabilities are not discounted.

Overseas currencies
Transactions denominated in foreign currencies are recorded in sterling at actual
rates as of the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the year end are reported at the rates of exchange prevailing at
the year end. Any gain or loss arising from a change in exchange rates subsequent to
the date of the transaction is included as an exchange gain or loss in the proﬁt and

Derivative financial instruments and hedge accounting
The company uses foreign currency borrowings and currency swaps to hedge its
investment in overseas investments. Changes in the fair value of derivative ﬁnancial
instruments that are designated and effective as hedges of investment in overseas
operations are recognised directly in reserves and the ineffective portion, if any, is
recognised immediately in the proﬁt and loss account. The hedged items are adjusted
for changes in exchange rates, with gains or losses from re-measuring the carrying
amount being recognised directly in reserves.

Share-based payments
The company has applied the requirements of FRS 20 Share-based payments. In
accordance with the transitional provisions, FRS 20 has been applied to all grants of
equity instruments after 7 November 2002 that were unvested as of 1 January 2005.

The company issues equity-settled and cash-settled share-based payments to
certain employees. Equity-settled share-based payments are measured at fair value
at the date of grant. The fair value is expensed on a straight-line basis over the
vesting period, based on the estimate of shares that will eventually vest. A liability
equal to the portion of the goods or services received is recognised at the current fair
value determined at each balance sheet date for cash-settled share based payments.

Employee benefits
In respect of the deﬁned beneﬁt plan, the scheme represents a multi employer deﬁned
beneﬁt scheme whereby the company is unable to identify its share of the underlying
assets and liabilities. In accordance with FRS17 Retirement beneﬁts the amounts
charged to the proﬁt and loss account is the contribution payable in the year.

Payments to deﬁned contribution schemes are charged as an expense as they fall due.

Own shares
The cost of the company’s investment in its own shares, which comprise shares
held in treasury by the company and shares held by employee beneﬁt trusts for
the purpose of funding certain of the company’s share option plans, is shown as
a reduction in shareholders’ funds.

2. Particulars of employees

Directors

2007
No.

2006
No.

The executive directors received all of their remuneration, as disclosed in the Remuneration Report on pages 46 to 55, from Taylor Wimpey Developments Limited and Taylor
Wimpey UK Limited. However, it is not practicable to allocate such costs between their services as executives of Taylor Wimpey Developments Limited and Taylor Wimpey UK
Limited and their services as directors of Taylor Wimpey plc and other Group companies. The remuneration of the non-executive directors, which is wholly attributable to the
company, is disclosed on page 53 of the Remuneration Report.

3. Auditors’ remuneration

External audit services
Other assurance
Other services:
Tax services
Corporate finance services

www.taylorwimpey.com

2007
No.

0.3
0.1

0.3
0.7

2006
No.

0.1
0.1

0.1
–

4. Investments in Group undertakings

Cost
31 December 2006
Changes in exchange rates
Additions

31 December 2007

Provision for impairment
31 December 2006
Charge for the year

31 December 2007

Carrying amount
31 December 2006

31 December 2007

Shares
£m

1,830.1
–
2,119.1

3,949.2

–
1,614.7

1,614.7

Loans
£m

372.3
(5.6)
–

366.7

–
72.1

72.1

Total
£m

2,202.4
(5.6)
2,119.1

4,315.9

–
1,686.8

1,686.8

1,830.1

2,334.5

372.3

294.6

2,202.4

2,629.1

All of the above investments are unlisted.
Particulars of principal subsidiary undertakings are listed on page 102, which forms part of these ﬁnancial statements.

During the year the company acquired the entire share capital of George Wimpey Plc. Information in respect of this addition to Group investments is provided in note 35 on
page 90 of the Taylor Wimpey plc consolidated ﬁnancial statements.

5. Debtors

Receivable within one year
Due from Group undertakings
Other debtors
Prepayments and accrued income
Corporation tax debtor

Receivable after one year
Deferred taxation
Currency and interest rate derivatives

The movement in the deferred taxation asset is as follows:

31 December 2006
Charged to profit and loss account

31 December 2007

The deferred taxation asset relates to short-term timing differences.

6. Creditors: amounts falling due within one year

Debenture loans
Due to Group undertakings
Other creditors
Accruals and deferred income
Currency derivative
Corporation tax creditor

2007
£m

2,305.0
8.2
12.2
0.8

0.5
17.7

2,344.4

2007
£m

1.4
636.2
0.5
38.2
2.4
–

678.7

2006
£m

944.3
0.8
1.9
–

3.2
15.2

965.4

£m

3.2
(2.7)

0.5

2006
£m

2.0
622.3
0.2
24.1
–
6.9

655.5

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Company Financial Statements continued
for the year 31 December 2007

7. Creditors: amounts falling due after one year

Debenture loans
Bank loans

Bank loans are repayable as follows:
In more than two years but less than five years

Total falling due in more than one year

8. Debenture loans

Floating rate notes 2008 – unsecured
6.625% £250m bonds 2012 – unsecured
5.53% US $75m notes 2011 – unsecured
6.03% US$ 175m notes 2014 – unsecured
6.375% £200m bonds 2019 – unsecured

Repayable
In more than five years

Total falling due in more than one year
Within one year or on demand

2007
£m

568.6
707.1

1,275.7

707.1

2007
£m

1.4
245.8
37.6
87.7
197.5

570.0

568.6

568.6
1.4

570.0

2006
£m

568.1
–

568.1

–

2006
£m

2.0
247.9
38.2
89.0
197.3

570.1

568.1

568.1
2.0

570.1

9. Retirement beneﬁt obligations
The company participates in the George Wimpey Staff Pension Scheme. This is a Deﬁned Beneﬁt Muliti-employer Plan, the assets and liabilities of which are held
independently from the Group. The company is unable to identify its share of the underlying assets and liabilities of the scheme and accordingly accounts for the plan as if it
was a deﬁned contribution plan.

Information in respect of the scheme is provided in note 23, on pages 83 to 86, to the Taylor Wimpey plc consolidated ﬁnancial statements. The fair value of assets as
disclosed in those ﬁnancial statements has been calculated in accordance with International Accounting Standard 19 Employee beneﬁts, in accordance with Financial
Reporting Standard No. 17 Retirement beneﬁts (FRS 17) the total fair value of scheme assets would be £686.4m (2006: £749.7m). All other information provided in those
ﬁnancial statements meets the disclosure requirements set out in FRS 17.

Contributions in respect of the Deﬁned Contribution Scheme for Directors can be found in the Remuneration Report on page 55. There were no outstanding contributions
at the year end.

10. Share capital

Authorised:
2,000,000,000 (2006: 780,000,000) ordinary shares of 25p each

Issued and fully paid:
31 December 2006
Acquisition of George Wimpey Plc
Options exercised
US Employee Stock Purchase Plan

31 December 2007

2007
£m

2006
£m

500.0

195.0

Number
of shares

594,150,096
563,919,759
194,175
30,678

1,158,294,708

£m

148.5
141.0
0.1
–

289.6

www.taylorwimpey.com

10. Share capital continued
2007 in respect of 716,604 shares (2006: 991,217) at nil p per share exercisable up to 1 April 2014. Under the Group’s performance share plan employees held conditional awards
at 31 December 2007 in respect of 4,512,837 shares (2006: 6,750,224) at nil p per share exercisable up to 30 June 2010. Under the Group’s share purchase plan employees held
conditional awards at 31 December 2007 in respect of 871,812 shares (2006: 687,045) at nil p per share. The former George Wimpey plans were acquired as part of the merger.
The awards were adjusted by the merger ratio of 1.3914 shares for each George Wimpey share. Under the George Wimpey Sharesave Scheme, employees held options at
31 December 2007 to purchase 3,378,282 shares at prices between 164.2p and 277.0p per share exercisable up to 31 May 2012. Under the George Wimpey Executive Option
Scheme, employees held awards at 31 December 2007 in respect of 4,182,473 shares at prices between 212.6p and 456.7p per share exercisable up to 2 April 2017. Under the
George Wimpey Long Term Incentive plan, employees held awards at 31 December 2007 in respect of 3,990,182 shares at nil p per share exercisable up to 2 April 2017.

11. Share premium

31 December 2006
Amortisation of debt transferred from retained earnings

Balance at 31 December 2007

12. Merger relief reserve

31 December 2006
Premium on ordinary shares issued on acquiring 100% equity in George Wimpey Plc
Transfer to profit and loss reserve

Balance at 31 December 2007

£m

758.8
(0.7)

758.1

£m

–
1,934.2
(1,000.0)

934.2

In accordance with section 131 of the Companies Act 1985, the premium on ordinary shares issued on the merger with George Wimpey Plc was recorded as a merger relief reserve.

The reserve is not distributable but can be used to:

(cid:129) Make a bonus issue of fully paid shares;

(cid:129) Transfer to the proﬁt and loss account reserve an amount equal to the amount that has become realised by virtue of either;

- The disposal of the related investment; or
- An amount written off the related investment and charged to the proﬁt and loss account.

During the year, £1,000.0m was transferred to the proﬁt and loss account reserve. The amount being equal to the impairment charge in respect of the George Wimpey Plc investment.

13. Capital redemption reserve

31 December 2007 and 31 December 2006

14. Translation reserve

31 December 2006
Transfer from profit and loss reserve

31 December 2007

15. Proﬁt and loss account

31 December 2006
Transfers to share premium account
Loss for the financial year
Dividends
Transfer to translation reserve
Transfer from merger relief reserve
Replacement share options on acquisition of subsidiary
Loss on disposal of own shares

31 December 2007

£m

31.5

£m

(44.9)
(5.6)

(50.5)

£m

1,167.1
0.7
(687.1)
(117.3)
5.6
1,000.0
2.9
(3.4)

1,368.5

As permitted by section 230 of the Companies Act 1985, Taylor Wimpey plc has not presented its own proﬁt and loss account. The loss of the company for the ﬁnancial year
was £687.1m (2006: proﬁt of £686.7m).

Included in the company proﬁt and loss account reserve is £290.2m (2006: £622.5m) of non-distributable reserves.

Taylor Wimpey plc Annual Report and Accounts 2007

Financial Statements
Notes to the Company Financial Statements continued
for the year 31 December 2007

16. Own shares

Own shares

These comprise ordinary shares of the company:

Treasury shares
Shares held in trust for bonus, options and performance award plans

2007
£m

(281.9)

Number

102.7
4.5

2006
£m

(44.8)

Number

12.2
5.0

The market value of the shares at 31 December 2007 was £218.1m (2006: £73.6) and their nominal value was £26.8m (2006: £4.3m).
Dividends on these shares have been waived except for 0.01p per share in respect of the shares held in trust.

Employee Share Ownership Trusts (‘ESOTs’) are used to hold the company’s shares (‘shares’) which are either acquired on the market or (during 2007) transferred out of the
company’s holding of shares in Treasury. These shares are used to meet the valid exercise and/or vesting of conditional awards (under the DBP and PSP) and options (under the
Savings-Related, Executive Share Option, George Wimpey LTIP and Executive Bonus Plans) over shares, and the matching award of shares under the Share Purchase Plan.

During 2007, 4.3m shares were transferred out of the company’s Treasury holding to the ESOTs for this purpose.

The ESOTs’ entire holding of shares at 31 December 2007, aggregating 4.5m shares, was covered by outstanding options and conditional awards over shares at that date.

17. Share-based payments
Details of share options granted by Group companies to employees, and that remain outstanding, over the company’s shares are set out in note 39, on pages 92 to 93,
to the Taylor Wimpey plc consolidated ﬁnancial statements. The company did not recognise any expense related to equity-settled share-based payment transactions in the
current or preceding year.

18. Contingent liabilities
The company has, in the normal course of business, given guarantees and entered into counter-indemnities in respect of bonds relating to the Group’s own contracts.

Provision is made for the directors’ best estimate of known legal claims and legal actions in progress. The Group takes legal advice as to the likelihood of success of claims
and actions and no provision is made where the directors consider, based on that advice, that the action is unlikely to succeed or a sufﬁciently reliable estimate of the potential
obligation cannot be made.

19. Reconciliation of movement in shareholders’ funds

Opening shareholders’ funds
Dividends paid
(Loss)/profit for the financial year
New share capital subscribed
Disposal of own shares
Purchase of own shares
Replacement share options on acquisition of subsidiary
Loss on disposal of own shares

Closing shareholders’ funds

2007
£m

2,016.2
(117.3)
(687.1)
2,075.3
14.5
(251.6)
2.9
(3.4)

2006
£m

1,396.4
(79.7)
686.7
3.3
16.7
(7.3)
–
–

3,049.5

2,016.2

20. Dividend
The proposed ﬁnal dividend of 10.25p (2006: 9.75p) per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in
these ﬁnancial statements.

21. Company name
On 3 July 2007 following the completion of the merger of George Wimpey Plc and Taylor Woodrow plc the company changed its name to Taylor Wimpey plc.

100 www.taylorwimpey.com

Opinion
In our opinion:

(cid:129) the parent company ﬁnancial statements give a true and fair view, in accordance
with United Kingdom Generally Accepted Accounting Practice, of the state of the
company’s affairs as at 31 December 2007;

(cid:129) the parent company ﬁnancial statements have been properly prepared in

accordance with the Companies Act 1985; and

(cid:129) the information given in the Directors’ Report is consistent with the parent company

ﬁnancial statements.

Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London, UK
5 March 2008

Financial Statements
Independent Auditors’ Report
to the members of Taylor Wimpey plc

We have audited the parent company ﬁnancial statements of Taylor Wimpey plc for
the year ended 31 December 2007 which comprise the Balance Sheet, the statement
of accounting policies and the related notes 1 to 21. These parent company ﬁnancial
statements have been prepared under the accounting policies set out therein.

We have reported separately on the group ﬁnancial statements of Taylor Wimpey plc
for the year ended 31 December 2007 and on the information in the directors’
remuneration report that is described as having been audited.

This report is made solely to the company’s members, as a body, in accordance with
section 235 of the Companies Act 1985. Our audit work has been undertaken so that
we might state to the company’s members those matters we are required to state to
them in an auditors’ 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
and the company’s members as a body, for our audit work, for this report, or for the
opinions we have formed.

Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and the parent
company ﬁnancial statements in accordance with applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are
set out in the Statement of Directors’ Responsibilities.

Our responsibility is to audit the parent company ﬁnancial statements in accordance
with relevant legal and regulatory requirements and International Standards on
Auditing (UK and Ireland).

We report to you our opinion as to whether the parent company ﬁnancial statements
give a true and fair view and whether the parent company ﬁnancial statements have
been properly prepared in accordance with the Companies Act 1985. We also report
to you whether in our opinion the Directors’ Report is consistent with the parent
company ﬁnancial statements. The information given in the Directors’ Report includes
that speciﬁc information presented in the Chief Executive’s Review that is cross
referred from the Business Review section of the Directors’ Report.

In addition we report to you if, in our opinion, the company has not kept proper
accounting records, if we have not received all the information and explanations we
require for our audit, or if information speciﬁed by law regarding directors’
remuneration and other transactions is not disclosed.

We read the other information contained in the Annual Report as described in the
contents section and consider whether it is consistent with the audited parent
company ﬁnancial statements. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies with the
parent company ﬁnancial statements. Our responsibilities do not extend to any further
information outside the Annual Report.

Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK
and Ireland) issued by the Auditing Practices Board. An audit includes examination,
on a test basis, of evidence relevant to the amounts and disclosures in the parent
company ﬁnancial statements. It also includes an assessment of the signiﬁcant
estimates and judgments made by the directors in the preparation of the parent
company ﬁnancial statements, and of whether the accounting policies are appropriate
to the company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with sufﬁcient
evidence to give reasonable assurance that the parent company ﬁnancial statements
are free from material misstatement, whether caused by fraud or other irregularity or
error. In forming our opinion we also evaluated the overall adequacy of the
presentation of information in the parent company ﬁnancial statements.

Taylor Wimpey plc Annual Report and Accounts 2007 101

Financial Statements
Particulars of Principal Subsidiary Undertakings

Country of incorporation and principal operations

Housing
United Kingdom

Canada

Spain

USA

Taylor Wimpey plc interest is 100% in the issued ordinary share capital of
these undertakings included in the consolidated accounts
(*Interests held by subsidiary undertakings)

Taylor Wimpey Developments Limited* ** (formerly Taylor Woodrow Developments
Limited)
Taylor Woodrow Holdings Limited
George Wimpey Limited* (formerly George Wimpey Plc)
Taylor Wimpey UK Limited* (formerly George Wimpey UK Limited)
Taylor Wimpey 2007 Limited
Wimpey Overseas Holdings Limited*
Taylor Woodrow Holdings of Canada Limited
Monarch Corporation* **
Monarch Development Corporation*
Taylor Woodrow de Espana S.A.* †
Taylor Woodrow Holdings (USA) Inc.*
Taylor Woodrow Holdings/Arizona, Inc.*
Taylor Woodrow Homes, Inc.* ††
Taylor Woodrow Homes Florida, Inc.*
Taylor Morrison, Inc*. (formerly Taylor Woodrow, Inc.)
Monarch Holdings (USA), Inc.* † ††
Monarch Homes of Florida, Inc.* ††
Taylor Morrison Services Inc.* (formerly Morrison Homes Inc.)

Construction
United Kingdom

Taylor Woodrow Construction Limited

* Variable rate, cumulative, non-voting, irredeemable preference shares are additionally held.

** 9.5% non-cumulative, non-voting, redeemable preference shares and 9% non-cumulative, non-voting, redeemable preference shares are additionally held.

† 9% cumulative, redeemable preference shares are additionally held.

‡ Non-voting, redeemable preferred shares are additionally held.

†† Subsequently merged into other USA group undertakings in 2008.

102 www.taylorwimpey.com

Financial Statements
Five Year Review

Income Statement
Revenue

Profit on ordinary activities before exceptional items, finance costs and tax
Exceptional items
Net finance costs

(Loss)/profit for the financial year
Taxation

(Loss)/profit for the financial year

Balance sheet
Goodwill
Other intangible assets
Investment properties
Other fixed assets
Interests in joint ventures
Non-current loans and receivables
Deferred tax asset
Net current assets (excluding cash and debt)
Non-current creditors (excluding debt) and provisions

Capital employed

Represented by:
Called-up non-equity preference share capital
Called-up equity ordinary share capital
Share premium account
Merger relief reserve
Revaluation reserve
Capital redemption reserve
Other reserve
Share-based payment tax reserve
Translation reserve
Profit and loss account
Own shares

Shareholders’ funds
Minority interests
Net debt

Statistics
Number of ordinary shares in issue at year end (millions)
Basic earnings per share
Dividends per ordinary share
Equity shareholders’ funds per share
Dividend cover (times)
Net gearing

IFRS
2007
£m

IFRS
2006
£m

IFRS
2005
£m

IFRS
2004
£m

UK GAAP
2003
£m

4,714.3

3,572.1

3,476.9

3,311.5

2,669.4

472.3
(379.7)
(112.1)

(19.5)
(177.2)

(196.7)

699.8
120.5
–
39.0
59.9
76.4
117.7
4,683.0
(675.7)

5,120.6

–
289.6
758.1
1,934.2
0.5
31.5
4.8
5.6
3.7
957.1
(282.0)

3,703.1
2.1
1,415.4

5,120.6

1,158.3
(24.2p)
15.75p
352.3
n/a
38.2%

469.8
–
(64.2)

405.6
(115.0)

290.6

363.1
–
–
25.5
56.2
56.0
95.4
2,261.0
(360.4)

2,496.8

–
148.5
758.8

1.5
31.5
4.8
8.2
(19.1)
1,214.3
(45.0)

2,103.5
2.0
391.3

2,496.8

594.2
50.5p
14.75p
364.7
3.4
18.6%

475.0
–
(64.0)

411.0
(124.5)

286.5

363.9
–
–
24.4
92.1
37.2
101.2
2,097.8
(330.4)

2,386.2

–
148.0
756.2

0.5
31.5
5.4
4.0
29.9
1,006.8
(53.9)

1,928.4
0.9
456.9

2,386.2

591.9
50.6p
13.4p
338.4p
3.8
23.7%

487.7
24.8
(108.6)

403.9
(123.0)

280.9

363.2
–
–
24.2
87.0
26.5
71.1
1,936.7
(266.1)

364.2
(20)
(40.2)

304.0
(101.5)

202.5

356.7
–
160.2
33.6
–
–
–
2,041.6
(272.2)

2,242.6

2,319.9

–
146.7
748.1

0.7
31.5
4.8
2.8
(6.5)
832.5
(57.8)

1,702.8
1.0
538.8

2,242.6

586.6
49.1p
11.1p
290.3p
4.4
31.6%

10.0
146.1
745.7

38.4
21.5
1.1
–
–
627.8
(14.7)

1,575.9
1.1
742.9

2,319.9

584.2
36.0p
8.9p
256.2p
4.0
47.1%

The ﬁgures for 2004 were restated in 2005 in respect of the transition from UK GAAP to IFRS. The ﬁgures for 2003 above, have not been restated to an IFRS basis as it is not
practicable to do so.

The ﬁgures for 2003 were restated in 2004 in respect of the change of accounting policy for retirement beneﬁts to comply with FRS 17.

Dividends per ordinary share comprise the interim and ﬁnal dividends declared for the year.

Taylor Wimpey plc Annual Report and Accounts 2007 103

Additional Pro Forma Unaudited Financial Information for Continuing Operations

Basis of preparation
The Group completed the merger with George Wimpey plc on 3 July 2007. The statutory results of the Group for the year to 31 December 2007 therefore exclude the ﬁrst
six months trading of the former George Wimpey plc businesses.

To assist investors in understanding the performance of the combined Taylor Wimpey plc Group, a summary pro forma income statement has been prepared by aggregating the
underlying ﬁnancial information for the year to 31 December 2007 of the former Taylor Woodrow plc (‘TW’) and the former George Wimpey Plc (‘GW’), to illustrate the effect of
the merger of TW and GW as if the transaction had taken place on 1 January 2006. The results from the two legacy businesses have been prepared on the basis of their historic
accounting policies as published in the 2006 ﬁnancial statements of the two Groups. In aggregating the two sets of ﬁnancial information, intra-Group trading between the two
entities has not been eliminated and fair value adjustments arising from the acquisition accounting have been excluded. This information has not been audited.

Pro Forma Unaudited Combined Group Summary Income Statement
for year to 31 December 2007

Pro forma
Combined before
exceptional items

Year to
31 December 2007
£m

Year to
31 December 2006
£m

5,887.5
(4,899.7)

987.8
(347.8)
27.0

667.0
(131.4)

535.6

6,719.5
(5,514.6)

1,204.9
(342.0)
29.7

892.6
(116.1)

776.5

Pro forma
Combined before
exceptional items

Year to
31 December 2007
£m

Year to
31 December 2006
£m

3,998.8
1,215.0
64.4
609.3
–

5,887.5

£m

608.5
62.4
7.9
2.0
(13.8)

667.0

4,150.4
1,926.4
92.1
550.6
–

6,719.5

£m

533.0
336.8
26.4
8.1
(11.7)

892.6

Consolidated Revenue
Cost of sales

Gross profit
Net operating expenses
Share of results of joint ventures

Profit on ordinary activities before finance costs
Net finance costs

Profit on ordinary activities before taxation

Note to the Pro Forma Unaudited Combined Group Summary Income Statement
for year to 31 December 2007

Revenue

Housing United Kingdom
Housing North America
Housing Spain and Gibraltar
Construction
Corporate

Proﬁt on ordinary activities before ﬁnance costs

Housing United Kingdom
Housing North America
Housing Spain and Gibraltar
Construction
Corporate

104 www.taylorwimpey.com

Shareholder Information
Notice of Meeting

This Notice of Meeting is important and requires your
immediate attention. If you are in any doubt as to the
action you should take, you are recommended to
seek your own financial advice immediately from a
stockbroker, bank manager, accountant or other
independent financial adviser authorised under the
Financial Services and Markets Act 2000.

Notice is hereby given that the seventy third Annual
General Meeting of Taylor Wimpey plc (the ‘Company’)
will be held on 17 April 2008 at 11.00 am at The Royal
College of Physicians, 11 St Andrews Place, Regent’s
Park, London NW1 4LE, for the following purposes:

ORDINARY BUSINESS
Ordinary resolutions:
1

To receive the Report of Directors and Accounts
together with the Auditors’ Report for the year ended
31 December 2007.

To declare due and payable on 1 July 2008 a final
dividend of 10.25 pence per ordinary share of the
Company for the year ended 31 December 2007
to shareholders on the register at close of business
on 23 May 2008.

To elect as a Director, Peter Redfern, who was
appointed as a Director of the Company by the
Board since the last Annual General Meeting.

To elect as a Director, Baroness Dean of Thornton-
le-Fylde, who was appointed as a Director of the
Company by the Board since the last Annual
General Meeting.

To elect as a Director, Anthony Reading, who was
appointed as a Director of the Company by the
Board since the last Annual General Meeting.

To elect as a Director, Ian Sutcliffe, who was
appointed as a Director of the Company by the
Board since the last Annual General Meeting.

To elect as a Director, David Williams, who was
appointed as a Director of the Company by the
Board since the last Annual General Meeting.

To re-elect Peter Johnson, who retires by rotation as
a Director of the Company in accordance with the
Articles of Association.

To re-elect Andrew Dougal, who retires as a Director
of the Company in accordance with the Combined
Code on Corporate Governance.

10 To re-appoint Deloitte & Touche LLP as auditors

of the Company, to hold office until the conclusion
of the next general meeting at which accounts are
laid before the Company, and authorise the Audit
Committee to fix their remuneration on behalf of
the Board.

11 That the Board be and it is hereby generally and
unconditionally authorised in substitution for any
previous authority or authorities to exercise all the
powers of the Company to allot relevant securities
(within the meaning of Section 80 of the Companies
Act) up to but not exceeding a maximum aggregate
nominal amount of £87,963,850 during the period
commencing on the date of passing this Resolution
and expiring at the conclusion of the Annual General
Meeting of the Company in 2009 save that the
Company may before such expiry make offers or
agreements which would or might require relevant
securities to be allotted after such expiry and
notwithstanding such expiry the Board may allot
relevant securities in pursuance of such offers or
agreements as if the authority conferred by this
Resolution had not expired.

Special resolutions:
12 That subject to the passing of Resolution 11, the

of any such contracts as if the authority conferred
by this Resolution had not expired.

Board be and it is hereby empowered, pursuant to
Section 95 of the Companies Act 1985 to allot equity
securities (within the meaning of Section 94 of the
Companies Act 1985) for cash pursuant to the
authority conferred by the previous Resolution
and/or where such allotment constitutes an allotment
of equity securities by virtue of Section 94(3A) of the
Companies Act 1985 as if sub-section (1) of Section
89 of the Companies Act did not apply to any such
allotment, provided that this power shall be limited:

(i)

to the allotment of equity securities in connection
with a rights issue, open offer or any other pre-
emptive offer in favour of ordinary shareholders
(excluding any shareholder holding shares as
treasury shares) where the equity securities
respectively attributable to the interests of such
ordinary shareholders are proportionate (as
nearly as may be) to the respective numbers of
ordinary shares held by them (subject to such
exclusions or other arrangements as the Board
may deem necessary or expedient to deal with
fractional entitlements or legal or practical
problems arising in any overseas territory, the
requirements of any regulatory body or stock
exchange or any other matter whatsoever); and

(ii)

to the allotment (otherwise than pursuant to sub-
paragraph (i) above) of equity securities up to an
aggregate nominal amount of £14,478,725;

and shall expire at the conclusion of the Annual
General Meeting of the Company in 2009, save that
the Company may before such expiry make offers
or agreements which would or might require equity
securities to be allotted after such expiry and
notwithstanding such expiry the Board may allot
equity securities in pursuance of such offers and
agreements as if the power conferred by this
Resolution had not expired.

13 That the Company be and it is hereby generally
and unconditionally authorised to make market
purchases (within the meaning of Section 163(3)
of the Companies Act 1985) of ordinary shares of
25 pence each of the Company (‘ordinary shares’),
provided that:

(i)

(ii)

the maximum number of ordinary shares
hereby authorised to be purchased shall be
115,829,900;

the minimum price which may be paid for
ordinary shares is 25 pence per ordinary share;

(iii) the maximum price (exclusive of expenses)

which may be paid for an ordinary share is an
amount equal to 105 per cent of the average
of the middle market quotations for an ordinary
share (as derived from the London Stock
Exchange Daily Official List) for the five business
days immediately preceding the date on which
such ordinary share is purchased;

(iv)

the authority hereby conferred shall expire at the
earlier of the conclusion of the Annual General
Meeting of the Company in 2009 and 16 October
2009 unless such authority is renewed prior to
such time save that the Company may make
contracts to purchase ordinary shares under the
authority hereby conferred prior to the expiry of
such authority which will or may be executed
wholly or partly after the expiry of such authority,
and may purchase ordinary shares in pursuance

SPECIAL BUSINESS
Ordinary resolutions:
14 To approve the Directors’ Remuneration Report for

the year ended 31 December 2007.

15 That in accordance with Section 367 of the
Companies Act 2006, the Company and all
companies which are its subsidiaries when this
Resolution is passed are authorised to:

(a) make political donations to political parties

and/or independent election candidates not
exceeding £250,000 in aggregate;

(b) make political donations to political organisations

other than political parties not exceeding
£250,000 in aggregate;

(c)

incur political expenditure not exceeding
£250,000 in aggregate

during the period beginning with the date of passing
this Resolution and ending on 16 October 2009 or,
if sooner, at the conclusion of the Annual General
Meeting of the Company in 2009.

For the purposes of this Resolution the terms
‘political donation’, ‘political parties’, ‘independent
election candidates’, ‘political organisation’ and
‘political expenditure’ have the meanings given by
sections 363 to 365 of the Companies Act 2006.

16. That the Directors be and are hereby authorised to
adopt the Taylor Wimpey Performance Share Plan
(the ‘TW Performance Share Plan’) the main features
of which are summarised in Appendix 1 on page 108
and in the form of the rules produced to the meeting
and initialled by the Chairman for the purpose of
identification and to do all things that they may
consider necessary or expedient to implement or
give effect to the same and to adopt further plans
based on the TW Performance Share Plan but
modified to take account of local tax, exchange
control, securities law or regulations in overseas
territories, provided that such further plans shall
count against any limits on individual or overall
participation under the TW Performance Share Plan.

17. That the Directors be and are hereby authorised to

adopt the Taylor Wimpey Share Option Plan (the ‘TW
Share Option Plan’) in the form of the rules produced
to the meeting and initialled by the Chairman for the
purpose of identification; and to do all things that
they may consider necessary or expedient to
implement or give effect to the same including
obtaining approval from HM Revenue & Customs for
the approved schedule to the TW Share Option Plan
and to adopt further plans based on the TW Share
Option Plan but modified to take account of local tax,
exchange control, securities law or regulations in
overseas territories, provided that such further plans
shall count against any limits on individual or overall
participation under the TW Share Option Plan.

Special resolution:
18. That the Articles of Association produced to the
meeting and initialled by the Chairman of the
meeting for the purpose of identification be adopted
as the Articles of Association of the Company in
substitution for, and to the exclusion of, the existing
Articles of Association.

Taylor Wimpey plc Annual Report and Accounts 2007 105

Shareholder Information
Notice of Meeting continued

Explanation of Resolutions
Ordinary Business
Ordinary Resolutions
Resolution 1: To receive the annual accounts
English Company law requires the Directors to lay the
annual accounts of the Company for the year ended
31 December 2007 and the reports of the Directors
and Auditors before a general meeting of the Company.

Resolution 2: To declare a final dividend
The Directors recommend the payment of a final
dividend of 10.25 pence per share in respect of the year
ended 31 December 2007. If approved at the Annual
General Meeting, the dividend will be paid on 1 July
2008 to shareholders who are on the Register of
Members at the close of business on 23 May 2008.

Dividend Re-Investment Plan
The Company has a Dividend Re-Investment Plan
(the ‘DRI Plan’) which is administered by the DRI Plan
Administrator, Capita IRG Trustees Limited, which is
authorised and regulated by the Financial Services
Authority. The DRI Plan offers shareholders the
opportunity to elect to invest cash dividends received
on their ordinary shares, in purchasing further ordinary
shares of the Company. These shares would be bought
in the market, on competitive dealing terms.

Full details of the terms and conditions of the DRI Plan
and the actions required to participate in it are available
on the Company’s website www.taylorwimpey.com or
on request from our Registrar, Capita Registrars.

Resolutions 3 to 9: Election of Directors
The current Articles of Association provide that:

(cid:129) any Director appointed since the previous Annual
General Meeting shall retire from office and may
seek election;

(cid:129) each year the nearest whole number to one third (but
not exceeding one third), of the Board of Directors
(excluding Directors appointed since the previous
Annual General Meeting) are required to retire from
office by rotation and may seek re-election.

In addition, the Combined Code on Corporate
Governance requires each Director to seek
re-appointment at least every three years.

The following Directors will therefore retire from office,
and all being eligible, will offer themselves for election
or re-election (as appropriate):

1) Peter Redfern, Brenda Dean, Anthony Reading,

Ian Sutcliffe and David Williams – all appointed by
the Board since the last Annual General Meeting;

2) Peter Johnson – retires by rotation in accordance

with the Articles of Association and seeks re-election;

3) Andrew Dougal – retires in accordance with the

Combined Code and seeks re-election.

Brenda Dean, Andrew Dougal, Anthony Reading and
David Williams are Non Executive Directors. The Board
has reviewed and re-affirmed that it considers all the
Non Executive Directors to be independent in character
and judgment.

Details of Directors’ service contracts, remuneration
and interests in the Company’s shares and other
securities are given in the Directors’ Remuneration
Report to shareholders on pages 46 to 55 of the
Report and Accounts. Biographical information
concerning each Director is on pages 38 and 39
of the Report and Accounts.

The following information is given in support of the Board’s
proposal for the election or re-election (as appropriate) of
these Directors:

Peter Redfern – Group Chief Executive
Pete Redfern joined the Board on 3 July 2007 upon
completion of the merger between Taylor Woodrow and
George Wimpey (the ‘Merger’), when he was appointed
Group Chief Executive of the Company. He is a member
of the Nomination and Corporate Responsibility
Committees. He brings to the Company a wide range
of experience as a leader of a major housebuilder in the
UK and overseas. His previous experience includes the
successive roles of Finance Director, Managing Director
and Chief Executive of George Wimpey’s UK housing
business. Prior to joining the Group, he was Finance
Director of Rugby Cement.

Baroness Dean of Thornton-le-Fylde – Independent
Non Executive Director
Brenda Dean was appointed a Non Executive Director
upon completion of the Merger. She is a member of the
Remuneration, Nomination and Corporate Responsibility
Committees. She is a member of the House of Lords
and is active in a number of public areas. She is
Chairman of the New Covent Garden Market Authority,
a member of the House of Lords Appointments
Commission and a Non Executive Director of Dawson
Holdings PLC. She was previously a Non Executive
Director of George Wimpey Plc.

Anthony Reading MBE – Independent Non
Executive Director
Tony Reading was appointed a Non Executive Director
upon completion of the Merger. He is Chairman of the
Remuneration Committee and a member of the Audit
and Nomination Committees. He was previously a
Director of Tomkins Plc and Chairman and Chief
Executive of Tomkins Corp. USA, and a Non Executive
Director of George Wimpey Plc. He is a Non Executive
Director of The Laird Group Plc, Spectris Plc and e2v
Technologies plc.

Ian Sutcliffe – Executive Director
Ian Sutcliffe was appointed Chief Executive, Taylor
Wimpey UK upon completion of the Merger with George
Wimpey. He is a member of the Corporate Responsibility
Committee. He previously held a number of senior roles
for Shell Oil, including Vice President Retail, and was
Managing Director of George Wimpey’s UK housing
business.

David Williams – Independent Non Executive Director
and Senior Independent Director
David Williams was appointed a Non Executive Director
and designated as the Senior Independent Director upon
completion of the Merger. He is a member of the Audit,
Remuneration and Nomination Committees. He was
Finance Director of Bunzl plc until January 2006 and a Non
Executive Director of George Wimpey Plc. He is a Non
Executive Director of DP World Limited (Dubai), Meggitt
PLC, Mondi PLC and Tullow Oil plc.

Peter Johnson – Group Finance Director
Peter Johnson has been Finance Director of the Company
since his appointment in November 2002. He is an
experienced financial executive with a strong background
in financial services and property investment, in both the
UK and North America. He is also a Non Executive
Director of Shanks Group plc and Oriel Securities Limited.

Andrew Dougal – Independent Non Executive Director
Andrew Dougal has been a Non Executive Director of the
Company since November 2002. A Chartered Accountant,

he has been the Chairman of the Audit Committee since
January 2004. He is also a member of the Nomination
and Corporate Responsibility Committees. He is a Director
of Premier Farnell plc and Creston plc. He was formerly
Group Finance Director of Hanson, the conglomerate, until
its demerger and subsequently Group Chief Executive of
Hanson Plc, the international building materials Company,
and a Non Executive Director of BPB Plc.

The Board confirms that each of the Directors proposed
for election or re-election have recently been subject to
formal performance evaluation, details of which are set
out in the Corporate Governance Report, and that each
continues to demonstrate commitment and to be an
effective member of the Board.

Resolution 10: Re-appointment of Deloitte & Touche
LLP (‘Deloitte’) as auditors of the Company and
authorisation of the Audit Committee to fix their
remuneration on behalf of the Board.
In accordance with English Company law, the Company
is required to appoint auditors at each general meeting
at which accounts are laid before the shareholders. It is
therefore being proposed that the auditors are appointed
from the conclusion of the 2008 Annual General Meeting
until the conclusion of the next general meeting at which
accounts are laid before shareholders.

During 2007, following the Merger, a competitive
tender for future external audit work was carried out
as described in the Corporate Governance Report.
This resulted in Deloitte being confirmed as external
auditors to the Company. The Board recommends the
re-appointment of Deloitte as the Company’s auditors
and also seeks shareholders’ authority for the Audit
Committee to determine on behalf of the Board the
remuneration of Deloitte for their services.

The Board has adopted a procedure governing the
appointment of Deloitte to carry out non-audit services,
details of which are given in the Corporate Governance
Report. Details of non-audit services performed by Deloitte
in 2007 are given on page 68 of the Report and Accounts.

Resolution 11: Authority to allot shares
The Board wishes to renew the existing authority to allot
relevant securities under the provisions of Section 80 of
the Companies Act 1985. The authority would apply for
the period commencing on the passing of this Resolution
and ending at the Annual General Meeting of the
Company in 2009. It is proposed to authorise the Board
to allot ordinary shares up to a maximum of £87,963,850
in nominal value (equivalent to 351,855,400 ordinary
shares), representing approximately 33.3 per cent of the
existing issued ordinary share capital of the Company
excluding 102,732,927 treasury shares as at the close
of business on 26 February 2008. The Company held
102,732,927 shares in treasury (representing
approximately 9.7 per cent of the issued ordinary share
capital of the Company excluding treasury shares) as at
the close of business on 26 February 2008. The Board
has no present intention of exercising the power which
such authority would confer.

Special Resolutions
Resolution 12: Authority to dis-apply pre-emption rights
The Board wishes to renew the existing authority
permitting the Board to allot equity securities for cash for
the purpose of a rights issue, open offer or any other pre-
emptive offer (including the sale of any ordinary shares
held in treasury) to shareholders and otherwise up to
£14,478,725 in nominal value (equivalent to 57,914,900
ordinary shares). This represents approximately 4.99 per

106 www.taylorwimpey.com

cent of the Company’s issued ordinary share capital as at
the close of business on 26 February 2008. The authority
would also enable the Board in the event of a rights issue,
open offer or other pre-emptive offer to make
adjustments to deal with overseas shareholders,
fractional entitlements and other legal or practical
problems. The authority will expire at the conclusion of
the Annual General Meeting of the Company in 2009.
The Board has no present intention of exercising the
authority which such a Resolution would confer.

Resolution 13: Authority to make market purchases
of shares
Given the uncertainty of the UK housing market, the
Board has decided to temporarily suspend the buyback
programme until conditions improve. As indicated at
the time of our preliminary results on 6 March 2008, the
Board will continue to review the phasing and pace of
the buyback programme in light of market conditions.
Accordingly, the Board wishes to renew its existing
authority to purchase its ordinary shares in the market.
Any purchases under the authority would be made in
one or more tranches and would be limited in aggregate
to 10 per cent of the ordinary shares in issue at the close
of business on 26 February 2008. The authority will
enable the Company to continue with the share buyback
programme announced on 6 August 2007 as and when
the Board determines that it is appropriate to do so.
Since the announcement of the programme, the
Company has purchased a total of 94,799,880 shares
for an aggregate consideration of £249,989,801.

The maximum price to be paid on any exercise of the
authority would not exceed 105 per cent of the average of
the middle market quotations for the Company’s ordinary
shares for the five business days immediately preceding
the date of the purchase. Shares purchased pursuant to
these authorities will be held as treasury shares, which the
Company can re-issue quickly and cost-effectively, and
provides the Company with additional flexibility in the
management of its capital base. The total number of
shares held as treasury shall not at any one time exceed
10 per cent of the Company’s issued share capital.
Accordingly, any shares bought back over the 10 per cent
limit will be cancelled. Following the purchases made
pursuant to the shareholder authority granted on 29 May
2007, the Company currently holds a total of 102,732,927
shares in treasury (representing 9.7 per cent of its issued
share capital).

The total number of options to subscribe for ordinary
shares outstanding as at the close of business on
26 February 2008 was 23,667,896, representing
approximately 2.2 per cent of the issued ordinary
share capital of the Company (excluding treasury shares)
as at that date and approximately 2.3 per cent of the
Company’s issued ordinary share capital following any
exercise in full of this authority to make market purchases.

At the Company’s Annual General Meeting on 2 May
2007, shareholders authorised the purchase of up to
59,415,008 shares. At the Company’s Extraordinary
General Meeting on 29 May 2007, shareholders
authorised an increase of a further 55,276,873 shares,
aggregating 114,691,881 shares.

Special Business
Ordinary Resolutions
Resolution 14: Approval of the Directors’ Remuneration
Report for the year ended 31 December 2007
The Directors’ Remuneration Report for the year ended
31 December 2007 has been prepared in accordance
with Schedule 7A to the Companies Act 1985 (‘the

Companies Act’). Section 241A of the Companies Act
requires the Company to submit the report to
shareholders for their approval by way of an ordinary
resolution for its approval to be put to shareholders and
voted on at a general meeting of the Company before
which the annual accounts for the financial year are to be
laid. The Directors’ Remuneration Report is on pages 46
to 55 of the Report and Accounts. The Board considers
that appropriate executive remuneration plays a vital part
in helping to achieve the Company’s overall objectives.
The vote on the Remuneration Report has advisory
status in respect of the remuneration policy and overall
remuneration packages and is not specific to individual
levels of remuneration.

Resolution 15: Authority to make political donations
In order to comply with its obligations under the
Companies Act 2006 and to avoid any inadvertent
infringement of the Companies Act 2006, the Board
wishes to renew its existing authority for a general level
of donation. Resolution 15 seeks to renew the existing
authority for the Company to make political donations
and incur political expenditure. The Companies Act 2006
requires this authority to be divided into three heads
with a separate amount specified as permitted for each.
We have specified an amount not exceeding £250,000
for each head of the authority, meaning that Resolution
15 would authorise the Company and its subsidiaries
together to incur expenditure/make donations of up
to £750,000 in aggregate. In accordance with the
Companies Act 2006, Resolution 15 extends approval
to all of the Company’s subsidiaries.

This authority will last until the earlier of 16 July 2009 and
the conclusion of the Company’s Annual General
Meeting in 2009, unless renewal was sought by further
resolution at that meeting.

The Company and the Group have not made any
donations to political parties since the resolution passed
at the previous Annual General Meeting. It is not our
policy to do so in the future and we have no present
intention of making any significant political donations in
the UK. Nevertheless, the Companies Act 2006 defines
political organisations very widely and, as a result, in
certain circumstances, donations made for charitable
or similar purposes may now be treated as a donation
to a political organisation. For example, a donation to a
humanitarian charity which operates as a political lobby,
sponsorship, subscriptions, paid leave to employees
fulfiling public duties and payments to industry
representative bodies may constitute a donation to
a political organisation within the current definitions.

Details of charitable donations appear on page 41 of the
Report and Accounts.

Resolutions 16 and 17: Adoption of the Taylor Wimpey
Performance Share Plan and the Taylor Wimpey Share
Option Plan
The Remuneration Committee has recently carried out
a thorough review of executive remuneration in order
to ensure that, following the Merger, long term incentive
arrangements are both internally aligned and are effective
in supporting the achievement of the Company’s
strategic priorities.

In conducting the review the Committee has been
mindful of changes in the external environment and
corporate governance good practice since the inception
of the existing Taylor Woodrow and George Wimpey
long term incentive arrangements. During the review the
Committee was advised by independent remuneration
consultants Mercer.

The Committee concluded that a new Taylor Wimpey
Performance Share Plan and Taylor Wimpey Share
Option Plan (together the ‘Plans’) should be introduced.
The Plans have been designed to deliver a common and
flexible long term incentive framework across the merged
business that clearly aligns senior executive reward with
the interests of shareholders using not only measures of
external value creation but also critical internal financial
measures of shareholder return.

Awards may be granted to senior executives over shares
worth up to 300% of their base salaries in any financial
year under each Plan. For Executive Directors that
annual limit is 200% for each Plan subject to the
discretion of the Committee in exceptional circumstances
to award up to 300% as referred to in the Appendices.
The maximum expected value of awards under both
Plans combined in any financial year for Executive
Directors will not exceed the expected value of a Taylor
Wimpey Performance Share Plan Award of 200% of
salary (face value). The extent that these shares vest will
depend on the Company’s performance over a three-
year period.

The Directors are therefore seeking authority to adopt
the Plans, whose principal terms are summarised in
Appendices 1 and 2. The Directors are also seeking the
power to do all things that they consider necessary to
implement the Plans, including the ability to adopt
further plans based on them in order to grant awards
to employees outside the UK but subject to the same
individual and aggregate limits.

Documents available for inspection
Copies of the rules of the Plans may be inspected as
noted on page 111.

Special Resolution
Resolution 18: Adoption of new articles of association
It is proposed in Resolution 18 to adopt new articles of
association (the ‘New Articles’) in order to update the
Company’s current articles of association (the ‘Current
Articles’) primarily to take account of changes in English
Company law brought about by the Companies Act 2006.

The principal changes introduced in the New Articles
are summarised in Appendix 3. Other changes, which
are of a minor, technical or clarifying nature and also
some more minor changes which merely reflect changes
made by the Companies Act 2006 are not noted in the
Appendix. The New Articles showing all the changes to
the Current Articles are available for inspection, as noted
on page 111.

By Order of the Board

James Jordan
Group Company Secretary and General Counsel
Taylor Wimpey plc
80 New Bond Street
London W1S 1SB
5 March 2008

Registered in England and Wales

Registration No. 296805

Taylor Wimpey plc Annual Report and Accounts 2007 107

Shareholder Information
Notice of Meeting continued

Appendix 1 – Taylor Wimpey Performance
Share Plan (‘TW Performance Share Plan’)
Introduction
The TW Performance Share Plan will be administered
by the Remuneration Committee (the ‘Committee’) of
the Company’s Board of Directors (the ‘Board’). The
TW Performance Share Plan provides for the Committee
to grant conditional awards over Ordinary Shares in the
Company (‘Shares’) and phantom awards, which entitle
the participants to cash payments equivalent to the
market value of a specified number of Shares on the
vesting of the awards. No consideration is payable by the
participant either for the grant or the vesting of awards.

Eligibility
Awards may only be made to Executive Directors or
other employees of the Company and its subsidiaries
(the ‘Group’), selected at the discretion of the Committee.

Timing of grants
The Committee may grant awards within 42 days
of the approval of the TW Performance Share Plan by
shareholders or following the announcement date of the
Company’s annual or half-yearly results. The Committee
may also grant awards at other times, where there are
exceptional circumstances which it considers justify the
granting of awards.

No awards may be granted more than 10 years after
the approval of the TW Performance Share Plan by
shareholders.

Individual grant limit
Except in circumstances which the Committee, after
consulting the Board, considers to be exceptional, an
individual may not be granted awards in any financial
year over Shares having a market value at the award
date in excess of 300% of the individual’s annual base
salary (200% in the case of Executive Directors).

The maximum expected value of awards under both
the TW Performance Share Plan and the TW Share
Option Plan combined in any financial year for Executive
Directors will not exceed the expected value of a TW
Performance Share Plan award of 200% of salary
(face value).

The Remuneration Committee will retain discretion
to determine in exceptional circumstances (such as
attracting new hires) an award quantum for Executive
Directors in excess of the above maximum quantum.
Any enhanced awards made pursuant to such discretion
will not exceed 300% base salary.

Share capital limits
Awards may be granted over new issue Shares, treasury
Shares or Shares purchased on the market through an
employee benefit trust.

No award may be granted under the TW Performance
Share Plan if the maximum number of Shares issuable
under the award, together with the maximum number of
Shares issuable or issued pursuant to awards or options
granted under the TW Performance Share Plan or any
other employee share plan operated by any Company in
the Group in the previous 10 years (excluding any rights
which have lapsed or been forfeited under such plans)
would exceed 10% of the Company’s issued ordinary
share capital at the time.

discretionary share plan operated by any Company in the
Group in the previous 10 years (excluding any rights
which have lapsed or been forfeited under such plans)
would exceed 5% of the Company’s issued ordinary
share capital at the time.

The above limits include new issue Shares and treasury
Shares but not Shares purchased on the market through
an employee benefit trust.

Vesting of awards and performance conditions
Awards will normally vest at the end of a performance
period of not less than three years, as soon as the
Committee has determined the extent to which the
applicable performance conditions have been met.

For the first awards granted under the TW Performance
Share Plan to Executive Directors, the proportion of each
award which vests will depend on two measures of the
Company’s performance.

Up to half of the Shares subject to the award will vest
depending on the Company’s total shareholder return
(‘TSR’) over a three-year period compared with two
groups of companies:

(cid:129) The following 12 industry peer companies: Barratt

Developments, Bellway, Berkeley Group, Bovis Homes
Group, Galliford Try, Kier Group, Marshalls, Persimmon,
Redrow, SIG, Travis Perkins and Wolseley

(cid:129) The companies which comprise the FTSE 100 index

at the start of the performance period

Equal weighting will be given to each comparator group.
The proportion of this portion of the award which vests
will be determined according to the following table:

Company’s
TSR ranking

Below median

Median

Between median and
75th percentile

75th percentile or higher

Proportion of this
portion of the award vesting

25%

25%-100% pro rata

100%

Up to half of the Shares subject to the award will vest
depending on the Company’s earnings per share (‘EPS’)
growth over a three-year period compared with the
increase in the Retail Prices Index (‘RPI’) determined
according to the following table:

Company’s annualised
EPS growth in excess of
annualised RPI increase

Below 3 percentage points

3 percentage points

Between 3 and 6
percentage points

Proportion of this
portion of the award vesting

25%

25%-100% pro rata

6 percentage points or more

100%

The Committee may review the performance conditions for
each grant of awards and may apply different conditions to
future awards, provided they remain no less challenging
and are aligned with the interests of shareholders.

Cessation of employment
As a general rule, an award will lapse if a participant
ceases to be employed within the Group before the
vesting date. However, if a participant leaves
employment because of:

• the participant’s death

• disability

• injury

• the Company or business in which the participant is

employed ceasing to be part of the Group

• other reasons, at the discretion of the Committee

then a part of the participant’s award will vest, which will be
determined by the Committee depending on the Company’s
performance and the proportion of the performance period
which has elapsed at the date of cessation.

Corporate events
In the event of a takeover, scheme of arrangement or
voluntary winding up of the Company (other than an
internal corporate reorganisation), all awards will vest
immediately. The part of each award which vests will
be determined by the Committee depending on the
Company’s underlying financial performance and the
proportion of the performance period which has elapsed.

In the event of an internal corporate reorganisation,
awards will be replaced by equivalent new awards over
shares in a new holding Company unless the Committee
decides that awards should vest on the basis which
would apply in the case of a takeover.

Variation of share capital
In the event of any variation of the Company’s share
capital, a demerger or payment of a special dividend,
or such other circumstances as the Committee consider
appropriate, the Committee may make such adjustment
as it considers fair and reasonable to the number of
Shares subject to an award.

Participants’ rights
Awards are not transferable, except to a participant’s
legal personal representatives on the participant’s death.

Awards will not confer any shareholder rights until
the awards have vested and the participants have
received their Shares. However, at the discretion of the
Committee, participants may receive a payment (in cash
and/or Shares) on or shortly following the vesting of their
awards of an amount equivalent to the dividends that
would have been paid on those Shares between the time
when the awards were granted and the vesting date.

Any Shares allotted when an award vests will rank
equally with Shares then in issue, except for rights arising
by reference to a record date prior to their allotment.

Awards do not count as part of participants’ pensionable
salaries for the purpose of employers’ contributions to
any Group pension schemes or other benefits.

Alterations to the TW Performance Share Plan
The Board, on the recommendation of the Committee,
may at any time amend the provisions of the Performance
Share Plan in any respect, provided that the prior approval
of Shareholders is obtained for any amendments that
are to the benefit of participants in respect of the rules
governing eligibility, limits on participation, the overall
limits on the issue of Shares, the basis for determining a
participant’s entitlement to, and the terms of, the Shares
to be acquired and the adjustment of awards.

The requirement to obtain the prior approval of
shareholders will not, however, apply to any minor
alteration made to benefit the administration of the TW
Performance Share Plan, to take account of a change
in legislation or to obtain or maintain favourable tax,
exchange control, securities law or regulatory treatment
for participants or for any Company in the Group.

Overseas plans
The Board may at any time, without further shareholder
approval, establish further plans in overseas territories.

108 www.taylorwimpey.com

Any such plan must be similar to the TW Performance
Share Plan but may be modified to take account of local
tax, exchange control, securities law or regulations. Any
Shares made available under such plans shall be
counted towards the limits on individual and overall
participation in the TW Performance Share Plan.

Appendix 2 – Taylor Wimpey Share Option Plan
(‘TW Share Option Plan’)
Introduction
The TW Share Option Plan will be administered by the
Remuneration Committee (the ‘Committee’) of the
Company’s Board of Directors (the ‘Board’). The TW
Share Option Plan provides for the Committee to grant
options over Ordinary Shares in the Company (‘Shares’)
and phantom options, which entitle the participants to
cash payments with a value equivalent to the excess of
the market value of a specified number of Shares on the
exercise date over the exercise price. No consideration is
payable by the participant for the grant of options or
phantom options.

The TW Share Option Plan also allows for the grant of
approved share options under a schedule to the rules
which is intended to be approved by HM Revenue &
Customs under Schedule 4 to the Income Tax (Earnings
and Pensions) Act 2003 as a company share plan.

Eligibility
Awards may only be made to Executive Directors or
other employees of the Company and its subsidiaries
(the ‘Group’), selected at the discretion of the
Committee.

Timing of grants
The Committee may grant awards within 42 days of the
approval of the TW Share Option Plan by shareholders or
following the announcement date of the Company’s annual
or half-yearly results. The Committee may also grant awards
at other times, where there are exceptional circumstances
which it considers justify the granting of awards.

No awards may be granted more than 10 years after the
approval of the TW Share Option Plan by shareholders.

Individual grant limit
An individual may not be granted awards in any financial
year over Shares having a market value at the award
date in excess of 300% of the individual’s annual base
salary (200% in the case of executive directors).

The maximum expected value of awards under both the
TW Performance Share Plan and the TW Share Option
Plan combined in any financial year for Executive
Directors will not exceed the expected value of a TW
Performance Share Plan award of 200% of salary.

Under current statutory limits, a participant may only hold
approved share options over £30,000 worth of Shares
(valued at the grant date) at any time.

Share capital limits
Awards may be granted over new issue Shares, treasury
Shares or Shares purchased on the market through an
employee benefit trust.

No award may be granted under the TW Share Option
Plan if the maximum number of Shares issuable under
the award, together with the maximum number of Shares

issuable or issued pursuant to awards or options granted
under the TW Share Option Plan or any other employee
share plan operated by any Company in the Group in the
previous 10 years would exceed 10% of the Company’s
issued ordinary share capital at the time.

No award may be granted under the TW Share Option
Plan if the maximum number of Shares issuable under
the award, together with the maximum number of Shares
issuable or issued pursuant to awards or options granted
under the TW Share Option Plan, or any other
discretionary share plan operated by any Company in the
Group in the previous 10 years, would exceed 5% of the
Company’s issued ordinary share capital at the time.

The above limits include new issue Shares and treasury
Shares but not Shares purchased on the market through
an employee benefit trust.

Exercise price
The exercise price per Share payable by a participant
on exercise of an option, and used to determine the
value payable on exercise of a phantom option, may not
be less than the market price of a Share on the dealing
day preceding the grant date (or, if the Committee so
decides, the average of the prices for the three
preceding dealing days).

Vesting of awards and performance conditions
Awards will normally become exercisable at the end of a
performance period of not less than three years, as soon
as the Committee has determined the extent to which
the applicable performance conditions have been met.

For the first awards granted under the TW Share Option
Plan to Executive Directors, the proportion of each award
which vests will depend on the excess of the Company’s
return on capital employed (‘ROCE’) in the last year of
the performance period over the Company’s cost of
capital (‘COC’), determined according to the following
table:

Company’s ROCE in excess
of the cost of capital

Below the cost of capital

Equal to the cost of capital

Between the cost of
capital and 3 percentage
points over the cost of capital

3 or more percentage points
over the cost of capital

Proportion of
award vesting

25%

25%-100% pro rata

100%

ROCE will be calculated based on the Company’s
earnings before interest, tax and amortisation.

COC will be calculated based on the following formula:

(risk free rate + equity risk premium)/(1 – tax rate) x
(average operating assets employed – average net debt)
+ net interest cost

average operating assets employed

(cid:129) Equity risk premium means the premium published

in Bloomberg (or such other recognised source to be
determined by the Remuneration Committee) as at
the balance sheet date

(cid:129) Operating assets means capital employed excluding

intangibles as set out in the Company’s latest
published annual accounts

(cid:129) Net debt means borrowings less cash or cash

equivalents

(cid:129) Net interest cost means interest on borrowings less

interest received

(cid:129) Risk free rate means UK Government gilt yields as at

the balance sheet date.

Exercise period
Awards may normally be exercised between the vesting
date and the expiry date, which may be no later than the
tenth anniversary of the date of grant.

Cessation of employment
As a general rule, an award will lapse if a participant ceases
to be employed within the Group before the vesting date.
However, if a participant leaves employment because of:

• the participant’s death

• disability

• injury

• the Company or business in which the participant is

employed ceasing to be part of the Group

• other reasons, at the discretion of the Committee

then a part of the participant’s award will become
exercisable, which will be determined by the Committee
depending on the Company’s performance and the
proportion of the performance period which has elapsed
at the date of cessation.

Corporate events
In the event of a takeover, scheme of arrangement or
voluntary winding up of the Company (other than an
internal corporate reorganisation), all awards will vest
immediately. The part of each award which becomes
exercisable will be determined by the Committee
depending on the Company’s underlying financial
performance and the proportion of the performance period
which has elapsed. Alternatively, with the agreement of
the acquiring Company, awards may be replaced with
equivalent new awards over shares in that Company.

Variation of share capital
In the event of any variation of the Company’s share
capital, a demerger or payment of a special dividend, or
such other circumstances as the Committee considers
appropriate the Committee may make such adjustment
as it considers fair and reasonable to the number of
Shares subject to an award and the exercise price.

Participants’ rights
Awards are not transferable, except to a participant’s
legal personal representatives on the participant’s death.

Awards will not confer any shareholder rights until the
awards have been exercised and the participants have
received their Shares. No dividend equivalents will be
payable in respect of the period before exercise.

Any Shares allotted when an award is exercised will rank
equally with Shares then in issue, except for rights arising
by reference to a record date prior to their allotment.

Awards do not count as part of participants’ pensionable
salaries for the purpose of employers’ contributions to
any Group pension schemes or other benefits.

Taylor Wimpey plc Annual Report and Accounts 2007 109

Shareholder Information
Notice of Meeting continued

Alterations to the TW Share Option Plan
The Board, on the recommendation of the Committee,
may at any time amend the provisions of the TW Share
Option Plan in any respect, provided that the prior
approval of shareholders is obtained for any
amendments that are to the advantage of participants
in respect of the rules governing eligibility, limits on
participation, the overall limits on the issue of shares,
the basis for determining a participant’s entitlement to,
and the terms of, the Shares to be acquired and the
adjustment of awards.

The requirement to obtain the prior approval of
shareholders will not, however, apply to any minor
alteration made to benefit the administration of the
TW Share Option Plan, to take account of a change in
legislation or to obtain or maintain favourable tax,
exchange control, securities law or regulatory treatment
for participants or for any Company in the Group.

Overseas plans
The Board may at any time, without further shareholder
approval, establish further plans in overseas territories.
Any such plan must be similar to the TW Share Option
Plan but may be modified to take account of local tax,
exchange control, securities law or regulations. Any
Shares made available under such plans shall be
counted towards the limits on individual and overall
participation in the TW Share Option Plan.

Appendix 3
Explanatory notes of principal changes to
the Company’s articles of association
1. Articles which duplicate statutory provisions
Provisions in the Current Articles which replicate
provisions contained in the Companies Act 2006 are
in the main to be removed in the New Articles. This is
in line with the approach advocated by the Government
that statutory provisions should not be duplicated in
a company’s constitution. Certain examples of such
provisions include provisions as to the form of
resolutions, the requirement to keep accounting records
and provisions regarding the period of notice required
to convene general meetings. The main changes made
to reflect this approach are detailed below.

2. Form of resolution
The Current Articles contain a provision that, where for
any purpose an ordinary resolution is required, a special
or extraordinary resolution is also effective and that,
where an extraordinary resolution is required, a special
resolution is also effective. This provision is being
removed as the concept of extraordinary resolutions
has not been retained under the Companies Act 2006.
Further, the remainder of the provision is reflected in
full in the Companies Act 2006.

3. Convening extraordinary and annual general meetings
The provisions in the Current Articles dealing with the
convening of general meetings and the length of notice
required to convene general meetings are being removed
in the New Articles because the relevant matters are
provided for in the Companies Act 2006. In particular
an extraordinary general meeting to consider a special
resolution can be convened on 14 days notice whereas
previously 21 days notice was required.

be received more than 48 hours before the meeting or,
in the case of a poll taken more than 48 hours after the
meeting, more than 24 hours before the time for the
taking of a poll, with weekends and bank holidays being
permitted to be excluded for this purpose. The New
Articles give the Directors discretion, when calculating
the time limits, to exclude weekend and bank holidays.
Multiple proxies may be appointed provided that each
proxy is appointed to exercise the rights attached to a
different Share held by the shareholder. The New Articles
reflect all of these new provisions.

5. Conflicts of interest
The Companies Act 2006 sets out directors’ general
duties which largely codify the existing law but with some
changes. Under the Companies Act, from 1 October
2008 a director must avoid a situation where he has,
or can have, a direct or indirect interest that conflicts,
or possibly may conflict with the Company’s interests.
The requirement is very broad and could apply, for
example, if a Director becomes a director of another
company or a trustee of another organisation.
The Companies Act 2006 allows directors of public
companies to authorise conflicts and potential conflicts,
where appropriate, where the Articles of Association
contain a provision to this effect. The Companies Act
2006 also allows the Articles of Association to contain
other provisions for dealing with Directors’ conflicts of
interest to avoid a breach of duty. The New Articles give
the directors authority to approve such situations and to
include other provisions to allow conflicts of interest to
be dealt with in a similar way to the current position.

There are safeguards which will apply when directors
decide whether to authorise a conflict or potential
conflict. First, only Directors who have no interest in the
matter being considered will be able to take the relevant
decision, and secondly, in taking the decision the
directors must act in a way they consider, in good faith,
will be most likely to promote the Company’s success.
The Directors will be able to impose limits or conditions
when giving authorisation if they think this is appropriate.

It is also proposed that the New Articles should contain
provisions relating to confidential information, attendance
at board meetings and availability of board papers to
protect a Director being in breach of duty if a conflict of
interest or potential conflict of interest arises. These
provisions will only apply where the position giving rise to
the potential conflict has previously been authorised by the
Directors. It is the Board’s intention to report annually on
the Company’s procedures for ensuring that the Board’s
powers to authorise conflicts are operated effectively.

6. Notice of board meetings
Under the Current Articles, when a Director is abroad
he can request that notice of Directors’ meetings are
sent to him at a specified address and if he does not
do so he is not entitled to receive notice while he is
away. This provision has been removed, as modern
communications mean that there may be no particular
obstacle to giving notice to a Director who is abroad.

7. Records to be kept
The provision in the Current Articles requiring the Board
to keep accounting records has been removed as this
requirement is contained in the Companies Act 2006.

4. Votes of members
Under the Companies Act 2006 proxies are entitled to
vote on a show of hands whereas under the Current
Articles proxies are only entitled to vote on a poll. The
time limits for the appointment or termination of a proxy
appointment have been altered by the Companies Act
2006 so that the articles cannot provide that they should

8. Distribution of assets otherwise than in cash
The Current Articles contain provisions dealing with the
distribution of assets in kind in the event of the Company
going into liquidation. These provisions have been
removed in the New Articles on the grounds that a
provision about the powers of liquidators is a matter
for insolvency law rather than for articles and that the

Insolvency Act 1986 confers powers on the liquidator
which would enable it to do what is envisaged by the
Current Articles.

9. Notice of refusal to register transfer
The Current Articles contain a provision that if the Board
refuses to register a transfer of a share it shall, within two
months after the date on which the transfer was lodged
with the Company, send notice of the refusal to the
transferee. This provision is being removed because this
requirement is contained in the Companies Act 2006.

The Current Articles allow the Directors to refuse to
register a transfer of shares without giving reasons. In
relation to share transfers taking place on or after 6 April
2008, the Companies Act 2006 requires the Board to
give reasons for any refusal to register a transfer. This
New Articles have been amended to reflect this.

10. Chairman’s casting vote
The Current Articles provide that in the case of an
equality of votes on a poll or a show of hands at a
general meeting, the Chairman of that meeting will have
a second or casting vote in addition to any other vote he
may have. The Companies Act 2006 abolishes the
concept of the Chairman’s casting vote and the New
Articles have been amended to reflect this.

11. Corporate representatives
The provision in the Current Articles relating to
requirements for the appointment of corporate
representatives has been removed as these requirements
are contained in the Companies Act 2006.

12. Retirement by rotation
The Current Articles relating to retirement by rotation
have been combined and amended. The concept of one
third of the Directors retiring from office at each annual
general meeting has been removed because it is no
longer appropriate in view of the Combined Code
requirement for directors to offer themselves for re-
election every three years. It is a principle of the
Combined Code that all Directors should be required to
submit themselves for re-election at regular intervals and
at least every three years. The New Articles reflect the
Combined Code guidance.

13. Electronic and web communications
Provisions of the Companies Act 2006 which came into
force in January 2007 enable companies to
communicate with members by electronic and/or
website communications. The New Articles continue to
allow communications to members in electronic form
and, in addition, they also permit the Company to take
advantage of the new provisions relating to website
communications. Before the Company can communicate
with a member by means of website communication, the
relevant member must be asked individually by the
Company to agree that the Company may send or
supply documents or information to him by means of a
website, and the Company must either have received a
positive response or have received no response within
the period of 28 days beginning with the date on which
the request was sent. The Company will notify the
member (either in writing, or by other permitted means)
when a relevant document or information is placed on
the website and a member can always request a hard
copy version of the document or information.

14. General
Generally the opportunity has been taken to bring clearer
language into the New Articles.

Action to be taken
Whether or not you intend to attend the Annual General
Meeting, you are requested to complete the enclosed

110 www.taylorwimpey.com

form of proxy and return it to the Company’s Registrars,
Capita Registrars, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU as soon as possible and in
any event so as to be received no later than 48 hours
before the time appointed for the Annual General
Meeting, that is no later than 11:00 am on 15 April 2008.
The completion and submission of a form of proxy will
not prevent you from attending and voting in person if
you so wish.

Your vote is important. The Board requests that all
shareholders exercise their right to vote.

Shareholders entitled to attend and vote at the Annual
General Meeting may appoint one or more proxies to
attend and vote in their place. A proxy need not be a
shareholder of the Company. The completion and return
of a form of proxy does not prevent a shareholder from
attending and voting at the meeting in person. To vote,
you can either:

Please bring with you the accompanying attendance
card and retain it until the end of the Meeting. It will
authenticate your right to attend, speak and vote, and
will help us to register your attendance without delay.

Registration will be available from 9:30 am. For the safety
and comfort of those attending the Meeting, large bags,
cameras, recording equipment and similar items will not
be allowed into the building.

The Meeting will commence at 11:00 am and light
refreshments will be available from 10:30 am and also
after the conclusion of the Meeting.

You are advised to bring your Annual Report with you to
the Meeting so that you can refer to it as necessary.

There is wheelchair access to the venue for shareholders
who require it or those with reduced mobility. However
attendees are strongly advised to bring their own carers
to assist with their general mobility around the venue.

- register your vote on-line at www.taylorwimpey.com;

An induction loop system operates in the meeting room.

- complete and return the enclosed form of proxy;

- use the service provided by CRESTCo for members

Directions to the venue can be found on the back of your
attendance card.

of CREST;

- attend and vote at the Annual General Meeting in

person; or

- have your proxy attend the Annual General Meeting on

your behalf.

When submitting a form of proxy, you can cast your
vote ‘For’ or ‘Against’ the resolutions or use the ‘Vote
Witheld’ option. The outcome of voting on all resolutions
will be announced at the Annual General Meeting and to
the market and published on our website at
www.taylorwimpey.com

Shareholders whose shares are held in CREST may use
the CREST electronic appointment service to retrieve
resolutions and submit proxy instructions. Please refer
to the CREST manual for further information on CREST
procedures, limitations and system timings.

Beneficial holders of shares with ‘information rights’
Section 325 Companies Act 2006 (the ‘Act’) does not
confer on persons nominated to receive information
rights under Section 146 of the Act, the right to appoint
proxies. Such persons who have received a copy of this
notice of meeting are hereby informed, in accordance
with Section 149 (2) of the Act, that they may have a
right under an agreement with the registered member by
whom they were nominated, to be appointed, or to have
someone else appointed, as a proxy for the Annual
General Meeting. If they have no such right, or do not
wish to exercise it, they may have a right under such an
agreement to give instructions to the member as to the
exercise of voting rights. Such persons should contact
the registered member by whom they were nominated
in respect of these arrangements.

Recommendation
Your Directors are of the opinion that the resolutions
to be proposed at the Annual General Meeting are in
the best interests of shareholders as a whole and
recommend you to vote in favour of them. Each Director
will be doing so in respect of his or her own beneficial
shareholdings.

Attendance and voting
As a shareholder of Taylor Wimpey plc, you have the
right to attend and vote at the Annual General Meeting.
As at 5 March 2008 the Company’s issued share capital
consisted of 1,158,299,201 ordinary shares carrying one
vote each. The total voting rights of the Company as at 5
March 2008 were 1,055,566,274.

If you do not wish, or are unable, to attend, you may
appoint either the Chairman of the Meeting or someone
else of your choice to act on your behalf and to vote in
the event of a poll. That person is known as a ‘proxy’.
You are advised to use the enclosed form of proxy to
appoint a proxy or to vote electronically as outlined
above and in more detail on the enclosed form of proxy.

A proxy need not be a shareholder and may attend and
vote on behalf of the shareholder who appointed him or
her.

At the Meeting, the proxy can act for the member he
or she represents. This includes the right to join in or
demand a poll, and to vote on a show of hands. The
proxy is also valid for any adjournment of the Meeting.

Please tick the appropriate box alongside each resolution
on the form of proxy to indicate whether you wish your
votes to be cast ‘for’, or ‘against’, or whether you wish
to withhold your vote from, that resolution. Unless you
give specific instructions on how to vote on a particular
resolution, your proxy will be able, at his or her discretion,
either to vote ‘for’ or ‘against’ that resolution or to
withhold your vote.

Before posting the form to the Registrar, please check
that you have signed it. In the case of joint holders,
either or any one of you may sign it.

As stated above, the forms of proxy must be received
in the offices of the Registrar no later than 11:00 am on
15 April 2008. Any form of proxy received after this time
will be void.

In order to facilitate voting by corporate representatives
at the Meeting, arrangements will be put in place at
the Meeting so that (i) if a corporate shareholder has
appointed the Chairman of the Meeting as its corporate
representative with instructions to vote on a poll in
accordance with the directions of all the other corporate
representatives for that shareholder at the Meeting, then
on a poll those corporate representatives will give voting
directions to the Chairman and the Chairman will vote
(or withhold a vote) as corporate representative in
accordance with those directions; and (ii) if more than
one corporate representative for the same corporate
shareholder attends the Meeting but the corporate
shareholder has not appointed the Chairman of the
Meeting as a corporate representative, a designated
corporate representative will be nominated, from those
corporate representatives who attend, who will vote

on a poll and the other corporate representatives will
give voting directions to that designated corporate
representative. Corporate shareholders are referred
to the guidance issued by the Institute of Chartered
Secretaries and Administrators on proxies and corporate
representatives (www.icsa.org.uk) for further details of
this procedure. The guidance includes a sample form of
representation letter if the Chairman is being appointed
as described in (i) above.

Notes:
i. A member entitled to attend and vote at this Meeting

may appoint a proxy to attend and vote instead of him
or her. A member may appoint more than one proxy
in relation to the Meeting provided that each proxy is
appointed to exercise the rights attached to a different
share or shares held by that member. The proxy need
not be a member of the Company.

ii. A form of proxy sent electronically that is found to

contain any virus will not be accepted.

iii. The Company, pursuant to Regulation 41 of the

Uncertificated Securities Regulations 2001, specifies
that only those shareholders registered in the Register of
Members of the Company at 6.00 pm on 15 April 2008
shall be entitled to attend or vote at the Annual General
Meeting in respect of the number of shares registered in
their name at that time. Changes to entries on the
relevant Register of Members after that time shall be
disregarded in determining the rights of any person to
attend or vote at the Annual General Meeting.

iv. Copies of the following documents are available for
inspection at the registered office of the Company
during usual business hours on weekdays (Saturdays
and public holidays excepted) up to and including the
date of the Annual General Meeting and at the place
of the meeting 15 minutes prior to and until the close
of the meeting:

(a) Register of the interests of each director in the shares

and other securities of the Company;

(b) Executive Directors’ contracts of service;

(d) Copies of the rules of the TW Performance Share Plan

and the TW Share Option Plan;

(e) Copies of the current Articles of Association of the
Company and a draft of the proposed amended
Articles of Association of the Company are available
for inspection at the registered office of the Company
and at the offices of Slaughter and May, One Bunhill
Row, London EC1Y 8YY in each case during usual
business hours on weekdays (Saturdays and public
holidays excepted) up to and including the date of
the Annual General Meeting and at the place of the
meeting 15 minutes prior to and until the close of
the meeting.

v. A copy of the full Annual Report and Financial

Statements for the year ended 31 December 2007,
including the Remuneration Report referred to in
Resolution 14, is also available on our website
www.taylorwimpey.com.

Taylor Wimpey plc Annual Report and Accounts 2007 111

network extras). To deal, you will need to provide your
surname, postcode, date of birth and investor code
(which can be found on your share certificate).

Taylor Wimpey and ‘CREST’
Taylor Wimpey shares can be held in ‘CREST’ accounts,
which do not require share certificates. This may make it
quicker and easier for some shareholders to settle stock
market transactions. Shareholders who deal infrequently
may, however, prefer to continue to hold their shares in
certificated form and this facility will remain available for
the time being, pending the likely general introduction of
dematerialised shareholdings in due course.

Taylor Wimpey share price
Our share price is printed in most UK daily
newspapers and is also available on our website
www.taylorwimpey.com. It appears on Ceefax (BBC1
page 232) and C4 Teletext (page 520) and may be
obtained by telephoning the Financial Times Cityline
Service, telephone: +44 (0)906 843 0000 and enter the
Company’s four digit code which is 4177 (calls cost
60p per minute).

Gifting shares to charity
If you have a small holding of Taylor Wimpey plc shares,
you may wish to consider gifting them to charity. You
can do so through ‘ShareGift’, which is administered by
a registered charity, Orr Mackintosh Foundation Limited.
Shares gifted are re-registered into the name of the
charity, combined with other donated shares and then
sold through stockbrokers who charge no commission.
The proceeds are distributed to a wide range of
recognised charities. For further details, please contact
Capita Registrars or approach ShareGift directly on
www.sharegift.org/sharegift or telephone them on
+ 44 (0)20 7337 0501.

Shareholder Information
Shareholder Facilities

Financial Calendar
Annual General Meeting
17 April 2008 11:00 am at:
The Royal College of Physicians
11 St Andrews Place, Regent’s Park, London NW1 4LE

At the 2007 AGM, shareholders approved an enabling
resolution which allows the Company, in due course, to
establish e-communications as the normal means of
communication with individual shareholders, unless they
choose otherwise.

Latest date for receipt of proxy instructions for 2008
Annual General Meeting:
11:00 am on 15 April 2008

Shares quoted ex-dividend on London Stock Exchange:
21 May 2008

Record date for final dividend entitlement:
23 May 2008

Latest date for receipt of mandates to join the Dividend
Re-Investment Plan to be effective for the 2007 final
dividend:
2 June 2008

Latest date for receipt of notice of withdrawal from the
Dividend Re-Investment Plan to be effective for the 2007
final dividend:
16 June 2008

Payment date for the 2007 final dividend:
1 July 2008

Interim Results announced:
31 July 2008

Group Company Secretary and General
Counsel and Registered Ofﬁce
James Jordan
80 New Bond Street
London W1S 1SB
Tel: +44 (0)20 7355 8100
Fax: +44 (0)20 7355 8196
Email: james.jordan@taylorwimpey.com

Registrar
For any enquiries concerning your shareholding or
details of shareholder services including the Dividend
Re-Investment Plan, please contact:

Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Email: ssd@capitaregistrars.com
Tel: +44 (0)871 664 0303
(Calls cost 10p per minute plus network extras)

Auditors
Deloitte & Touche LLP

Bankers
HSBC Bank plc

Solicitors
Slaughter and May

Stockbrokers
UBS Investment Bank
JPMorgan Cazenove

Shareholders’ Services
Electroniccommunications
Electronic communications offer mutual benefits for the
Company, for shareholders and for the environment.

The Company already encourages shareholders
to receive certain corporate documentation and
publications electronically via its website.

The Company has not yet implemented that change,
but in the meantime, we continue to encourage
all shareholders to elect voluntarily to use
e-communications as their preferred means of
receiving Company material. Shareholders can sign
up for this facility by logging onto our website at
www.taylorwimpey.com.

On-line facilities for shareholders
You can access our Annual and Interim Reports and
copies of recent shareholder communications on-line
at www.taylorwimpey.com.

To register for on-line access, go to
www.taylorwimpey.com and navigate through to Investor
Relations/Shareholder Information, and click on the
service you require. To access some of these services
you will first be required to apply on-line for a User ID.

Once you have registered for on-line access, you can
make on-line enquiries about your shareholding and
advise the company of changes in personal details.

On-line proxies
Shareholders may also submit forms of proxy for
shareholder meetings on-line at www.taylorwimpey.com.

Beneficial holders of shares with ‘information rights’
Beneficial owners of shares who have been nominated by
the registered holder to receive information rights under
section 146 Companies Act 2006 should direct any
communications and enquiries to the registered holder
of the shares and not to the Company or its Registrar.

Dividend Re-Investment Plan
You can choose to invest your cash dividends in
purchasing Taylor Wimpey shares on the market
under the terms of the Dividend Re-Investment Plan.
For further information on the Plan and how to join,
go to www.taylorwimpey.com and navigate through to
Investor Relations/Shareholder Information/Dividend
Re-Investment Plan.

Dividend mandates
We strongly encourage all shareholders to receive their
cash dividends by direct transfer to a bank or building
society account. This ensures that dividends are
credited promptly to shareholders without the cost and
inconvenience of having to pay in dividend cheques at
a bank. If you wish to use this cost-effective and simple
facility, complete and return the dividend mandate form
attached to your dividend cheque. Additional mandate
forms may be obtained from Capita Registrars.

Duplicate share register accounts
If you are receiving more than one copy of our Annual
Report, it may be that your shares are registered in two
or more accounts on our register of members. You might
wish to consider merging them into one single entry.
Please contact Capita Registrars who will be pleased
to carry out your instructions in this regard.

Low-cost share dealing services
We have arranged both telephone and on-line share
dealing services for UK residents to buy or sell up to
£25,000 worth of Taylor Wimpey plc shares. The
services are operated by Capita Registrars. To use the
services either visit www.capitadeal.com or telephone
+44 (0)871 664 0454 (Calls cost 10p per minute plus

112 www.taylorwimpey.com

Principal Operating Addresses

Taylor Wimpey plc
80 New Bond Street
London
W1S 1SB

Tel: +44 (0)20 7355 8100
Fax: +44 (0)20 7355 8196

Email: twplc@taylorwimpey.com
www.taylorwimpey.com

Registered in England and Wales number 296805

Taylor Wimpey UK Ltd.
Gate House
Turnpike Road
High Wycombe
Buckinghamshire
HP12 3NR

Tel: +44 (0)1494 558323
Fax: +44 (0)1494 885663

Taylor Woodrow Construction Ltd.
41 Clarendon Road
Watford
Hertfordshire
WD17 1TR

Tel: +44 (0)1923 478 400
Fax: +44 (0)1923 478 401

Spain and Gibraltar

Taylor Woodrow de España S.A.
C/Aragon, 223-223A
07008 Palma de Mallorca
Mallorca
Spain

Tel: +00 (34)971 706 570
Fax: +00 (34)971 706 565

Taylor Woodrow (Gibraltar) Ltd.
17 Bayside Road
Gibraltar

Tel: +00 (350) 78780
Fax: +00 (350) 75529

North America

Taylor Morrison Inc.
8430 Enterprise Circle, Ste. 100
Bradenton
FL 34202

Tel: +00 (1)941 554 2000
Fax: +00 (1)941 554 3005

Details of all our operating locations
are available on our website
www.taylorwimpey.com

Published by Black Sun Plc
Printed by Royle Corporate Print

Taylor Wimpey plc Annual Report and Accounts 2007 113

Taylor Wimpey plc
80 New Bond Street
London
W1S 1SB

Taylor Wimpey plc

Annual Report and Accounts 2007

This report is printed on Revive 50:50 which is
made up of 25% post-consumer waste, 25%
pre-consumer waste and 50% virgin wood
ﬁbre from FSC managed forests. Our printer
is also FSC and Carbon Neutral accredited.

Taylor Wimpey plc is a focused homebuilding company

with operations in the UK, North America, Spain and

Gibraltar. We aim to be the homebuilder of choice for

customers, employees, shareholders and communities.

Financial Highlights

Revenue

Pro forma** operating proﬁt*

£4,714m

£3,572m

£667.0m

£892.6m

Taylor Wimpey

Taylor Woodrow

Taylor Wimpey

£4,714m

£667.0m

Proﬁt before exceptional items and tax

(Loss)/proﬁt before tax

£360.2m

£405.6m

Taylor Wimpey

Taylor Woodrow

£(19.5)m

Taylor Wimpey

Taylor Woodrow

£405.6m

£360.2m

£(19.5)m

Adjusted basic earnings per share

Basic (loss)/earnings per share

30.8p

378

50.5p

Taylor Wimpey

Taylor Woodrow

30.8p

Dividend per share†

Taylor Wimpey

Taylor Woodrow

15.75p

(24.2)p

Taylor Wimpey

Taylor Woodrow

xx.x

50.5p

(24.2)p

15.75p

14.75p

38.2%

Year end gearing

18.6%

Taylor Wimpey

Taylor Woodrow

38.2%

* Proﬁt on ordinary activities before ﬁnance costs, exceptional items and amortisation of brands.

**The basis of preparation of pro forma ﬁnancial information is set out on page 104.

† Paid and proposed.